THIRTEENTH CONGRESS OF THE REPPUBLIC ) 
OF THE PHILIPPINES 
First Regular Session 
i .  
, 
M y  18 All :44 
1 
Introduced by Senator Miriam Defensbr Santiago 
'r . . I. 
EXPLANATORY NOTE 
This bill is proposed to expand the scope of the Bioethanol Bill by including 
biodiesel and promoting the development of other indigenous sources of biofuels. This 
bill comes at a propitious time because it addresses our three-pronged goal of: a) 
increasing energy independence by providing an indigenous alternative to gasoline by 
way of bioethanol and to diesel by way of biodiesel (particularly coconut methyl ester); 
b) improving air quality by providing cleaner-burning alternatives to fossil fuels; and c) 
spurring the growth of rural economies by creating and developing markets for 
agricultural crops such as coconut and sugar. 
b 
This bill seeks to mandate the use of bioethanol beginning at 5% within two years 
from the effectivity of this Act and a minimum of 10% within four years from the 
effectivity of this Act. It also mandates the use of biodiesel at a minimum blend of one 
(1%) and five percent (5%) within two and four years from the effectivity of this Act. 
This bill further grants incentives to the production and use of biofuels, identifies the 
powers and functions of key national government agencies involved, and imposes 
penalties on prohibited acts. 
D 


THIRTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
First Regular Session 
MAY 18 All :43 
,
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I 
S E N A T E  
S.B. No. wf 
# 
Introduced by Senator Miriam Defensor Santiago 
AN ACT 
TO MANDATE THE USE OF BIOFUELS IN THE TRANSPORT SECTOR, ESTABLISHING 
FOR THE PURPOSE THE NATIONAL BIOFUEL PROGRAM, APPROPRIATING FUNDS 
THEREFOR 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. -This Act shall be known as the “Biofuels Act of 2005.” 
SECTION 2. Declaration of Policy. - It is hereby declared the policy of the State to 
pursue a policy towards energy independence consistent with the country’s sustainable economic 
growth that would expand opportunities for livelihood, with due regard to the protection of 
public health and the enviroimient by mandating the use of biofuels in the transport sector as a 
measure to: 
a) 
b) 
mitigate toxic and greenhouse gas (GHC) emissions; 
develop and utilize indigenous renewable energy sources to reduce dependence 
on imported oil; and 
increase m a l  employment and income. 
c) 
SECTION 3. Definition of Terms. -As used in this Act, the following terms: 
a) “AFTA” - shall refer to the ASEAN Free Trade Agreement; 
b) “Bioethanol” - shall refer to ethanol (CzHsOH) produced form biomass; 
c) “Biodiesel: - shall refer to mono-alkyl esters of long chain fatty acids derived from 
vegetable oils or animal fats for use in diesel engines; 
d) “Bioethanol Fuel” - shall refer to hydrous or any anhydrous bioethanol suitably 
denatured for use as motor fuel; 


e) “Biofuel” - shall refer to a liquid fuel made from biomass and primarily used to fuel 
vehicles, but can also fuel engines or fuel cells for e lechicity generation, and may 
include bioethanol and biodiesel, among others; 
0 “Biomass” - shall refer to any organic matter, particularly cellulosic or 
lignocellulosic matter, which is available on a renewable or recurring basis, including 
trees, crops and associated residues, plant fiber, poultry litter and other animal wastes, 
industrial wastes, and the biodegradable component of municipal solid waste; 
g) “DA” - shall refer to the Department of Agriculture created under Executive Order 
No. 116, as amended; 
h) “DOE’ - shall refer to the Department o f  Energy created under Republic Act No. 
7638, as amended; 
i) “DENR” shall refer to the Department of Environment and Natural Resources created 
under Executive Order No. 192, as amended; 
j) “Diesel” - a heavy mineral oil used as fuel in diesel engines; 
k) “DOTC” - shall refer to the Department of Transportation and Communication 
created under Executive Order No. 125-A, as amended; 
1) “DTI” - shall refer to the Department of Trade and Industry created under Executive 
Order No. 133; 
m) “Feedstock” - shall refer to organic sources or biomass used in the production of 
biofuels; 
n) “Gasoline” - shall refer to a complex mixture of relatively volatile hydrocarbons with 
or without small quantities of additives, blended to form a fuel suitable for use in 
spark-ignition engines and Research Octane Number (RON) of 90 or above; 
0) “Motor fuel” - shall refer to all volatile and inflammable liquids produced, blended or 
compounded for the p wpose o f, or which are suitable or practicable for, operating 
motor vehicles; 
p) “NBB or Board” - shall refer to the National Biofuel Board created under Section 8 
hereof; 


q) “Renewable Energy Sonrces” - shall refer to energy sources that do not have an 
upper limit on the total quantity to be used. Such resources are renewable on a 
regular basis, and whose renewal rate is relatively rapid to consider availability over 
an indefinite period of time; and 
r) “WTO - shall refer to the World Trade Organization. 
SECTION 4. Mandatory Use of Biofuek- 
a) In pursuance of the above policy, the Department of Energy is hereby directed to 
immediately adopt a National Biofuel Program that will implement the following: 
(1) a mandated blending of gasoline with bioethanol fuel. Within two (2) years 
form the effectivity of this Act, a minimum of five percent (5%) bioethanol 
fuel by volume shall be blended into all gasoline to be distributed, sold and 
used as motor fuel. Within four (4) years from the effectivity of this Act, a 
minimum o f t en p ercent ( 10%) b ioethanol fuel b y  volume s hall b e b lended 
into all gasoline to be distributed, sold and used as motor fuel; and 
(2) a mandated blending of diesel with biodiesel as motor fuel. Within two (2) 
years from the effectivity of this Act, a minimum of one percent (1%) 
biodiesel by volume shall be blended into all diesel to be distributed, sold and 
used as motor fuel. Within four (4) years from the effectivity of this Act, a 
minimum of five percent (5%) biodiesel by volume shall be blended into all 
diesel to be distributed, sold and used as motor fuel. 
b) Subsequently and every two (2) years thereafter, the National Biofuel Board shall 
review and assess the impact of the use of bioethanol fuel and biodiesel as well as the 
availability of local supply and shall determine the appropriate increase in the 
mandated minimum blend beyond ten percent (10%) and five percent (5%), 
respectively. 
c) Beginning January 1, 2015, only biofuel vehicles, engines and parts shall be 
manufactured, imported and sold in the Philippines, except for vehicles, engines and 


pats that run on alternative fuels such as but not limited to, compressed natural gas, 
LPG, electricity, and fuel cells. 
SECTION 5. Incentive Scheme. - To encourage private entities to invest in the 
production of biofuels and distribution of biofuel blends at and beyond the minimum mandated 
blends, the following incentive scheme is hereby provided: 
a) Fiscal Incentives 
(1) All entities engaged in the production of biofuel as may be certified by the 
Department of Energy shall, for a period of ten (10%) years from the 
effectivity of this Act, be exempted from the payment of tariff and duties in 
the important of all types of inputs. 
b) Non-Fiscal Incentives 
(2) Subject to the rules and regulations of the Board of Investments, all 
investments in the production of biofuel feedstocks and production and 
blending of biofuels within three years after the effectivity of this Act shall be 
classified as pioneering andor preferred areas of investment under its annual 
investment priorities plan (PP) and shall enjoy the applicable fiscal and non- 
fiscal incentives as may be provided for under the Omnibus Investment Code, 
as amended. 
c) Financial Assistance 
(1) Government Financial Institutions such as the Development Bank of the 
Philippines, Land Bank of the Philippines, Quedancor and such other 
government institutions providing financial services shall in accordance with 
and to the extent allowed by the enabling provisions of their respective 
charters or applicable laws, accord high priority to extend financing to entities 
that shall engage in activities involving production of biofuel and biofuel 
feedstock. 


SECTION 6 .  Powers and Functions o f t  he D epavtment of E nevgy. - In addition to its 
existing powers and functions, the Department of Energy is hereby mandated to take appropriate 
and necessary actions to implement the National Biofuel Program. In pursuance thereof, the 
Department shall: 
a) Formulate within six (6) mouths from the effectivity of this Act the Implementing 
Rules and Regulations under Section 13 hereof; 
b) Prepare the National Biofuel Program consistent with the Philippine Energy Plan; 
c) Within six (6) months form the effectivity of this Act: 
(1) Establish standards for biofuels and biofuel-blended gasoline and diesel; and 
(2) Establish guidelines for the transport, storage and handling of biofuels; 
d) Impose fines and penalties against persons or entities found to have committed any 
of the prohibited acts under Section 10 @) through (d) hereof; 
e) Confiscate gasoline and diesel sold in the market that are found to be not compliant 
with the specifications provided for under Sections 4 and 5 and corresponding 
issuances of the Department; and 
fl Conduct an information campaign (IEC) to promote the use of biofuels. 
SECTION 7. Creation of the National Biofuel Board. - The National Biofuel Board is 
hereby created. It shall be composed of the Secretary of the Department of Energy or his 
designated Undersecretary as chairman and the Secretaries or the designated undersecretaries or 
assistant secretaries of the Department of Trade and Industry @TI), Department of Science and 
Technology (DOST), Department of Agriculture and Food (DAF), and Department of 
Environment and Natural Resources (DENR); one (1) representative from the biofuel industry; 
and one (1) representative from the petroleum industry, duly endorsed by their respective 
industry associations and appointed by the President of the Republic of the Philippines, as 
members. 
The DOE Secretary or his designated Undersecretary, in his capacity as Chairperson, 
b 
shall, within one (1) month form the effectivity of this Act, convene the NBB. 


The Board shall be assisted by a Technical Secretariat attached to the Office of the 
Secretary or the Office of the Undersecretary of the Department as the case maybe. It shall be 
headed by a Director to be appointed by the Board. The number of staff of the Technical 
Secretariat and the corresponding positions shall be determined by the Board, subject to approval 
by the Department of Budget and Management (DBM) and existing civil service rules and 
regulations. 
SECTION 8. Powers and Functions ofthe NBB. - The National Biofuel Board shall have 
the following powers and functions: 
a) Approve the National Biofuel Program; 
b) Monitor and review the implementation of the National Biofuel Program; 
c) Monitor the supply and utilization of biofuels and biofuel blends and recommend 
appropriate measures in cases of shortage o f  feedstock supply for approval by the 
Secretary of DOE; 
d) Evaluate plans for further expansion of the program; 
e) Review and increase the minimum mandated biofuel blends as it deems appropriate; 
fJ Recommend specific actions concerning the implementation of the National Biofuel 
Program to be executed by the Department and other appropriate agencies of 
government. 
SECTION 9. Role of Government Agencies. - To ensure the effective implementation of 
this program, concerned agencies shall perform the following functions: 
a) The Department of Finance shall: 
(1) In coordination with the Tariff Commission, create and classify a tariff line 
for biofuels and blends harmonized with the WTO and AFTA agreements. 
(2) Review existing levels of specific tax on petroleum products, and re-align to 
consider the biofuel blends vis-his other petroleum products. 


(3) Identify suitable incentives to encourage investments in domestic production 
of biofuels and to cause the petroleum companies operating in the Philippines 
to blend and retail biofuel blends. 
(4) Monitor the production and importation of biofuels through the Bureau of 
Internal Revenue and the Bureau of Customs. 
(5) Through the Bureau of Internal Revenue and Bureau of Customs, impose fines 
and penalties to any person or juridical entity committing the prohibited act 
under Section lO(a) of this Act and coordinate with the Department of Energy 
on enforcement of specifications and standards for biofuels and biofuel- 
blended gasoline and diesel. 
b) The Department of Science and Technology (DOST) and the Department of 
Agriculture (DA) shall coordinate in identifjmg and developing viable feedstock for 
the production of biofuels. 
c) The DOST through the PCIERD shall develop and implement a research and 
development (R&D) Program supporting a sustainable improvement in biofuel 
production and utilization technology. It shall also publish and showcase related 
technologies developed locally and abroad. 
d) The DA through its relevant agencies shall: 
(1) Within six (6) months from the effectivity of this Act, develop a national 
program for the production of crops for use as feedstock supply. 
(2) Ensure increased productivity and sustainable supply of biofuel feedstocks. It 
shall institute a program that would guarantee that a sufficient and reliable 
supply of feedstock is allocated for biofuel production. 
(3) Publish information on available and suitable areas for cultivation and 
production of such crops. 
The Secretary of DA shall instruct the Administrators of the Sugar Regulatory 
Administration and the Philippine Coconut Authority, and other DA-attached 
agencies to, within their authority, develop and implement policies supporting 
the National Biofuel Program. 


e) The Department of Trade and Industry shall ensure the inclusion in its Motor Vehicle 
Development Program the development and promotion of the manufacture andor 
investment in production of biofuel vehicles. 
f) The Local Government Units (LGUs) shall assist the Department in monitoring the 
distribution, sale and use of biohels and biofuel blends. 
SECTION 10. ProhibitedActs. -The following acts shall be prohibited: 
a) Diversion of biofuels, whether locally produced or imported; 
b) Distribution, sale and use of straight gasoline or diesel and biofuel-blended gasoline 
or diesel not complying with the requirement under Section 4 of the Act; 
c) Non-compliance with the establishment standards and guidelines of the DOE; and 
d) Inappropriate and fallacious labeling of biofuels and biofuel-blended gasoline and 
diesel. 
SECTION 11. Penal Provisions. - Any person, including but not limited to the chief 
operating officer, chief executive officer of the partnership, corporation or any entity involved, 
who violates any provision of this Act shall suffer the penalty of three (3) months to one (1) year 
imprisonment and a fine ranging from fifty thousand pesos (P50,OOO.OO) to three hundred 
thousand pesos (P300,OOO.OO). 
In addition, the DOE shall confiscate any amount of gasoline which is not compliant with 
the specifications provided for under Sections 4 and 5 hereof and corresponding issuances of the 
DOE. The DOE shall stop the operation of businesses for refusal to comply with any order or 
instruction of the DOE Secretary in the exercise of his function under this Act. 
SECTION 12. Appropriations.- The fund necessv for the initial implementation of this 
Act shall be charged against the current appropriations of the Department. ThereaRer, the fund 
necessary to carry out the provisions of this Act shall be included .in the annual General 
Appropriations Act. 


SECTION 13. Implementing Rules and Regulations. - The Department, through the 
National Biofkel Board, in consultation with the Committees of Energy of the Senate and the 
House of Representatives, the stakeholders and other agencies concerned, shall, within six (6) 
months after the effectivity of this Act, promulgate the implementing rules and regulations of 
this Act: Provided, That the draft of the implementing rules and regulations shall be posted in the 
DOE Website for one (1) month. 
SECTION 14. Repealing Clause. - Any law, presidential decree or issuance, executive 
order, letter of i nstruction, administrative o rder, rule or regulation contrary t 0, or inconsistent 
with the provisions of this Act is hereby repealed, modified or amended accordingly. 
SECTION 15. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
publication in at least two (2) newspapers of general circulation. 
Approved,