FOURTEENTH CONGRESS OF THE 
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REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
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S E N A T E  
S.NO. 
I189 
INTRODUCED BY THE HONORABLE MAR R O U S  
EXPLANATORY NOTE 
This bill seeks to amend Republic Act No. 8479, otherwise known as the 
“Downstream Oil Industry Deregulation Act” by increasing competition at the retail industry 
level and strengthening the power of the Department of Energy. 
One of the primary aims of this amendment is to eneourage greater competition at the 
retail level. To address this, the retail industry has to be freed from the influence of big oil 
companies which own most of the retail outlets all over the country. This will encourage 
investment in the retail level, which wiIl eventually lead to greater competition. With 
greater margin of Competition, it is hoped that pump prices will be brought to reasonable 
levels. 
The deregulation of the oil industry was brought about by the desire of the 
government to allow free market forces tb influence the prices of oil petroleum products. 
With the deregulation of the industry, it was the intention of the law for new players to 
come in, thus creating an environment of competition, which eventually will lead to fair, 
market-driven oil prices. 
There are currently 66 new players that invested in the oil industry. However, the 
industry suffers from incredulity in terms of fair competition. While new players are 
present, there is a growing concern whether there indeed exists free enterprise, or whether 
there is a cartel-like environment that allows present players to dictate in one way or the 
other the prices of oil products. 
Despite all the developments in the industry, the reality is that there is a need for 
more players. Notwithstanding Section 10 of the Downstream Oil Industry Deregulation Act 
of 1998 which provides for financial assistance for the establishment and operation of 
gasoline stations, the number of existing gasoline stations does not seem to suggest a friendly 
retail-level industry. Of the Php300 million allocated by law to be taken out of PAGCOR 
coffers for this purpose, only Php30 million was actually divested to the DOE. Out of this 
amount, only Php20 million has been used up for loans since the passage of the oil 
deregulation law in 1998. With big oil companies controlling the industry down the whole 
supply chain, it is understandable that operating a gasoline station does not present itself to 
be a promising enterprise. 
Hence, there is the necessity to introduce the proposed 
amendment. 


There is also a need to have transparency in the pricing of oil products. Deregulation 
allows industry players to determine their prices, but in an industry imbued with much 
public interest, the public has the right to know whether the prices are fairly determined. 
Thus, the Department of Energy’s powers are expanded so that it may effectively carry out its 
mandate to inform and protect the public from any illicit practices in the industry. 
In view of the foregoing, approval of this bill is earnestly requested. 


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FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
‘First Regular Session 
) 
S E N A T E  
S.W. ‘1189 
INTRODUCED BY THE HONORABLE MAR R O U S  
AN ACT 
AMENDING REPUBLIC ACT NO. 8479, OTHERWISE KNOWN AS THE 
“DOWNSTREAM OIL INDUSTRY DEREGULATION ACT.” 
Be it enacted by the Senate and House Of Representatives of the Philippines in 
Congress assem bled: 
SECTION 1. Section 4 of R.A. 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: 
“(a) Basel Convention shall refer to the international accord which governs the 
trade or movement of hazardous and toxic wastes across borders; 
“(b) Boardshall refer to the Energy Regulatory Board; 
“(c) BOIshall refer to the Board of Investments; 
“(D) COMPANY OPERATED STATION MEANS A SERVICE STATION 
OWNED OR CONTROLLED BY AN OIL COMPANY AND OPERATED 
WITH COMPANY PERSONNEL, A SUBSIDIARY COMPANY, OR A 
COMMISSIONED AGENT OR UNDER CONTRACT WITH- ANY PERSON, 
FIRM OR CORPORATION MANAGING ANY SUCH OUTLET ON A FEE 
ARRANGEMENT OR ON ANY FEE FOR SERVICE ARRANGEMENT WITH 
THE OIL COMPANY. 
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“(E) [(d)] Cmde Oil shall refer to oil in its natural state before the same has 
been refined or otherwise treated, but excluding water, bottoms, sediments 
and foreign substances; 
“(F) [(e)] Dealer shall refer to any person, whether natural or juridical, who is 
engaged I the marketing and direct selling of petroleum products to motorists, 
end users, and other consumers; 
“(G) [(a 
DOEshall refer to the Department of Energy; 
“(H) [(g)] DOJshall refer to the Department of Justice; 
“(I) [(h)] Downstream Oil Industry (DOI) or Industq shall refer to the 
business of importing; exporting, re-exporting, shipping, transporting, 
processing, refining, storing, distributing, marketing and/or selling crude oil, 
gasoline, diesel, liquefied petroleum gas (LPG), kerosene, and other petroleum 
products: 
“(J) [(i)] Hauler shall refer to any person, whether natural or juridical, engaged 
in the transport, distribution, hauling, and carriage of petroleum products, 
whether in bulk or packed form, from the oil companies and independent 
marketers to the petroleum dealers and other consumers: 
x, 
“(K) [(j)] LPG DistnlJutor shall refer to any person or entity, whether natural 
or juridical, engaged in exporting, refilling, transporting, marketing, and/or 
selling of LPG to end users and other consumers; 
“(L) [(k)] New Industry Participants shall refer to new participants in a 
particular sub-sector of the downstream oil industry with investments and 
initial business operations commencing after January 1,1994; 
“(M) OIL COMPANY SHALL REFER TO ANY PERSON, FIRM OR 
CORPORATION OR AFFILIATE THEREOF, ENGAGED IN THE REFINING 
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OR IMPORTATION OF PETROLEUM PRODUCTS TO BE SOLD TO 
DEALERS OR RETAILERS. 
“(N) [(l)] Person shall refer to any person, whether natural or juridical, who is 
engaged in any activity of the downstream oil industry; 
“(0) [(m)] Petruleurn shall refer to the naturally occurring mixture of 
compounds of hydrogen and carbon with a small proportion of impurities and 
shall include any mineral oil, petroleum gas, hydrogen gas, bitumen, asphalt, 
mineral wax, and all other similar or naturally-associated substances, with the 
exception of coal, peat, bituminous shale and/or other stratified mineral fuel 
deposits; 
“(P) [(n)] Petroleum Producers shall refer to products formed in the case of 
refining crude petroleum through distillation, cracking, solvent refining and 
chemical treatment coming out as primary stocks from the refinery such as, 
but not limited to: LPG, naphtha, gasolines, solvents, kerosenes, aviation fuels, 
diesel oils, fuel oils, waxes and petrolatums, asphalt, bitumens, coke and 
refinery sludges, or other such refinery petroleum fractions which have not 
undergone any process or treatment as to produce separate chemically-defined 
compounds in a pure or commercially pure state and to which various 
substances may have been added to render them suitable for particular uses: 
Provided, That the resultant product contains not less than fifty percent (50%) 
by weight of such petroleum products; 
“(Q [(o)] Singapore Import Pariry (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; 
. . .  
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“(R) [(p)] Singapore Posting shall refer to the price of petroleum products 
periodically posted by oil refineries in Singapore and reported by independent 
international publications: and 
“(S) [(q)] Wholesale Posred Price (WPP) shall refer to the ceiling price of 
petroleum products set by the Board based on its duly approved automatic 
pricing formula.” 
SEC 2. Section 10 of FL4 8479 is hereby amended to read as follows: 
“SEC 10. Promotion of Retail Competition. - (A) 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, FINANCING and managementhkills 
training, the active and direct participation of the private sector and cooperatives in 
the retailing of petroleum products through joint venturehpply agreements with 
new industry participants for the establishment and operation of gasoline stations: 
Provided, That the training herein shall include LPG retailing. 
xxxxxxxxx 
“Of this amount, two percent (2%) plus any additional funding shall be 
allocated for the two-fold program; one percent (lo/) plus any additional funding 
shall be set aside for administrative, maintenance, and other operating expenses: 
ninety-four percent (94%) shall be used exclusively for lending and financial 
assistance: the remaining three percent (3%) shall be utilized in accordance with the 
provisions of Section 26 of this Act: Provided, That the loans to be awarded herein 
shall be from short- to medium-term with low interest rates; Provided, firthe& That 
these loans shall be awarded to qualified persons who are able to comply with the 
conditions set forth in the next two (2) preceding paragraphs. 
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“(B) BEGINNING JANUARY 1,2008, NO OIL COMPANY MAY OPEN NEW 
COMPANY-OPERATED GASOLINE STATION, PROVIDED, THAT BEGINNING 
JANUARY 1, 2009, NO SUCH OIL COMPANY MAY OPERATE MORE THAN 
ONEHALF (1/2) THE NUMBER OF ITS GASOLINE STATIONS LAWFULLY 
OPERATED ON JANUARY 1, 2008; PROVIDED FURTHER, THAT BEGINNING 
JANUARY 1, 2010, NO SUCH OIL COMPANY MAY OPERATE ANY GASOLINE 
STATION PROVIDED, FINALLK THAT OIL COMPANIES MAY ENTER INTO 
NON-EXCLUSIVE FRANCHISE AGREEMENT WITH INDEPENDENT GASOLINE 
STATION DEALERS. 
“IT SHALL BE UNLAWFUL FOR OIL COMPANIES TO: 
“(1) SELL OR OFFER TO SELL PETROLEUM PRODUCTS TO AN 
INDEPENDENT GASOLINE STATION DEALER AT A PRICE THAT 
EXCEEDS THE CURRENT MARKET RETAIL PRICE OF PETROLEUM 
PRODUCT OF THE SAME GRADE BEING SOLD AT ANY COMPANY 
OPERATED STATION DURING THE PERIOD THAT OIL COMPANIES ARE 
ALLOWED TO OPERATE GASOLINE STATIONS; 
“(2) OVERCHARGE AN INDEPENDENT GASOLINE STATION DEALER 
FOR PETROLEUM PRODUCT; 
“(3) PERFORM SUCH OTHER ACTS WHERE THE EFFECT THEREOF 
AMOUNTS TO A CIRCUMVENTION OF THIS PROVISION OR OF OTHER 
ACTS PROHIBITED BY THIS LAW. 
“ANY PERSON. INCLUDING BUT NOT LIMITED TO THE CHIEF 
OPERATING OFFICER OR CHIEF EXECUTIVE OFFICER OF THE PARTNERSHIP, 
CORPORATION OR ANY ENTITY INVOLVED, WHO IS FOUND GUILTY OF ANY 
OF THE SAID PROHIBITED ACTS SHALL SUFFER THE PENALTY OF 
,. 
.
.
 
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IMPRISONMENT FOR FIVE (5) YEARS AND FINE RANGING FROM FIVE 
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HUNDRED THOUSAND PESOS (P500,OOO.OO) TO ONE MILLION PESOS 
(P1,000,000.00).” 
.. 
SEC. 3. Section 14 of RA 8479 is hereby amended to read as follows: 
“SECTION 14. Monitoring - (a) The DOE shall monitor and publish daily 
international crude oil prices, as well as follow the movements of domestic oil prices 
THROUGHOUT THE WHOLE SUPPLY CHAIN. IT SHALL DETERMINE THE 
FACTORS WHICH CAUSE THE INCREASE AND DECREASE IN PRICES OF 
PETROLEUM PRODUCTS AND ANALYZE THE PROPRIETY AND NECESSITY OF 
SUCH INCREASE OR DECREASE. THIS MAY BE THE BASIS, AMONG OTHERS, 
FOR THE PROPER ACTION AGAINST ANY PERSON OR ENTITY IN THE 
INDUSTRY WHICH VIOLATES THE PROVISIONS OF THIS ACT. TO 
IMPLEMENT THIS, ANY PERSON OR ENTITY ENGAGED IN THE INDUSTRY 
SHALL SUBMIT A VERIFIED MONTHLY REPORT TO THE DOE OF THEIR 
PRICES FOR THE PROCESSING, SALE, EXPORTATION, REFINING, STORAGE, 
TRANSPORT OR DELIVERY OF PETROLEUM PRODUCTS, DETAILING IN THE 
SAID REPORT ALL THE FACTORS, ASSUMPTIONS, AND FORhfULAE USED IN 
THE COMPUTATION OF THE PRICE. THE INFORMATION HEREUNDER 
OBTAINED SHALL BE CONSIDERED AS MATTER OF PUBLIC INTEREST AND 
SHALL BE MADE PUBLIC FROM TIME TO TIME. 
“(B) ON THE BASIS OF RELEVANT DATA AND INFORMATION 
OBTAINED, INCLUDING BUT NOT LIMITED TO THE AFORESAID REPORT, THE 
DOE SHALL ISSUE AND PUBLISH EACH MONTH AN OPINION WHICH STATES 
ITS VIEW WHETHER THE PRICES OF PETROLEUM PRODUCTS AT THE RETAIL 
LEVEL FAIRLY REFLECT THEIR COST OF PRODUCTION. 
.._ 
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“(C) [It] THE DOE shall [likewise] monitor the quality of petroleum products 
and stop the operation of businesses involved in the sale of petroleumproducts 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. 
“(D) [(b)] The DOE shall monitor the refining and manufacturing processes of 
local petroleum products to ensure that clean and safe (environment and worker- 
benign) technologies are applied. This shall also apply to the process of marketing 
local and imported petroleum products. 
“(E) [(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. To implement this, the importers, refiners, and marketers are hereby 
required to submit monthly to the DOE their actual importations, local purchases, 
sales andor consumption, and inventory on a per crude/product basis. 
“(F) [(d)] Any report from any person of an unreasonable rise in the prices of 
petroleum products shall be immediately acted upon. For this purpose, the creation of 
the DOE-DOJ 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: Provided, That nothing herein shall prevent the said task force from 
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investigating andor filing the necessary complaint with the proper court or agency 
motupropio. 
“Upon the effectivity of this Act, the Secretaries of Energy and Justice shall 
jointly appoint the members of a committee who shall be tasked with the drafting of 
the rules and guidelines to be adopted by the Task Force in the performance of its 
duty. These guidelines shall ensure the efficiency, promptness, and effectiveness in 
the handling of its cases. The Task Force shall be organized and its members 
appointed within one (1) month from the effectivity of this Act. 
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“(G) [(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 4. A new Section 15 is inserted to read as follows: 
“SECTION 15. VISITORIAL AND INSPECTION POWERS. - (A)., TO 
ENFORCE AND ENSURE COMPLIANCE WITH THE PROVISIONS OF THIS ACT 
OR DETERMINE ANY VIOLATION THEREOF, THE SECRETARY OF ENERGY OR 
HIS DULY AUTHORIZED REPRESENTATIVES SHALL REGULARLY CONDUCT 
AN UNANNOUNCED INSPECTION OF PREMISES AND EQUIPMENTS OWNED, 
LEASED OR OPERATED BY PERSONS OR ENTITITES ENGAGED IN THE 
INDUSTRY, AND SHALL HAVE THE AUTHORITY TO INSPECT THE BOOKS OF 
ACCOUNTS AND RECORDS OF ANY SUCH PERSON OR ENTITY AND TO 
INVESTIGATE ANY FACT, CONDITION OR MATTER WHICH MAY BE 
NECESSARY TO DETERMINE VIOLATIONS OR WHICH MAY AID THE 
ENFORCEMENT OF THIS ACT.” 
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SEC. 5. The current Section 15 is renumbered to become Section 16. A new Section'l7 
is hereby inserted to read as follows: 
SECTION 17. FOR THE DOE TO EFFECTIVELY CARRY OUT ITS 
MANDATE UNDER THIS ACT, THE CONGRESS SHALL INCREASE ITS BUDGET 
IN THE GENERAL ANNUAL APPROPRIATIONS TO BE ALLOCATED FOR THE 
MONITORING OF PRICES, QUALITY AND LEVEL OF SUPPLY OF PETROLEUM 
PRODUCTS, AND THE ENFORCEMENT OF THE SECRETARY'S VISITORIAL 
AND INSPECTION POWERS. 
SEC. 6. Sections 16 to 29 of the current law are hereby renumbered accordingly 
pursuant to the foregoing amendments. 
SEC. 7. Repealing Clause. - All laws, decrees and orders or parts thereof inconsistent 
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herewith, are deemed repealed or modified accordingly. 
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SEC. 8. SeparabiIity Clause. -The provisions of this Act are hereby declared to be 
separable and, in the event any of such provisions is declared unconstitutional, the other 
provisions which are not affected thereby shall remain in h l l  force and effect. 
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SEC. 9. Effectivity - This Act shall take effect fifteen (15) days following its 
publications in a newspaper of general circulation in the Philippines. 
Approved, 
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