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Republic of the Philippines
 DATE:.FEB 17 206
*

HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
Second Regular Session

HOUSE BILL NO. 8764

Introduced by HON. EDGAR M. CHATTO
First District, Bohol

EXPLANATORY NOTE

In February 1998, Congress passed Republic Act No. 8479 or the “Downstream Oil
Industry Deregulation Law”. RA 8479 has two main objectives': (1) to ensure a truly
competitive market under a regime of fair prices, and (2) to ensure adequate and
continuous supply of environmentally clean and high-quality petroleum products.

To implement the first objective of ensuring fair prices, the DOE is tasked? to
monitor and publish daily international crude oil prices, and to follow the movements of
domestic oil prices. The DOE subscribes to the Mean of Platts Singapore (MOPS), which
shows daily trading prices of crude and refined oil in Singapore.s

According to the DOE, consistent with the regime of deregulation, “the Oil
Deregulation Law did not prescribe a specific formula. The market is expected to set the
prices. Notwithstanding deregulation, however, players in the industry must adhere to the
fundamental principle of fair prices as provided under the law.”

However, the absence of a clear definition of “fair prices” under RA 8479 has given
rise to confusion and oppression. This has likewise justified the wide gap in prices of
gasoline and its products between and among provinces of the same or neighboring regions
as well as between and among contiguous cities and municipalities within a province
separated only by a few kilometers as is our case in the Province of Bohol.

The capital city of Tagbilaran registers the highest prices of oil in the province
despite carrying the biggest oil depot in the island. The municipality of Ubay which gets oil
from the Tagbilaran City depot and is 97 kilometers away from the capital is Php 4.40
cheaper in terms of diesel prices and Php 9.07 cheaper in premium gasoline prices. While
in the neighboring municipality of Dauis, separated from the capital city by a mere 12-
kilometer distance, diesel is Php 8.31 cheaper and premium gasoline by Php 10.12. Finally,
4 kilometers away from Dauis is Panglao. This tourism hotspot registers fuel prices that is
cheaper than in Tagbilaran City by as much as Php 5.00 per liter for unleaded gasoline.

+ Section 2 of RA 8479
* under Section 14 of RA 8479

3 Fifteen Years Since Oil Deregulation: Assessment of the Department of Energy’s Role in the
Implementation of Republic Act 8479 by Emir-Deogene Mendoza, Ron Ponce Dangcalan and Albertine June
Din, Philippine Journal of Public Administration, Vol. LVIII No. 1 (January-June 2014)


Outside the province but within the same Region VII, the situation of Tagbilaran
City is no different. In Cebu City, there is a difference of Php 5.16 for diesel and Php 7.64
for premium gasoline. Even as compared a city outside the region, diesel in Tagbilaran City
is Php 3.31 more expensive and premium gasoline by Php 5.59 in Cagayan de Oro City in
Region X.

‘The disparity of average fuel prices in different places within the province of Bohol
and in neighboring cities is unreasonable. It does not promote sound economy and stability
in the cost of commodities which necessarily hinge upon the price of fuel within a specific
jurisdiction.

Last May 2019, the DOE issued Department Order Circular No. DC2019-05-0008 or
the “Revised Guidelines for the Monitoring of Prices in the Sale of Petroleum Products by
the Downstream Oil Industry in the Philippines”. The circular aims to make oil price
rollbacks or hikes more transparent as the detailed breakdown of the changes is shown.
The circular requires oil companies to unbundle their price adjustments and submit a
report to the DOE with a detailed breakdown of their import costs, tariffs, biofuel costs, oil
company take components, and other essential cost components that contribute to the
changes in retail prices in the hope of gathering data necessary to formulate proactive and
appropriate policy initiatives for the benefit of consumers and the downstream oil industry
as well as provide data that will support investigations on reported incidents of anti-
competitive behavior,

To date, three regional trial courts — Taguig, Makati and Mandaluyong, have issued
temporary restraining orders (TROs) against the implementation of the DOE Circular,
arguing that it is against fostering market driven competition.

As to the second objective of RA 8479 referring to the quality of the petroleum
products which should be “environmentally-clean and high-quality”, the law delegates the
definition to government agencies, thereby not explicitly specifying the benchmark for
identifying what exactly the law considers as the objective in terms of quality.

To date, fossil fuel combustion — for electricity, heat production and transportation
— is the principal greenhouse gas contributing to global warming. The use of sustainable
technology and practices should not only be encouraged but be made a priority.

The proposed amendments under this legislative measure, hence, seeks to give to
the DOE, in consultation with stakeholders, the power to determine the formula to set the
“fair price” of petroleum products. Additional mandates, under the monitoring powers of
the DOE, were also given. Finally, a premium on compliance with environmental laws is
ensured.

In view of the foregoing considerations, the passage of this law is earnestly sought,

if

REP. EDGAR M. CHATTO


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
Second Regular Session

HOUSE BILLNo. _°764

Introduced by HON. EDGAR M. CHATTO
First District, Bohol

“AN ACT
AMENDING REPUBLIC ACT NO. 8469 OR THE
‘DOWNSTREAM OIL INDUSTRY DEREGULATION ACT”

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Section 2 of Republic Act No. 8479 is amended to read as follows:

SEC. 2. Declaration of Policy. - It shall be the policy of the state to
liberalize and deregulate the downstream oil industry in order to
ensure a truly competitive market under a regime of fair prices,
adequate and continuous supply of environmentally-clean and high
quality petroleum products. To this end, the State shall promote and
encourage the entry of new participants in the downstream oil
industry, and introduce adequate measures to ensure the attainment
of these goals.

IT SHALL BE THE POLICY OF THE STATE TO ENSURE FAIR,
REASONABLE AND TRANSPARENT PRICES FOR PETROLEUM
PRODUCTS AND TO PREVENT MONOPOLY, OLIGOPOLY,
COMBINATION IN RESTRAINT OF TRADE, UNFAIR
COMPETITION, AND ECONOMIC DOMINATION IN THE
INDUSTRY IN CONSONANCE WITH PUBLIC INTEREST.

IT SHALL ALSO BE THE POLICY OF THE STATE TO ENSURE THE
WELFARE AND SAFETY OF THE CONSUMERS AND THE
GENERAL PUBLIC AS WELL AS THE ENVIRONMENT THROUGH
THE STRICT OBSERVANCE OF RELEVANT ENVIRONMENTAL
LAWS AND INTERNATIONAL AGREEMENTS ON THE
HANDLING OF HAZARDOUS CHEMICALS.”

SECTION 2. Section 12 of R.A, No, 8479 is hereby amended to read as follows:
SEC.12. Other Prohibited Acts.— To ensure compliance with the

provisions of this Act, the refusal to comply with any of the following
shall likewise be prohibited:


a)

submission of any reportorial requirements;

b) use of clean and safe (environment and worker-benign)
technologies;

C) ENTRANCE OF REPRESENTATIVES FROM DOE AND/OR
THE DEPARTMENT OF ENVIRONMENT AND NATURAL
RESOURCES AND THE DEPARTMENT OF JUSTICE
EXERCISING VISITORIAL POWERS UNDER SECTION 14 OF
THIS ACT;

D

[c)] any order or instruction of the DOE Secretary issued in the
exercise of his enforcement powers under Section 15 of this Act;
and

E) [d)] registration of any fuel additive with the DOE prior to its use
as an additive.

Any person, including but not limited to the chief operating or chief
executive officer of the partnership, corporation or any entity
involved, who is found guilty of any of the said prohibited acts shail
suffer the penalty of i popeieonmenes for two (2) years and fine ranging
from Two £4

iianaved Sosan pesos (P500,000.00) TO ONE MILLION PESOS
(P1,000,000.00).

SEC. 3. Section 14 of R.A. No. 8479 is hereby amended to read as follows:
"SEC. 14. Monitoring. —

a) The DOE shall monitor and publish daily international crude oil
prices, as well as follow the movements of domestic oil prices. It
shall likewise monitor the quality of petroleum products and stop
the operation of businesses involved in the sale of petroleum
products with the national standards of quality that are aligned
with the international standards/protocols of quality. The Bureau
of Product Standards (BPS) 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
efficiency and reduced emissions. The BPS shall also specify the
allowable content of additives in all types of fuels and fuel-related
products.

B) THE DOE SHALL REGULARLY MONITOR THE RETAIL AND

PUMP PRICES OF FUEL AND OTHER PETROLEUM

PRODUCTS. TO ENSURE TRANSPARENCY, ANY PERSON OR

ENTITY ENGAGED IN THE BUSINESS OF PETROLEUM

SHALL SUBMIT A VERIFIED MONTHLY REPORT OF THEIR

PRICES TO THE DOE, WHICH SHALL INCLUDE A


Cc

D)

)

E)

F

G

BREAKDOWN OF THE FORMULATION OF SUCH PRICES.
SUCH REPORT SHALL BE CONSIDERED AS A MATTER OF
PUBLIC INTEREST AND SHALL BE MADE PUBLIC FROM
TIME TO TIME.

THE DOE SHALL HAVE THE AUTHORITY TO INSPECT THE
BOOK OF ACCOUNTS AND RECORDS OF SUCH PERSON OR
ENTITY AS PART OF THE MONITORING POWERS OF THE
AGENCY.

{b)] The DOE shall monitor the refining and manufacturing
processes of local petroleum products to ensure that clean and
safe (environment and worker-benign) technologies are applied.
This shall also apply to the process of marketing local and
imported petroleum products.

THE DOE SHALL HAVE THE AUTHORITY, BY ITSELF OR
TOGETHER WITH THE DEPARTMENT OF ENVIRONMENT
AND NATURAL RESOURCES AND THE DEPARTMENT OF
JUSTICE TO INSPECT THE PREMISES OF THE ENTITY, AS
PART OF THE MONITORING POWERS OF THE AGENCY, TO
ENSURE STRICT COMPLIANCE WITH ENVIRONMENTAL
LAWS.

[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 and projected
importations, local purchases, sales and/or consumption, and
inventory on a per crude/product basis.

[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 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
circumstances: Provided, That nothing herein shall prevent the
said task force from investigating and/or filing the necessary
complaint with the proper court or agency moto propio. THE
TASK FORCE SHALL CONDUCT UNANNOUNCED,
UNRESTRICTED AND UNHAMPERED _ VISITORIAL
INSPECTION OF PREMISES, LEASED AND OPERATED BY
THE COMPANIES ENGAGED IN THE BUSINESS OF
PETROLEUM.

THE DOE WILL INFORM THE ENTITY OF VIOLATION/S OF
THIS SECTION IN WIRITING AND GIVE REASONABLE TIME
FOR COMPLIANCE.

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 rules and guidelines to be


adopted by the Task Force in the performance of its duty. These
guidelines shall ensure 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.

H

[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.”

SEC. 4. Section 15 of R.A. No. 8479 is hereby amended to read as follows:

"SEC. 15. Additional Powers of the DOE Secretary. - In connection
with the enforcement of this Act, the DOE Secretary shall have the
following powers:

A) IN CONSULTATION WITH THE OIL INDUSTRY SECTOR, THE
DEPARTMENT OF TRADE AND _ INDUSTRY, THE
DEPARTMENT OF JUSTICE, THE NATIONAL ECONOMIC
AND DEVELOPMENT AUTHORITY AND THE CONSUMERS
SECTOR, FACILITATE THE DETERMINATION OF THE
FORMULA, IN CONSULTATION WITH THE STAKEHOLDERS,
THAT WILL GOVERN THE COMPUTATION OF THE FAIR
PRICE TO BE USED BY THE OIL INDUSTRY SECTOR IN THE
INCREASE OR DECREASE OF THE PRICES OF GASOLINE
AND ITS PRODUCTS.

B) CONDUCT A_ PERIODIC EVALUATION OF THE
EFFECTIVENESS AND EFFICIENCY OF THE FORMULA AND.
RECOMMEND ITS REVIEW AND ADJUSTMENT SHOULD
THE CIRCUMSTANCES SO WARRANT AND _ IN
CONSULTATION WITH STAKEHOLDERS.

C) TO FIX THE MAXIMUM RATE OF INCREASE IN THE PRICES
OF FUEL AND OTHER PETROLEUM PRODUCTS, TAKING
INTO CONSIDERATION INTERNATIONAL AND LOCAL
MARKET PRICES, TO SAFEGUARD AGAINST DISPARITY
BETWEEN LOCATIONS, AREAS AND COMMUNITIES.

D)

[a)] To gather and compile appropriate information concerning,
and to investigate from time to time the organization, business,
conduct, practices, and management of any person or entity in
the Industry;

E)

[b)] To require, by general or special orders, persons and entities
engaged in a particular activity of the Industry: (j) to file an
annual or special report, or both in such form as the Secretary
may prescribe; or (ii) to answer specific questions in writing,
furnishing to the Secretary such information as he may require as
to the organization, business, conduct, practices, management,
and relation to other corporations, partnerships, and individuals


of the respective persons or entities filing such reports or answer.
Such reports and/or answer shall be filed with the Secretary
under oath and within such reasonable time as the Secretary may
prescribe;

F) [c)] Upon the direction of the President or either House of
Congress, to investigate and report the facts relating to any
alleged violation of this Act by any person or corporation;

G)

[d)] Upon the application of the Secretary of Justice, to
investigate and make recommendations for the adjustment of the
business of any person or entity alleged to be violating this Act in
order that such person or entity may thereafter maintain his or
its organization, management, and conduct of business in
accordance with laws;

H) [e)] To. recommend to. the proper government agency the
suspension or revocation and termination of the business permit
of an offender;

1) [] Concomitant with the policy of ensuring a continuous,
adequate and economic supply of energy to exercise his powers
and functions as provided under Section 5 (c) of Republic Act No.
7638;

J) [g)] To make public from time to time such portions of the
information obtained by him hereunder as are in the public
interest; and to make annual and special reports to Congress and
to submit therewith recommendations for additional legislation;
and to provide for the publication of his reports and decisions in
such form and manner as may be best adapted for public
information and use; Provided, That the Secretary shall not have
any authority to make public any trade secret or any commercial
or financial information which is obtained from any person or
entity and which is privileged or confidential, except that the
Secretary may disclose such information to officers and
employees of appropriate law enforcement agencies or to any
officer or employee of any such law. enforcement agency upon. the
prior certification by an officer of any such law agency that such
information will be maintained in confidence and will be used
only for official law enforcement purposes: and;

K) Whenever a final order has been entered against any dependent
in any suit brought by the government to prevent and restrain
any violation of the anti-trust provisions of this Act to make
investigation, upon his initiative of the manner in which the
decree has been or is being carried out, and upon the application
of the Secretary of Justice, it shall be his duty to make such
investigation. He shall transmit to the Secretary of Justice a
report embodying his findings and recommendations as a result
of any such investigation, and the report shall be made public at
the discretion of the Secretary."


SEC. 5. Implementing Rules and Regulations. - The DOE shall issue the

necessary rules and regulations necessary for the implementation of the provisions of this
Act.

SEC. 6. Repealing Clause. — All acts, presidential decrees, executive orders and
issuances inconsistent with this Act are hereby repealed or amended accordingly.

SEC. 7. Separability Clause. - If any provision of this Act is declared

unconstitutional or inoperative, the other provisions not so declared shall remain in force
and effect.

SEC. 8, Effectivity. — This Act shall take effect fifteen (15) days after its publication
in a newspaper of general circulation.

Approved,