THIRTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
1 
S. No. 
INTRODUCED BY HONORABLE MAR ROXAS 
EXPLANATORY NOTE 
This bill seeks to amend Republic Act No. 8479, otherwise known as the “Downstream 
Oil Industry Deregulation Act” by increasing competition at the retail industry level and 
strengthening the power of the Department of Energy. 
One of the primary aims of this amendment is to encourage greater competition at the 
retail level. To address this, the retail industry has to be freed from the influence of big oil 
companies which own most of the retail outlets all over the country. This will encourage 
investment in the retail level, which will eventually lead to greater competition. With greater 
margin of competition, it is hoped that pump prices will be brought to reasonable levels. 
The deregulation of the oil industry was brought about by the desire of the government to 
allow free market forces to influence the prices of oil petroleum products. With the deregulation 
of the industry, it was the intention of the law for new players to come in thus creating an 
environment of competition, which eventually will lead to fair, market-driven oil prices. 
There are currently 66 new players that invested in the oil industry. However, the 
industry suffers from incredulity in terms of fair competition. While new players are present, 
there is a growing concern whether there indeed exists free enterprise, or whether there is a 
cartel-like environment that allows present players to dictate in one way or the other the prices of 
oil products. 
Despite all the developments in the industry, the reality is that there is a need for fiore 
players. Notwithstanding Section 10 of the Downstream Oil Industry Deregulation Act of 1998 
which provides for financial assistance for the establishment and operation of gasoline stations, 
the number of existing gasoline stations doesn’t seem to suggest a friendly retail-level industry. 
Of the P300 million allocated by law to be taken out of PAGCOR coffers for this purpose, only 
P30 million was actually divested to the DOE. Out of this amount, only P20 million has been 
used up for loans since the passage of the oil deregulation law in 1998. With big oil companies 
controlling the industry down the whole supply chain, it is understandable that operating a 
gasoline station doesn’t present itself to be a promising enterprise. Hence, there is the necessity 
to introduce the proposed amendment. 
There is also a need to have transparency in the pricing of oil products. Deregulation 
allows industry players to determine their prices, but in an industry imbued with much public 
interest, the public has the right to know whether the prices are fairly determined. Thus, the 
Department of Energy’s powers are expanded so that it may effectively carry out its mandate to 
inform and protect the public from any illicit practices in the industry. 
In view of the foregoing, approval of this bill i 
‘ M A R R O T  
Senator 


,’ I 
“;ENATE 
i 
QFFiCE OF TkE SECRETANY 
0 
THIRTEENTH CONGRESS OF 
1 
THE REPUBLIC OF THE PHILIPPINES 
First Regular Session 
1 1 
5 HAY 24 P4:55 - 
L 
S E N A T E  
~~~~~~~~ 
BY :- 
S. No. 
INTRODUCED BY HONORABLE MAR R O U S  
AN,ACT 
AMENDING REPUBLIC ACT NO. 8479, OTHERWISE KNOWN AS THE 
“DOWNSTREAM OIL INDUSTRY DEREGULATION ACT.” 
Be it enacted by the Senate and House OfRepresentatives of the Philippines in Congress 
assem bled: 
SECTION 1. Section 4 of R.A. No. 8479 is hereby amended to read as follows: 
SECTION 4. Definition of Terms. - For purposes of this Act, the following terms 
are hereinbelow defined: 
(a) Basel Convention shall refer to the international accord which governs the 
trade or movement of hazardous and toxic wastes across borders; 
(b) Board shall refer to the Energy Regulatory Board; 
(c) BOIshall refer to the Board of Investments; 
(D) COMPANYOPERATED STATIONMEANS A SERVICE STATION OWNED 
OR CONTROLLED BY P+N OIL COMPANY AND OPERATED WITH 
AGENT OR UNDER CONTRACT WITH ANY PERSON, FIRM OR 
CORPORATION MANAGING ANY SUCH OUTLET ON A FEE 
ARRANGEMENT OR ON ANY FEE FOR SERVICE ARRANGEMENT WITH 
THE OIL COMPANY. 
COMPANY PERSONNEL, A SUBSIDIARY COMPANY, OR A COMMISSIONED 
(E) [(d)] Crude Oilshall refer to oil in its natural state before the same has been 
refined or otherwise treated, but excluding water, bottoms, sediments and foreign 
substances; 
(F) [(e)] Dealershall refer to any person, whether natural or juridical, who is 
engaged I the marketing and direct selling of petroleum products to motorists, end 
users, and other consumers; 
(G) [(Q] DOEshall refer to the Department of Energy; 
(H) [(g)] DOJshall refer to the Department of Justice: 


(I) [(h)] Downstream Oil i'ndustiy(D0r) or Indusriyshall refer to the business of 
importing; exporting, re-exporting, shipping, transporting, processing, refining, 
storing, distributing, marketing andor selling crude oil, gasoline, diesel, liquefied 
petroleum gas (LPG), kerosene, and other petroleum products; 
(J) [(i)] Hauler shall refer to any person, whether natural or juridical, engaged in 
the transport, distribution, hauling, and carriage of petroleum products, whether 
in bulk or packed form, from the oil companies and independent marketers to the 
petroleum dealers and other consumers; 
(IC) [(j)] LPGDistrburorshall refer to any person or entity, whether natural or 
juridical, engaged in exporting, refilling, transporting, marketing, andor selling of 
LPG to end users and other consumers; 
(L) [(k)] NewIndusrvParticjpanrs shall refer to new participants in a particular 
sub-sector of the downstream oil industry with investments and initial business 
operations commencing after January 1,1994; 
(M) OIL COMPANYSHALL REFER TO ANY PERSON, FIRM OR 
CORPORATION OR AFFILIATE THEREOF, ENGAGED IN THE REFINING OR 
IMPORTATION OF PETROLEUM PRODUCTS TO BE SOLD TO DEALERS OR 
RETAILERS. 
(N) [(l)] Person shall refer to any person, whether natural or juridical, who is 
engaged in any activity of the downstream oil industry; 
(0) [(m)] Petraleum shall refer. to the naturally occurring mixture of compounds 
of hydrogen and carbon with a small proportion of impurities and shall include 
any mineral oil, petroleum gas, hydrogen gas, bitumen, asphalt, mineral wax, and 
all other similar or naturally-associated substances, with the exception of coal, 
peat, bituminous shale and/or other stratified mineral fuel deposits; 
(P) [(n)] Petroleum Producrs shall refer to products formed in the case of refining 
crude petroleum through distillation, cracking, solvent refining and chemical 
treatment coming out as primary stocks from the refinery such as, but not limited 
to: LPG, naphtha, gasolines, solvents, kerosenes, aviation fuels, diesel oils, fuel 
oils, waxes and petrolatums, asphalt, bitumens, coke and refinery sludges, or other 
such refinery petroleum fractions which have not undergone any process or 
treatment as to produce separate chemically-defined compounds in a pure or 
commercially pure state and to which various substances may have been added to 
render them suitable for particular uses: Provided, That the resultant product 
contains not less than fifty percent (50%) by weight of such petroleum products; 
(Q) [(o)] Singapore Imporr Pariry(SIP) shall refer to the deemed landed cost of a 
petroleum product imported from Singapore at a free-on-board price equal to the 
average Singapore Posting for that product at the time of loading; 
(R) [ (p)] Singapore Posting shall refer to the price of petroleum products 
periodically posted by oil refineries in Singapore and reported by independent 
international publications; and 
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(S) [(q) J Wholesale PosredPrice (WPP) shall refer to the ceiling price of 
petroleum products set by the Board based on its duly approved automatic pricing 
formula. 
SECTION 2. Section 10 of FL4 8479 is hereby amended to read as follows: 
SECTION 10. Promorion ofRetail Cornperifion. - (A) To achieve the social and 
policy objective of fair prices, facilitate the attainment of a truly competitive product 
market in the retail level, the DOE shall promote and encourage by way of information 
dissemination, networking, FINANCING and managementhkills training, the active and 
direct participation of the private sector and cooperatives in the retailing of petroleum 
products through joint venturehupply agreements with new industry participants for the 
establishment and operation of gasoline stations: Provided, That the training herein shall 
include LPG retailing. 
x x x  
x x x  
x x x  
Of this amount, two percent (2Yo) plus any additional funding shall be allocated 
for the two-fold program; one percent (1Yo) plus any additional funding shall be set aside 
for administrative, maintenance, and other operating expenses: ninety-four percent 
(94%) shall be used exclusively for lending and financial assistance: the remaining three 
percent (3%) shall be utilized in accordance with the provisions of Section 26 of this Act: 
Provided, That the loans to be awarded herein shall be from short- to medium-term with 
low interest rates; Provided, firrher, That these loans shall be awarded to qualified 
persons who are able to comply with the conditions set forth in the next two (2) 
preceding paragraphs. 
(B) BEGINNING JANUARY 1,2006, NO OIL COMPANY MAY OPEN NEW 
COMPANY-OPERATED GASOLINE STATION, PROVIDED, THAT BEGINNING 
JANUARY 1,2007, NO SUCH OIL COMPANY MAY OPERATE MORE THAN ONE- 
HALF (1/2) THE NUMBER OF ITS GASOLINE STATIONS LAWFULLY OPERATED 
ON JANUARY 1,2006; PROVIDED FURTHER, THAT BEGINNING JANUARY 1,2008, 
NO SUCH OIL COMPANY MAY OPERATE ANY GASOLINE STATION PROVIDED 
FRANCHISE AGREEMENT WITH INDEPENDENT GASOLINE STATION DEALERS. 
FURTHER, THAT OIL COMPANIES MAY ENTER INTO NON-EXCLUSIVE 
IT SHALL BE UNLAWFUL FOR OIL COMPANIES TO: 
(1) SELL OR OFFER TO SELL PETROLEUM PRODUCTS TO AN 
INDEPENDENT GASOLINE STATION DEALER AT A PRICE THAT EXCEEDS THE 
CURRENT MARKET RETAIL PRICE OF PETROLEUM PRODUCT OF THE SAME 
GRADE BEING SOLD AT ANY COMPANY OPERATED STATION DURING THE 
PERIOD THAT OIL COMPANIES ARE ALLOWED TO OPERATE GASOLINE 
STATIONS. 
(2) OVERCHARGE AN INDEPENDENT GASOLINE STATION DEALER FOR 
PETROLEUM PRODUCT. 
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(3) PERFORM SUCH OTHER ACTS WHERE THE EFFECT THEREOF 
AMOUNTS TO A CIRCUMVENTION OF THIS PROVISION OR OF OTHER ACTS 
PROHIBITED BY THIS LAW. 
ANY PERSON, INCLUDING BUT NOT LIMITED TO THE CHIEF OPERATING 
OFFICER OR CHIEF EXECUTIVE OFFICER OF THE PARTNERSHIP, CORPORATION 
OR ANY ENTITY INVOLVED, WHO IS FOUND GUILTY OF ANY OF THE SAID 
PROHIBITED ACTS SHALL SUFFER THE PENALTY OF IMPRISONMENT FOR FIVE 
(5) YEARS AND FINE RANGING FROM FIVE HUNDRED THOUSAND PESOS 
(P500,OOO.OO) TO ONE MILLION PESOS (Pl,OOO,OOO.OO). 
SECTION 3. Section 14 of RA 8479 is hereby amended to read as follows: 
SECTION 14. Monitoring - (a) The DOE shall monitor and publish daily 
international crude oil prices, as well as follow the movements of domestic oil prices 
THROUGHOUT THE WHOLE SUPPLY CHAIN. IT SHALL DETERMINE THE 
FACTORS WHICH CAUSE THE INCREASE AND DECREASE IN PRICES OF 
PETROLEUM PRODUCTS AND ANALYZE THE PROPRIETY AND NECESSITY OF 
SUCH INCREASE OR DECREASE. THIS MAY BE THE BASIS, AMONG OTHERS, FOR 
THE PROPER ACTION AGAINST ANY PERSON OR ENTITY IN THE INDUSTRY 
WHICH VIOLATES THE PROVISIONS OF THIS ACT. TO IMPLEMENT THIS, ANY 
PERSON OR ENTITY ENGAGED IN THE INDUSTRY SHALL SUBMIT A VERIFIED 
MONTHLY REPORT TO THE DOE OF THEIR PRICES FOR THE PROCESSING, SALE, 
EXPORTATION, REFINING, STORAGE, TRANSPORT OR DELIVERY OF 
PETROLEUM PRODUCTS, DETAILING IN THE SAID REPORT ALL THE FACTORS, 
ASSUMPTIONS, AND FORMULAE USED IN THE COMPUTATION OF THE PRICE. 
THE INFORMATION HEREUNDER OBTAINED SHALL BE CONSIDERED AS 
MATTER OF PUBLIC INTEREST AND SHALL BE MADE PUBLIC FROM TIME TO 
TIME. 
(B) ON THE BASIS OF RELEVANT DATA AND INFORMATION OBTAINED, 
INCLUDING BUT NOT LIMITED TO THE AFORESAID REPORT, THE DOE SHALL 
ISSUE AND PUBLISH EACH MONTH AN OPINION WHICH STATES ITS VIEW 
WHETHER THE PRICES OF PETROLEUM PRODUCTS AT THE RETAIL LEVEL 
FAIRLY REFLECT THEIR COST OF PRODUCTION. 
(C) [It] THE DOE shall [likewise] monitor the quality of petroleum products 
and stop the operation of businesses involved in the sale of petroleum products 
which do not comply with the national standards of quality that are aligned with the 
national standards/protocols of quality. The Bureau of Product Standards of the 
DTI, together with the Department of Environment and Natural Resources (DENR), 
the DOE, the Department of Science and Technology (DOST), representatives of the 
fuel and automotive industries and the consumers, shall set the specifications for all 
types of fuel and fuel-related products to improve fuel composition for increased 
effkiency and reduced emissions. The BPS shall also specify the allowable content of 
additives in all types of fuels and fuel-related products. 
(D) [(b)] The DOE shall monitor the refining and manufacturing processes of local 
petroleum products to ensure that clean and safe (environment and worker-benign) 
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technologies are applied. This shall also apply to the process of marketing local and 
imported petroleum products. 
(E) [(c)] The DOE shall maintain a periodic schedule of present and future total 
industry inventory of petroleum products for the purpose of determining the level of 
supply. To implement this, the importers, refiners, and marketers are hereby required to 
submit monthly to the DOE their actual importations, local purchases, sales andlor 
consumption, and inventory on a per crude/product basis. 
(F) [(d)] Any report from any person of an unreasonable rise in the prices of 
petroleum products shall be immediately acted upon. For this purpose, the creation of the 
DOE-DOJ Task Force is hereby mandated to determine within thirty (30) days the merits 
of the report and initiate the necessary actions warranted under the circumstance: 
Provjded, That nothing herein shall prevent the said task force from investigating and/or 
filing the necessary complaint with the proper court or agency motupropio. 
Upon the effectivity of this Act, the Secretaries of Energy and Justice shall jointly 
appoint the members of a committee who shall be tasked with the drafting of the rules 
and guidelines to be adopted by the Task Force in the performance of its duty. These 
guidelines shall ensure the efficiency, promptness, and effectiveness in the handling of its 
cases. The Task Force shall be organized and its members appointed within one (1) 
month from the effectivity of this Act. 
(G) [(e)] In times of national emergency, when the public interest so requires, the 
DOE may, during the emergency and under reasonable terms prescribed by it, 
temporarily take over or direct the operation of any person or entity engaged in the 
Industry. 
SECTION 4. A new Section 15 is inserted to read as follows: 
SECTION 15. WSITORIAL AND INSPECTIONPOWERS. - (A) TO ENFORCE 
AND ENSURE COMPLIANCE WITH THE PROVISIONS OF THIS ACT OR 
DETERMINE ANY VIOLATION THEREOF, THE SECRETARY OF ENERGY OR HIS 
DULY AUTHORIZED REPRESENTATIVES SHALL REGULARLY CONDUCT AN 
UNANNOUNCED INSPECTION OF PREMISES AND EQUIPMENTS OWNED, LEASED 
OR OPERATED BY PERSONS OR ENTITITES ENGAGED IN THE INDUSTRY, AND 
SHALL HAVE THE AUTHORITY TO INSPECT THE BOOKS OF ACCOUNTS AND 
RECORDS OF ANY SUCH PERSON OR ENTITY AND TO INVESTIGATE ANY FACT, 
VIOLATIONS OR WHICH MAY AID THE ENFORCEMENT OF THIS ACT. 
CONDITION OR MATTER WHICH MAY BE NECESSARY TO DETERMINE 
SECTION 5. The current Section 15 is renumbered to become Section 16. A new Section 
17 is hereby inserted to read as follows: 
SECTION 17. FOR THE DOE TO EFFECTIVELY CARRY OUT ITS MANDATE 
UNDER THIS ACT, THE CONGRESS SHALL INCREASE ITS BUDGET IN THE 
GENERAL ANNUAL APPROPRIATIONS TO BE ALLOCATED FOR THE 
MONITORING OF PRICES, QUALITY AND LEVEL OF SUPPLY OF PETROLEUM 
PRODUCTS, AND THE ENFORCEMENT OF THE SECRETARY'S VISITORIAL AND 
INSPECTION POWERS. 
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SECTION 6. Sections 16 to 29 of the current law are hereby renumbered accordingly 
pursuant to the foregoing amendments. 
SECTION 7. Repealing Clause. - All laws, decrees and orders or parts thereof 
inconsistent herewith, are deemed repealed or modified accordingly. 
SECTION 8. Separability Clause. -The provisions of this Act are hereby declared to be 
separable and, in the event any of such provisions is declared unconstitutional, the other 
provisions which are not affected thereby shall remain in full force and effect. 
SECTION 9. Effectivity. - This Act shall take effect fifteen (15) days following its 
publications in a newspaper of general circulation in the Philippines. 
Approved. 
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