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1,,"_ 
SIXTEENTH CONGRESS OF THE REPUBLIC) 
il1)ff,;r tlf HI" j-f-(n"hr~ 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
'13 
SEP 11 
P 2 :42 
SENATE 
Senate Bill No. 16 4 2 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
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 encourage greater 
I competition at the retailleve!. 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 will 
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 to influence the prices of oil petroleum 
products. With the deregulation of the industry, it was the intent.ion 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, tl:1e 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. 
Senator 


';''''11' )" 
,~):( 
'_11.1; 
SIXTEENTH CONGRESS OF THE REPUBLIC) 
d){h;(' nf th{1 '~r1\ I'bJf~ 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
'13 
SEP 11 
P 2 :42 
SENATE 
Senate Bill No. 16 4 2 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
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 assembled: 
SECTION 1. Section 4 of R.A. No. 8479 is hereby amended to read as 
follows: 
USEC. 4. Definition of Terms. - For purposes of this Act, the 
following terms are herein below defined: 
U(a) Base Convention shall refer to the international accord which 
governs the trade or movement of hazardous and toxic wastes 
across borders; 
U(b) Board shall refer to the Energy Regulatory Board; 
"(c) BOI shall refer to the Board of Investments; 
U(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. 
U(E) [(d)] Crude 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; 
U(F) 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; 
U(G) [(Q] DOE shall refer to the Department of Energy; 
U(H) [(g)] DOJ shall refer to the Department of Justice; 


"(I) [(h») Downstream Oil Industry (001) or Industry 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; 
"(K) [G)] LPG Distributor 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 R IMPORTATION OF PETROLEUM PRODUCTS to 
BE SOLD TO DEALERS OR RETAILERS. 
"(N) [(I») Person shall refer to any person, whether natural or 
juridical, who is engaged in any activity of the downstream oil 
industry; 
"(0) [(m») Petroleum 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) [(0)) Singapore Imporl Parity (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; 
"(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 Posted 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 R.A. 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 management skills training, the active 
and direct participation of the private sector and cooperatives in the 
retailing of petroleum products through joint venture/supply 
agreements with new industry participants for the establishment 
and operation of gasoline stations: Provided, That the training 
herein shall include LPG retailing. 
Xxx 
"Of this amount, two percent (2%) plus any additional funding shall 
be allocated for the two-fold program; one percent (10/) 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, further 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. 
"(B) BEGINNING JANUARY 1, 2011, NO OIL COMPANY MAY 
OPEN 
NEW COMPANY-OPERATED GASOLINE 
STATION, 
PROVIDED, THAT BEGINNING JANUARY 1, 2012, NO SUCH OIL 
COMPANY MAY OPERATE MORE THAN ONE HALF (1/2) THE 
NUMBER OF ITS GASOLINE STATIONS LAWFULLY OPERATED 
ON JANUARY 1, 2011; PROVIDED FURTHER, THAT BEGINNING 
JANUARY 1, 2013, NO SUCH OIL COMPANY MAY OPERATE 
ANY GASOLINE STATION PROVIDED, FINALLY 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 SUF'FER THE 
PENALTY OF 
IMPRISONMENT FOR FIVE (5) YEARS AND FINE RANGING 
FROM FIVE HUNDRED THOUSAND PESOS (P500,000.00) 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 FORMULATE 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. 


• 
"(C) [It] THE DOE shall [likewise] monitor the quality of petroleum 
products and stop the operation of businesses involved in the sale 
of petroleum products 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 and/or 
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 investigating and/or filing the necessary complaint 
with the proper court or agency motu propio. 
"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. 
"(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 EQUIPMENT 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." 
SEC. 5. The current Section 15 is renumbered to become Section 16. A 
new Section 17 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 herewith, are deemed repealed or modified accordingly. 
SEC. 8. Separability 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 full force and effect. 
SEC. 9. Effectivity - This Act shall take effect fifteen (15) days following 
its publications in a newspaper of general circulation in the Philippines. 
Approved,