FIFTEENTH CONGRESS OF THE REPUBLIC 
) 
~" 
' 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
., 7 , 
SENIl.T,El 
S. No. 
J. ti 49 
. \ 
Introduced by Senator Miriam Defensor Santiago 
\ \,.J 
EXPLANATORY NOTE 
The series of oil price hikes has led to public clamor for the review of Republic Act No. 
8479, otherwise known as the Downstream Oil Industry Deregulation Law of 1998. Upon the 
directive of President Gloria Macapagal Arroyo, the Department of Energy created an 
Independent Review Committee (IRC) consisting of professionals from the private sector who 
are respected in their fields, to review and assess whether the Oil Deregulation Law bas been 
effective and whether it has attained its goals under the prevailing economic circumstances and 
conditions in the country. 
Among the findings of the IRC, effective enforcement of the law is the key issue. The 
reported malpractices and illegal activities, such as substandard service stations and petroleum 
product smuggling demoralize legitimate investors. It is in this area where it is believed most of 
the problems arise. 
Deregulation of the oil industry does not necessarily mean absence of any form of 
government intervention. It is consistent with the government's mandate to supervise the 
industry and regulate those aspects where market forces may not operate satisfactorily and thus 
more active intervention may be justified to ensure a truly competitive market, under a regime of 
, 
fair prices, and adequate and continuous supply of enviroumentally clean and high-quality 
petroleum products. 
The IRe finds that jurisdiction over the oil industry is spread out to many government 
agencies under Executive Order No. 377 (Providing the Institutional Framework for the 
Administration of the Deregulated Downstream Oil· Industry), which makes coordination and 
enforcement very difficult, with each agency trying to protect one's turf. 
1 


Thus, enforcement of laws, rules and regulations is one of the critical issues in 
monitoring the downstream sector particularly in the retailing of LPG and Liquid Fuels. 
Removing certain powers from the DOE, under Republic Act No. 8479 has led to the 
proliferation of illegal, unsafe, unfair practices in the LPG and liquid fuel ("botebote") sectors of 
the oil industry, especially in the retailing sector. 
Most of the players favor reinstatement and even strengthening of the DOE's authority to 
register and issue certifications for qualified industry participants so that the 
DOE can effectively enforce compliance with rules and regulations on product quality, facility 
standards, and safety. 
This bill, therefore, seeks to provide definitive rules and regulations to restore the DOE's 
authority and police power to suspend operations and revoke licenses of violators and erring 
players in the 'industry in the context of a deregulated environment. 12 
I As a result of a public hearing and consultations during the 13th Congress, this is the DOE-proposed 
substitute bill that seeks to amend Republic Act No. 8479. 
2 This bill was originally filed during the Fourteenth Congress, First Regular session. 
2 


, 
FIFTEENTH .CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
) 
) 
) 
First Regular Session 
SENATE 
S.No. 1649 
"~r 
('I'f(Cl:. ,:.+ .:,. 
Introduced by Senator Miriam Defensor Santiago 
1 
AN ACT 
, 
SJf ,J,,;Uf ;"l,d/ ' 
L( 
2 
AMENDING REPUBLIC ACT NO. 8679, OTHERWISE KNOWN AS THE 
3 
"DOWNSTREAM OIL INDUSTRY DEREGULATION ACT OF 1998" 
4 
5 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
6 
Congress assembled: 
7 
SECTION 1. Section 5 of Republic Act No. 8479 is hereby amended to read as follows: 
8 
Section 5. Liberalization of the Industry. 
-
Any law to the contrary 
9 
notwithstanding, any person or entity may import or purchase any quantity of crude oil 
10 
and petroleum products from a foreign or domestic source, lease or own and operate 
11 
refineries and other downstream oil facilities and market such crude oil and petroleum 
12 
products either in a generic name or his or its own trade name, or use the same for his or 
13 
its own requirement: Provided, That any person [who shall] ENGAGED OR 
14 
INTENDING TO engage in any such activity shall give prior notice thereof to the DOE 
15 
for monitoring purposes AND SHALL FIRST SECURE A CERTIFICATE OF 
16 
COMPLIANCE (COC) OR, FOR LPG RELATED ACTIVITIES, A STANDARD 
17 
COMPLIANCE CERTIFICATE (SCC) FROM THE DOE: Provided, further, That [such 
18 
nqlice] THE ISSUANCE OF SAID COC/SCC shall NOT exempt such person or entity 
19 
from securing certificates of quality, health and safety and environmental clearance from 
20 
the proper gove~mental agencies: PrOVided, furthermore, That such person or entity 
21 
shall, for monitoring purposes, report to the DOE his or its every importation/exportation: 
22 
PrOVided, finally, That all oil importations shall be in accordance with the Basel 
23 
Convention. 
24 
SECTION 2. Section 14 of Republic Act No. 8479 is hereby amended to read as follows: 
25 
Section 14. MONITORING AND ENFORCEMENT MECHANISMS. -
1 


1 
(A) 
CERTIFICATE 
OF 
COMPLIANCE/STANDARD 
COMPLIANCE 
2 
CERTIFICATE - THE COC/SCC PROVIDED UNDER SECTION 5 J HEREOF SHALL 
3 
BE A MANDATORY REQUIREMENT FOR THE GRANT OR RENEWAL OF ANY 
4 
LOCAL GOVERNMENT LICENSE OR PERMIT (LE. 
BUSINESS/MAYOR'S 
5 
PERMIT) TO ENGAGE IN ANY ACTIVITY IN THE DOWNSTREAM OIL 
6 
INDUSTRY. NO BUSINESS PERMIT SHALL BE ISSUED OR RENEWED 
7 
WITHOUT FIRST SECURING COC/SCC FROM THE DOE. THE COC/SCC SHALL 
8 
INDICATE THAT THE PERSONENTITY APPLYING THEREFOR HAS COMPLIED 
9 
WITH. THE SUBMISSION OF ALL INFORMATION REQUIRED UNDER 
10 
PERTINENT DOE CIRCULARS AND GUIDELINES AND SHALL STATE THAT 
11 
THE FACILITIES OF SAID PERSON/ENTITY WAS SUBJECTED TO AND PASSED 
12 
THE INSPECTION, BACKGROUND INVESTIGATION AND EVALUATION OF 
13 
EQUIPMENT, PRODUCTS AND FACILITIES TO ENSURE COMPLIANCE WITH 
14 
STANDARDS ON QUALITY, 
HEALTH~ SAFETY AND ENVIRONMENTAL 
15 
PROTECTION. THE SCC FOR PERSON/ENTITY INVOLVED IN THE RETAILING 
16 
OF LPG SHALL INCLUDE THE SPECIFIC BRAND/S A RETAILER IS ALLOWED 
17 
TO SELL AS PROVIDED FOR IN THE CERTIFICATION SUBMITTED BY THE 
18 
BRAND OWNERS TO THE DOE. 
19 
THE DOE SHALL NOT ISSUE OR RENEW ANY COC/SCC IF, BASED ON 
20 
ITS RECORDS, THE APPLICANT IS SUBJECT OF A COMPLAINT OR CASE 
21 
FILED FOR NON-COMPLIANCE OF THE PROVISIONS OF THIS ACT AND 
22 
RULES AND REGULATIONS ISSUED BY THE DOE IN RELATION THERETO, 
23 
UNLESS 
SUCH 
COMPLAINT 
OR 
CASE 
HAS 
BEEN 
DISMISSED 
OF 
24 
COMPLETBL Y 
RESOLVED 
THROUGH 
THE 
PAYMENT 
OF 
THE 
25 
CORRESPONDING 
ADMINISTRATIVE 
FINES 
OR 
PENALTIES, 
AMONG 
26 
OTHERS, PROVIDED, FURTHER, THAT THE DOE SHALL REVOKE A COC/SCC 
27 
AND DISQUALIFY FOR ISSUANCE OF NEW COC/SCC ANY PERSON/ENTITY 
28 . 
FOUND TO HAVE COMMITTED THE SAME VIOLATION AT LEAST THREE (3) 
29 
TIMES WITHIN A PERIOD OF TWELVE (12) SUCCEEDING MONTHS, 
2 


1 
REGARDLESS 
OF 
THE 
PAYMENT 
OF 
THE 
CORRESPONDING 
2 
ADMINISTRATIVE FINE OR PENALTY FOR EACH VIOLATION. 
3 
THE COC SHALL BE VALID FOR FIVE (5) YEARS AND THE SCC SHALL 
4 
BE VALID FOR ONE (1) YEAR FROM THE DATE OF ISSUANCE THEREOF, 
5 
UNLESS SOONER REVOKED OR SUSPENDED. THE REVOCATION OR 
6 
SUSPENSION OF A COC/SCC SHALL BE A GROUND FOR THE REVOCATION 
7 
AND/OR SUSPENSION BY THE LGU CONCERNED OF THE PERMIT AND 
8 
OPERATION OF ERRING PERSON/ENTITY. 
9 
(B) MONITORING AND STANDARDS COMPLIANCE INSPECTION - THE 
10 
DOE, BY ITSELF 
OR IN PARTNERSHIP 
WITH 
OTHER CONCERNED 
11 
GOVERNMENT AGENCIES, SHALL CONDUCT REGULAR MONITORING AND 
12 
INSPECTION OF PERSON/ENTITY INVOLVED IN THE DOWNSTREAM OIL 
13 
ACTIVITIES TO ENSURE THAT CLEAN, ENVIRONMENTALLY-SAFE AND 
14 
WORKER-BENIGN 
TECHNOLOGIES 
ARE 
APPLIED 
AND 
TO 
ENSURE 
15 
CONFORMITY WITH QUALITY AND SAFETY STANDARDS AND OTHER 
16 
MANDATORY REQUIREMENTS OF THE LAW. THE DOE SHALL NOT ISSUE 
17 
COC/SCC UNLESS IT IS SHOWN UPON PROPER CONDUCT OF STANDARD 
, 
18 
COMPLIANCE INSPECTION, THAT THE PERSON/ENTITY ENGAGED IN THE 
19 
DOWNSTREAM OIL ACTIVITIES HAS COMPLIED WITH THE PROVISIONS OF 
20 
THIS ACT, THE PNS ON PETROLEUM PRODUCTS AND FACILITIES AND SUCH 
21 
OTHER RULES AND REGULATIONS AS MAY BE PRESCRIBED BY THE DOE. 
22 
SPECIFIC TO THE LPG SECTOR, THE DOE SHALL CONFISCATE 
23 
CYLINDERS FOUND TO BE IN VIOLATION OF RULES AND REGULATIONS ON 
24 
SAFETY, MEASUREMENT OR VOLUME STANDARDS, MARKINGS AND 
25 
RELATED MATTERS (I.E. UNDERFILLED, UNBRANDED, POSSESSION OF 
26 
TAMPERED, ALTERED OR MODIFIED LPG CYLINDERS, AND THE LIKE) AND 
27 
SHALL FILE NECESSARY ADMINISTRATIVE AND/OR CRIMINAL CHARGES IN 
28 
COOPERATION WITH CONCERNED GOVERNMENT AGENCIES. THE DOE 
29 
SHALL 
FORMULATE 
RULES, 
IN 
CONSULTATION 
WITH 
INDUSTRY 
3 


1 
PARTICIPANTS, FOR THE DISPOSITION OF CONFISCATED, SEIZED AND 
2 
IMPOUNDED LPG CYLINDERS. 
3 
THE DOE SHALL REQUIRE PERSON/ENTITY ENGAGED IN THE 
4 
DOWNSTREAM OIL ACTIVITIES TO REGULARLY SUBMIT INFORMATION 
5 
SUCH AS, 
BUT NOT LIMITED TO, 
NATURE OF BUSINESS, TRADE 
6 
NAME/BRAND NAME OWNERS, LIST AND ADDRESS OR LOCATION OF 
, 
7 
FACILITIES AND EQUIPMENT AND SUCH OTHER RELEVANT INFORMATION 
8 
AS MAY BE DETERMINED BY THE DOE. THE DOE SHALL ESTABLISH A 
9 
CENTRAL DATABASE WITH ONE (1) YEAR FROM EFFECTIVITY OF THIS ACT. 
10 
THE DOE SHALL MAINTAIN THE DATABASE AND UPDATE THE SAME ON A 
11 
QUARTERLY BASIS. THE DATABASE SHALL BE MADE AVAILABLE TO THE 
12 
PUBLIC UPON REQUEST, SUBJECT TO THE LIMITATIONS PROVIDED IN 
13 
SECTION 15 (G) OF THIS ACT AND THE APPROVAL OF THE DOE. 
14 
(C) REPORTS AND DISCLOSURE TO DOE - THE DOE SHALL HAVE THE 
15 
AUTHORITY TO REQUIRE ANY PERSON/ENTITY ENGAGED IN THE 
16 
DOWNSTREAM OIL ACTIVITIES TO SUBMIT WRITTEN, ELECTRONIC OR 
17 
OTHER FORM OF REPORTS OR DISCLOSURES, AS MAY DEEM REASONABLE 
18 
AND NECESSARY TO EFFECTIVELY PERFORM THEIR FUNCTIONS UNDER 
19 
THIS ACT. ANY PERSON/ENTITY WHO FAILS TO SUBMIT ANY SUCH REPORT 
20 
OR DISCLOSURE WITHIN THE PERIOD AND IN THE MANNER PRESCRIBED 
21 
BY THE DOE SHALL BE PENALIZED UNDER THIS ACT. 
22 
(D) MONITORING OF DOWNSTREAM OIL INDUSTRY ACTIVITY-
23 
(1)( a) 1 The DOE shall monitor and publish daily international crude oil prices, as 
24 
well as follow the movements of domestic oil prices. FOR THIS PURPOSE, THE 
25 
GENERAL APPROPRIATIONS ACT (GAA) SHALL PROVIDE FOR THE DOE 
26 
SUCH FUNDS, BUDGET OR ALLOCATION FOR THE DOE'S SUBSCRIPTION TO 
27 
INTERNATIONAL OIL PRICE WIRE SERVICES. It shall likewise monitor the quality 
28 
of petroleum products and stop the operation of businesses involved in the sale of 
29 
petroleum products which do not comply with the national standards of quality that are 
4 


1 
aligned with the international standards/protocols of quality. The Bureau of Product 
2 
Standards of the DTI, together with the Department of Environment and Natural 
3 
Resources (DENR), the DOE, the Department of Science and Technology (DOST), 
4 
representatives of the fuel and automotive industries and the consumers, shall set the 
5 
specifications for all types of fuel and fuel-related products to improve fuel composition 
6 
for increased efficiency and reduced emissions. The BPS shall also specify the allowable 
7 
content of additives in all types of fuels and fuel-related products. 
8 
(11) [(b)] The DOE shall monitor the refining and manufacturing processes of 
9 
local petroleum products to ensure that clean and safe (environment and worker-benign) 
10 
technologies axe applied. This shall also apply to the process of marketing local and 
11 
imported petroleum products. FOR THIS PURPOSE, THE GAA SHALL FURTHER 
12 
PROVIDE FOR ADDITIONAL BUDGETARY SUPPORT TO THE DOE FOR THE 
13 
ACQUISITION AND MAINTENANCE OF THE APPROPRIATE MOBILE TESTING 
14 
FACILITIES AND EQUIPMENT. 
15 
(III) [(c)] The DOE shall maintain a periodic schedule of present and future total 
16 
industry inventory of petroleum products for the purpose of determining the level of 
17 
supply. To implement this, the importers, refiners, and marketers are hereby required to 
18 
submit monthly to the DOE their actual importations, local purchases, sales and/or 
19 
consumption, and inventory on a per crude/product basis. 
20 
(rV) [(d)] Any report from any person of an unreasonable rise in the prices of 
21 
petroleum products shall be immediately acted upon. For this purpose, the creation of the 
22 
DOE-DOJ Task Force is hereby mandated to determine within thirty (30) days the merits 
23 
of the report and initiate the necessary action warranted under the circumstance: 
24 
Provided, That nothing herein shall prevent the said task force from investigating and/or 
25 
filing the necessary complaint with the proper court or agency motu propio. 
26 
Upon the effectivity ofthis Act, the Secretaries of Energy and Justice shall jointly 
27 
appoint the members of a committee who shall be tasked with the drafting of the rules 
28 
and guidelines to be adopted by the Task Force in the performance of its duty. These 
29 
guidelines shall ensure the efficiency, promptness, and effectiveness in the handling of its 
5 


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29 
cases. The Task Force shall be organized and its members appointed within one (l) 
mouth from the effectivity ofthis Act. 
(V) [(e)]ln 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. 
SECTION 3. Section 15 of Republic Act No. 8479 is hereby amended to read as 
follows: 
Section 15. Additional Powers of the DOE Secretary. - In connection with the 
enforcement of this Act, the DOE Secretary shall have the following powers: 
(a) To gather and compile appropriate information concerning, and to investigate 
from time to time the organization, business, conduct, practices, and management of any 
person or entity in the Industry; 
(b) To require, by general or special orders, persons or entities engaged in a 
particular activity of the industry: (i) to file an annual or special report, or both in such 
form as the Seclietary may prescribe, or (ii) to answer specific questions in writing, 
furnishing to the Secretary such information as he may require as to the organization, 
business, conduct, practices, management, and relation to other corporations, 
partnerships, and individuals of the respective persons or entities filing such reports or 
answer. Such reports and or answer shall be filed with the Secretary under oath and 
within such reasonable time as the Secretary may prescribe;. 
, (c) Upon the direction of the President or either House of Congress, to investigate 
and report the facts relating to any alleged violation of this Act by any person or 
corporation; 
(d) Upon the application of the Secretary of Justice, to investigate and make 
recommendations for the readjustment of the 'business of any person or entity alleged to 
be violating this Act in order that such person or entity may thereafter maintain his or its 
organization, management, and conduct of business in accordance with law; 
6 


1 
(e) [To recommend to the proper government agency the suspension or revocation 
2 
and termination of the business permit of an offender;] FOR ANY VIOLATION OR 
3 
NON-COMPLIANCE WITH THIS ACT OR SUCH RULES AND REGULATIONS 
4 
ISSUED BY THE DOE IN RELATION THERETO, TO IMPOSE AND COLLECT 
5 
ADMINISTRATIVE FINES AND PENALTIES WHICH SHALL RANGE FROM A 
6 
MINIMUM OF TEN THOUSAND PESOS (PHP 10,000.00) TO A MAXIMUM OF 
7 
FIVE HUNDRED THOUSAND PESOS (PHP 500,000.00) FOR EACH VIOLATION 
8 
OR NON-COMPLIANCE, REVOKE/SUSPEND 
A 
COC/SCC 
AND 
CAUSE 
9 
CORRESPONDING ACTION BY LGU ON THE SUSPENSION OR REVOCATION 
10 
AND TERMINATION OF THE BUSINESS PERMIT OR LICENSE OF AN 
11 
OFFENDER, PROVIDED THAT, THE ADMINISTRATIVE FINE OR PENALTY 
, 
12 
THAT MAY BE IMPOSED BY THE DOE SHALL BE WITHOUT PREJUDICE TO 
13 
THE FILING OF ANY CRIMINAL ACTION, IF WARRANTED UNDER THE 
14 
CIRCUMSTANCES; 
15 
(f) Concomitant with the policy of ensuring a continuous, adequate and economic 
16 
supply of energy to exercise his powers and functions provided under Section 5 (c) of 
17 
Republic Act No. 7638; 
18 
(g) To make public from time to time such portions of the information obtained 
19 
by him hereunder as are in the public interest; and to make annual and special reports to 
20 
Congress and to submit therewith recommendations for additional legislation; and to 
21 
provide for the publication of his reports and decisions in such form and manner as may 
22 
be best adapted for public information and use: Provided, That the Secretary shall have 
23 
any authority to make public any trade secret or any commercial or financial information 
24 
which is obtained from any person or entity which is privileged or confidential, except 
25 
that the Secretary may disclose such information to officers and employees of appropriate 
26 
law enforcement agencies or to any officer or employee of any such law enforcement 
27 
agency upon the prior certification by an officer of any such law enforcement agency that 
28 
such information will be maintained in confidence and will be used only for official law 
29 
enforcement purposes; [and] 
7 


I 
.' (h) Whenever a final order has been entered against any defendant in any suit 
2 
brought by the government to prevent and restrain any violation of the antitrust 
3 
provisions of this Act to make investigation, upon his initiative, of the manner in which 
4 
the decree has been or is being carried out, and upon the application of the Secretary of 
5 
Justice, it shall be his duty to make such investigation. He shall transmit to the Secretary 
6 
of Justice a report embodying his findings and recommendations as a result of any such 
7 
investigation, and the report shall be made public at the discretion of the Secretary; AND 
8 
(I) PERFORM SUCH OTHER POWERS AND FUNCTIONS AS MAYBE 
9 
NECESSARY IN FURTHERANCE OF THE OBJECTIVES OF THIS ACT. 
10 
II 
SECTION 4. Separability Clause. - If any provision of this Act is held invalid or 
12 
unconstitutional, the remainder of the Act or the provision not otherwise affected shall 
13 
remain valid and sUbsisting. 
14 
IS 
SECTION 5. Effectivity Clause. - This Act shall take effect fifteen (IS) days after 
16 
its publication in at least two (2) newspapers of general circulation. 
17 
18 
Approved. 
8