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Integrated MPSA for Non-Mineral Reservation Areas

MPSA NO. 054-96-IX


MINERAL PRODUCTION SHARING AGREEMENT
The MINERAL PRODUCTION SHARING AGREEMENT (this "Agreement")
is made and entered into in Quezon City, Metro Manila, Philippines, this day of Oct 23 1996 by and between:


THE REPUBLIC OF THE PHILIPPINE, hereinafter referred to
as the GOVERNMENT, represented in this act by the Secretary
of the Department of Environment and Natural Resources, with
principal office at Department of Natural Resources
Building, Visayas Avenue, Diliman, Quezon City, Metro Manila


and


RAMON B. BOSQUE, of legal age, married with residence
at Ipil, Zamboanga del Sur, and hereafter referred to as the
"CLAIMHOLDER"



and



BENGUET CORPORATION, a corporation duly organized and
existing under the laws of the Republic of the Philippines,
hereinafter referred to as the "OPERATOR", with principal
office at Benguet Centre, 12 ADB Avenue, Mandaluyong City
and represented in this act by its Executive Vice President,
ROGELIO G. LARAYA as authorized by its Board under Annex "A"
which forms an integral part hereof.

Both CLAIMHOLDER AND OPERATOR being collectively
referred to as the "CONTRACTOR".




WITHNESSETH:



WHEREAS, the 1987 Constitution of the Republic of the
Philippines (the "Constitution") provides in Article XII,
Section 2 that all lands of the public domain, waters,
^ minerals, coal, petroleum, and other natural resources are
owned by the state and that the exploration, development and
utilization shall be under the full control and supervision
of the state;
WHEREAS, the Constitution further provides that the state
may directly undertake such activities, or it may enter into
a co-production, joint venture, or production sharing
agreements with Filipino citizens, or Cooperatives or
Corporation or Associations with at least sixty per centum
of whose capitalization is owned by such citizens
Integrated MPSA for Non-Mineral Reservation Areas Page 2








WHEREAS, pursuant to Republic Act No. 7942, otherwise known


as "The Philippine Mining Act of 1995", which took effect on


09 April 1995, the Secretary of the Department of


Environment and Natural Resources is authorized to enter


into mineral production sharing agreements in furtherance of


the objectives of the government and the Constitution to


bolster the national economy through sustainable and


systematic development and utilization of mineral lands;


WHEREAS, the Government desires to avail itself of the


financial resources, technical competence and skill which


Contractor is capable of applying to the mining operations


of 'the project contemplated herein;


WHEREAS, the Contractor desires to join and assist the


Government in the sustainable development and utilization


for commercial purposes of certain bolh, Silver, Copper,


Zinc and other minerals existing in the Contract Area (as


hereinafter defined ) and any other Minerals which may be


discovered in such Contract Area;


WHEREAS, the Contractor commits itself to protect and


safeguard the environment during its mining operations;


WHEREAS, the Contractor shall assist and Lead in the


development of the host and neighboring communities and


shall contribute in the development of mining technology and


geosciences; and


WHEREAS, the Contractor has available to it the capital,


technical competence and environmental management skills


necessary to carry out the Mining Operations herein


described.


NOW, THEREFORE, for and in consideration of the premises,


the mutual covenants, terms and conditions hereinafter set


forth, it is hereby stipulated and agreed as follows:











SECTION I











i. i This Agreement is a Mineral Production Sharing


Agreement entered into pursuant to Republic Act


No. 7942 and its Implementing Rules and


Regulations. The primary purpose of this


agreement .is to provide for the exploration,


sustainable development, and commercial


utilization of Gold, Silver, Copper, Zinc and


other mineral deposits existing within the


---\

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Contract Area, with all necessary services,
technology and financing to be furnished ox-
arranged fox- by the Contractor in accordance with
the provisions of this Agreement. The Contractor
shall not, by virtue of this Agreement, acquire
any title to lands encompassed within the Contract
Area .
1.2 The Contractor shall undertake and execute, for

and on behalf of the Government, sustainable
Mining Operations with the provision of this
Agreement, and is hereby constituted and appointed
for the pui'pose of this Agreement the exclusive
entity to conduct Mining Operations i::i the
Contract Area.

1.3 The Contractor shall assume all the explox'ation
risk such that if no Minerals in commercial
quantity are developed and produced, it will not
be entitled for reimbursement.
1.4 During the tern of this Agreement, the total value

of production and sale of Minerals derived from
the Mining Operations contemplated herein shall be
accounted for and divided between the Government
and the Contractor in accordance with Section VIII
hereof.




SECTION II
DEFINITIONS


As used in this Agreement, the following words end terms
whether singular- or plural, shall have the following
respective meaning :

2.1 "The__Act" refers to R.A. No. 7942, othei'wise
known as the "Philippine Mining Act of 1995".
2 .2 Agreement means this Mineral Production Sharing

Agreement.

2.3 Associated_Minerals means other ore minerals
which occur together with the principcil ore/
mineral.

2.4 Bangko Sentral means Bangko Sentral ng Pilipinas.

2.5 Budget means an estimate of expenditures to be
made by Contractor in Mining Operations
 
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contemplated hereunder to accomplish the Work
Program for each particular period.

2 . 6 Calendar Year or Year means a period of twelve
(12) consecutive months starting with the first
day of January and ending on December 31, while
"Calendar Quarter" means a period of three
consecutive months with the first calendar quarter
starting with the first day of January.

2.7 Commercial Production means the production of
sufficient quantity of minerals. to sustain
economic viability of mining operations reckoned
from the date of commercial operation as declared
by the Contractor or as stated in the feasibility
study, whichever comes first.

2.8 Constitution or Philippine Constitution means the
1907 Constitution of the Republic of the
Philippines adopted by the, Constitutional
Convention of 1986 on October 15, 1986 and
ratified by the People of the Republic cf the
Philippines on February 2, 1987.
2.9 Contract Area means the area onshore or offshore

delineated under the mineral agreement subject to
the relinquishment obligations of the contractor
and properly defined by latitude and longitude.

2.10 Contract Year means a period of twelve (12)
consecutive months counted from the Effective Date
of this Agreement or from the anniversary of such
Effective Date.

2.11 Contractor means the CLAIMHOLDER and the OPEibATOR,
whether singly or collectively referred to herein,
and assignee or assignees of interest cf the
CLAIMHOLDER and the OPERATOR under this Agreement
provided such assignment of any of such interest
is accomplished pursuant to the provision hereof.

2.12 Declaration_of Mining Feasibility means a
document proclaiming the presence of minerals in a
specific site that are recoverable by socially
acceptable, environmentally safe and economically
sound methods included in the Mine Development
Plan .
2.13 Effective Date means the date of execution of

this Agreement by the Contractor and by the DENR
Secretary in behalf of the Government. In cases,
wherein a Temporary Exploration Permit is issued,
the effective date of this Agreement shall be the
date of issuance of the Temporary Exploration
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2.14 Environment means all facets of man's
surroundings: physical, ecological, aesthetic,
cultural, economic, historic, institutional, and
social.

2.15 Exploration means searching or prospecting for
mineral resources by geological, geophysical,
geochemical surveys, remote sensing, test pitting,
trenching, drilling, shaft sinking, tunneling, or
any other means for the purpose of determining the
existence, extent, quality, and quantity of
mineral resources and the feasibility of mining
them for profit.

2.16 Exploration Period shall mean the time period
from the issuance of this Agreement which shall
be for two (2) years, and may be extended for two
(2) years each or a maximum of six (6) years
provided that the Contractor has complied with all
the terms and conditions of this Agreement.


2.17 Force Majeure means acts or circumstances beyond
the reasonable control of Contractors including
but not limited to war, rebellion, insurrection,
riots, civil disturbances, blockade, sabotage,
embargo, strike, and lockout and other labor
disturbances, any disputes, epidemics,
earthquake, storm, flood, or other adverse weather
conditions, explosion, fire> adverse action of the
government, laws, rules, regulations and orders of
government or its agencies, or any of its
instrumentality or subdivision, or any act of God
or the public enemy, breakdown of machinery which
have a major effect on the operations of the
Contractor, any act over which the party has no
reasonable control and which is of such nature as
to delay, curtail or prevent timely action by the
party affected.

Foreign Exchange means any currency other than
the currency of the Republic of the Philippines
acceptable to the Government and the Contractor.

2.19 Government means the Government of the Republic
of the Philippines or any of its agencies and
instrumentalities.

2.20 Gross Output means the actual market value of the
minerals or mineral products from each mine or
mineral land operated as a separate entity,
without any deduction for mining, processing,

refining, transporting, handling, marketing, or
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or mineral products are sold or consigned abroad
by the Contractor under C.I.F. terms, the actual
cost of ocean freight and insurance shall be
deducted: provided however that in the case of
concentrates which are not traded in commodity
exchanges in the Philippines or abroad such as
copper concentrate, the actual market value shall
be the world price quotation of the refined
mineral products contained thereof prevailing in
the said commodity exchanges, after deducting the
smelting ,refining, treatment, insurance,
transportation and other charges incurred :n the
process of converting mineral concentrate!: into
refined metal traded in those commodity exchanges.
 
2.21 Mine Development refers to work undertaken to
explore and prepare an ore body or a mineral
deposit for mining, including tlib cbnstruction of
necessary infrastructure and related facilities.
2.22 Minerals means all naturally occurring inorganic
substances in solid, liquid, gas or any
intermediate state excluding energy materials
such as coal, petroleum, natural gas, radioactive
materials and geothermal energy.
2.23 Mineral Products means materials derived from
mineral ores/rocks and prepared into marketable
state by metallurgical processes which include
ber.ef iciation, cyanidation, leaching, smelting,
calcination and other similar processes.
 
2.24 Minina Area means that portion of the Contract
Area identified by the Contractor for purposes of
development, mining, utilization, and sites for
support facilities or in the immediate vicinities
of the mining operations as specified Ln the
Declaration of Mining Feasibility.
 
2.25 Mining Operations means mining activities
involving exploration, feasibility study,
environmental impact assessment, development,
utilization, mineral processing, and mine
rehabilitation.
 
2.26 Notice means notice in writing, or by telex or by
telecopy (authenticated by answer back or
confirmation received) addressed or serf. as
provided in Section 16.2 of this Agreement.
 
2.27 Ore means naturally occurring substance or
material from, which a mineral or element can be
mined and/or processed for profit. .
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2.28 Ore Mineral means a mineral that can be extracted
from ore and contributes to the value of ;he ore.
2.29 Pollution means any alteration of the physical,

chemical, and biological properties of any water,
air and/or land resources of the Philippines, or
any discharge thereto of any liquid, gaseous or
solid wastes as will or is likely to crente or
render such water, air, and land resources
harmful, detrimental or injurious to public
health, safety or welfare or which will adversely
affect their utilization for domestic,
commercial, industrial, agricultural, recreational
or other legitimate purposes.
2.30 Secretary means the Secretary of the Department
of Environment and Natural Resources.

2.31 Department or DENR means the Department of
Environment and Natural Resources.
 
2.32 Work Program, means a document which presents the
plan of major mining activities and the
corresponding expenditures and Budget of the
Contractor in its Contract Area during a given
period of time, including the plan and
expenditures for environmental protection. and
rehabilitation, development of host . and
neighboring communities and of local geoscience
and mineral technology, as submitted and approved
pursuant to this Agreement.




SECTION III

TERMS OF AGREEMENT

3.1 This Agreement shall have a term of twenty-five
(25) years from effective date, and may be renewed
thereafter for another term. The renewal of this
agreement, as well as the changes in the terms and
conditions shall be upon mutual consent by the
parties. In the event the government decides to
allow mining operations thereafter by any
Contract, this must be through competitive public
bidding and after due publication of notice, the
Contract shall have the right to equal the highest
bid upon reimbursement of all reasonable expenses
of the highest bidder.
Integrated MPSA for Non-Mineral Reservation Areas Page 8



SECTION IV

Contract Area

4.1 Size, Shape, and Location of Contract Area. This

Agreement covers a total area of 508.3396 hectares
(Please refer to ANNEX "B"), situated at Canatuan,
Bgy. Tabayo, Siocon, Zamboanga del Norte and
bounded with the following geographical
coordinates:


POINT LATITUDE LONGITUDE

1 7° 433’ 30" 122° 16' 00”
2 7° 44’ 30” 122° 16’ 00”
3 7° 44' 30” 122° 17’ 30”
4 7° 43’ 30” 122° 17' 30”


SECTION V
EXPLORATION PERIOD


5.1 Timetable for Exploration - The Contractor
shall commence Exploration Operations not later
than three (3) months after the Effective Date
for a period of two (2) years renewable for a term
of two (2) years each subject to compliance with the terms and conditions of the agreement and of
reasonable expectation of success during the
extension. A temporary exploration permit may be
issued by the Director, upon request of the
applicant, when the mineral agreement is
recommended to the Secretary for approval. Period
of such temporary exploration permit shall be
included as part of the exploration period of the
mineral agreement.

5.2 Work Programs and Budgets - The Contractor
shall strictly comply with both Exploration and
Environmental Work Programs together with their
Budgets submitted to and approved by the
Government (Please refer to ANNEXES "C" and "D"
for the two (2) year Exploration Work Program and
Budget and for the Environmental Work Program,
respectively).

The amount to be spent by the Contractor in conducting Exploration Operations under the terms
Integrated MPSA for Non-Mineral Reservation Areas Page 9

this agreement during the exploration period
shall be in the aggregate of not less than that
hereinafter specified for each of cue below
Contract Years, as follows:


For the Exploration Work Program:

1st Contract Year_ : P2,755,620.00
2nd Contract Year P3,560,430.00

Total Estimated Budget for the
,
Exploration Work Program: P6,316,050.00
Estimated budget for the P 71,700.00
Environmental work Program:


In the event of extension, the amount to be spent
every year shall first be agreed upon by the
parties.
In the event of termination of this agreement. the

contractor shall only be obliged to expend the
pro-rata amount for the period of such Contract
Year prior to termination. If during any Contract
Year, the Contractor should expend none of the
amount to be expended as provided, above the
excess may he subtracted from the amount required
tc be expended by the contractor during the
succeeding Contract Years, and should the
Contractor, due to unforeseen circumstances or
with the consent of the government expend less
during a year then, the deficiency shall be
applied to the amount to be expended during the
succeeding Contract Years.
5.3 Reporting

a) Semi-Annual Accomplishment Report - During the

Exploration Period, the Contractor shall
supply geological, geophysical, radio letric
and other information relating to' the
exploration areas and its activities under
oath to be submitted within thirty (30; days
from the end of each semester, to the Regional
Director, copy furnished the Director. Such
information shall include financial
expenditures, raw and processed analytical
data, copies of originals of assay results,
duplicated samples, field data, copies of
originals from drilling re;ports, maps,
environmental work program implementation and
expenditures showing discrepancies/deviations
Integrated MPSA for Non-Mineral Reservation Areas Page 10

with approved exploration plans and programs,
and all other information of any kind
collected during the exploration activities.
All such information shall be confidential,
subject to the provisions elsewhere provided
herein.

b) Final Report - The Contractor shall submit to
the Regional Director, copy furnished the
Director, a final report under oath upon the
expiration of the Exploration Period which
shall be in the form and substance comparable
to published professional reports of

respectable international institutions and
shall incorporate all the findings in the
Contract Area, including maps and location of
samples, assays, chemical analysis, and
assessment of mineral potentials. Such report
shall also include complete detailed
expenditures incurred during the Exploration
Period. In case of diamond drilling, the
Contractor shall upon request of the Regional
Director, submit to the Regional Office a
quarter of the core samples which shall be
deposited in the Regional Office Core Library
for safe keeping and reference.

c) Relinquishment Report - The Contractor shall
submit a separate relinquishment report with a
detailed geologic report of the relinquished
area accompanied by maps at a scale of
1:50,000 and results of analyses and
corresponding expenditures, among others.


\ 5.4 Mining Feasibility - During the Exploration
Period, the Contractor shall conduct. feasibility

studies for any part of the Contract Area as may
be warranted. Within the Period, the Contractor
shall submit to the Regional Director, copy
furnished the Director, a Declaration of Mining
Feasibility accompanied with a three (3) year Work
Program for development indicating therein the
Mining Area. Areas not delineated as part of the
Mining Area shall be deemed relinquished in favor
of the Government.

F'ailure of the Contractor to submit a Declaration
of Mining Feasibility during the Exploration
Period shall be considered a substantial breach of
this Agreement.



5.5 Survey of the Contract Area - The Contractor shall
cause the survey of the perimeter of the Contract
Integrated MPSA for Mon-Mineral Reservation Areas Page 11

requirements, filed with the Regional Office
simultaneous with the submission oil the
Declaration of Mining Project Feasibility. .Survey
returns shall be submitted to the Regional
Director for approval within one (1) year from
receipt of the Order of Survey complete with the
mandatory requirements stated in the implementing
rules and regulations.




SECTION VI
DEVELOPMENT AND CONSTRUCTION PERIOD


Timetable - The Contractor shall complete the
development of the mine including the construction
of production facilities within thplrty six (36)
months from the submission of the fjeclarat :.on of
Mining Feasibility, subject to such extension
based on justifiable reasons as the Secretary may
approve, upon recommendation of the Regional
Director, through the Director.

Reporting
6.2

a) Annual - The Contractor shall submit, within
sixty (60) days after December 31 of each
year, to the Regional Director, copy furnished
the Director, an annual report which states
the major activities, achievements and
expenditures during the year covered,
including maps, assays, rock and mineral
analyses and progress geological and
environmental reports during the development
and construction period.
b) Final Report - Within six (6) months from the

completion of the development and construction
activities, the Contractor shall subnit a
final report to the Regional Director, copy
furnished the Director. Such report shall
integrate all information in maps of
appropriate scale and quality as well as in
monographs or reports in accordance with
international standards.
Integrated MPSA for Non-Mineral Reservation Areas Page


SECTION VII

OPERATION PERIOD

Timetable - The Contractor shall submit, within
thirty (30) days from completion of the
construction of production facilities, to the DENR
Secretary through the Regional Director, copy
furnished the Director, a Work Program for a
period of three (3) years. The Contractor shall
commence Commercial Production immediately upon
approval of the aforesaid Work Procjram. Failure
of the Contractor to commence Commercial
Production within ninety (90): days of said
approval shall be considered a substantial oreach
of the Agreement.
Operation Work Program and Budget - During the
7.2
Operation Period, the Contractor sllall submit to
the DENR Secretary through the Regional Director,
copy furnished the Director, Work Programs
covering a period of three (3) years each which
shall be submitted not later than thirty (30)
days before the expiration of the period covered
by the previous Work Programs.

The Contractor shall conduct Mining Operations and
other activities for the duration of the
Production Period in accordance with the duly
approved Work Program and any modification thereof
shall be approved by the Secretary.
Reporting

a) Quarterly Reports - Beginning with the first
Calendar Quarter following the commencement of
the Operating Period, the Contractor shall
submit, within thirty (30) days after the end
of each Calendar Quarter, to the DENR Secretary
through the Regional Director, copy furnished
the Director, a Quarterly Report stating the
tonnage of production in terms of ores,
concentrates, and their corresponding grades
and other types of products; value, destination
of sales or exports and to whom sold; terms of
sales and expenditures.
b) Annual Reports - During the Operating Period,
the Contractor shall submit, within sixty (60)
days from the end of each Calendar Year, to the
DENR Secretary through the Regional Director,
copy furnished the Director, an Annual Report
indicating in sufficient detail:
Integrated MPSA for Non-Mineral Reservation Areas Page 13

b.l) The total tonnage of ore reserves whether
proven, probable, or inferred, the total
tonnage of ores, kind by kind, broken down
between tonnage mined, tonnages transported
from the minesite and their corresponding
destination, tonnages stockpiled in the mine
and elsewhere in the Philippines, tonnages
sold or committed for export (whether actually
shipped from the Philippines or not), tonnages
actually shipped from the Philippines (with
full details as to purchaser, destination and
terms of sale) , and if known to the
Contractor, tonnages refined, processed or
manufactured in the Philippines with full
specifications as to the intermediate
products, by-products or final products and of
the terms at which they were disposed;
b.2) Work accomplished and work in progress at the
end of the year in question with respect to
all the installations and facilities related
to the utilization program, including the
investment actually made or committed;

b.3) Profile of work force, including management
and staff, stating particularly their
nationalities, and for Filipinos, their place
of origin (i.e., barangay, town, province,
region )and
b.4) Ownership of the Contractor, particularly
with respect to nationality.

7.4 Expansion and Modification of Facilities - The
Contractor may make expansions, modifications,
improvements, and replacements of the mining
facilities and may add new facilities as the
Contractor may consider necessary for the
operations, provided such plans shall be embodied
in an appropriate Work Program approved by the
Secretary.



SECTION VIII
FISCAL REGIME

8.1 General Principle - The financial regime of this
Agreement shall be governed by the principle
according to which the Government expects a
reasonable return in economic value for the
utilization of non-renewable natural resources
 
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under its natural sovereignty while the Contractor
expects a reasonable return on its investment with
special account to be taken for the high risk of
exploration , the terms and conditions prevailing
elsewhere in the industry and any special
efficiency to be gained by a particularly good
performance of the Contractor.

8.2 Occupation Fees - Upon registration and every year
thereafter, the Contractor shall pay to the
Government an Occupation Fee over the Contract Area

at the annual rate of fifty (50) pesos per hectare.
It shall be paid to the concerned Municipal/City
Treasurer where the Contract Area is located. If
the fee is not paid on the date specified, the
Contractor shall pay a surcharge of twenty five
(25%) percentum of the amount due in addition to
the occupation fees.
8.3 Share of the Government - The government share

shall be the excise tax on mineral products at the
following rate of the actual market value of the
gross output thereof at the time of removal as
provided for in Republic Act No. 7729 amending
Section 151 (a) of the National Internal Revenue
Code as amended: For Copper & other metallics
(except Gold and Chromite) : From June 24, 1994 -
June 23, 1997 - 1.0%; From June 24, 1997 to June
23, 1999 - 1.5%; From June 24, 1999 onwards - 2.0%;
For Gold and Chromite - 2% as well as other taxes,
duties, and fees levied by existing laws.

For purposes of determining the amount of the
herein government share, the Contractor shall
strictly comply with the auditing and accounting
requirements prescribed, under existing laws and
regulations.

The government share shall be allocated in
accordance with Sections 290 and 292 of R. A. No.
7160, otherwise known as "The Local Government Code
of 1991".

8.4 Pricing of Sales - The Contractor shall endeavor to
obtain the best achievable price for its production
and pay the lowest achievable marketing commissions
and related fees. Contractor shall seek to strike
a balance between long-term sales comparable to
policies followed by independent producers in the
international mining industry.


The Contractor shall likewise seek a balanced
distribution among consumers. Insofar as sales to

Contractor's affiliates are concerned, prices shall
be at arm's length. Standard and competing offers
Integrated MPSA for Non-Mineral Reservation Areas Page 15

for large scale and long-term contracts shall be
procured.

8.5 Associated Minerals - If Minerals, other than
Gold, Silver, Copper and Zinc are discovered in
commercial quantities in the Contract Area, the

value thereof shall be added to the value of the
principal mineral in computing the share of the

government, based on the rates shown in Section 8.3
above.





SECTION IX

Work Programs

9.1 Submission to Government - Within the periods
stated herein, the Contractor shall prepare and
submit to the Government/DENR Secretary through
the Director of the concerned Regional Office,
copy furnished the Director, Mines and Geosciences
Bureau, a Work Program and Budget for the Contract
Area stating the Mining Operations which the
Contractor proposes to carry out during the period
covered with the details and particulars set forth
elsewhere in this Agreement or in the Implementing
Rules and Regulations of R.A. No. 7942.

9.2 Examination, Revision - Should the Government wish
to propose a revision to a certain specific
feature in the Work Program or Budget, it shall
within thirty (30) days after receipt thereof
provide a Notice to the Contractor specifying in
reasonable detail its reasons therefore. Promptly
thereafter, the Government and Contractor will
meet and endeavor to agree on the revision
proposed by the Government. In any event, any
portion of said Work Program or Budget as to which
the Government shall fail to notify the Contractor
of proposed revision shall insofar as possible be
carried out as prescribed herein. If the
Government should fail within sixty (60) days from
receipt thereof to notify Contractor of the
proposed revisions, the Work Program and Budget

proposed by the Contractor shall be deemed to be
approved.


9.3 It is recognized by the Government and the
Contractor that the details of any Work Program
may require changes in the light of changing
circumstances. The Contractor may make such
changes provided they do not change the general
 
Integrated MPSA

objective of the Work Program,and provided
further, that changes which entail appearance of
a- least twenty (20) percentum shall be subject to
the -approval of the Secretary.
9.4 The Government's approval of a proposed. Work

Program and Budget will not be unreasonably
withheld.





SECTION X
ENVIRONMENTAL PROTECTION AND SAFETY AND HEALTH
 
10.1 Consistent with the basic policy of: the state to
assure the availability, sustainability and
equitable distribution of the country's natural
resources, the Department adopts the policy that
mining activities attendant to permits, agreements
and leases shall be managed in a technically,
financially, socially, culturally and
environmentally responsible manner to achieve,
generally, the welfare of the country and,'
particularly, the sustainable development
objectives and responsibilities as provided for
under these Implementing Rules and Regulations.
10.2 The Contractor shall prepare a plan of ir.in-.ng so

that its damage to the environment will be
minimal. To the extent possible, control of
pollution and the transformation of the mined-out
areas or materials into economically and socially
productive forms must be done simultaneously with
mining.
10.3 An Environmental Compliance Certificate (ECC)
shall be secured first by the Contractor prior to
the conduct of any mine development work in the
Contract Area.

10.4 The Contractor shall submit within thirty (30)
Calendar days after the issuance and receipt of
the ECC, an Environmental Protection and
Enhancement Program (EPEP) using MGB Form No. 19-1
covering all areas to be affected by mining
development, utilization and processing under this
Contract.

10.5 The contractor shall submit within thirty (30)
days prior to the beginning of every calendar year
an Annual. Environmental Protection and Enhancement
Program (AEPEP) using MGB Form 19-3, which shall
 

Integrated MPSA for Non-Mineral Reservation Areas Page 17

be based on the approved EPEP . The AE1PEF shall
be implemented during the year for which i.t was
submitted.
10.6 Subject to the provisions of DENR AO No. 95-25,

the Contractor shall establish a Mine
Rehabilitation Fund (MRF) based on the financial
requirements of the approved EPEP as a reasonable
environmental deposit to ensure satisfactory
compliance with the commitments/strategies of the
EPEP/AEPEP and availability of funds for the
performance of the EPEP/AEPEP durintj the specific
project phase. The MRF shall be depqsited as Trust
Fund in a government depository bank and shall be
used for physical and social rehabilitation of
areas affected by mining activities and for
research on the social, technical hnd preventive
aspects of rehabilitation.

10.7 The Contractor shall set-up mitigating measures
such as mine waste and mill tailings disposal
system, mine rehabilitation decommissioning, water
quality monitoring, etc. to minimize land
degradation, air and water pollution, acid rock
drainage and-changes in hydrogeology.
10.8 The Contractor shall set-up an Environmental and

Safety Unit manned by qualified personnel tc plan,
implement and monitor its approved EPEP.

10.9 The Contractor shall be responsible :.n the
monitoring of environmental safety and health of
the contract area and shall strictly comply with
all the rules and regulations embodied under Mines
Administrative Order No. 51, Series of 1991,
otherwise known as the "Mine Safety Rules and
Regulations".

10.10 The Contractor shall submit to the Bureau a
Safety and Health Program covering its area of
operation within fifteen (15) days before? the
start of every Calendar Year, copy furnished
Regional Office.
Integrated MPSA for Non-Mineral Reservation Areas Page 18

SECTION XI
RIGHTS AND OBLIGATIONS OF THE PARTIES
 
11.1 Rights and Obligations of the Contractor
The Contractor shall have the following rights and
obligations:
a) Exclusively conduct mining operations within
the Contract Area with full right of ingress
and egress and the right to occupy the same.
b) Construct and operate any facilities specified
under the Mineral Agreement or approved Work
Program.
c) Determine the exploration, mining and
treatment process to be utilized in the mining
operations;
d) Extract, remove, use and dispose of any
tailings as authorized by an approved Work
Program;
e) Secure all permits necessary or desirable for

the purpose of mining operations;
f) Keep accurate technical records about the
operations as well as financial and marketing
accounts and make them available to Government
representatives authorized by the Director for
the purpose of assessing the performance and
compliance of the Contractor with the terms of
this Agreement. Authorized representatives of
other Government Agencies may also have access
to such accounts in accordance with existing
Laws, Rules and Regulations;
g) Furnish the Bureau all the data and information gathered on the Contract Area and allow, upon prior written notice, the inspection of its books of accounts and records at reasonable hours on any business day
 
h) Hold the Government free and harmless from all
claims and accounts of all kinds, as well as
demands and actions arising out of the
accidents or injuries to persons or properties
caused by Mining Operations of the Contractor
and indemnify the Government for any expenses
or cost incurred by the Government by reason
Integrated MPSA for Non-Mineral Reservation Areas Page 19

of any such claims accounts, demands or
actions.

i) In the development of the community, the
Contractor shall:

i.l) Recognize and respect the rights, customs and
traditions of indigenous tribal communities
over their ancestral lands.


i.2) Allocate budget for community development
particularly mining community, Indigenous
Cultural Community and Non-Indigenous
Cultural Community living in the host and
neighboring communities.

1.3) Coordinate with proper authorities in
providing development plans for the host and
neighboring communities;

1.4) Assist the community through the development
of social infrastructure, livelihood
programs, education, water, electricity and
medical services. Where traditional self-
sustaining income and the community
activities are identified to be present, the
Contractor shall assist in the preservation
and/or enhancement of such activities;

i.5) Give preference to Filipino citizens, who
have established domicile in the neighboring
communities, in the hiring of personnel for
its mining operations. If necessary skills
and expertise are currently not available,
the Contractor must immediately prepare and
undertake a training and recruitment program
at its expense;

1.6) Negotiate payment of royalty to indigenous
cultural communities within validated
ancestral domain areas based on a management
plan formulated by the community.

1.7) Incorporate in the mine feasibility study the
planned expenditures necessary to implement
(i.l) to (i.5) of this section.

j) In the development of Mining Technology and
Geosciences, the Contractor shall, among
others, perform the following:

j.l) In the course of its operations, produce
geological, geophysical, geochemical and
other types of maps and reports that are
appropriate in scale and in format and
 
Integrated MPSA for Non-Mineral Reservation Areas Page 20

substance which are consistent with the
internationally accepted standards and
practices. Such maps shall be made available
to the scientific community in the most
convenient and cost effective forms, subject
to the condition that the Contractor may
delay release of said information for a
reasonable period of time which shall not
exceed three (3) years;

j . 2) Systematically keep the data generated from
the contract/mining area such as cores,
assays and other related information,
including economic and financial data and
make them accessible to students, researchers
and other persons responsible for developing
mining, geoscience and processing technology
subject to the condition that the Contractor
may delay release of data to the science and
technology community within a reasonable
period of time which shall not exceed three
(3) years; and

j.3) Transfer to the Government or local mining
company the appropriate technology it may
adapt in the exploration, development and
commercial utilization of the minerals in the
Contract Area provided that where proprietary
rights or licensing agreements are involved,
that the Government shall respect the
requirements, limitations, terms and
conditions attached thereto.

j.4) Allocate research and development budget for
the advancement of mining technology and
geosciences in coordination with Bureau,
Research Institutions, Academe, etc.
j.5) Replicate data, maps and reports cited in

(j.l) and (j . 2) and furnish the Bureau for
archiving and systematic safekeeping which
shall be made available to the science and
technology community for conducting research
and undertaking other activities which
contribute to the development of mining,
geoscience and processing technology and the
corresponding national pool of manpower
talents: provided, however, that the release
of data, maps and the like shall be similarly
constrained in accordance with (j.l) and
(j.2) above.

k) After the Exploration Period, the Contractor
shall relinquish to the Government any portion
of the Contract Area which shall not be
Integrated MPSA for Non-Mineral Reservation Areas Page 21

necessary for Mining Operations and not
covered by any Declaration of Mining
Feasibility.
1) The Contractor must pay all other taxes and

fees mandated by existing laws, rules and
regulations.



Rights of the Contractor
The Contractor shall:
a) Have the right to conduct mining operations in

the Contract Area in accordance with the terms
and conditions hereof.
b) Have the right of possession of the Contract

Area, with full right of ingress and egress
and the right to occupy the same, subject to
surface and easement rights.

c) Have the right to use and have access to all

declassified geological, geophysical,
drilling, production and other data relevant
to the mining operations.
d) Have the right to sell, assign, transfer,

convey or otherwise dispose of all its rights,
interests and obligations under the Agreement
subject to the approval of the Government.
e) Subject to applicable laws and regulations, to
A employ or bring into the Philippines foreign

technical and specialized personnel (including
the immediate members of their families) as
may be required in the operations of the
Contractor, provided, that if the employment
connection of such foreign persons with the
Contractor ceases, the applicable laws and
regulations on immigration shall apply to
them.
f) Enjoy, subject to pertinent laws, rules and
regulations and the rights of third parties,
easement rights and use of timber, water and
other natural resources in the Contract Area.
g) Have the right of repatriation of capital and
remittance of profits, dividends and interest
on loans, subject to existing laws and Bangko
Sentral rules and regulations; and
Integrated MPSA for Non-Mineral Reservation Areas Page 22

h) Have the right to import when necessary all
equipment, spare parts and raw materials
required in the operations in accordance with
existing laws and regulations.


11.3 Obligation of_the Government

The Government shall


a) Ensure that the Contractor has the Government
full cooperation in the exercise of the rights
granted to it under this Agreement.

b) Use its best efforts to ensure the timely
issuance of necessary permits and similar
authorizing documents for usfe of the surface
of the Contract Area.
 
c) If Contractor seeks to obtain financing
contemplated herein from banks or other
financial institutions, the Government shall
cooperate with the Contractor in such efforts.
The Contractor may assign its rights, title
and interest in this Agreement for the purpose
of securing financing for the Project, with
right of further assignment by the financial
institution in favor of a qualified third
party, subject to the approval of the
Secretary which consent and approval shnl not
be unreasonably withheld; Provided, that each
assignment shall be deemed automatically
approved if not acted upon by the Secretary
within thirty (30) working days from receipt
of the application; Provided, further, that
notwithstanding such assignment, the
Contractor shall continue to be bound to
perform its obligations and responsibilities
under this Agreement; and Provided, further,
that such assignment shall not adversely
affect the rights of the Government under this
Agreement.

d) Recognize the Royalty Agreement between
Claimholder and Operator dated April 8, 1991
which is made an integral part hereof by
reference.







 

Integrated MPSA for Non-Mineral Reservation Areas Page


SECTION XII
ASSETS AND EQUIPMENT
12.1 Contractor shall acquire for the Mining Operations
only such assets that are reasonably estimated to
be required in carrying out such Mining
Operations.
12.2 All materials, equipment, plant and other
installations erected or placed on the Contract
Area of a movable nature by the Contractor shall
remain the property of the Contractor and shall
have the right to remove and re-export such
materials and equipment, plant and other
installations from the Philippines, subject to
existing rules and regulations. In case of
cessation of Mining Operations on public lands
occasioned by its voluntary abandonment or
withdrawal, the Contractor shall have a period of
one (1) year from the time of cessation within
which to remove its improvements; otherwise, all
social infrastructures and facilities shall be
turned over or donated tax free to the proper
government authorities, national or local, to
ensure that said infrastructures and facilities
are continuously maintained and utilized by the
host and neighboring communities.


SECTION XIII
EMPLOYMENT AND TRAININGS OF FILIPINO PERSONNEL

13.1 The Contractor agrees to employ, to the extent
possible, qualified Filipino personnel in its
Mining Operations; and after Commercial Production
commences shall; in consultation and with consent
of the Government, elaborate an extensive training
programme for employment of suitable Filipino
nationals at all level of employment. The
objective of said programme shall be to reach
within the time table set forth below the
following targets of "Filipinization".
Integrated MPSA for Non-Conservation Area

Unskilled Skilled Clerical Professional Management
Year 1 100% 100% 100% 75% 75%
Year 3 100 100 100 30 80
Year 5 100 100 100 90 90
Year 7 100 100 100 95 95
Year 10 100 100 100 95 95
Year 15 100 100 100 95 95

13.2 Cost and expenses of training such Filipino
personnel and the Contractor's ovhi employees shall
be included in the Operating Expanses.
\

SECTION XIV

ARBITRATION


14.1 The Government and the Contractor shall consult

with each other in good faith And shall exhaust
all available remedies to settle any and all
disputes or disagreements arising out of or
relating to the validity, interpretations,
enforceability, or performance of this Agreement
before resulting to arbitration as provided for in
Section 14.2 below.

14.2 Any disagreement or dispute which can rat be
settled amicably within a period of one (li year
from the time the issue was raised by i Party
shall be settled by a tribunal of thr?e (3)
arbitrators, one to be appointed by the
Contractor, another to be appointed by the
Government, and the third by the arbitrators so
'appointed who shall serve as Chairman. The first
two appointed arbitrators shall continue to
consider names of qualified persons until
agreement on a mutually acceptable Chairman of the tribunal is needed. Such arbitration shall be
initiated and conducted pursuant to republic Act
Mo. 876, otherwise known as the Arbitration Act.


The decision of a majority of the arbitrators
shall be final and binding upon the parties.
Judgment upon the award rendered may be entered in
any court having jurisdiction or application may
be made to such court for a judicial acceptance of
the award and an order of enforcement, as the case
may be.
In any event, the arbitration shall be conducted
applying the substantive laws of the Republic of
the Philippines.
Integrated MPSA for Non-Mineral Reservation Areas Page 25

14.3 Each party shall pay fifty per centum (50%) of the
fees and expenses of the Arbitrators and the costs
of arbitration. Each party shall pay its own
costs and attorney's fee.



SECTION XV

SUSPENSION OR TERMINATION OF CONTRACT,
TAX INCENTIVES AND CREDITS

 
15.1 This contract may be suspended for .failure of the

Contractors: (a) to comply with,; any provision or
requirement of the Philippine Minirig Act of 1995
and/or its Implementing Rules and Regulations; (b)
to pay taxes, fees and/or other charges demaudable
and due the Government.
15.2 This Agreement terminates or may be terminated for

the following causes: (a) expiration of its term
whether original or renewal; (b) withdrawal, from
the agreement by the Contractor; (c) violation by
the Contractor of the Agreement's terms and
conditions; (d) failure to pay taxes, fees/or
charges or financial obligations for two(2)
consecutive years; (e) false statement or omission
of facts by the Contractor; and (f) any other
cause or reason provided under the Act and its
Implementing Rules and Regulations, or any other
relevant laws and regulations.
The Government shall, by written notice to the
Contractor, advise the latter of its decision to
terminate the Agreement stating the reason or
reasons therefor. The Contractor shall have a
right to contest it in writing within a period of
thirty (30) days from receipt of the written
notice from the Government. In case of
disagreement between the parties, the matter shall
be submitted to arbitration as provided for under
Section XIV.

15.3 All statements made in this Agreement shtll be
considered as conditions and essential parts
hereof, and any falsehood in said statements or
omission of facts which may alter, change or
affect substantially the fact set forth in said
statements shall be a ground for its revocation
and termination.




 
integrated f IPSA for Non-Mineral Reservation Areas Page 26

15.4 The Contractor may, by giving due notice at any
time during the term of this agreement, apply for
its cancellation due to causes which, in the
opinion of the Contractor, render continued
mining operation no longer feasible or viable. In
this case, the Secretary shall decide on the
application within thirty (30) days from notice,
provided that the Contractor has . met all the
financial, fiscal and legal obligations.
.' I
15.5 No delay or omissions or course 6f dealing by the
Government shall impair any of the party's rights
under this Agreement, except in the case of a
written waiver. Each party's right to seek
recourse and relief by all other means shall not
be construed as a waiver of any succeeding or
other default unless the contrary intention is
reduced in writing and signed by the party
authorized to exercise the waiver.

15.6 In case of termination, the Contractor shall pay
all the fees and other liabilities due up too the
end of the year in which the termination becomes
effective. The Contractor shall immediately carry
out the restoration of the Contract Area in
accordance with good mining industry practice.

15.7 The following acts or omission, inter alia shall
constitute breach of contract upon which the
Government may exercise its right to terminate the
contract:
a) Failure of the Contractor without valid reason
to commence Commercial Production within the
period prescribed; and

b) Failure of the Contractor to conduct quarrying
operations and other activities in accordance
with the approved Work Programs and/or any
modification thereof as approved by the
Secretary.
15.8 The Government may suspend and cancel tax
incentives and credits if the Contractor fails to
abide by the terms and conditions of said
incentives and credits.
integrated MPSA for Non-Mineral Reservation Areas Page 27

SECTION XVI
OTHER PROVISIONS

16.1 Any terms and conditions resulting from repeal or
amendment of any existing laws or regulation or
from the enactment of a law(, regulation or
administrative order shall be corllsidered a part of
this agreement provided such ; new terms and
conditions are not adverse to the CONTRACTOR.

16.2 Notice
All notices, demands and other communications

required or permitted hereunder shall be made in
writing or by telex or telecopy and shs.ll be
deemed to have been duly given in the case of
telex or telecopy notice if answered back or
confirmation received, or if delivered by hand
upon receipt or ten days after being deposited in
the mail, airmail postage prepaid and addressed as
follows:
If to the Government:

TlIC SECRETARY
Department of Environment and Natural Resources
DENR Building , Visayas Avenue
Diiiman, Quezon City

If to the Contractor :
The President
Benguet Corporation
12 ADB Avenue, Ortigas Complex
Mandaluyong City
Either party may substitute or change such address
on notice thereof to the other party
16.3 Government Law

This Agreement and the relation between the
parties hereto shall be governed by and construed
in accordance with the laws of the Republic of the
Philippines. The Contractor hereby agrees and
obliges itself to comply with the provisions of
the Act, its Implementing Rules and Regulations
and other relevant laws and regulations. .
 
Integrated MPSA for Non-Mineral Reservation Areas Page 28



16.4 Suspension of Obligation
a) Any failure or delay on the part of any party in
the performance of its obligation or duties
hereunder shall be excused to the extent
attributable to Force Majeure.
b) If Mining Operations are delayed, curtailed or
prevented by such Force Majeure causes, then the
time for enjoying the rights and carrying out the
obligations thereby affected, the term of this
Agreement and all rights and obligations hereunder
shall be extended for a period equal to the period
of delay, curtailment or prevention.
c) The party whose ability to perform its obligations
shall promptly give Notice to the other in writing
of any such , delay or failure of performance, the
expected duration thereof, and its anticipated
effect on the Party expected to perform and both
parties shall do what is reasonable within their
power to remove such cause, except that neither
Party shall be under any obligation to settle a
labor dispute.
16.5 Amendments
This Agreement shall not be annulled amended or
modified in any respect except by mutual consent
in writing of the herein parties.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement, as of the day and year first above written


THE REPUBLIC OF THE PHILIPPINES


BY

VICTOR O. RAMOS
Secretary-

Department of Environment and
Natural Resources

BY


BENGUET CORPORATION
AS OPERATOR:



ROGELIO G. LARAYA RAMON V. BOSQUE
Executive Vice President Claimholder
Integrated MPSA for Non-Mineral Reservation Areas Page 29


SIGNED IN THE PRESENCE OF












Republic of the Philippines


Before me, a notary Public for and in the City of personally appeared H ON. VICTOR with 1 Certificate No. issued on
, in his capacity as Secretary of Department of Environment and Natural Resources and RAMON V. BOSQUE,with Residence Certificate No. 13110656 issued on Jnauary 23, 1996 at Ipil, Zamboanga del Sur, as CLAIMHOLDER and ROGELIO G. LARAYA with Residence Certificate No. 10402019 issued on April 12, 1996 at Pasig City as authorized officer
of OPERATOR

all known to me and to me known to be the same persons who
executed the foregoing instrument consisting of Twenty nine
(29) pages, including this acknowledgment page, and
acknowledged to me that the same is their voluntary act and
deed and that of the principals they respectfully represent.