Article 77p. 77

NATURAL RESOURCES AND ENVIRONMENTAL LAWS STATUTES and IMPLEMENTING RULES AND REGULATIONS

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.Settlement of disputes by agreement. — 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.Definition of "waste." — 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.Prevention of waste. — 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

regarding

conservation of petroleum. — 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 filed prior to approval of this

Act. — 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.Transfer and assignment. — 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.Partial invalidity. — 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.Repeal of laws, rules and regulations. — 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

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