BED Bureau Circular No. 82-12-12





The active exploration and exploitation of coal resources by the government has been declared as an urgent national policy under Presidential Decree No. 972, as amended by Presidential Decree No. 1174.  “Work and financial commitments of the contractor are embodied in the work program which forms an integral part of each coal operating contract to be complied with within definite terms.”


Exploration activities pursuant to the said work program may include tunneling, shaft sinking, aditing, diamond drilling, auger drilling, test pitting, trenching, etc. During the exploration over the coal operating contract areas by the operators, coal is removed or extracted as incident to such exploratory activities.


Investigations made by the BED technical staff, however, indicate that many coal operating contractors or operators for exploration have concentrated their activities on the extraction or removal of coal deposits rather than actively prosecuting exploration works as embodied in their work program.  Reports further show that the volume of coal extracted are considerably more than reasonably necessary to conduct exploration works and that although geological studies warrant the conversion of the contract from exploration to development/production, there is an intention to delay such conversion.


There are also reported instances of operators using their contracts to accommodate and sell coal produced by persons who have no operating contract and of operators selling their production through another operator.


Accordingly, pursuant to Section 18 of Presidential Decree No. 972, as amended, in relation to Section 6 (e) and 12 a (iii) of Presidential Decree No. 1206, as amended by Presidential Decree No. 1573, the following reminders and guidelines are hereby issued for the strict enforcement and compliance of holders of coal operating contracts or operators for exploration, to wit:


(1)      Holders of coal operating contracts for exploration are hereby reminded that they are allowed to extract coal from their coal operating contract areas only such amount or volume as are reasonably necessary and incidental to the exploration activities done on said areas, consistent with the work commitment embodied in their respective work programs.


The volume of coal extracted should be included and reported to the Bureau of Energy Development on a monthly basis using BED-CD-Coal 4 (per Circular No. 81-11-10).  The proceeds from the sale of such extracted coal should be included in the quarterly reports denominated as Coal Operations Return required under BED Circular No. 81-11-10.


(2)      Coal operators are not allowed to purchase or otherwise acquire by any other means coal produces by persons or corporations who are without a coal operating contract.  Without prejudice to the applicable penal sanction elsewhere provided herein and penalties for violation of the Anti-Fencing Law, as re-stated in BED Circular No. 82-12-11 the coal thus acquired by the operator shall be treated as production, subject as a aforementioned to accounting and payment of the government’s share.  The costs for acquiring such coal are non-recoverable under the operator’s coal operating contract.


(3)      Unless otherwise duly authorized by BED, coal operators should sell their coal produce only to legitimate end users and to persons or entities which are duly authorized by law or existing rules and regulations to purchase coal.  Without prejudice to the applicable penal sanction elsewhere provided, the coal operator shall be liable for the payment of any damages which the government may have suffered for violation of this provision.


(4)      Coal operators who sell coal produced by another coal operating contractor shall be responsible for the withholding and remittance of the government share to the Bureau of Energy Development.  The government share shall be computed at 3% of gross sales without the benefit of any deduction and shall be remitted to BED within ten (10) days from date of sale.  This does not exempt the producing contractor to render the quarterly report and remittance required under Circular No. 81-11-10.


(5)      Every violation of, or omission under this Circular shall be punishable by a fine of One Thousand Pesos (P 1,000.00), without prejudice to the suspension or cancellation of the coal operating contract of the coal contractor or operator concerned, in the discretion of the Bureau of Energy Development.


The guidelines (Item 2-5) contained in this Circular shall take effect upon approval by the Minister of Energy.





Acting Director







Minister of Energy


December 27, 1982

Bureau of Energy Development

Merritt Road, Fort Bonifacio

Metro Manila


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