Petroleum Act of 1949

Article 97

Prior to the issuance of a concession, except the Non-Exclusive Exploration Permit, the concessionaire shall post a bond in favor of the Government in the sum to be fixed by the Regulations and with surety or sureties satisfactory to the Secretary of Agriculture and Natural Resources, conditioned upon the faithful performance by the concessionaire of any or all of his obligations under the concession.

Article 98

In case an Exploration or Exploitation Concession covers, in whole or in part, private lands title to which has been finally adjudicated by a court of competent jurisdiction, the exploration or exploitation tax due to the Government for the area of such private lands, shall be reduced by ten per cent of the same, which reduction shall be the landowner's share. In the case of lands title to which has not been finally adjudicated all the exploration and exploitation tax for said areas due to the Government shall be paid to the Collector of Internal Revenue or his duly authorized deputy, subject to the rule and regulations of the Bureau of Internal Revenue. In any case, the right of private owner to recover ten per cent share when and if his title shall have been finally adjudicated in his favor shall be respected and for such purpose the Government shall hold the same until such title has been so finally adjudicated.

Article 99

Concessions granted under this Act shall be subject to the rights of the Government, in case of and during the period of war or national emergency, to pass such lawful measures, as it may consider necessary, requisitioning for its use and/or restricting the sale or disposal of all products produced under the terms of the concessions and/or interfering with the free movement thereof, upon just compensation paid to the concessionaires.

Article 100

In the event that substances other than petroleum, as defined in article two, should occur naturally and be produced with petroleum, the exploitation concessionaire may separate such other substances at his own expense; Provided, That in the event that any such other substances be sold, the value thereof shall be taken into account in fixing the value of petroleum for the purpose of liquidating royalty in cash as provided in article sixty-eight: And provided, further, That if the Secretary of Agriculture and Natural Resources elects to receive such other substances in kind the concessionaire shall, upon request of the Secretary of Agriculture and Natural Resources, separate and deliver to the Government such substances through the facilities of the concessionaire and at the expense of the Government.

Article 101

The Government reserves the right to take all helium from any gas produced by the concessionaire and the right to erect, maintain, and operate on lands covered by the concession, all reduction works and other equipment necessary for the extraction of helium. The Secretary of Agriculture and Natural Resources shall prescribe the necessary rules and regulations governing the delivery to the Government of gas containing helium for the extraction thereof.

Article 102

Work obligations, special taxes and royalties which are fixed by the provisions of this Act or by the concession for any of the kinds of concessions to which this Act relates, are considered as inherent on such concessions after they are granted, and shall not be increased or deceased during the life of the concession to which they apply; nor shall any other special taxes or levies be applied to such concessions, nor shall concessionaires under this Act be subject to any provincial, municipal, or other local taxes or levies; nor shall any sales tax be charged on any petroleum produced from the concession or portion thereof, manufactured by the concessionaire and used in the working of his concession. All such concessionaires, however, shall be subject to such taxes as are of general application, in addition to taxes and other levies specifically provided in this Act.

Article 103

During the first five years following the granting of any concession, the concessionaire may import free of customs duty, all equipment, machinery, material, instruments, supplies and accessories. No exemption shall be allowed on goods imported by the concessionaire for his personal use or that of any others; nor for sale or for re-export; and if any goods on which exemption has been allowed be thus used or disposed of, the concessionaire is obliged to make a report to the Secretary of Agriculture and Natural Resources to that effect and to pay such import duty as is due.

Article 104

No export tax shall be levied upon petroleum produced from exploitation concessions granted under this Act as well as on equipment, machinery, materials, instruments, supplies and accessories imported and used exclusively in the furtherance of the operations of the concessionaire under this Act if exported any time after such bona fide use thereof. As to equipment, materials, instruments, supplies and accessories mentioned in this article, in order to qualify for the exemption, the concessionaire shall notify the Secretary in writing before the date of the export and the failure to do so shall constitute a forfeiture of the exemption from the export tax which shall become promptly payable. (Amendments to R. A. No. 387 (Petroleum Act of 1949), Republic Act No. 3098, [June 17, 1961])

Article 105

In the event of failure by a concessionaire to pay any tax or royalty due under the provisions of this Act within six months of the date upon which they are due, the Government may resort to compulsory collection under the provisions of applicable laws.

Article 106

The Secretary of Agriculture and Natural Resources and the Director of Mines shall have authority to send their delegates or representatives to inspect any operations of the concessionaire at all reasonable times and to examine all the books and accounts pertaining to operations or conditions related to payment of taxes and royalties under this Act, and to carry out any other inspections authorized by law. The concessionaire shall furnish to such delegates or representatives all technical and accounting data specified in the Regulations, and shall give them ample facilities and assistance to discharge their duties as such representatives and inspectors. For the purpose of enabling proper examination as provided for in this article, each concessionaire shall be obligated to retain within the country all original records or original carbon copies thereof which are essential for the purpose of determining the amount of taxes and royalties due to the Government, except as may be agreed upon between the Secretary of Agriculture and Natural Resources and the concessionaire.

Article 107

For the purpose of settling or terminating any controversy arising out of the provisions of this Act, other than those arising out of conflict of applications, the Secretary of Agriculture and Natural Resources is authorized, to enter into agreement with any petroleum concessionaire, and in case of their failure to come to such an agreement, the Secretary of Agriculture and Natural Resources shall render his decision thereon, from which decision the concessionaire adversely affected thereby, may bring the matter to the court of competent jurisdiction within forty-five days from the date of his receipt of a copy of said decision. Failure to take such action within the said period, shall make such decision final and binding upon the concessionaire. Such agreement between the Secretary of Agriculture and Natural Resources and a concessionaire may be reached either with or without the intervention of arbitrators selected by the parties to the controversy.

Article 108

The term "waste" shall specifically include among other things the following: (a)The operation of any petroleum well or wells with an inefficient gas-oil ratio. (b)The drowning with water of any stratum or part thereof capable of producing oil or gas, or both oil and gas, in paying quantities. (c)Permitting any natural gas well to burn wastefully. (d)Physical waste or loss incident to, or resulting from, so drilling, equipping, locating, spacing, or operating well or wells as to reduce or tend to reduce the total ultimate recovery of crude petroleum oil or natural gas from any pool. (e)Waste or loss incident to, or resulting from, the unnecessary, inefficient, excessive or improper use of the reservoir energy, including the gas energy or water drive, in any well or pool. (f)Surface waste or surface loss, including the storage either permanent or temporary of crude petroleum or the placing of any product thereof, in open pits or earthen storage, and all other forms of surface waste or surface loss, including unnecessary or excessive surface losses, or destruction without beneficial use, either of crude petroleum or of natural gas. (g)The production of crude petroleum or natural gas in excess of transportation or market facilities or reasonable market demand.

Article 109

All concessionaires, operators, contractors, or drillers, pipe line companies, petroleum refining companies, or gas distributing companies, drilling for or producing petroleum or petroleum products, or piping petroleum for any purpose, shall use every possible precaution in accordance with the most improved methods to stop and prevent waste of petroleum or natural gas in drilling and producing operations, storage or in piping or distributing, and shall not wastefully utilize petroleum or natural gas or allow same to leak or escape from natural reservoirs, wells, tanks, containers, or pipes.

Article 110

Rules and regulations may be issued which shall require concessionaires to utilize in their exploration and exploitation operations the latest and most improved methods and devices to prevent waste in petroleum as well as to prevent oil, oil-field brine or other oil-field contamination from causing pollution or otherwise damaging streams, surface or underground water supply, and valuable mineral deposits. The Secretary of Agriculture and Natural Resources may also issue orders which shall control the rate of production from any well in the interest of conservation of the petroleum resources so as to prevent waste, as elsewhere defined in this Act. (Amendments to R. A. No. 387 (Petroleum Act of 1949), Republic Act No. 3098, [June 17, 1961])

Article 111

Applications for geological exploration, petroleum drilling lease, concession, or contract of service, presented prior to the promulgation of this Act to the Philippine Oil Commission, the Secretary of Agriculture and Natural Resources, or the Director of Mines, which applications have not been granted, or if granted, had already expired, or are no longer in effect at the time this Act becomes effective, shall remain without effect.

Article 112

No assignment or transfer in whole or in part of the rights of the concessionaire shall be made without the previous written approval of the Secretary of Agriculture and Natural Resources. Such approval shall be granted after (1) the proposed assignee or transferee is found by the Secretary to be duly qualified to acquire or hold concessions under the provisions of Article thirty-one of this Act and other applicable laws, and if said assignee or transferee is or has been a petroleum concessionaire, he was or has been diligent in the prosecution of his obligations as such, (2) the concessionaire is found by the Secretary to have complied with all his obligations under the terms of his concession contract, the provisions of this Act and the regulations, and other applicable laws and regulations, and (3) the transferee binds himself to assume all the rights and obligations of the concessionaire: Provided, That in case retention of unreasonable royalty interest by the assignor, directly or indirectly, is involved in said transfer or assignment, the same shall be examined to protect public interest: And provided, further, That the proposed transferee or assignee shall not hold a total area under exploration and/or exploitation concessions, including that being transferred to him, of more than the maximum areas allowed under this Act. (Amendments to R. A. No. 387 (Petroleum Act of 1949), Republic Act No. 3098, [June 17, 1961])

Article 113

If any clause, sentence, provision or article of this Act should for any reason be held to be invalid or unconstitutional, it shall not affect in anywise the remaining parts of this Act and such remaining parts shall remain in full force and effect.

Article 114

All acts, laws, rules and regulations inconsistent with any of the provisions of this Act are hereby repealed.

Article 115

Effective date. —This Act shall take effect upon its approval. Approved: June 18, 1949