13“’ CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
1 
Second Regular Session 
1 
Introduced by Senator Ralph G. Recto 
EXPLANATORY NOTE 
This bill seeks to promote the use of indigenous alternative fuels to reduce the 
country’s dependence on imported oil and to promote it as an alternative to the high-cost 
crude oil thereby alleviating the worsening energy crisis plaguing our country. 
This legislation shall be known as the “National Biofuels Development Act of 2005” 
in consonance with the State policy to pursue energy independence consistent with the 
country’s sustainable economic growth. Also, this measure is in line with the Clean Air Act of 
1999, which seeks to formulate a holistic national program of air pollution management. 
In pursuance of the above-stated policy, the Department of Energy (DOE) is directed 
to immediately adopt a National Biofuels Development Program which aims to encourage the 
use of domestically produced fuel ethanol to promote cleaner air and to increase rural 
employment and income. 
The DOE is further empowered to implement a mandated 
blending of gasoline with bioethanol as motor fuel and spearhead the continuing phase out of 
harmful gasoline additives and/or oxygenates found detrimental to human health and the 
environment. 
Government statistics showed that the mandatory five percent (5%) bioethanol blend 
within two (2) years could result in gasoline displacement of 236 million’liters equivalent to 
$129 million in foreign exchange savings per year. 
This measure provides for fiscal and non-fiscal incentives in order to entice private 
entities to invest in the production and distribution of biofuels. These incentives include: 
reduction of tariff duty on the importation of equipment, machineries and inputs to only one 
percent (1%) for a period of ten (IO) years; VAT zero-rated sale of biofuels as provided for in 
R.A. No. 3337; and high priority financial services to be extended by Government Financial 
Institutions. 
The consumers are expected to benefit largely from this bill because the use of 
alternative indigenous fuels could bring a very substantial lowering of the cost of gasoline, 
which is a major input in a majority of businesses and industries. 
With the expected benefits this measure would bring to 
immediate 
passage of this bill is earnestly sought. 
,,/ /” 


13TH 
CONGRESS OF THE 
1 
REPUBLIC OF THE PHILIPPINES 
) 
Second Replur Session 
) 
S .  Bill No. 
2159 
Introduced by Senator Ralph G. Recto 
AN ACT 
MANDATING THE USE OF BIOETHANOL 
OR ETHYL ALCOHOL AS 
TRANSPORT FUEL AND SUPPORTING THE DEVELOPMENT AND USE OF 
OTHER BIOFUELS, ESTABLISHING FOR THE PURPOSE THE NATIONAL 
BIOFUELS DEVELOPMENT PROGRAM, APPROPRIATING FUNDS THEREFOR, 
AND FOR OTHER PURPOSES 
Be it enucted by the Senute und House of Representatives of the Philippines in Congress ussembled: 
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SECTION 1. Short Title. - This Act shall be known as the ?National Biofuels 
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Development Act of 2005”. 
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SEC. 2. Declurution ofPolicy. - It is hereby declared the policy of the State to pursue a 
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policy towards energy independence consistent with the country’s sustainable economic 
growth that would expand opportunities for livelihood, with due regard to the protection of 
public health and the environment by mandating the use of bioethanol as motor fuel and 
supporting the development and use of other biofuels as a measure to: 
(a) mitigate toxic and greenhouse gas (GHG) emissions; 
(b) provide indigenous renewable energy sources to reduce dependence on imported 
fuel oil; and 
(c) increase rural employment and income. 
SEC. 3. Definition of Terms. - As used in this Act, the following terms shall have the 
following meanings: 
(a) “AFTA” shall refer to the ASFAN 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) “Bioethanol” shall refer to ethanol (C,H,OH) produced from biomass. 


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(c) “Bioethanol Fuel” shall refer to hydrous or anhydrous bioethanol suitably denatured 
for use as motor fuel. 
(d) “Biofuels” shall refer to a liquid fuel produced from biomass and primarily used to 
fuel vehicles, but can also fuel engines or fuel cells for electricity generation and may include 
bioethanol and biodiesel, among others. 
(e) “Biomass” shall refer to any organic matter, particularly cellulosid or ligno-cellulosic 
matter, which is available on a renewable or recurring basis, including trees, crops and 
associated tesidues, plant fiber, poultry litter and other animal wastes, industrial wastes, and 
the biodegradable component of municipal solid waste. 
(0 “DA” shall refer to the Department of Agriculture created under Executive Order 
No. 116, as amended. 
(g) “DOE shall refer to the Department of Energy created under Republic Act No. 
7638, as amended. 
(h) “DENR” shall refer to the Department of Environment and Natural Resources 
created under Executive Order No. 192, as amended. 
(i) “DOF” shall refer to the Department of Finance created under Executive Order No. 
127. 
(j) “.DOST” shall refer to the Department of Science and Technology created under 
Executive Order No. 192. 
(k) “DOTC” shall refer to the Department of Transportation and Communications 
created under Executive Order No. 125-A, as amended. 
(I) “Feedstock” shall refer to organic sources such as molasses, sugarcane, cassava or 
other biomass used in the production of bioethanol. 
(m)“Gasohol” shall 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 the Department of Trade 
and Industry (DTI). 


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(n) “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 sparl- 
ignition engines with Research Octane Number (RON) of 93 or above. 
(0) “Motor fuel” shall refer to all volatile and inflammable liquids produced, blended or 
compounded for the purpose of, or which are suitable or practicable for, operating motor 
vehicles. 
(p) “NBDB” or “Board” shall refer to the National Biofuels Development Board created 
under Section 8 hereof. 
(q) “Oxygenate” shall refer to substances, which, when added to gasoline, increase the 
amount of oxygen in that gasoline blend. 
(r) “Renewable Energy Sources” shall refer to energy sources that do not have an upper 
limit on the total quantity to be used. Such resources are renewable on a regular basis, and 
whose renewal rate is relatively rapid to consider availability over an indefinite period of time. 
(s) “WTO” shall refer to the World Trade Organization which is the only global 
international organization, created by the Uruguay Round of Negotiations from 1986 to 1994 
and established in Geneva, Switzerland on January 1, 1995, dealing with the rules of trade 
among nations to help producers, exporters and importers of goods and services conduct their 
businesses, and which operates within the framework of the two agreements, negotiated and 
signed by the bulk of the world’s trading nations and ratified by their respective 
congresses/parliaments. 
SEC, 4. Phasing Out of the Use of Hurmfil Gasoline Additives and/or Oxygenates. - 
Within five (5) months from the effectivity of this Act, the DOE shall gradually phase out the 
use of harmful gasoline additives and/or oxygenates found to be detrimental to human health 
and the environment such that within two and a half (2 Yz) years from the effectivity of this 
Act, such harmful gasoline additives andlor oxygenates shall have been totally phased out 
nationwide. 
SEC. 5. Mandutovy Use of Bioethanol. - In pursuance of the above policy, the DOE is 
hereby directed to immediately adopt a National Biofuels Development Program that will 
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implement a mandated blending of gasoline with bioethanol as motor fuel. Within two years 


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from the effectivity of this Act, a minimum of seven and a half percent (7 '/z %) bioethanol by 
volume shall be blended into all gasoline to be distributed, sold and used as motor fuel. 
Thereafter, the NBDB 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, as 
appropriate, an increase in the mandated minimum blend by up to five percent (5%) evety 
two years thereafter until such time when the NBDB shall determine a higher limit: Provided 
however, That the octane rating of the gasohol shall in no case be lower than ninety (90). 
SEC. 6. Incentive Scheme. - To encourage private entities to invest in the production 
and distribution of biofuels, the following incentive scheme is hereby provided: 
(a) Fiscal Incentives - 
(1) 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 (1%) 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, machinety, equipment, and planting and breeding materials shall be for 
the exclusive use of the importing entity: Pwvided, firthey, That such duty rate shall not 
apply to imported biofuels and feedstock; and 
(2) The sale of biofuels shall be VAT zero-rated, pursuant to Section 6, paragraph B, 
sub-paragraph 7 of Republic Act No. 9337. 
(b) Non-Fiscal Incentives - 
(1) Subject to the rules and regulations of the Board of Investments, all investments in 
the production and blending of biofuels and biofuel feedstocks as provided under the 
Philippine- Energy Program shall enjoy the applicable fiscal and non-fiscal incentives provided 
for under the Omnibus Investment Code, as amended; and 
(2) 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 ace 
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 


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guidelines issued pursuant to Republic Act No. 9275, subject to the monitoring and 
evaluation by the DENR and approval of the DA. 
(c) Financial Assistance - 
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. 
SEC. 7. Powevs and Functions of the Department of Energy. - In addition to its existing 
powers and functions, the DOE is hereby mandated to take appropriate and necessary actions 
to implement the National Biofuels Development Program. In pursuance thereof, the DOE 
shall: 
(a) Prepare the National Biofuels Development Program consistent with the Philippine 
Energy Plan; 
(b) Within five months from the effectivity of this Act: 
(1) establish 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) establish the guidelines for the transport and handling of bioethanol fuel; 
(c) Impose fines and penalties against persons or 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 bioethanol and other biofuels intended 
for motor fuel use through the Bureau of Internal Revenue (BIR) and the Bureau of Customs 
(BOC); 
(f) Propose a national program for biofuels other than bioerhanol; and 


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(g) Conduct an information and education campaign (IEC) to promote the use of 
gasohol and other biofuels. 
SEC. 8. Cveation of the NBDB. -The NBDB 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), and one representative each from the feedstock 
producers for bioethanol, distillery industry, petroleum 
industry and automotive 
manufacturers, duly endorsed by their respective industry associations and appointed by the 
President of the Republic of the Philippines, as members. 
The DOE secretary or his designated undersecretary, in his capacity as chairperson, 
shall, within one month from the effectivity of this Act, convene the NBDB. 
The Board shall be assisted by a technical secretariat whose personnel shall be on detail 
The Technical 
from the DOE and/or other departments/agencies comprising the Board. 
Secretariat shall be attached to the Office of the Secretaty or the Undersecretary of the DOE. 
SEC. 9. Powers and Functions of the NDBB. - The NBDB shall have the following 
powers and functions: 
(a) Formulate, within six months from the effectivity of this Act, the implementing 
rules and regulations (IRR) under Section 14 hereof for approval by the Congressional 
Biofuels Development Oversight Committee; 
(b) Approve the National Biofuels Development 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 Development 
Program and other biofuels programs; 


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(e) Monitor the supply and utilization of bioethanol fuel and gasohol and recommend 
appropriate measures in cases of shortage of feedstock supply for approval by the Secretary of 
the DOE; 
(0 Monitor the development and implementation of a research and development 
(R&D) program supporting a sustainable improvement in bioethanol fuel and other biofuels 
production and utilization technology by the DOST through the Philippine Council for 
Industry and Energy Research Development (PCIERD); 
(g) Evaluate plans for further expansion of the National Biofuels Development Program 
and other biofuels programs; 
(11) Review and increase the minimum mandated bioethanol blend for gasoline as it 
deems appropriate; and 
(i) Recommend specific actions concerning the implementation of the National 
Biofuels Development Program and other biofuels programs to be executed by the DOE and 
other appropriate agencies of government. 
SEC. 10. Role of GovernmentAgencies. - To ensure the effective implementation of this 
program, concerned agencies shall perform the following functions: 
(a) The DOF shall: 
(1) in coordination with the Tariff Commission, create and classify a tariff line for 
bioethanol fuel and gasohol and other biofuels; 
(2) review provisions of the Tax Code covering transactions related to the sale/putchase 
of denatured and undenatured bioethanol intended for motor fuel use. In addition, review 
existing levels of specific tax on petroleum products, and re-align to consider the gasohol 
blend vis-&vis other petroleum products; 
(3) identify suitable incentives to encourage investments in domestic production of 
bioethanol fuel and other biofuels and cause the petroleum companies operating in the 
Philippines to blend and retail ethanol-gasoline blended fuel and other biofuels-blended 
gasoline; and 


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(4) through the BIR and the BOC, impose fines and penalties to any person or juridical 
entity committing the prohibited act under Section 1 l(a) of this Act and coordinate with the 
DOE on enforcement of bioethanol fuel and gasohol specifications and standards. 
(b) The DOST' and the DA shall coordinate in identifying and developing viable 
feedstock for the production of bioethanol fuel such as cassava, sweet sorghum, sugarcane, 
sugar syrups, molasses and cellulose materials, and viable feedstock for the production of other 
biofuels. 
(c) The DOST through the PCIERD shall develop and implement a R&D program 
supporting a sustainable improvement in bioethanol fuel and other biofuels 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 five months from the effectivity of this Act, develop a national program for 
the production of crops for use as feedstock including but not limited to sugarcane, cassava, 
sweet sorghum and corn to ensure availability of feedstock for production of bioethanol for 
motor fuel; 
(2) within five months from the effectivity of this Act, develop a national program for 
the production of crops for use as feedstock including, but not limited to, coconut and 
jatropha to ensure availability of feedstock for production of biofuels for motor fuel; 
(3) ensure increased productivity and sustainable supply of bioethanol feedstock. It 
shall institute a program, which would guarantee sufficient and reliable supply of feedstock for 
fuel ethanol production. 
Towards this end, the Secretary of the DA'shall instruct the 
Administrator of the SRA and other DA-attached agencies within their authority to develop 
and implement policies supporting the National Biofuels Development Program; and 
(4) publish information on available and suitable areas for cultivation and production of 
such crops. 
(e) The LGUs shall assist the DOE in monitoring the distribution, sale and use of 
bioethanol fuel and gasohol. 
SEC. 11. ProhibitedActs. -The following acts shall be prohibited: 


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(a) Diversion of bioethanol, whether locally produced or imported, to non-fuel uses; 
(b) Distribution, sale and use of gasoline without bioethanol blend and gasohol with 
bioethanol concentration level not complying with the requirement under Section 5 of this 
Act; 
(c) Distribution, sale and use of automotive fuel containing harmful additives andlor 
oxygenates at such concentration exceeding the limits to be determined by the NBB; 
(d) Noncompliance with the established standards and guidelines of the DOE; and 
(e) Inappropriate and fallacious labeling of bioethanol and gasohol products. 
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 the following sanctions: 
(a) Fine of not less than Fifty thousand pesos (P50,OOO.OO) but not more than One 
hundred thousand pesos (PlO0,OOO.OO) per day of violation; 
(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. Appropriations. - 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 Regulations. - The DOE, through the NBDB, in 
consultation with the Committees on Energy of the Senate and the House of Representatives, 
the stakeholders and other agencies concerned, shall, within five months after the effectivity of 
this Act, promulgate the IRR of this Act: Provided, That the draft of the IRR shall be posted 
in the DOE Website for one month prior to the approval by the Congressional Biofuels 
Development Oversight Committee: Provided, jother, That the approved IRR shall be 
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published in at least two newspapers of general circulation. 
SEC. 15. Congressional Oversight Committee on Biofiels Development. - In order to 
monitor the implementation of this Act, a Congressional Oversight Committee on Biofuels 


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Development is hereby created to be composed of seven (7) members from the Senate and 
seven (7) members from the House of Representatives, to be designated respectively by the 
President of the Senate and the Speaker of the House of Representatives, who shall endeavor 
to have the various sectors and regions of the country represented. 
The Chairmen of the Committee on Energy of the Senate and the House of 
Representatives shall be co-chairmen of the Oversight Committee. 
SEC. 16. Repealing Clam. - 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. Sepurubility Cluure. - 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. Effectivity. - This Act shall take effect upon its approval and publication in at 
least two newspapers of general circulation. 
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Approved,