RULES AND REGULATIONS IN THE ISSUANCE OF ONSHORE SPECIAL MINERALS EXTRACTION PERMITS (SMEP) TO QUALIFIED GOVERNMENT ENTITIES/INSTRUMENTALITIES FOR GOVERNMENT PROJECTS

Pursuant to Section 4 of Executive Order No. 200, the following
rules and regulations in the issuance of onshore Special Minerals
Extraction Permits (SMEP) for Government Projects to Qualified
Government Entities/Instrumentalities are hereby promulgated for the
guidance and compliance of all concerned.

SECTION 1.       Title . — The title of this
Administrative Order shall be “Rules and Regulations in the Issuance of
Onshore Special Minerals Extraction Permits (SMEP) to Qualified
Government Entities/Instrumentalities for Government Projects.”

SECTION 2.       Scope. — This Administrative Order
provides policies in the issuance of onshore SMEP over areas exceeding
two (2) hectares by the Department of Environment and Natural Resources
(DENR) to the Natural Resources Development Corporation (NRDC) or any
Qualified Government Entity/Instrumentality involving the exploration,
development, utilization and/or disposition of quarry resources, sand,
gravel, clay and other related materials required for the
construction/implementation of Government Projects.

SECTION 3.       Definition of Terms . — As used in and for the purpose of this Administrative Order, the following terms shall mean:

a.   Special Minerals Extraction Permit (SMEP) — refers
to the permit granted to a Qualified Government Entity/Instrumentality
over onshore areas exceeding two (2) hectares for the exploration,
development, extraction and/or disposition of quarry resources, sand,
gravel, clay and other related materials to serve the purposes of
Government Project(s).

b.   Permit Holder — refers to the holder/grantee of an SMEP.

c.   Qualified Government Entity/Instrumentality — refers
to the NRDC or any entity/instrumentality of the Government of the
Republic of the Philippines duly created in accordance with law,
including government-owned and -controlled corporations, duly authorized
under its charter to explore, develop, utilize and/or dispose mineral
resources.

d.   Government Project — refers to all priority
infrastructure projects/activities and/or other civil works, including
but not limited to dam, flood control and reclamation projects, of
Government.

All other terms which are not defined herein shall have their
meaning as used in Republic Act (R.A.) No. 7942 and its Revised
Implementing Rules and Regulations (DENR A.O. No. 96-40, as amended).

SECTION 4.       Areas Open for SMEP Application . — Areas open to SMEP applications are:

a.    Public or private lands not covered by valid and existing mining rights;

b.    Areas covered by applications for mining permits/contracts;

c.    Lands covered by expired/abandoned/cancelled mining/ quarrying, rights;

d.    Mineral Reservations; and

e.    Timber or forest lands as defined in existing laws.

Provided, That the concerned mining applicant shall be duly notified
by the concerned Mines and Geosciences Bureau Regional Office (MGB RO)
about the acceptance and/or approval of the SMEP application.

SECTION 5.       Areas Closed to SMEP Application. — The following areas are closed to SMEP applications:

a.    Protected Areas as defined under R.A. No. 7586 and DENR A.O. No. 25, Series of 1992;

b.    Areas covered by valid and existing mining rights and SMEPs,
unless a prior written consent is obtained from the concerned mining
contractors/permittees/permit holders; and

c.    Other areas expressly prohibited under R.A. No. 7942,
proclamations, executive orders and other existing laws, and their
respective implementing rules and regulations.

SECTION 6.       Eligibility of an SMEP Applicant . — Any Qualified Government Entity/Instrumentality shall be allowed to apply for an SMEP.

SECTION 7.       Maximum Area Allowed Under an SMEP
. — The maximum area that a Qualified Government Entity/Instrumentality
may apply for or hold at any one time under an SMEP shall be based on
the nature and volume of materials required for the specific Government
Project, as indicated in the feasibility study report of the said
project, and with due consideration to environmental aspects.

SECTION 8.       Term of an SMEP . — The SMEP shall
have a term coterminous with the construction/development period of the
Government Project based on the approved feasibility study thereof,
subject to verification by the concerned MGB RO.

SECTION 9.       Mandatory Requirements for an SMEP Application . — The applicant shall submit to the concerned MGB RO at least five (5) copies of the following mandatory requirements:

a.      Duly certified copy of the charter;

b.      The approved Feasibility Study Report of the Government Project;

c.      Sketch Plan of the proposed Permit Area showing its
geographic coordinates and meridional block(s) in relation to major
environmental features and other projects, using a NAMRIA topographic
map in a scale of 1:50,000 or any other appropriate scale, duly
prepared, signed and sealed by a Bureau-deputized Geodetic Engineer;

d.      Exploration Work Program (MGB Form No. 5-4) or
Development/Utilization/Operation Work Program (MGB Form No. 6-2),
whichever is applicable, duly prepared, signed and sealed by a licensed
Geologist in the case of the Exploration Work Program or a licensed
Mining Engineer for the Development/Utilization Work Program, or the
appropriate and authorized technical staff for the Operation Work
Program; and

e.      Environmental Work Program (MGB Form No. 16-1), in case where an Exploration Work Program is to be pursued.

Provided, That an Environmental Compliance Certificate (ECC),
Environmental Protection and Enhancement Program (EPEP), and Area Status
and Clearance from the concerned government agencies/entities shall be
required prior to the approval of the SMEP.

SECTION 10.    Filing and Acceptance of an SMEP Application
. — The duly accomplished Application Form together with the mandatory
requirements provided in the preceding section shall be filed by the
applicant, or through its duly authorized representative, with the
concerned MGB RO. Such application shall be accepted only upon payment
of a Filing Fee of PhP 10.00 per hectare plus PhP 20.00 pursuant to
Presidential Decree (P.D.) No. 1856: Provided, That the Filing Fee shall
not be less than PhP 5,000.00.

SECTION 11.    Evaluation of an SMEP Application . —
Within fifteen (15) days upon the date of acceptance of the SMEP
application, the concerned MGB RO shall evaluate the same, and if found
in order, such application shall be indorsed by the said Office to the
Secretary, through the Mines and Geosciences Bureau Central Office
(Bureau) for consideration and approval.

SECTION 12.    Approval and Registration of the SMEP
. — Upon approval of the SMEP by the Secretary, the same shall be
forwarded to the Bureau for numbering and, thereafter, to the concerned
MGB RO for registration. The concerned Regional Director shall notify
the Permit Holder to cause the registration of its SMEP with the
concerned MGB RO within fifteen (15) working days from receipt of
written notice. Registration is effected only upon payment of a
Registration Fee of PhP 1,000.00 per permit plus PhP 20.00 pursuant to
P.D. No. 1856.

Failure of the Permit Holder to cause the registration of its SMEP
within the prescribed period shall be a sufficient ground for
cancellation of the same.

SECTION 13.    Terms and Conditions of an SMEP . — The terms and conditions of an SMEP shall include the following:

a.      The Permit Holder shall undertake its mining operations in
accordance with the approved Environmental Work Program,
Exploration/Development/Utilization/Operation Work Program and EPEP, and
that any negative variance of at least twenty percent (-20%) therefrom
shall be subject to the approval of the concerned Regional Director;

b.      The Permit Holder may relinquish any portion of the Permit Area at any stage of its SMEP operations;

c.      The SMEP operations shall be conducted in consonance with
the pertinent provisions of R.A. No. 7942, DENR A.O. No. 96-40, as
amended, Mines Administrative Order No. MRD-51 and other applicable
laws, rules and regulations;

d.      The Permit shall not be assigned to another entity, either government or private;

e.      The Permit may be cancelled, revoked or terminated for
failure of the Permit Holder to comply with the terms and conditions
thereof; and

f.       The cancellation, revocation, termination or withdrawal
of the Permit shall not release the Permit Holder from any and all
financial, fiscal, environmental and legal obligations under the Permit.

SECTION 14.    Interim SMEP. — Pending the approval
of the SMEP application and provided that the applicant has secured the
Area Status and Clearance, and ECC of the Government Project concerned,
the SMEP applicant may file with the concerned MGB RO an application
for an Interim SMEP.

The Interim SMEP may be issued by the Secretary, through the
Director, upon the recommendation of the concerned Regional Director and
shall have a term of ninety (90) days upon the issuance thereof. It
shall allow the Permit Holder to undertake the activities for the
corresponding first ninety (90) days of the approved pertinent Work
Programs, including the EPEP.

SECTION 15.    Priority Right of Previous Private Applicant
. — In the event that an SMEP is terminated, cancelled, revoked or
otherwise withdrawn, and the Permit Area was formerly covered by a valid
and existing mining application, such Permit Area shall be declared
open to mining application and the previous private applicant shall have
priority to pursue his/her/its application over the area: Provided,
That such priority shall be exercised by filing the necessary Letter of
Intent within a period of sixty (60) days upon receipt of written notice
from the concerned MGB RO. For this purpose, the said private applicant
shall be duly informed by the concerned MGB RO about the issuance of
the order of termination, cancellation, revocation or formal acceptance
of a Notice of Withdrawal.

SECTION 16.    Service Contract and/or Memorandum of Agreement (MOA
). — The Permit Holder may avail of the services of a qualified Service
Contractor(s) or enter into a MOA with the proponent of Government
Project to undertake specific works related to the said project:
Provided, That the pertinent Service Contract(s) or MOA shall require
the approval of the Secretary.

SECTION 17.    Authority of NRDC to Collect Certain Fees
. — In cases where the NRDC is the Permit Holder, the management and
service fees collected under the SMEP shall be shared by the NRDC and
the concerned Local Government Units (LGUs), as follows: 60% for NRDC
and 40% for the LGUs.

SECTION 18.    Separability Clause . — If any
clause, sentence, section or provision of this Administrative Order is
held or declared to be unconstitutional or invalid by a competent court,
the remaining parts hereof shall continue to be valid and in effect.

SECTION 19.    Repealing Clause . — All orders,
rules and regulations inconsistent with or contrary to the provisions
hereof are hereby repealed or modified accordingly.

SECTION 20.    Effectivity. — This Administrative
Order shall take effect fifteen (15) days after its complete publication
in a newspaper of general circulation and fifteen (15) days after
registration with the Office of the National Administrative Register.

Adopted: 03 May 2000

(SGD.) ANTONIO H. CERILLES
Secretary