THIRTEENTH CONGRESS OF THE REPUBLIC ) 
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OF THE PHILIPPINBS 
Second Regular Session 
6 MAR 14 P2 :a2 
(Insubstitution ofSB Nos. 1587, 1677, 1907,2007,2083,2159,2178,2179, and2185 
taking into consideration HB No. 4629.) 
Prepared by the Committees on Energy, Agriculture and Food and Finance, with 
Senators Santiago, Pimentel Jr., Cayetano, Recto, Roxas, Gordon, and Angara, 
as authors thereof 
Ah’ ACT 
TO MANDATE THE USE OF BIOFUELS IN THE TRANSPORT SECTOR, 
ESTABLISHING FOR THIS PURPOSE THE PHILIPPINE BIOFUEL 
PROGRAM. APPROPRIATING FUNDS THEREFOR, AND FOR OTHER 
PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. - This Act shall be known as the “Biofuels Act of 
2006.” 
SECTION 2. Declaration of Policy. - It is hereby declared the policy of the 
State to pursue 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 biohels 
as a measure to: 
a) develop and utilize indigenous renewable energy sources to reduce 
dependence on imported oil; 
b) mitigate toxic and greenhouse gas (GHG) emissions; and 
c) increase rural employment and income. 
SECTION 3. Definition of Terms. As used in this Act, the following terms 
shall be taken to mean as follows: 
a) AFTA - shall refer to the ASEAN Free Trade Agreement; 
b) Alternative Fuel Vehicles - shall refer to vehicles that use alternative fuels 
such as biodiesel, bioethanol, natural gas, electricity, hydrogen and 
automotive LPG, instead of gasoline and diesel; 
c) Bioethanol- shall refer to ethanol (CzHsOH) produced from biomass; 
d) Biodiesel - shall refer to Fatty Acid Methyl Ester (FAME) or mono-alkyl 
esters derived from vegetable oik or animal fats for use in diesel engines, 
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with quality specifications in accordance with the Philippine National 
Standards (PNS); 
e) Bioefhanol Fuel - shall refer to hydrous or anhydrous bioethanol suitably 
denatured for use as motor fuel, with quality specifications in accordance 
with the Philippine National Standards (PNS); 
f) 
Biofuel - shall refer to bioethanol and biodiesel and other fuels made f?om 
biomass and primarily used for motive, thermal and power generation, with 
quality specifications in accordance with the PNS; 
g) Biomass - 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; 
h) DA - shall refer to the Department of Agriculture created under Executive 
Order No. 116, as amended; 
i) DOE- shall refer to the Department 'of Energy created under Republic Act 
No. 7638, as amended; 
j) DENR - shall refer to the Department of Environment and Natural 
Resources created under Executive Order No. 192, as amended; 
k) Diesel - shall refer to refined petroleum distillate, which may contain small 
amount of hydrocarbon or non-hydrocarbon additives to improve ignition 
quality or other characteristics, suitable for compression ignition engine 
and other suitable types of engine with quality specifications in accordance 
with the PNS; 
DOF - shall refer to the Department of Finance created under 
Administrative Order Nos. 127 and 127-A; 
1) 
m) DOST - shall refer to the Department of Science and Technology created 
under Republic Act No. 2067; 
n) DOTC - shall refer to the Department of Transportation and 
Communication created under Executive Order No. 125-A, as amended; 
0) DTI - shall refer to the Department of Trade and Industry created under 
Executive Order No. 133; 
p) Feedstock - shall refer to organic sources or biomass used in the 
production of biofuels; 
s) Gasoline - shall refer to volatile mixture of liquid hydrocarbon, generally 
containing small amount of additives, suitable for use as a fuel in spark- 
ignition internal combustion engine with quality specifications in 
accordance with the PNS; 
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r) Motor fuel - shall refer to all volatile and inflammable liquids and gas 
produced, blended or compounded for the purpose of, or which are suitable 
or practicable for, operating motor vehicles; 
s) PBB or Bourd - shall refer to the Philippine Biofuel Board created under 
Section 7 of this Act; 
t) 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 whoseienewal rate is relatively rapid to 
consider availability ova: an indefinite period of time; 
.. 
u) Transporf Sector - as used in this Act, sdall refer to transport system; and, 
v) WTO - shall refer to the :&orld Trade Or&mization. 
SECTION 4. Mandufovy &e ofBiofuels. Pursuant to the above policy, it is 
hereby enacted that all liquid fuels for motors and engines sold in the Philippines shall 
contain locally-sourced components as follows: 
4.1 Within two (2) years from the effectivity of this Act, a minimum of five 
percent (5%) bioethanol fuel by volume shall be blended into all gasoline fuel 
distributed and sold in the country provided that the ethanol blends conforms 
to PNS on fuel ethanol. The Philippine Biofuel Board (PBB) created under 
this Act is empowered to determine the feasibility and thereafter mandate a 
total of ten percent (10%) blend of bioethanol by volume within four (4) years 
from effectivity of this Act. 
4.2 Immediately upon effectivity of the IRR of this Act, a minimum of one 
percent (1%) biodiesel by volume shall be blended into all diesel engine fuels 
sold in the country, provided the biodiesel blend conforms to PNS for 
biodiesel. The Philippine Biofuel Board (PBB) created under this Act is 
empowered to determine the feasibility and thereafter mandate a totaI of two 
percent (2%) blend of biodiesel by volume within two (2) years from 
effectivity of this Act. 
4.3 The Philippine Biofuel Board shall periodically review and assess the 
economic, technical, environmental and social impact of the use of bioethanol 
fuel and biodiesel as well as the availability and security of supply and shall 
determine the appropriate minimum blend, subject to the provision in Section 
8(c) of this Act. 
SECTION 5. Incentive Scheme. - To encourage investments in the 
production, distribution and use of locally-produced biokels at and above the 
minimum mandated blends, the following incentive scheme is hereby provided 
a) SpecificTax 
The specific tax on biofuels, per liter of volume capacity, shall be zero (0). 
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b) Duties on Plant Investments 
Entities that are accredited by the DOE in accordance with this Act, within 
five (5) years fiom the effectivity hereof, shall be allowed to import exempt 
from duties such machinery and equipment actually, directly and 
exclusively for use in tbe production ofgbiofuels for a period of five (5) 
years from the date of 'DOE accreditation. Provided, however, that the 
imported machinery and equipment are not manufactured domestically in 
sufficient quantity, of comparable quality, and at competitive prices. 
I? 
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c) Board of Investments (BOI) Incentives 
Subject to the rules and regulations of the BOI, all investments in the 
production, blending, and distribution of biofuels and adoption of biofuel- 
compliant vehicle technologies shall enjoy the applicable fiscal and non- 
fiscal incentives as may be provided for under the Omnibus Investment 
Code, as amended; 
d) Water Effluents 
All water effluents such as but not limited to distillery slops from the 
production of biofuels used as liquid fertilizer and for other agricultural 
purposes are considered reuse, and are therefore, not covered under Section 
13 of Republic Act No. 9275, also known as the Philippine Clean Water 
Act; Provided, however, that such application shall be in accordance with 
the guidelines issued pursuant to R.A, No. 9275, subject to the monitoring 
and evaluation by DENR and approved by DA. 
e) 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, 
storage, handling and transport of biofuel and biofuel feedstock, including 
the blending of biofuels with petroleum, as certified by the DOE. 
SECTION 6. Powers and Functions of the Department of Energy. - In 
addition to its existing powers and functions, the Department of Energy is hereby 
mandated to take appropriate and necessary actions to implement the Philippine 
Biofuel Program. In pursuance thereof, the Department shall 
a) 
Formulate within six (6) months from the effectivity of this Act the 
Implementing Rules and Regulations under Section 14 of this Act; 
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b) 
Within six (6) months from the effectivity of this Act, prepare the 
Philippine Biofuel Program consistent with the Philippine Energy Plan and 
taking into consideration the DOE’S existing biohels program; 
c) Within six (6) months from the effectivity of this Act: 
(1) Establish standards for biofuels and biofbel-blended gasoline and 
diesel; and, 
(2) Establish guidelines for the transport, storage and handling of biofuels; 
d) 
Impose fines and penalties against persons or entities found to have 
committed any of the prohibited acts under Section 11 (b) to (d) of this 
Act; 
e) 
Stop the sale of biofuels and biofuel-blended gasoline and diesel that is 
not in conformity with the specifications provided for under Section 4 of 
this Act, the PNS and corresponding issuances of the Department; and, 
0 
SECTION 7. Creafion of the Phil@pine Biofuel Board. - The Philippine 
Biohel Board is hereby created. It shall be composed of the Secretary of the 
Department of Energy or his designated Undersecretary as Chairman and the 
Secretaries or the designated undersecretaries or assistant secretaries of the 
Department of Trade and Industry (DTI), Department of Science and Technology 
(DOST), Department of Agriculture and Food (DAF), Department of Transportation 
and Communications (DOTC), Department of Finance (DOF - Bureau of Internal 
Revenue, Bureau of Customs and Tariff Commission) and the Department of 
Environment and Natural Resources (DENR); one (1) representative each from the 
biofuel industry, the petroleum industry and the automotive industry duly endorsed by 
their respective industry associations and appointed by the President of the Republic 
of the Philippines. 
Conduct an information campaign to promote the use of biofuels. 
The DOE Secretary or his designated Undersecretary, in his capacity as 
Chairperson, shall, within one (1) month from the effectivity of this Act, convene the 
PBB. 
The Board shall be assisted by a Technical Secretariat attached to the Office of 
the Secretary or the Ofice of the Undersecretary of the DOE as the case maybe. It 
shall be headed by a Director to be appointed by the Board. The number of staff of the 
Technical Secretariat and the corresponding positions shall be determined by the 
Board, subject to approval by the Department of Budget and Management (DBM) and 
existing civil service rules and regulations. 
SECTION 8. Powers and Functions of the PBB. - The Philippine Biofuel 
Board shall have the following powers and functions: 
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a) Review, monitor the implementation of, and evaluate for further expansion, 
the Philippine Biofuel Program prepared by the DOE pursuant to Section 6 
(b) of this Act; 
b) Monitor the supply and utilization of biofuels and hiofuel blends and 
recommend appropriate measures in cases of shortage of feedstock supply 
for approval of the Secretary of DOE; 
c) Review and adjust the minimum mandated biofitel blends as it deems 
appropriate, subject to publication;. provided that the minimum blend shall 
not be lowered within seven (7) years &om the effectivity or full 
implementation of the mandated minimum blend as provided for in Section 
4 of this Act; 
d) Recommend a program that will ensure the availability of alternative fuel 
technology for vehicles, engines and parts in consonance with the 
mandated minimum hiofuel blends, and to maximize the utilization of 
biofuels, for the adoption and implementation of appropriate government 
agencies; 
e) Recommend specific actions to be executed by the DOE and other 
appropriate agencies of government concerning the implementation of the 
Philippine Biofuel Program 
SECTION 9. Role of Governmenf Agencies. - To ensure the effective 
implementation of the Philippine Biofuel 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 biofuels and biofuel blends in consideration of WTO and 
AFTA agreements. 
(2) Monitor the production and importation of biofuels through the Bureau 
of Internal Revenue and the Bureau of Customs. 
(3) Through the Bureau of Internal Revenue and Bureau of Customs, 
impose fines and penalties on any person or juridical entity committing 
the prohibited act under Section 1 l(a) of this Act. 
b) The Department of Science and Technology (DOST) and the Department 
of Agriculture (DA) shall coordinate in identifying and developing viable 
feedstock for the production of biofuels. 
b) The DOST through the Philippine Council for Industry and Energy 
Research and Development (PCIERD) shall develop and implement a 
research and development program supporting a sustainable improvement 
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in biofuel production and utilization technology. It shall also publish and 
promote related technologies developed locally and abroad. 
c) The DA through its relevant agencies shall 
(1) Within six (6) months from &e effectivity of this Act, develop a 
national program for the production of crops for use as feedstock 
supply. For this purpose, the Administrators of the Sugar Regulatory 
Administration and the Philippine Coconut Authority, and other DA- 
attached agencies shall, within their authority, develop and implement 
policies supporting the Philippine Biohel Program and submit the 
same to the Secretary of the Department of Agriculture for 
consideration. 
(2) Ensure increased productivity and sustainable supply of biofuel 
feedstocks. It shall institute a program that would guarantee that a 
sufficient and reliable supply of feedstocks is allocated for biohel 
production. 
(3) Publish information on available and suitable areas for cultivation and 
production of such crops. 
e) The Department of Trade and Industry shall 
(1) Include in its Motor Vehicle Development Program the 
development and promotion of the manufacture andor investment 
in production of alternative fuel vehicles. 
(2) Within six (6) months Erom the effectivity of this Act, develop and 
adopt standards for vehicles and vehicle parts and components for 
incorporation into and in support of the Philippine Biofuel Program 
intended to ensure compliance with safety and fuel efficiency 
requirements as well as emission standards. 
The DTI, in 
coordination with the DOE, the DOTC and the DENR shall ensure 
the strict enforcement of these standards. 
f) The Local Government Units (LGUs) shall assist the DOE in monitoring the 
distribution, sale and use of biohels and biohel blends. 
SECTION 10. Oversight Committee on Biofuels - It is hereby mandated to 
create an oversight committee on biofuels headed by the chairpersons of the 
Committee on Energy of both houses of Congress to monitor and ensure the 
implementation of the provisions of this Act. 
SECTION 11. Prohibited Ads. -The following acts shall be prohibited 
a) Diversion of biofuels, whether locally produced or imported; 
b) Sale and use of pure gasoline or diesel and I or biohel-blended gasoline or 
diesel in violation of the requirement under Section 4 of the Act; 
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c) Non-compliance with the established standards and guidelines of the DOE 
adopted for the implementation of this Act; and 
d) Mislabeling, misleading or fallacious labeling of gasoline, diesel, biofuels and 
biofuel-blended gasoline and diesel. 
SECTION 12. Penal Provisions. -Any person, including but not limited to the 
chief operating officer, chief executive officer of the partnership, corporation or any 
entity involved, in violation of any provision of this Act shall suffer the penalty of 
three (3) months to one (1) year imprisonment and a fine ranging from fifty thousand 
pesos (P50,OOO.OO) to three hundred thousand pesos (P300,OOO.OO). 
In addition, the DOE shall confiscate any amount of such products that fail to 
compIy with the requirements of Sections 4 and 5 of this Act, and implementing 
issuances of the DOE. The DOE shall stop the operation of businesses for refusal to 
comply with any order or instruction of the DOE Secretary in the exercise of his 
functions under this Act. 
SECTION 13. Appropriations. - The hnd necessary for the initial 
implementation of this Act shall be charged against the current appropriations of the 
Department. Thereafter, the fund necessq to carry out the provisions of this Act 
shall be included in the annual General Appropriations Act. 
SECTION 14. Implementing Rules and Regulations. - The DOE, through the 
Philippine Biofuel Board, in consultation with the Committees of Energy of the Senate 
and the House of Representatives, the stakeholders and other agencies concerned, shall 
within six (6) months €?om the effectivity of this Act, promulgate the implementing 
rules and regulations of this Act: Provided, That prior to its effectivity, the draft of the 
implementing rules and regulations shall be posted at the DOE Website for at least one 
(1) month, and shall be published in at least two (2) newspapers of general circulation. 
SECTION 15. Repealing Clause. -All laws, presidential decrees or issuances, 
executive orders, presidential proclamations, rules and regulations or parts thereof 
inconsistent with the provisions of this Act, are hereby repealed, modified or amended 
accordingly. 
SECTION 16. Separabili@ Clause. - If any provision of this Act is declared 
unconstitutional, the same shall not affect the validity and effectivity of the other 
provisions hereof. 
SECTION 17. Effectiviw. - This Act shall take effect fifteen (15) days aRer its 
publication in at least two (2) newspapers of general circulation. 
Approved, 
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