June 25, 2010

JOINT DENR-DOF-DBM-DILG CIRCULAR NO. 001-10

 

1.0 Legal Bases

Section 5 of Republic Act (RA) No. 7942, the Philippine Mining Act of 1995, provides that the President may establish Mineral Reservations.

Section 13 of Department of Environment and Natural Resources (DENR) Administrative Order (DAO) No. 96-40, as amended, the revised Implementing Rules and Regulations (IRR) of RA No. 7942, provides that the Contractors/Permit Holders shall pay to the Mines and Geosciences Bureau (MGB) a royalty for minerals/mineral products extracted or produced from the Mineral Reservations.

Section 290 of RA No. 7160 (The 1991 Local Government Code) and its IRR provide that LGUs are entitled to a 40% share from the gross collection derived by the National Government (NG) from the preceding fiscal year from royalty income.

2.0 Purpose

In general, this circular is issued to streamline and enhance the guidelines and procedures for the release of LGUs' share from royalty income.

The specific objectives are as follows:

2.1 To ensure the correctness and accuracy of royalty income collections in arriving at the shares due to the LGUs concerned.

2.2 To expedite the processing and release of the LGUs allocable shares from the royalty income thru a simplified process within the given timeframe. EaCDAT

2.3 To clarify the roles and responsibilities of the NGAs involved in the implementation of this Circular.

3.0 Definition of Terms

As used in and for the purposes of this Circular, the following terms shall mean:

a. Contractor — a qualified person acting alone or in consortium, who is a party to a Mineral Agreement or Financial or Technical Assistance Agreements as provided under DAO No. 96-40, as amended.

b. Exclusive Economic Zone — the water, sea bottom and subsurface measured from the baseline of the Philippine Archipelago up to two hundred (200) nautical miles offshore.

c. Mineral Reservations — areas established and proclaimed as such by the President of the Philippines upon the recommendation of the Director of the MGB through the secretary of the DENR, including all submerged lands within the contiguous zone and Exclusive Economic Zone, pursuant to RA No. 7942 and its IRR.

d. Minerals — 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.

e. Permit Holder — a holder of any mining permit issued under DAO No. 96-40, as amended, other than Exploration Permit.

f. Royalty — the income of Government, which shall not be less than five percent (5%) of the market value of the gross output of the minerals/mineral products extracted or produced from the Mineral Reservations, being paid by the Contractors/Permit Holders concerned to the MGB.

4.0 Roles and Responsibilities

The following NGAs shall endeavor to establish and share among themselves on a timely basis, information and an updated database to facilitate the exchange of information needed for the smooth and reliable processing and release of the shares of LGUs from the royalty income.

4.1 DENR — MGB, shall:

4.1.1 For budget preparation purposes, submit to the Department of Budget and Management (DBM), the estimated or projected royalty income to be collected for the current year and the corresponding forty percent (40%) share of the LGUs on or before March 15 of every year. The amount should be consistent with that reflected in the MGB Statement of Revenue (BF Form 100). cSICHD

4.1.2 For budget execution purposes, prepare a Joint Certification of the actual collections from royalty income during each calendar year. The said certification/documents shall be transmitted to the BTr, for validation and approval purposes, within sixty (60) days immediately after the end of the year. This shall be supported with the List of Deposited Collections, validated deposit slip and a schedule of the corresponding shares of the beneficiary LGUs from the actual royalty income collections from the preceding year. In case the mining sites/operations are located in two (2) or more provinces, or in two (2) or more component cities, or in two (2) or more barangays, the updated master list of land area officially issued by the Land Management Bureau (LMB) and the updated census of population officially issued by the National Statistics Office shall be adopted as basis in computing the allocation of shares of the affected LGUs.

4.1.3 Inform the LGUs of their share from the proceeds of the royalty income from Mineral Reservation of the preceding year within thirty (30) days after receipt of the copy of the validated and approved Joint Certification submitted by the BTr to DBM.

4.2 Department of Finance — BTr, shall:

4.2.1 Validate and approve the Joint Certification transmitted by MGB based on confirmed royalty collections within thirty (30) days immediately after receipt thereof. The said certification shall be validated from the reports transmitted by the BTr Regional Offices and Authorized Government Depository Banks.

4.2.2 Transmit to the DBM the duly validated and approved Joint Certification together with validated collections and schedule of the corresponding shares of the beneficiary LGUs within thirty (30) days immediately after the actual receipts of said certification/documents from the MGB.

4.2.3 Furnish the MGB a copy of the validated and approved Joint Certification within fifteen (15) days from transmittal thereof to the DBM.

4.3 Department of the Interior and Local Government (DILG) — Bureau of Local Government Supervisions (BLGS), shall:

4.3.1 Enjoin the Local Chief Executives (LCEs) to ensure submission by the Contractors and Permit Holders of the quarterly production and sales report form to the MGB Regional Offices. IHSTDE

4.3.2 Furnish the DBM and MGB with the updates of the masterlist of LGUs during the 1st quarter of each year as a result of the creation, conversion, merger and abolition of LGUs.

4.4 Department of Budget and Management (DBM) — Budget and Management Bureau — G (BMB-G) and Regional Offices (ROs), shall:

4.4.1 For budget preparation purposes, program the amount representing the LGUs shares on the royalty income in the budget of the following year, based on the DENR-MGB estimated or projected royalty income to be collected for the current year and the corresponding 40% share of the LGUs.

4.4.2 Release within thirty (30) days the shares of the LGUs in the royalty by issuing the allotment and the corresponding cash allocation based on the Joint Certification issued by the MGB and BTr of royalty collections and the schedule of the corresponding shares of the beneficiary LGUs. The funding check shall be deposited to the Government Servicing Banks (GSBs) for direct credit to the account of beneficiary LGUs.

5.0 Distribution of Shares of LGUs

5.1 Pursuant to Section 292 of R.A. No. 7160, the 40% share of the LGUs from the preceding year's collections royalty income shall be distributed as follows:

		Percentage (%) of Distribution
Particular	Province	Component	Highly Urbanized/	Barangay	Total
		City/Municipality	Independent
			Component City
Where the natural resources	20	45		35	100
are located in the Province and
in one city/municipality/
Barangay
Where the natural resources			65	35	100
are located in a highly
urbanized or independent
component city and in one
barangay

Provided, however, that where the natural resources are located in two (2) or more provinces, or in two (2) or more component cities or municipalities, or in two (2) or more highly urbanized or independent component or in two (2) or more barangays, their respective shares shall be computed on the basis of:

Population	70
Land Area	30

 

6.0 Funding Source

6.1 The 40% share of LGUS from the gross royalty income collections derived by the NG from the preceding fiscal year shall be released chargeable against the current year's General Appropriations Act. DaAETS

7.0 Timelines for the Submission, Processing and Release of the Shares of LGUs

Period	MGB Submission	BTr Validation	Release of
	of Joint	(of) and	Funds by DBM
	Certification to	Submission of
	BTr	Joint MGB & BTr
		Certification to
		DBM
January 1 to	Within 60 days	30 days from	Within 30 days
December 31 of the	from the end of	the submission	from receipt of
current year	the preceding	of MGB	the joint
	year	collections/15	certification
		days after	from MGB and
		completion of	BTr
		validation

8.0 Repealing Clause

Any provision of DBM-DOF-DENR-DOE Joint Circular No. 2006-1 dated February 13, 2006 and any rule or regulation in connection with the release of the share of local government units (LGUs) derived by the national government from royalty income collected from mineral reservation projects are hereby amended or repealed accordingly.

9.0 Effectivity Clause

This Joint Circular shall take effect immediately.

(SGD.) MARGARITO B. TEVESSecretary

(SGD.) JOAQUIN C. LAGONERASecretary

(SGD.) RONALDO V. PUNOSecretary

(SGD.) HORACIO C. RAMOSSecretary