NINETEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES
Sno 202 t

House Bill No.

Introduced by Representative Ralph G. Recto

AN ACT
TO PROMOTE FAIR TRADE IN THE OIL INDUSTRY AND FOR OTHER
PURPOSES, AMENDING REPUBLIC ACT NO. 8479, OTHERWISE KNOWN AS:
THE “DOWNSTREAM OIL DEREGULATION ACT OF 1998”

EXPLANATORY NOTE

Republic Act (R.A.) No, 8479, otherwise known as the “Downstream Oil
Industry Deregulation Act of 1998” was enacted to liberalize and deregulate the
downstream oil industry to ensure a truly competitive market under a regime of fair
prices, adequate and continuous supply of environmentally-clean and high-quality
petroleum products. Under the law, the government can no longer interfere with the
pricing of oil products except to monitor which also means that it is freed from
providing costly subsidies.

However, R.A. No. 8479 has failed to mitigate the effects of a global cil crisis.
Worse, it appears that the deregulation policy even strengthened the cartelization of
oil industry players since automatic oil price hikes are allowed without control from

the government.

The disruptions in the global oil and gas supply chain brought about by the
Russia-Ukraine conflict has a tremendous impact on the Philippines’ oil supply and



Prices. Average Dubai crude oil price jumped from US$ 73.19 in January 2022! to
US$ 112.30 in June 2022.?

Frequent oil price hikes aggravated the hardships of the public especially the
consumer, agriculture, manufacturing and service sectors. Thus, people’s
organizations have been demanding for a review of R.A. No. 8479. These groups
have consistently raised concems on whether international price movements were
accurately considered in the pricing of petroleum products. It is, therefore,
incumbent upon the government to ensure transparency in the pricing of petroleum
products by the local oil industry players and to determine the computations or
assumptions employed in their price adjustments to prevent oll companies from
engaging in unwarranted profiteering.

To achieve this purpose, this measure shall require the local oil companies the
submission of financial documents, that are pertinent in the determination of price
adjustments of petroleum products. Submission of these documents is mandatory
and penalties for non-compliance are increased.

This bill also declares unlawful for oi! companies to engage in unwarranted oil
price increases as may be determined by the Department of Energy (DOE) and
provides for the imposition of heavier penalties against erring oil companies and
Officials.

To strengthen the Task Force created under Section 14 of the law, which is
tasked to investigate and file complaints against unreasonable rise in the prices of
petroleum products, this bill seeks the inclusion of representatives from consumer
and public transport groups in the Task Force, together with the Departments of
Energy, Justice and Trade and Industry.

Finally, to provide Filipinos the best energy choices and to ensure
transparency in the pricing of oll products, the Task Force is mandated to post twice

Department of Energy. “Briefer on the Current Oil Supply and Price Situation and Implications of the
Russian-Ukraine Conflict” 14 March 2022.
? https://ph jnvesti commas 2

June 2022).


a month on the DOE's official website and publish in at least two (2) national
newspapers the prevailing price of petroleum products in the retail market.

With the foregoing considered, the approval of this bill is earnestly sought.



eer annua we

10
a
12
13

15
16
7
18

NINETEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES
sill No.2 oe |

House Bill No.

Introduced by Representative Ralph G. Recto

AN ACT
TO PROMOTE FAIR TRADE IN THE OIL INDUSTRY AND FOR OTHER
PURPOSES, AMENDING REPUBLIC ACT NO. 8479, OTHERWISE KNOWN AS.
THE “DOWNSTREAM OIL DEREGULATION ACT OF 1998”

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

Section 1. Section 4 of Republic Act No. 8479 is hereby amended to read as
follows:
"Sec. 4. Definition of Terms. - For purposes of this Act, the following
terms are herein below defined:

“xx

“(O) PREVAILING RETAIL PRICE ~ SHALL REFER TO THE
CURRENT PUMP PRICE OF ALL PETROLEUM PRODUCTS IN THE
COUNTRY;

fe) (P) Singapore Import Parity (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;

"£te} (Q) Singapore Posting ~ shall refer to the price of petroleum
products periodically ’posted by oil refineries in Singapore and reported by
independent international publications; and

“E(@} (R) Wholesale Posted Price (WPP) — shall refer to the ceiling
price of petroleum products set by the Board based on its duly approved

automatic pricing formula.”


2
3
4

23
24
25
26

29
30
31
32
33

Sec, 2. Creation of the Oil Monitoring Task Force. - The Oil Monitoring Task

Force, herein referred to as the Task Force, shall be organized within one (1) month
from the effectivity of this Act to implement the Anti-Trust safeguards under Section
11 of Republic Act No. 8479 and ensure fair competition in the oil industry.

1) Creation and Composition. - The Secretaries of the Departments of
Energy (DOE), Justice (DOJ) and Trade and Industry (DTI) shall jointly appoint
the members of the Task Force which shall be composed of an Undersecretary
from the Departments of Energy and Justice, as Co-Chairpersons with the
following members:

a) One (1) member from the DOE;

b) One (1) member from the DOJ;

©) One (1) member from the DTI;

d) Two (2) members from the consumer and public transport
groups which have been in existence and active for the last five (5) years
prior to this Act; and

e) One (1) industry financial expert.

2) The members of the Task Force shall adopt its rules and guidelines in
the performance of its functions. These guidelines shall ensure the efficiency,
Promptness, and effectiveness in the handling of its cases.

Sec. 3. Powers and Functions of the Oil Monitoring Task Force. -

a) To establish stricter and more industry-specific reporting guidelines;

b) To conduct periodic and unannounced inspections of oil depots and
facilities;

c) To inspect the books of accounts of companies engaged in the oil
industry;

4) To request all records that are deemed necessary to ensure
transparency and compliance of all oil industry participants with the provisions
of this Act; and

) To conduct an annual analysis of oil industry performance, including
findings and issues encountered by the Task Force to be posted in the DOE
website.

Sec. 4. Section 10 of Republic Act No. 8479 is hereby amended to read as

follows:


22
23
24
25
26
a7
28
29

32
33

“Sec. 10. Promotion of Retail Competition. - THE TASK FORCE SHALL
ADOPT ALL MEASURES TO PROMOTE FAIR TRADE IN THE RETAIL
MARKET AND THE CONSUMERS’ RIGHT OF ACCESS TO ANY AND ALL
INFORMATION REGARDING THE PRICES OF ALL PETROLEUM
PRODUCTS IN THE RETAIL MARKET. THE TASK FORCE SHALL
CONTINUE TO MONITOR THE MOVEMENT OF OIL PRICES IN THE
RETAIL MARKET AND POST THE PREVAILING RETAIL PRICES ON THE
DOE’S OFFICIAL WEBSITE AND PUBLISH THE SAME IN AT LEAST TWO.
(2) NATIONAL NEWSPAPERS OF GENERAL CIRCULATION ON A
BIWEEKLY BASIS. THESE PRACTICES ARE INTENDED TO PROVIDE
THE CONSUMERS WIDER ACCESS TO PETROLEUM PRODUCTS THAT
GIVE BEST VALUE FOR MONEY.”

“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,
and management/skills training, the active and direct participation of the
private sector and cooperatives in the retailing of petroleum products through
joint venture/supply agreements with new industry participants for the
establishment and operation of gasoline stations: Provided, That the training
herein shall include LPG retailing.

OK
OOK

Hx

pond
Sec. 5. Section 11 of Republic Act No. 8479 is hereby amended to read as

follows:

“Sec. 11. Anti-Trust Safeguards. To ensure fair competition and prevent
cartels and monopolies in the Industry, the following acts are hereby
prohibited:

*(a) xxx
*(b) 100
“Any person, including but not limited to the chief operating officer, chief

executive officer or chief finance officer of the partnership, corporation or any
3


1 entity involved, who is found guilty of any of the said prohibited acts shall

2 suffer the penalty of three (3) to seven (7) years imprisonment, and a fine
3 ranging from £One-miion-pesos-{P-4,000,0000,00)-to} Two million pesos (P
4 2,000,000.00) TO THREE MILLION PESOS (P 3,000,000.00).”

5 Sec. 6, Section 12 of Republic Act No. 8479 is hereby amended to read as
6 follows:

7 “Sec. 12, Other Prohibited Acts. - To ensure compliance with the
8 provisions of this Act, the refusal to comply with any of the following shall
9 likewise be prohibited:

10 “(@) Submission of any reportorial requirements SUCH AS BUT
rr NOT LIMITED TO BOOKS OF ACCOUNTS, AUDITED FINANCIAL
2 STATEMENTS, VERIFIED REPORTS OF THE COMPANY'S
B ASSUMPTIONS AND COMPUTATIONS IN THE PRICING OF THEIR
u PETROLEUM PRODUCTS, WHETHER IN THE PROCESSING,
4s REFINING, DISTRIBUTING OR SELLING OF SAID PRODUCTS, TO
16 ENSURE THAT OIL COMPANIES ARE NOT INVOLVED IN
7 PROFITEERING;

18 "(b) 200

19 (c) 100

20 *(d) wx.

2 “Any person, including but not limited to the chief operating officer or
22 chief executive officer of the partnership, corporation or any entity involved,
23 who is found guilty of any of the said prohibited acts shall suffer the penalty of
24 imprisonment for two (2) years and a fine ranging from Ewe-hundred-fitty
25 thousand—pesos—{P—250,000.00}to} Five hundred thousand pesos (P
26 500,000.00) TO SEVEN HUNDRED FIFTY THOUSAND PESOS (P
7 750,000.00).

28 “IT SHALL LIKEWISE BE UNLAWFUL TO CAUSE THE
29 UNNECESSARY INCREASE OR CAUSE AN UNREASONABLE AMOUNT OF
30 INCREASE IN THE PRICES OF PETROLEUM PRODUCTS UNDER
31 SECTION 7 OF THIS ACT.”

32 Sec. 7. Section 14 of Republic Act No. 8479 is hereby amended to read as

33 follows:


22
23
24
25
26
27

31
32
33

"Sec. 14. MONITORING. ~ (a) The DOE shall monitor ACTIVELY and
publish daily international crude oil prices, as well as follow the movements of
domestic oil prices. IT SHALL DETERMINE THE FACTORS WHICH CAUSE
THE CHANGE IN THE PRICES OF PETROLEUM PRODUCTS, EVALUATE
THE NECESSITY OF THE CHANGE IN THE PRICES AND THE
REASONABILITY OF THE AMOUNTS OF INCREASE OR DECREASE
BASED ON THE ACTUAL CONDITIONS OF THE MARKET AND OTHER
CAUSATIVE AND CONTRIBUTORY FACTORS AS IT MAY DETERMINE. It
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 efficiency and reduced emissions. The BPS shall also
specify the allowable content of additives in all types of fuels and fuel-related
products.

"(b) v0

“(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 FOR THE SUCCEEDING MONTH. To
implement this, the importers, refiners, and marketers are hereby
required to submit {monthly} EVERY THIRD WEDNESDAY OF THE
MONTH to the DOE their FORTY FIVE (45)-DAY INVENTORY of
actual importations, local purchases, sales and/or consumptionf—and
inventory] on a per crude/product basis.

“(d) Any report from any person of an unreasonable rise} CHANGE
in the prices of petroleum products shall be immediately acted upon. For
this purpose, the fereation~ef-the-DOE-DO3} 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:
5


13
14
15
16
7

Provided, That nothing herein shall prevent the said Task Force from
investigating and/or filing the necessary complaint with the proper court
or agency motu propio.
Epen_the-effectivity_of this et, the -Secretaries-of_Energyand
Justice_shalt_ jointly appoint the-members-ofa-committee-whe-shall-be
tasked-with-the-drafting-of the ruies-and guidelines to-be-adopted-by-the
Fask-Foree-ia-the-performanee-of tts-dutyThese-guidelines-shal-ensure

he-efficiency;-promptness,-and-eff the-handling-of tts :
Fhe-Fask-Ferce-shalt be-organized-_and-its- members -appeinted-within-one
¢4} menth-from-the effectivity ef this Act

“(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. 8. Implementing Rules and Regulations. ~ The DOE, in coordination with
the DOJ, DTI, and representatives from the consumer and transport groups, shall
within sixty (60) days from the effectivity of this Act, promulgate the rules and
regulations to effectively implement the provisions of this Act.

Sec. 9. Separability Clause. ~ If any portion or provision of this Act is declared
unconstitutional, the remainder of this Act or any provisions not affected thereby
shall remain in force and effect.

Sec. 10. Repealing Clause. - Any law, presidential decree or issuance,
executive order, letter of instruction, rule or regulation inconsistent with the
provisions of this Act is hereby repealed, amended or modified accordingly.

Sec. 11. Effectivity. — This Act shall take effect after fifteen (15) days following
its complete publication in the Official Gazette or in at least two (2) newspapers of
general circulation,

Approved,