NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
SENATE
S.B. No. 381
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72 JUL 12 All '56
RliCElV-D BV:
Introduced by Senator WIN GATCHALIAN
AN ACT
FURTHER AMENDING PRESIDENTIAL DECREE NO. 87, OTHERWISE 
KNOWN AS THE OIL EXPLORATION AND DEVELOPMENT ACT OF 1972, AS
AMENDED
EXPLANATORY NOTE
Petroleum exploration and development is a capital-intensive economic activity which 
plays a significant role in achieving the Philippines' energy security and self-sufficiency. 
It is rightfully an activity that is highly regulated by the State which owns all the natural 
resources found within its territory.1 Under Presidential Decree No. 87 (PD 87), private 
entities which are legally, financially, and technically qualified are granted the privilege 
to explore and develop these natural resources through a Service Contract entered 
with the government.
When a service contractor deems it proper to transfer or assign its rights and 
obligations under a Service Contract to a third party, the State, acting through the 
Department of Energy (DOE), has the duty to ensure that the transferee or assignee 
is qualified to assume and fulfill the obligations of the transferor or assignor under the 
Service Contract by reviewing and approving such transfer. This is mandated under
Section 2. Article XII. 1987 Constitution.


PD 87. However, the said law does not provide for penalties when this requirement 
is not followed.
As such, this proposed legislation introduces amendments to PD 87 by providing 
specific penalties for government officials and entities holding participating interests 
in service contracts who fail to con^ply with the prior approval requirement. By doing 
so, this proposed legislation places a safeguard on every transfer or assignment and 
ensures that the interests of the State and the Filipino people are protected.
For these reasons, the immediate passage of this measure is sought:
IN^ATCHALIAN


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NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
SENATE
S.B. No. 381
I V'l
ot liK 1
I - U;
72 JUL 12 All 56
RtCtlV'.-U B :
Introduced by SEN. WIN GATCHALIAN
AN ACT
FURTHER AMENDING PRESIDENTIAL DECREE NO. 87, OTHERWISE 
KNOWN AS THE OIL EXPLORATION AND DEVELOPMENT ACT OF 1972, AS
AMENDED
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled:
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Section 1. A new section designated as Section 32-A and Section 32-B of 
Presidential Decree No. 87, as amended, are hereby added to read as follows:
"SECTION 32-A. PROHIBITED ACTS. - WITHOUT
PREJUDICE TO CIVIL AND CRIMINAL LIABILITY, THE
FOLLOWING ACTS SHALL BE PROHIBITED:
(a) 
FOR ANY PERSON HOLDING A PARTICIPATING 
INTEREST IN A SERVICE CONTRACT: FAILING TO 
COMPLY WITH THE PRIOR APPROVAL 
REQUIREMENT UNDER SECTION 11 OF THIS ACT;
AND
(b) 
FOR ANY GOVERNMENT OFFICIAL: APPROVING A 
TRANSFER OR ASSIGNMENT OF RIGHTS AND 
OBLIGATIONS IN A SERVICE CONTRACT IN FAVOR 
OF AN UNQUALIFIED TRANSFEREE OR ASSIGNEE.


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SECTION 32-B. PENALTIES. - WITHOUT PREJUDICE TO 
CIVIL AND CRIMINAL LIABILITY, THE FOLLOWING 
ADMINISTRATIVE PENALTIES SHALL BE IMPOSED UPON 
ANY NATURAL OR JURIDICAL PERSON FOR THE 
COMMISSION OF THE PROHIBITED ACTS ABOVE:
(a) 
SECTION 27 
(A): FINE RANGING FROM A
MINIMUM OF TEN MILLION PESOS (P10,000.00)
TO A MAXIMUM OF FIFTY MILLION PESOS 
(P50,000,000.00) AND REVOCATION OF THE 
SERVICE CONTRACT,
(b) 
SECTION 27 (B): FINE NOT EXCEEDING THE 
EQUIVALENT OF SIX (6) MONTHS' SALARY AND 
REMOVAL FROM OFFICE."
Section 2. Separability Clause. - Should any provision of this Act be held 
unconstitutional, no other provision hereof shall be affected thereby.
Section 4. Effectivity. -This Act shall take effect fifteen (15) days after Its 
publication in at least two (2) newspapers of general circulation.
Approved,