FIFTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
) 
'11 
APR -7 P 1 :25 
SENATE 
S. N~. 2788 
Introduced by Senator JUAN MIGUEL F. ZUBIRI 
EXPLANATORY NOTE 
. 
The incident which started in July of 2010 in the area of Barangay Bangkal, 
~kati City became an eye-opener for the public, particularly the residents of Metro 
Manila and nearby provinces, on our vulnerability to a potential disaster and 
conflagration. 
This incident was the oil pipeline leak near the West Tower 
Condominium in Barangay Bangkal in Makati City. 
The West Tower Condominium residents were the first to report the leak to the 
Bureau of Fire Protection and the Philippine National Police Makati when leaks at the 
Basement 2 of the building and water mixed with suspected fuel were noticed. The 
Bureau of Fire Protection in Makati City in turn reported the incident to the First 
Philippine Industrial Corporation, the owner and operator of an oil pipeline which 
traverses that area of Makati City. 
Several tests were conducted by FPIC contracted entities and by the University 
of the Philippines-National Institute for Geological Sciences' geologists to pinpoint the 
exact source of the leaks. It was identified by the UP-NIGS geologists that the FPIC oil 
pipeline near the ramp of the Magallanes flyover in Barangay Bangkal in Makati was the 
source of the fuel leaks. 
The FPIC oil pipeline was constructed in 1967 and became operational in 1969. 
The white oil pipeline which transports diesel, gaSOline and jet fuel is about 117 
kilometers long from Batangas to the Pandacan Oil Depot in Manila. 
The efficiency in the transport of oil and gas and the economic benefits derived 
through the use of a pipeline system in the oil and gas industry can not be ignored. 
Such service is crucial in our progress and development. 
However, we have seen the damaged and sufferings it caused the residents of 
Barangay Bangkal in Makati and the displacement of the West Tower Condominium 
residents in their dwellings. 
They were also exposed to toxic and hazardous 
substances brought about by the fuel leaks which posed risks to their health and safety. 
Fortunately, the leak was contained in specific areas and did not result to explosion or 
fire or even a conflagration, which is a great possibility for such situation. 
Such 
horrifying scenario could have been avoided of prevented if proper regulation and 
monitoring of the oil pipeline had been done and safety standards were in place. 
Unfortunately, despite the oil pipeline's potential as a source of disaster and 
serious threat to the safety and health of our citizens in case of fuel leaks, such as what 
happened in Barangay Bangkal, no particular agency of government is directly tasked 
and mandated to regulate this particular industry. 
To avoid this similar situation happening in the future and to properly monitor and 
regulate the operations of oil and gas pipelines in the country, and assure the health 


and safety of our citizens, a regulatory framework for this specific industry is necessary. 
This bill entitled: '~n Act Providing For The Regulation Of Oil And Gas Pipelines, 
Creating The National Pipeline Board For The Purpose, Appropriating Funds Therefor, 
And For Other Purposes'; is envisioned to provide the necessary regulatory framework 
for the operations of oil and gas pipelines in the country. 
This bill creates the National Pipeline Board which is tasked to regulate and 
monitor the operations of oil and gas pipelines. Through the National Pipeline Board, 
safety and maintenance standards in the operation of the oil and gas pipeline shall be 
formulated. The NPB 
This bill also classifies oil and gas pipeline systems as national security 
concerns, thus a Pipeline Security Inter-Agency Committee is also created which shall 
devise a "National Pipeline Security Plan". 
This bill also categorizes the oil and gas pipeline system as a common carrier for 
the transport of oil and gas and as such requires the owners of the oil and gas pipeline 
to secure a Congressional franchise before they could operate. 
In view of the foregoing, immediate passage of this bill is respectfully sought. 
2 


FIFTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
) 
·11 
APR -7 P 1 :25 
SENATE 
S. No. 2788 
Introduced by Senator JUAN MIGUEL F. ZUBIRI 
AN ACT 
PROVIDING FOR THE REGULATION OF OIL AND GAS PIPELINES, CREATING 
THE NATIONAL PIPELINE BOARD FOR THE PURPOSE, APPROPRIATING FUNDS 
THEREFOR, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
1 
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3 
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CHAPTER I 
GENERAL PROVISIONS 
5 
SECTION 1. Short Title. - This Act shall be known as the "Oil and Gas Pipeline 
6 
Regulation Act of 2011". 
7 
8 
SEC. 2. Declaration of Policy. - It is hereby declared the policy of the State to provide 
9 
for enhanced safety and environmental protection in pipeline transportation, and greater 
10 
reliability in the transportation of oil and gas by pipeline in the country. 
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12 
SEC. 3. Scope and Application. - This Act shall apply to all existing and future oil and 
13 
gas pipelines in the country. 
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SEC. 4. Definition of Terms. -
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a) AFP - shall refer to the Armed Forces of the Philippines; 
17 
b) DILG - shall refer to the Department of Interior and Local Government; 
18 
c) DOE - shall refer to the Department of Energy; 
19 
d) DOH - shall refer to the Department of Health; 
20 
e) DOTC 
-
shall 
refer 
to 
the 
Department 
of Transportation 
and 
21 
Communications; 
22 
f) DND - shall refer to the Department of National Defense; 
23 
g) DPWH - shall refer to the Department of Public Works and Highways; 
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h) Gas Pipeline - shall refer to a structure for transporting gaseous fuels over 
3 
long distances; 
4 
i) 
NPB - shall refer to the National Pipeline Board created under this Act; 
5 
j) Oil pipeline - shall refer to a structure for transporting liquid fuels over long 
6 
distances; 
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k) Person - shall include natural or juridical person; 
8 
I) Petroleum - shall include any mineral oil, hydrocarbon gas, bitumen, asphalt, 
9 
mineral wax, and all other similar or naturally associated substances; with the 
10 
exception of coal, peat, bituminous shale, and/or other stratified mineral fuel 
11 
deposits; and 
12 
m) Pipeline - shall mean a conduit made from pipes connected end-to-end for 
13 
long-distance transport and traversing different local geographical units. 
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CHAPTER \I 
17 
PIPELINE FRANCHISE 
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19 
SEC. 5. Nature and Scope of a Pipeline Franchise. -
Subject to the provisions of 
20 
the 1987 Constitution and applicable laws, rules and regulations, the Congress of the 
21 
Philippines may grant, upon application of any person, a franchise to construct, install, 
22 
own, operate and maintain for commercial purposes and in the interest of the public, oil 
23 
and gas pipeline system including such other equipment or facilities as may be needed 
24 
from time to time for the purpose of transporting and distributing oil and gas through 
25 
pipeline in the country. 
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SEC. 6. 
Prior Approval of the Department of Energy and the Department of 
28 
Environment and Natural Resources. - The franchise grantee shall secure from the 
29 
DOE and the DENR, the appropriate permits and licenses for the construction, 
30 
installation, ownership, operation and maintenance of oil and gas pipeline system. 
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SEC. 7. Rights Conveyed Under the Pipeline Franchise. - A pipeline franchise 
33 
grantee acquires the non-exclusive right to transport petroleum, by means of, and 
34 
through, a pipeline or system of pipelines, between the sources of production and/or 
35 
refining and the places defined in the Pipeline Franchise, in accordance with the 
36 
provisions of this Act and the implementing rules and regulations. 
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This franchise privilege inciudes the construction and operation of pipelines, 
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pumping or compressing stations, storage tanks, gas tanks, power plants, shops, 
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storehouses and other buildings, water supply and communication systems, roads, and 
2 
such other equipment or facilities as may be needed for the purpose of the franchise. 
3 
4 
All such auxiliary works and operations and the products thereof shall be for the 
5 
exclusive use of the franchise grantee in the operation of his franchise: Provided, 
6 
however; That all roads and bridges constructed by the franchise grantee, except as 
7 
may otherwise be agreed upon between the Secretary of the DOE and the franchise 
8 
grantee, shall be available for public use. 
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SEC. 8. Pipeline Franchise as a Common Carrier. - A pipeline franchise shall have 
11 
the preferential right to utilize his installations for the transportation of petroleum owned 
12 
by him, but is obligated to utilize any remaining transportation capacity pro rata for the 
13 
transportation of such other petroleum as may be offered by others for transport, and to 
14 
charge without discrimination such rates as may be approved by the NPB, pursuant to 
15 
the provisions of this Act. 
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17 
When the pipeline franchise grantee is also an exploration concessionaire, the 
18 
Secretary of DOE may require that the royalty in kind of the Government received from 
19 
the same franchise grantee, be transported, pro rata, with that owned by the franchise 
20 
grantee from the same concession; and in all cases the petroleum of the Government 
21 
shall have priority over all other petroleum in the utilization of the excess capacity of the 
22 
pipeline over that required to transport petroleum owned by the pipeline franchise 
23 
grantee. 
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25 
Procedure for the determination of pipeline transportation rates and the 
26 
conditions governing the transportation of petroleum other than that owned by the 
27 
franchise grantee shall conform to the implementing rules and regulations set by the 
28 
NPB. 
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30 
SEC. 9. Term of Pipeline Franchise. - The term of a Pipeline Franchise shall not 
31 
exceed twenty-five (25) years counted from the date of its issuance, unless sooner 
32 
revoked or cancelled. The term of the franchise is renewable for another twenty-five 
33 
(25) years, upon application of the grantee filed prior to the expiration of the original 
34 
term. 
35 
36 
SEC. 10. Termination of Pipeline Franchise. -
Any Pipeline Franchise may be 
37 
terminated or revoked at any time for any violation of the franchise terms and 
38 
conditions. 
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2 
SEC. 11. Franchise Tax. - In lieu of all national internal revenue taxes, the grantee of 
3 
a Pipeline Franchise shall pay an annual franchise tax equivalent to five percent (5%) of 
4 
gross income earned during the year. 
5 
6 
7 
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10 
CHAPTER III 
PETROLEUM TRANSPORTATION CAPACITY AND 
REGULATORY ADEQUACY STUDY 
11 
SEC. 12. Petroleum Transportation Capacity and Regulatory Study. The Secretary 
12 
of the DOE shall conduct periodic analyses of the domestic transport of petroleum 
13 
products by pipeline. Such analyses should identify the areas through which the pipeline 
14 
traverses where unplanned loss of pipeline facilities may cause shortages of petroleum 
15 
products or price disruptions and where shortages of pipeline capacity and reliability 
16 
concerns may have or are anticipated to contribute to shortages of petroleum products 
17 
or price disruptions. Upon identifying such areas, the Secretary may determine if the 
18 
current level of regulation is sufficient to minimize the potential for unplanned losses of 
19 
pipeline capacity. 
20 
21 
SEC. 13. Consultation with other Government AfJencies. In preparing any analysis 
22 
under this Chapter, the Secretary of DOE may consult with the heads of other 
23 
government agencies and public and private-sector experts in pipeline and other forms 
24 
of petroleum product transportation, energy consumption, pipeline capacity, population 
25 
and economic development. 
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27 
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CHAPTER IV 
CREATION OF THE NATIONAL PIPELINE BOARD, 
ITS POWERS AND FUNCTIONS 
32 
SEC. 14. Creation of the National Pipeline Board (NPB) - The National Pipeline 
33 
Board (NPB) is hereby created. The NPB shall be composed of the Secretary of the 
34 
DOE as Chairman and the Secretaries of DENR, DOTC, DPWH, DOH and DILG as 
35 
members or their duly deSignated representatives who shall not be below the rank of 
36 
Assistant Secretary and who shall sit on a permanent basis. 
37 
38 
The DOE Secretary, in his capacity as Chairperson, shall, within one month from 
39 
the effectivity of this Act, convene the NPB. 
40 
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The NPB shall be assisted by a Technical Secretariat attached to the Oi/lndustry 
42 
Management Bureau of the DOE. The number of staff of the Technical Secretariat and 
4 


1 
the corresponding positions shall be determined by the NPB, subject to approval by the 
2 
Department of Budget and Management (DBM) and existing civil service rules and 
3 
regulations. 
4 
5 
SEC. 15. Powers and Functions of the NPB. - The NPB shall have the following 
6 
powers and functions: 
7 
8 
a) Prescribe the environment and safety standards in the construction, installation, 
9 
ownership, operation and maintenance of oil and gas pipeline systems, as well 
10 
as in remediation procedures in cases of pipeline leaks or other physical 
11 
disturbances; 
12 
13 
b) Within six months from convening, the NPB shall prescribe minimum standards 
14 
for integrity management programs for oil and gas pipelines. For this purpose, 
15 
the NPB may require operators of distribution pipelines to continually identify and 
16 
assess risks on their distribution lines, to remediate conditions that present a 
17 
potential threat to line integrity and to monitor program effectiveness; 
18 
19 
c) Issue regulations providing that, after notice and opportunity for a hearing, if it 
20 
determines that the pipeline facility has a condition that poses a pipeline integrity 
21 
risk to public safety, property, or the environment, it may order the pipeline 
22 
franchise grantee to take the necessary corrective action, including physical 
23 
inspection, testing, repair, or other appropriate action, to remedy the condition; 
24 
25 
d) Order and require the pipeline franchise grantee, forthwith, or within or at any 
26 
specified time and in any manner prescribed by it, any act, matter or undertaking 
27 
that such pipeline franchise grantee is or may be required to do under this Act, or 
28 
any regulation, certificate, license, or permit, or any order or direction made or 
29 
given under this Act; 
30 
31 
e) Prohibit the commission or violation of any provisions of the pipeline franchise; 
32 
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f) Be the repository of pipeline franchises, data and information pertaining to the oil 
34 
and gas pipeline industry; 
35 
36 
g) In carrying out its duties and functions under this section, it shall, wherever 
37 
appropriate, utilize agencies of the government to obtain technical, economic and 
38 
statistical information and advice. 
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1 
2 
3 
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CHAPTER V 
PIPELINE SECURITY AND 
ROLE OF OTHER GOVERNMENT AGENCIES 
6 
SEC. 16. Pipeline Security. - It is hereby declared that oil and gas pipeline systems 
7 
are national security concerns. 
For this purpose, the DOE, DND and DILG shall 
8 
cornpose the Pipeline Security Inter-Agency Committee under the supervision of the 
9 
NPB which shall devise a "National Pipeline Security Plan". The composition of the 
10 
Pipeline Security Inter-Agency Committee may be expanded by the President to include 
11 
other concerned agencies. 
12 
13 
SEC. 17. Role of Other Government Agencies. 
-
In the implementation of the 
14 
provisions of this Act, its implementing rules and regulations and related laws, the 
15 
following agencies shall perform, among others, the following functions: 
16 
17 
a) The DOE shall: 
18 
19 
20 
21 
i) Conduct periodic analyses of the domestic transport of petroleum 
products by pipeline; and. 
ii) Monitor the integrity of the pipeline. 
22 
b) The DOTC shall: 
23 
i) Coordinate networks of pipeline transportation as well as the fast and 
24 
safe transportation services; and 
25 
ii) Advise the NPB of identified routes, zones and/or areas of operations 
26 
of particular operators. 
27 
28 
c) The DENR shall: 
29 
i) Enforce environmental protection laws; 
30 
31 
32 
33 
34 
35 
36 
37 
38 
39 
ii) 
Recommend 
rules 
and 
regulations 
for environmental 
impact 
assessments and provide technical assistance for their implementation 
and monitoring; 
iii) Take charge of remediation measures; and 
iv) Undertake, in the event that emergency clean-up operations are 
necessary and the polluter fails to undertake the same, in coordination 
with other government agencies concerned, containment, removal and 
clean-up operations. Expenses incurred in said operations shall be 
reimbursed by the persons found to have caused such pollution upon 
proper administrative determination in accordance with this Act. 
6 


1 
2 
d) The DPWH shall: 
3 
i) Identify and/or advise the Pipeline Franchise Grantee the route or 
4 
areas where the pipeline can be installed; and 
5 
ii) Provide the technical supervision in the construction and installation of 
6 
oil and gas pipelines. 
7 
8 
e) The DND shall: 
9 
i) Develop, through the AFP, a security plan for oil and gas pipelines; 
10 
and 
11 
ii) Conduct regular site security inspections of the oil and gas pipelines. 
12 
13 
f) The DILG shall: 
14 
i) Provide, through the Philippine National Police (PNP), manpower to 
15 
implement the security plan established under e.(i) of this Section; 
16 
ii) Employ the assistance, cooperation and coordination of local 
17 
government units (LGUs) in the implementation of the policies and 
18 
orders issued by the NPB; and 
19 
iii) Mobilize the Bureau of Fire Protection (BFP) to ensure the prevention 
20 
21 
22 
and suppression of all destructive fires on the petroleum industry 
installations. 
23 
h) The DOH shall: 
24 
i) 
Formulate rules and regulations concerning health emergency 
25 
preparedness and response in cases of oil and gas pipeline system 
26 
disturbances. 
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29 
CHAPTER VI 
30 
REPORTORIAL REQUIREMENTS 
31 
32 
SEC. 18. Reportorial Requirements. - To ensure the safety, security and integrity of 
33 
the oil and gas pipelines and the installations within the vicinity where said pipelines 
34 
traverse, the following are required to submit to the NPB: 
35 
a) For franchise grantees: 
36 
1. 
Pipeline Profile; 
37 
2. 
Pipeline Right of Way; 
38 
3. 
Vicinity Layout and Route Map of the Pipeline; 
39 
4. 
Pipeline Integrity Inspection Report, annually; 
40 
5. 
Safety Management Plan; 
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6. 
In-Out Petroleum Data Supply, quarterly; 
7. 
Repair Method; 
8. 
Weld Procedures for welding on live pipelines; 
9. 
Accomplishment Reportls; and, 
10. Audit Process for management and operating systems. 
b) For oil and gas companies. -
Oil and gas companies transporting their 
products in the pipeline system of the franchise grantee are required to 
submit, on a regular basis, with a minimum of monthly basis, to the pipeline 
franchise grantee the supply or delivery reports of oil and gas which passed 
through the pipeline facility of the franchise grantee. Significant loss or under-
delivery of oil and gas should be immediately reported to the franchise 
grantee and the NPB, in which case if the NPB found that there is sufficient 
basis that the loss or under-delivery of oil and gas is due to leak/leaks in the 
pipeline, the NPB, through its Chairman, may motu propio, order the franchise 
grantee to shut down its pipeline operations and conduct an investigation, 
including leak tests, to determine the real cause of the loss or under-delivery. 
The 
NPB 
may 
require 
other documents 
and 
data, 
other than 
the 
abovementioned, from the pipeline franchise grantee, and the oil companies, especially 
in cases of leaks, disasters and similar emergencies. 
CHAPTER VII 
PROHIBITED ACTS 
SEC. 19. Prohibited Acts. - The following acts shall be prohibited: 
a) Any person who engages in demolition, excavation, tunneling, or construction in 
areas traversed by the oil and gas pipelines without first securing clearance from 
the NPB; and 
b) Any entity who fails to comply with any of the foregoing provisions shall be 
subject to appropriate sanctions imposed under applicable laws, rules and 
regulations. 
8 


• 
1 
CHAPTER VIII 
2 
FINAL PROVISIONS 
3 
4 
SEC. 20. Transitory Provision. - The grantee of existing pipeline concession shall be 
5 
allowed to operate until the expiration of the term of its concession. Thereafter, such 
6 
concessionaire shall secure a Congressional franchise to be allowed to continue to 
7 
operate. 
8 
9 
SEC. 21. Penal Sanction. - Any person who violates any of the provisions of this Act 
10 
shall suffer the penalty of two (2) to six (6) years imprisonment and a fine ranging from 
11 
Five Hundred Thousand Pesos (PhP500,000.) to One Million Pesos (Ph Pi ,000,000.). If 
12 
the violator is a corporation, the president or chief executive officer shall be held liable. 
13 
14 
SEC. 22. Implementing Rules and Regulations. - The DOE, in coordination with the 
15 
Board, shall formulate and issue the necessary implementing rules and regulations 
16 
within (60) days after the effectivity of this Act. 
17 
18 
SEC. 
23. 
Appropriations. -
An 
amount of Two 
Hundred 
Million 
Pesos 
19 
(PhP200,OOO,OOO.) is hereby appropriated for the initial operation of the NPB and to be 
20 
included in the General Appropriations Act in the year following the approval of this Act. 
21 
Thereafter, the fund necessary to carry out the provisions of this Act shall be included in 
22 
the annual General Appropriations Act. 
23 
24 
SEC. 24. Separability Clause. -
If any provision of this Act is declared invalid or 
25 
unconstitutional, the other provisions not affected thereby shall remain valid and 
26 
subsisting. 
27 
SEC. 25. Repealing Clause. -
Republic Act No. 387, otherwise known as the 
28 
"Petroleum Act of 1949" is hereby repealed. Such other laws, acts, executive orders, 
29 
rules and regulations and other issuances inconsistent with this Act are hereby repealed 
30 
or modified accordingly. 
31 
32 
SEC. 26. Effectivity. - This Act shall take effect immediately upon publication in at 
33 
least two (2) newspapers of general circulation. 
34 
35 
Approved. 
9