Mining Act of 1995

Also known as: RA 7942 · Republic Act No. 7942 · Philippine Mining Act of 1995 — the short title fixed by Section 1 · An Act Instituting a New System of Mineral Resources Exploration, Development, Utilization, and Conservation — the long title

Government

Definition

The Mining Act of 1995 is the short title that Section 1 gives to Republic Act No. 7942, officially “An Act Instituting a New System of Mineral Resources Exploration, Development, Utilization, and Conservation.” The bill — a consolidation of House Bill No. 10816 and Senate Bill No. 1639 — was finally passed by the House of Representatives and the Senate on February 20, 1995, and was approved by President Fidel V. Ramos on March 3, 1995. (LawPhil — RA 7942)

The Act works out the constitutional design of Section 2, Article XII of the 1987 Constitution: all minerals belong to the State, their exploration, development, and utilization “shall be under the full control and supervision of the State,” and the President may enter into agreements with foreign-owned corporations involving “either technical or financial assistance” for large-scale minerals development, notifying Congress within thirty days of execution. (LawPhil — 1987 Constitution, Art. XII, Sec. 2) The statute builds a two-track regime on that text. The first track is the mineral agreement of Section 26, in three forms — the mineral production sharing agreement (MPSA), in which the government grants exclusive mining rights and shares in gross output; the co-production agreement, in which the government provides inputs other than the mineral resource; and the joint-venture agreement, organized through a joint company held by both parties — all reserved to a “qualified person,” defined in Section 3(aq) as at least sixty percent Filipino-owned capital. The second track is the Financial and Technical Assistance Agreement (FTAA) of Chapter VI (Sections 33–41): a large-scale instrument, negotiated by the Department of Environment and Natural Resources (DENR) and executed and approved by the President, for which a legally organized foreign-owned corporation is “deemed a qualified person” under the proviso in Section 3(aq) — the opening through which wholly foreign-owned corporations may undertake large-scale mining in the Philippines.

Section 2 declares the policy of the Act in regalian terms: all mineral resources in public and private lands within the territory and exclusive economic zone of the Philippines are owned by the State, which must promote their “rational exploration, development, utilization and conservation through the combined efforts of government and the private sector in a way that effectively safeguards the environment and protect the rights of affected communities.”

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Also Known As

RA 7942
Republic Act No. 7942
Philippine Mining Act of 1995 — the short title fixed by Section 1
An Act Instituting a New System of Mineral Resources Exploration, Development, Utilization, and Conservation — the long title

Examples and Analogies

Two lanes, one road: the Act’s regime is like a highway with a domestic lane and a foreign lane over the same state-owned road — mineral agreements (MPSA, co-production, joint venture) carry Filipino-majority capital, while the FTAA lane lets wholly foreign-owned corporations drive large-scale projects as contractors of the State, which keeps title and control.
Arithmetic of scale: the FTAA’s ceiling of 1,000 meridional blocks onshore (Section 34) works out to roughly 81,000 hectares, since a block is defined in Section 3(b) as about eighty-one hectares — an area the size of a small province surrendered to single-contractor management.
Verified statutory data:
Approval: March 3, 1995, by President Fidel V. Ramos; passed by Congress February 20, 1995; effective April 9, 1995
Agreement forms: mineral production sharing, co-production, and joint-venture agreements (Sec. 26), each for up to twenty-five years, renewable once (Sec. 32)
FTAA: Chapter VI, Secs. 33–41; term not exceeding twenty-five years, renewable for up to twenty-five more (Sec. 38); maximum area 1,000 blocks onshore and 4,000 offshore (Sec. 34); executed and approved by the President, with Congress notified within thirty days (Sec. 36)
Conversion option: an FTAA contractor may convert to a mineral agreement, with a foreign contractor reducing its equity to forty percent (Sec. 39)
Indigenous provisions: prior consent before ancestral lands are opened (Sec. 16); royalties held in trust for the community’s socioeconomic well-being (Sec. 17)
Administration: the DENR is the primary agency (Sec. 8); the Mines and Geosciences Bureau has direct charge of mineral lands (Sec. 9)

Usage Scenarios

1. Acquiring Mining Rights

An applicant determines its track at the outset: Filipino-controlled entities proceed through exploration permits and mineral agreements with the DENR, while a foreign-owned corporation seeking large-scale operations proceeds toward an FTAA executed and approved by the President.

2. Structuring Foreign Participation

Lawyers advising foreign mining capital work through the FTAA’s terms — area ceilings, the twenty-five-year renewable term, recovery of expenditures before the government share is collected, and the conversion option at reduced foreign equity — to decide whether and how to enter Philippine mining.

3. Consulting Indigenous Communities

Projects touching ancestral lands must confront Section 16’s consent requirement and Section 17’s royalty-trust-fund mechanism, applied today alongside the stricter free and prior informed consent regime of the Indigenous Peoples Rights Act of 1997.

4. Testing Constitutionality in Litigation

Public-interest lawyers and community petitioners have used the Act as the target of constitutional litigation — the route that produced the two La Bugal-B’laan rulings of 2004 — attacking the FTAA provisions as beyond what the Constitution’s “technical or financial assistance” clause permits.

Strategies

State ownership with private execution: the Act keeps the regalian premise — State ownership of all minerals — while contracting out exploration, development, and utilization to qualified persons, a structure the Supreme Court would later justify as the State securing foreign help while maintaining full control.
Scale-matched instruments: the statute matches the instrument to the investor — Filipino-capital arrangements under mineral agreements, capital-intensive foreign operations under FTAAs with presidential execution and congressional notice.
Environmental and community safeguards as statutory conditions: Sections 69–71 order environmental protection, environmental impact assessment, and a mine rehabilitation fund, while Section 19 closes old-growth forests, watershed reserves, and protected areas to mining applications.
For researchers: trace any FTAA through the sections the Supreme Court parsed — eligibility (Sec. 33), area (Sec. 34), negotiation and approval (Secs. 36–37), term (Sec. 38), conversion (Sec. 39) — because the litigation record turns on those very provisions.

Security and Safety Measures

Prior consent for ancestral lands: Section 16 bars the opening of ancestral lands to mining without the prior consent of the indigenous cultural community concerned, and Section 17 channels royalties into a trust fund for the community’s socioeconomic well-being.
The IPRA overlay: the Indigenous Peoples Rights Act of 1997 (Republic Act No. 8371) tightened this interface — defining free and prior informed consent as the consensus of the community under its customary laws (Sec. 3(g)) and requiring, through Section 59, that no concession, license, lease, or production-sharing agreement be issued or renewed without certification by the National Commission on Indigenous Peoples that the area does not overlap any ancestral domain. (LawPhil — RA 8371)
Closed areas: Section 19 withdraws old-growth forests, watershed reserves, and protected areas from mining applications.
Environmental compliance: Sections 69–71 impose environmental work programs, impact assessment, and a mine rehabilitation fund; the implementing rules were issued as DENR Administrative Order No. 96-40 (1996), the very rules the Supreme Court scrutinized in the La Bugal-B’laan litigation.
Enforcement deputization: Section 9 authorizes the Bureau to deputize, among others, Philippine National Police members, barangay officials, and non-governmental organizations to police mining activities.

Historical Context

The Act replaced the system of service contracts that had governed mineral development since 1935-era practice and that Executive Order No. 279 (1987) had carried into the post-EDSA period by authorizing the DENR Secretary to conclude production-sharing and assistance agreements. Passed under the Ramos administration’s liberalization program, RA 7942 was signed on March 3, 1995 and took effect on April 9, 1995. Barely before effectivity, on March 30, 1995, the government executed an FTAA with WMC (Philippines), Inc. (WMCP) — a fully foreign-owned company — covering 99,387 hectares across South Cotabato, Sultan Kudarat, Davao del Sur, and North Cotabato. In January 1997, after a demand letter to the DENR, the La Bugal-B’laan Tribal Association, Inc. — joined by former Senator Wigberto Tañada, peasant leader Jaime Tadeo, and a coalition of legal-resource, agrarian-reform, and environmental non-governmental organizations — petitioned the Supreme Court against the DENR Secretary, the MGB Director, the Executive Secretary, and WMCP, assailing the Act’s constitutionality; WMC had meanwhile sold its WMCP shares to Sagittarius Mines (January 23, 2001). (LawPhil — La Bugal-B’laan v. Ramos, January 27, 2004)

Challenges and Controversies

The FTAA Constitutionality Saga

On January 27, 2004, the Supreme Court En Banc (Carpio-Morales, J.) granted the petition and declared unconstitutional the proviso in Section 3(aq), Section 23, Sections 33 to 41, Section 56, the second and third paragraphs of Section 81, and Section 90 of RA 7942, together with the non-conforming provisions of DENR Administrative Order 96-40 and the WMCP FTAA itself — reading the Constitution’s “financial or technical assistance” clause narrowly because the 1987 framers had deliberately deleted the 1973 Charter’s “service contracts” language. On December 1, 2004, on motions for reconsideration, the Court En Banc (Panganiban, J.) reversed itself: it set aside the January 27 decision, dismissed the petition, and declared constitutional the Mining Act, the FTAA-related implementing rules, and the WMCP FTAA — invalidating only Sections 7.8 and 7.9 of the FTAA as contrary to public policy and grossly disadvantageous to the government. The reversal let the FTAA regime stand as the instrument of large-scale foreign mining. (LawPhil — La Bugal-B’laan Resolution, December 1, 2004)

Foreign Ownership and the Regalian Debate

The recurring controversy is whether the FTAA merely lets foreign corporations render “assistance” to the State, as the Constitution’s text says, or effectively transfers management and beneficial enjoyment of the minerals. The January 2004 majority stressed that the WMCP FTAA allowed a fully foreign-owned corporation to “manage and operate every aspect of the mining activity”; the December 2004 majority answered that the State may secure foreign help “provided that, at all times, the State maintains its right of full control,” while the dissent of Justices Carpio and Carpio-Morales warned that the reversal would “once again open the doors to foreign control and ownership of Philippine natural resources.”

Indigenous Consent and the IPRA Interface

The Act’s own consent mechanism — Section 16’s prior consent and Section 17’s royalties — predates and is narrower than the regime the Indigenous Peoples Rights Act of 1997 would create. Advocacy for indigenous cultural communities continues to test how mining applications satisfy the NCIP’s Section 59 certification precondition and the constitutional protection of ancestral domains, a litigation line this wiki’s entries on the Indigenous Peoples Rights Act and Cruz v. Secretary of DENR document.