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REPUBLIC OF THE PHILIPPINES 
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Second Regular Session 
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THIRTEENTH CONGRESS OF THE 
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S E N A T E  
Introduced by SENATOR EDGARDO J. ANGARA 
EXPLANATORY NOTE 
Today, Philippines supply 65% of the world’s requirements for vegetable oil, 
making it the single leading provider of the world’s vegetable oil market. 
Vegetable oils and their derivatives, ,particularly the methyl esters, or 
“biodiesel” is one of the most promising fuel alternative in a world screaming for a 
better air quality, and a cleaner and safer environment, in general. Fuel and energy 
crisis and the depletion of the world’s non-renewable resources prompted various 
sectors to look into fuel alternatives or fuel substitute as the better option. 
Interestingly, the use of vegetable oils as diesel is as old as the diesel engine 
itself. This is because diesel engine inventor Rudolf Diesel reportedly used groundnut 
(peanut) oil as a fuel for demo purposes in 1900. Research activities in the years that 
followed using oils from coconut, soy bean, sunflower, peanut, linseed and palm were 
used depending on what country they grow most abundantly. Philippines alone 
conducted quite a number of studies for more than three (3) decades on the fuel 
application of coconut oil or coconut methyl ester (CME). 
But there were delays encountered in the widespread use of coco-biodiesel as 
alternative fuel, mainly due to economics (technologically but not economically 
viable due to high cost of raw materials) and the properties of biodiesel (which cause 
injector cooking, engine deposits, ring sticking and thickening of the engine 
lubricant). To address the economic issues, CME will not be ‘used as diesel fuel 
substitute but as an economically viable petroleum diesel fuel (PDF) quality enhancer 
as proposed in this bill by mandating its pre-blending on all diesel used as motor fuel 
at 1% per volume; To address the biodieseI properties issue, efforts were made to 
develop production of CME, an ester derivative of coconut oil. 
The lifecycle production and use of biodiesel produces approximately 80% less 
carbon dioxide emissions, and almost 100% less sulfur dioxide. Combustion of 
biodiesel alone provides over a 90% reduction in total unburned hydrocarbons, and a 
75-90% reduction in aromatic hydrocarbons. It further provides significant reductions 
in particulates and ,carbon monoxide than petroleum diesel fuel. Last, it provides a 
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slight increase or decrease in nitrogen oxides depending on engine family and testing 
procedures. 
By and large, biofuels, which include bioethanol and biodiesel, are reliable, 
renewable, indigenous, and non-toxic. It can be produced from any kind of oil, even 
used frying oil, both vegetable and animal source. As agricultural products, all 
countries, especially Philippines, have the ability to produce and control this energy 
source as oppose to crude oil. Its use in the petroleum industry will provide new and 
significant market for our agricultural products. 
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Biofuels, therefore, are not only alternatives, but are in fact, imperatives for 
the country’s energy requirements and environmental and economic concerns. 
I, therefore, express support for this measure and urge my colleagues to do no 
less. 
EDGARDO J. ANGARA 
Senator 
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5 QEG 20 1-73 :! I:‘ 
THIRTEENTH CONGRESS OF THE 
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REPUBLIC OF THE PHILIPPINES 
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Second ReguIar Session 
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S E N A T E  
S. B. NO. 
Introduced by SENATOR EDGARDO J. ANGARA 
AN ACT MANDATING THE USE OF BIOFUELS AS QUALITY-ENHANCING 
ADDITWES IN GASOLINE AND DIESEL FUEL FOR TRANSPORT USE, 
ESTABLISHING FOR THE PURPOSE THE NATIONAL 
BIOFUELS PROGRAM, APPROPRIATING FUNDS THEREFOR, 
AND FOR OTHER PURPOSES. 
Be it enacted by the Senate and House OfRepresentatives of the Philippines in 
Congress assem bled: 
SECTION 1. Short EtIe. This Act shall be known as the ‘Philippine Biofieh 
Act of 2005. ” 
SEC. 2. Declaration ofPolicy. It is hereby declared the policy of the State to 
pursue a policy towards energy independence through the use of alternative and 
renewable energy sources consistent with the country’s sustainable economic growth 
plan that would attain energy self-sufficiency and expand opportunities for 
livelihood, with due regard to the protection of public health and the environment by 
mandating the use of bioethanol and coco-diesel as pre-blends in gasoline and diesel 
fuels, and supporting the development and use of other indigenous Fatty Acid Methyl 
Esters (FAME) as a measure to: 
(a) Mitigate toxic and greenhouse gas (GHG) emissions; 
(b) Develop and utilize indigenous renewable energy sources to reduce 
dependence on imported fuel oil; and 
(c) Increase rural employment and income. 
SEC. 3. Definitions. For purposes of this Act, 
(a) ‘2FTA”shalI refer to the ASEAN Free Trade Area initiated by the Association of 
Southeast Asian Nations (ASEAN) at the fourth ASEAN Summit in January 1992, 
which laid out a comprehensive program of regional tariff reduction, to be carried 
out in phases through the year 2008; 
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(b) “Biodiesel”shal1 refer to any Fatty Acid Methyl Ester (FAME) which is a diesel- 
like fuel sourced from plant oil that conforms to pertinent standards such as the 
Philippine National Standards (PNS) for biodiesel; the European Standard (EN 
14214); and the American Standard; 
(c) ‘fBioetlianol”shal1 .refer to ethanol (C2H50H) produced from biomass; 
(d) “Bioethanol Fuel” shall refer to hydrous or anhydrous bioethanol suitably 
denatured for use as motor fuel: 
(e) ‘IBiofieIs” shall refer to liquid fuels and blending components produced from 
biomass feedstocks, such as: ethanol from corn, cassava, sugarcane and biodiesel 
from coconut and vegetable oil, and primarily used as substitute or additive to 
fossil-petroleum fuels; 
(f) ‘Womass” shall refer to any organic matter, particularly cellulosic or ligno- 
cellulosic 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) “Coco-biodiesel” refers to CME that complies with the Philippine National 
Standards (PNS), the European Standard (EN 14214), and the American Standard 
(ASTMD675 1) for biodiesel. CME’s which are non-compliant with the foregoing 
standards or other future standards established for biodiesel shall not be referred 
to as biodiesel. (Note: Coco-biodiesel is methyl ester as distinct from the coco- 
diesel of 80s which was pure coconut oil); 
(h) “Coco MetIyI Ester (CME) ”shall refer to FAME sourced from coconut oil used 
either as CME sulfonates in soap productin, CME amines for foam boosting, and 
CME biodiesel as additive and / or substitute for diesel fuel; 
(i) “Department of Agriculture (DA)” shall refer to the government agency created 
under Executive Order No. 116, as amended; 
(j) ‘Department of Energy (DOE)” shall refer to the government agency created 
under Republic Act No. 7638, as amended; 
(k) “Department of Environment and Natural Resources” shall refer to the 
government agency created under Executive 22 Order No. 192, as amended; 
(1) ‘Department of Finance (DOF)” shall refer to the government agency created 
under Executive Order No. 127; 
(m) ‘Department of Science and Technology (D0ST)”shall refer to the government 
agency created under Executive Order No. 192; 
(n) ‘‘Department of Transportation and Communications (DOTC)” shall refer to the 
Department of Transportation and Communications created under Executive 26 
Order No. 125-A, as amended: 
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diesel fuel; 
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diesel fuel; 
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(0) “Diesel Fuel” is fossil fuel for diesel engines representing the middle distillate 
component of crude oil produced through fractional distillation and conforms to a 
set of quality parameters established by Philippine National Standards (PNS) for 
(p) ‘FaqAcidMether Ester (FAME)” refers to the remaining component of plant oil 
(fatty acid) when glycerine is removed, and has been neutralized of its acidity by 
way of an alchol (methanol) reaction in a process known as esterficiation. The 
remaining fatty substance is methyl ester, a product that has the same features as 
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(9) ‘~ste~~cation”invo1ves 
the separation of glycerine from fatty acid by a reaction 
process with an ,alcohol aided by a catalyst. After recovering the alcohol, what 
remains is a fatty substance or ester which has a carbon chanin profile similar to 
diesel plus an oxygen molecule at the end of its carbon chain making it an 
(r) ‘Feedstock”shal1 refer to organic sources such as molasses, sugarcane, cassava or 
other biomass used in the production of bioethanol; 
(s) “Gasohol”shal1 refer to gasoline blended with ethanol that meets the motor fuel 
specification standards developed by the Technical Committee on Petroleum 
Products and Additives, and promulgated by the Bureau of Product Standards of 
(t) “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 with Research Octane Number (RON) of 93 or 
(u) “Motor fuel”shal1 refer to all volatile and inflammable liquids produced, blended 
or compounded for the purpose of, or which are suitable or practicable for, 
(v) “National BiofieIs Board” shall refer to the Board created under Section 8 hereof; 
(w) “0xygenare”shail refer to substances, which, when added to gasoline, increase the 
amount of oxygen in that gasoline blend; 
(x) ‘Renewable Energy Sources”shal1 refer to energy sources that do not have an 
upper limit on the total quantity to be used, are renewable on a regular basis, and 
whose renewal rate is relatively rapid to consider availability over an indefinite 
(y) ‘Word Trade Organization, or hereafter referred as WT0”is the only global 
international organization established in Geneva, Switzerland on 1 January 1995, 
that deals with the rules of trade among nations to help producers, exporters and 
importers of goods and services conduct their businesses. 
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SEC. 4. Phasing Out of the Use of Harmful Gasoline Additives an4or 
Oqgenates. Within, six (6) months from the effectivity of this Act, the DOE shall 
gradually phase out the use of harmful gasoline additives andor oxygenates found to 
be detrimental to human health and the environment. Within three (3) years from 
the effectivity of this Act, such harmful gasoline additives and/or oxygenates shall 
have been totally phased out nationwide. 
SEC. 5. Mandatory Use of Bioethanol. 
a) In pursuance of the above policy, the DOE is hereby directed to immediately 
adopt a National Bioethanol Program that will implement the following: 
1) A mandated blending of gasoline with bioethanol fie]: Within two (2) 
years from the effectivity of this Act, a minimum of five percent (5Vo) 
bioethanol by volume shall be blended into all gasoline to be distributed, 
sold and used as motor fuel. Thereafter, the NBB shall periodically review 
and assess the impact of the use of bioethanol as well as the availability of 
local supply of bioethanol fuel and shall recommend, whenever 
appropriate, an increase in the mandated minimum blend by up to five 
percent (50/0) every two (2) years thereafter until such time when the NBB 
shall determine a higher limit: Provided, however, That the octane rating 
of the gasohol shall in no case be lower than eightyseven (87); and 
2) A mandated blending of diesel fuel with coco-biodiesd: Upon effectivity of 
the Implementing Rules and Regulations (IRR) of this Act, a minimum of 
one percent (1%) coco-biodiesel by volume shall be blended into all locally 
refined and imported diesel fuel distributed, sold and used as motor fuel: 
Provided, however, That the coco-biodiesel blend is ce'i-tified by the DOE 
as compliant to the Philippine National Standard for biodiesel as evidenced 
by a Certificate of Fuel Additive Registration (CFAR). The blend shall 
increase to a minimum of two percent (2%) coco-biodiesel by volume after 
four (4) years from the effectivity of this Act. 
b) Subsequently and every two (2) years thereafter, the National Biofuels Board 
(NBB) shall review and assess the impact of the use of bioethanol and coco- 
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: and 
c) Beginning 1 January 2015, only biofuel-compatible vehicles, engines, and parts 
shall be manufactured, imported, and sold in the Philippines, except for 
vehicles, engines, and parts that run on alternative fuels such as, but not 
limited to, compressed natural gas, LPG, electricity, and fuel cells. 
SEC. 6. Incentive Scheme. To encourage private entities to invest in the 
production and distribution of biofuels, the following incentive scheme is hereby 
provided 
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(a) Fiscal Incentives 
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2. 
All entities engaged in the production, storage, handling, and transport of 
biofuels and feedstock, including the blending of biofuel with petroleum 
and other fuels, as may be certified by the DOE shall, for a period of ten 
(10) years from the effectivity of this Act, be subject to a duty of one 
percent (lo/) in the importation of all types of inputs, machinery, 
equipment, and planting and breeding materials as duly certified by the 
DA. Provided, That the imported inputs, machinery, equipment, and 
planting and breeding materials shall be for the exclusive use of the 
importing entity: Provided, firthez That such duty rate shall not apply to 
imported biofuels and feedstock; and 
The sale of biofuels shall be VAT zero-rated, pursuant to Section 6, 
paragraph B, sub-paragraph 7 of 7 Republic Act No. 9337. 
(b) Non-Fiscal Incentives 
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Subject to the rules and regulations of the Board of Investments, all 
investments in the production and blending of biofuels and biofuel 
feedstocks within three (3) years after the effectivity of this Act shall be 
classified as pioneering and / or preferred areas of investments under its 
annual investment priorities plan (IPP) and shall enjoy the applicable fiscal 
and non-fiscal incentives provided for under the Omnibus Investment 
Code, as amended; and 
All water effluents such as, but not limited to, distillery slops from the 
production of biofuels used as liquid fertilizer, or for other agricultural 
purposes are considered reuse and are therefore not covered under Section 
13 of Republic Act No. 9275, the Philippine Clean Water Act: Provided, 
however, That such application shall be in accordance with the guidelines 
issued pursuant to R. A. 9275, subject to the monitoring and evaluation by 
the DENR and approval of the DA. 
Financial Assistance 
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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 biofuels and feedstocks 
such as, but not limited to, sugarcane, coconut palm, jatropha, cassava, sweet 
sorghum and corn. 
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SEC. 7. Powers and Functions ofthe Department ofEnerg. In addition to its 
existing powers and functions, the DOE is hereby mandated to take appropriate and 
necessary actions to implement the National Biofuels Program. 
In pursuance thereof, the DOE shall 
(a) Prepare the National Bioethanol Program consistent with the Philippine 
Energy Plan; 
(b) Establish, within six (6) months from the effectivity of this Act, the following: 
(1) Standards for the minimum alcohol content of anhydrous bioethanol fuel, 
denaturing, addition of color, blending and labeling of bioethanol fuel and 
gasohol for motive fuel; and 
(2) Guidelines for the transport and handling of bioethanol fuel; 
(c) Impose fines and penalties against persons or 1 entities found to have 
committed any of the prohibited acts under Section 11 (b) through (e) hereof; 
(d) Confiscate gasoline and gasohol sold in the market that are found to be not 
compliant with the specifications provided for under Sections 4 and 5 hereof 
and corresponding issuances of the DOE; 
(e) Monitor the production and importation of biofuels intended for motor fuel 
use through the Bureau of Internal Revenue (BIR) and the Bureau of Customs 
(BOC); and 
(0 Conduct an information and education campaign (IEC) to promote the use of 
gasohol and other biofuels. 
SEC. 8. The National BiofieIs Board and its Composition. The National 
Biofuels Board, hereafter referred to as the ‘Board,’’ is hereby created. It shall be 
composed of the Secretary of the DOE or his designated undersecretary as chairman 
and the secretaries or the designated undersecretaries or assistant secretaries of the 
DTI, the DOF, the DOTC, the DOST, the DA, the DENR, the Department of Labor 
and Employment (DOLE), the Administrator of the Sugar Regulatory Administration 
(SRA), the Administrator of the Philippine Coconut Authority (PCA), aqd one 
representative each from the feedstock producers for’ bioethanol and biodiesel, from 
an accredited advocacy for “clean” fules, from the Biodiesel Manufacturers 
Association of the Philippines (BMAP), from the Philippine Biodiesel Association 
(TBPA), from the major oil companies through their association (PIP), from 
independent oil companies through their assocaiton (IPPCA) and from the 
automotive manufacturers association (CAMPI), duly endorsed by their respective 
industry associations and appointed by the President of the Republic of the 
Philippines, as members. 
The chairman shall, within one (1) month from the effectivity of this Act, 
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The Board shall be assisted by a technical secretariat whose personnel shall be 
on detail from the DOE and/or other departmentdagencies comprising the Board. The 
Technical Secretariat shall be attached to the Office of the Secretary or the 
Undersecretary of the DOE. 
SEC. 9. Powers and Functions of the Board The Board shall have the 
following powers and functions: 
(a) Formulate, within six (6) months from tLe effectivity of this Act, the 
implementing rules and regulations (IRR) under Section 14 hereof for approval 
by the Congressional Biofuels Oversight Committee; 
(b) Approve the National Bioethanol Program and other biofuels programs as may 
be-proposed by the DOE; 
(c) Approve the DA Program to ensure the availability of feedstock for the 
production of,biofuels for motor fuel; 
(d) Monitor and review the implementation of the National Biofuels Program; 
(e) Monitor the supply and utilization of biofuels and recommend appropriate 
measures in cases of shortage of feedstock supply for approval by the Secretary 
of the DOE; 
(Q Evaluate plans for further expansion of the National Bioethanol Program and 
other biofuels programs; 
(8) Review and increase the minimum mandated blending rates of biofuels as it 
deems appropriate; 
(h) Recommend specific actions concerning the implementation of the National 
Biofuel Program to be executed by the DOE and other appropriate agencies of 
government; and 
(i) Monitor the development and implementation of a research and development 
(R&D) program supporting a sustainable improvement in biofueis production 
and utilization technology by the DOST through the Philippine Council for 
Industry and Energy Research Development (PCIERD); 
SEC. 10. Role of various 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 bioethanol fuel and gasohol and other biofuels; 
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(2) Review existing levels of tax rates 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 
Customs and the Bureau of Internal Revenue; and 
(5) Through the BIR and the BOC, impose fines and penalties to any person or 
juridical entity committing the prohibited act under Section ll(a) of this 
Act and coordinate with the DOE on the enforcement of specifications and 
standards for biofuels and biofuel-blended gasoline and diesel. 
(b) The DOST and the DA shall coordinate in identifylng 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; 
(2) Ensure increased productivity and sustainable supply of bioethanol 
feedstock. It shall institute a program, which would guarantee sufficient 
and reliable supply of feedstock is allocated for biofuel production; and 
(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 Atuhority, and other DA-attached agencies to develop and 
implement policients supporting the National Biofuels Program. 
(e) The DTI shall ensure the inclusion in its Motor Vehicle Development Program 
the development and promotion of the manufacture and / or investment in 
production of biofuel vehicles; and 
(f) The LGUs shall assist the DOE in monitoring the distribution, sale and use of 
bioethanol fuel and gasohol. 
SEC. 11. ProhibiredActs. The following acts shall be prohibited: 
(a) Diversion of bioefuels, whether locally produced or imported, to non-fuel 
uses; 
(b) Distribution, sale and use of straight gasoline or diesel without biofuel blended 
gasoline or diesel not complying with the requirement under Section 5 of this 
Act; 
(c) Noncompliance with the established standards and guidelines of the DOE; and 
(d) Inappropriate and fallacious labeling of biofuel and biofuel-blended gasoline 
and diesel. 
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SEC. 12. Penal Provisions. Any person or entity that commits any of the 
prohibited acts or any provision of this Act and its IRR shall be subject to: 
(a) Imprisonment of three (3) months to one (1) year or a fine of not less than Fifty 
thousand pesos (P50,OOO.OO) but not more than One hundred thousand pesos 
(PlOO,OOO.OO) per day of violation or both; 
(b) Confiscation of gasoline not complying with the specifications provided for under 
Sections 4 and 5 hereof and corresponding issuances of the DOE; and 
(c) Closure of distribution facilities for nonpayment of fines and blatant disregard of 
DOE orders. 
SEC. 13. Approp~ations. The fund necessary for the initial implementation of 
this Act shall be charged against the current appropriations of the DOE. Thereafter, 
the fund necessary to carry out the provisions of this Act shall be included in the 
annual General Appropriations Act. 
SEC. 14. Implementing Rules and Replations. The DOE, through the Board, 
in consultation with the Committees on Energy of the Senate 'and the House of 
Representatives, the stakeholders and other agencies concerned shall, within six 
months after the effectivity of this Act, promulgate the IRR of this Act: Provided, 
however, That the draft of the IRR shall be posted in the DOE Website for one (1) 
month prior to the approval by the Congressional Biofuels Oversight Committee: 
SEC. 15. Congressional Oversight Committee. Upon the effectivity of this Act, 
the Committee on Energy and the Committee on Agriculture and Food of the Senate 
and of the House of Representatives, shall jointly monitor the implementation of this 
Act. Likewise, the Oversight Committee shall be co-chaired by the Chairpersons of 
the Committee on Energy and the Committee on Agriculture and Food of both 
Houses of Congress. 
SEC. 16. Repealing Clause. - All laws, presidential decrees, executive orders, 
presidential proclamations, rules and regulations or parts thereof inconsistent with 
the provisions of this Act are hereby repealed or modified accordingly. 
SEC. 17. Separability Clause. IF any provision of this Act is declared 
unconstitutional, the same shall not affect the validity and effectivity of the other 
provisions hereof. 
SEC. 18. Effectiviq. This Act shall take effect upon its approval and 
publication in at least two newspapers of general circulation. 
Approved,