FIFTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S,B.'No, 159 
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Introduced by Senator TEOFISTO "TG" GUINGONA III 
EXPLANATORY NOTE 
With the Downstream Oil Industry Deregulation Act of 1998 (RA 8479), the Philippine 
oil and petroleum industry has been left in the hands of the free market to ensure competition and 
better prices, Nevertheless, it is of great importance that the government has a direct hand in 
protecting the country's supply security, especially over these essential commodities, A new 
balance between the market system and state control must be defined in order to stabilize not 
only the price of petroleum products but, more importantly, their supply, 
The Philippine National Oil Corporation (PNOC) is mandated to prOVide and maintain an 
adequate and stable supply of oil and petroleum products for the domestic reqUirement (P,D, 
334), The LPG shortage last January-February 2009 has given the Philippine government good 
reason to pause and come up with a strategy to ensure that the people's supply of petroleum 
products is secure, One of the obvious solutions is to establish a reserve to be used primarily in 
times of emergency and, incidentally, to augment existing supplies in the anticipation and 
prevention of a shortage, This strategy has been used by developed countries such as the United 
States of America and Japan, and has proved to be effective, Furthermore, unlike foreign 
reserves, which consist of crude oil, It will serve the Philippines best if the reserves consIst of 
refined and ready-to-use petroleum products such as gasoline, diesel and liquefied petroleum gas 
(LPG), 
When the market tails to meet the people's demand tor whatever reason, the government 
has to step in and act as the supplier of last resort, Hence, this law shall provide the PNOC with a 
new mechanism for it to accomplish its task of meeting the country's petroleum product needs 
more efficiently, 
In view of the foregoing, the immediate enactment of this measure is earnestly sought. 
." GUlNGONA 111 


FIFTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S.B. 'No. 159 
Introduced by Senator TEOFISTO "TG" GUINGONA III 
AN ACT 
CREATING THE PHILIPPINE STRATEGIC PETROLEUM RESERVE AND FOR 
OTHER PURPOSES. 
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 "Philippine Strategic 
Petroleum Reserve Act of20lU. " 
SECTION 2. Policy. - Consistent with the mandate of the Philippine National Oil 
Corporation (PNOC) to provide and maintain an adequate and stable supply of oil and petroleum 
products tor the domestic requirement, it is the policy orthe State to act as the people's supplier 
of last resort and establish a strategic petroleum reserve for the purpose of providing economic 
and national security during energy crises. 
The ASEAN Petroleum Security Agreement (APSA), of which the Philippines is a 
signatory, recognizes the need to secure the ASEAN member countries' petroleum supplies, 
especially at a time when petroleum prices have soared to record highs. Thus, Petroleum Sharing 
Agreements among member countries in times of crisis as well as stockpiling of petroleum 
resources tor such purpose is encouraged, although on a voluntary basis. 
SECTION 3. Creating the Philippine Strategic Petroleum Reserve. - The PNOC shall 
establish a Strategic Petroleum Reserve (SPR) the sole purpose of securing the country's supply 
of petroleum products. The supplies, however, may be used in trade to provide funds tor the 
maintenance of the reserve. 
Initially, the petroleum reserve shall store gasoline, diesel, liquefied petroleum gas (LPG) 
in their tinal retined torm. 
At a future time and as may be required according to the judgment of the DOE or PNOC, 
other refined petroleum products may be added the list in the immediately preceding paragraph, 
without any need tor further legislation. 


SECTION 4. Operation, Management and Administration - The petroleum reserve 
shall be operated, managed and administered by the PNOC by itself or in partnership or joint 
venture with other parties. The PNOC shall be the controlling government agency for the 
strategic reserve. 
SECTION 5. Funding Source. - The amount necessary to implement and sustain the 
program under this Act shall be included in the annual General Appropriations Act or sourced 
from the sale ofPNOC assets, should there be any. 
SECTION 6. Powers and Duties of tile PNOC in relation to tile Petroleum Reserve.-
In addition to the powers granted to it by Presidential Decree No. 334, the PNOC shall have the 
following powers and duties with regard to the petrolenm reserve: 
(a) To establish, maintain, control and direct in any area within or without the national 
territory as it may deem appropriate, a petroleum reserve and construct, install or 
maintain therein duty-free ports adequate for the use of vessels, ports sufficient for direct 
service flights, telecommunications center and ship-to-shore communications facilities, 
provide electric power and ii-esh water supply, and pertbrm such other acts as it may 
deem necessary and advantageous or convenient to such operations. 
(b) Set Implementing Rules and Regulations (JRR) for the proper management of the 
petroleum reserve. 
(c) Formulate strategies for petroleum product shortage prevention. 
(d) Monitor and determine the volume of petroleum products needed to keep the reserve 
adequate. 
(e) Manage the reserve to ensure that the country's petroleum product needs are met by 
releasing supplies to the public, either directly or through private distributors when the 
need arises. 
(f) Set the price of petroleum products originating from the reserve based on current market 
standards. 
(g) To exercise the right of eminent domain as may be necessary for the purpose of 
establishing the petroleum reserve. 
(h) Enter into contracts with any person or entity, domestic or ibreign and with governments, 
by way of purchase, lease or rent or other deferred payment arrangements of equipment 
and/or raw materials and supplies, as well as for services connected therewith under such 
terms and conditions as it may deem proper and reasonable to establish, maintain and 
administer the petroleum reserve etliciently. 
(i) Enter into loan or exchange contracts with any person or entity, domestic or foreign and 
with governments to provide funds for the maintenance of the reserve, to increase reserve 


capacity, to replace retined petroleum products that are about to degrade or under any 
other circumstances requiring trade or sale, under such terms and conditions as it may 
deem proper and reasonable to establish, maintain and administer the petroleum reserve 
efficiently. 
SECTION 7. DrawdownAuthority. - The drawdown of petroleum reserve is authorized 
only upon a finding by the Secretary of Energy of any ofthese instances: 
(1) Full Drawdown to counter an actual severe supply interruption. This situation exists 
when both the toll owing conditions exist: 
(a) An emergency situation exists and there is a significant reduction in supply which 
is of significant scope and duration; and 
(b) A severe increase in the price of petroleum products has resulted from such 
emergency situation and such price increase is likely to cause a major adverse 
impact on the national economy. 
(2) Limited Drawdown to counter a perceived petroleum shortage. This exists when there is 
a reduction in supply that appears sufficiently severe to bring about an increase in the 
price of petroleum likely to cause a major adverse effect on the economy, and 
(3) Trade Drawdown which includes the sale or exchange of petroleum products with other 
ASEAN member countries as provided for in the APSA or with other parties for higher 
quality petroleum products, in exchange for storage capacity, or to resolve petroleum 
delivery problems of oil companies, among others, as may be determined by the 
President. 
The IRR shall determine the aggregate quantity of petroleum to be withdrawn from the 
reserve under any of the above circumstances. 
SECTION 8. Documents to be Submitted. - Within sixty (60) days from the effectivity 
of this Act, the Department of Energy (DOE), through the PNOC shall submit the following 
documents to the Legislature and the President: 
(1) Implementing Rules and Regulations (lRR); 
(2) Business plan and feasibility study of setting up the reserve; 
In this regard, the Legislature shall conduct consultation sessions with PNOC, DOE and 
other concerned government agencies and petroleum industry players. 
SECTION 9. Deadline for the Establishment of the Petroleum Reserve. - Within two 
(2) years from the lapse of the sixty (60) days set tor the submission ofthe documents required in 
the previous section, the PNOC shall perform all the acts necessary and within its power to 
establish, manage, operate and develop the petroleum reserve. 


SECTION 10. Separability Clause. - Should any section or provision oUms act be held 
unconstitutional or invalid, such declaration shall not invalidate other provisions hereof. 
SECTION 11. Repealing Clause. - All laws, decrees, executive orders, proclamations, 
rules and regulations inconsistent herewith are hereby repealed and/or moditied accordingly. 
SECTION 12. Effectivity. - This Act shall take effect fifteen (15) days following its 
publication in the Official Gazette or in two (2) newspapers of general circulation. 
Approved,