THIRTEENTH CONGRESS OF THE REPUBLIC 1 
OF THE PHlLlFjPlNES 
1 
Second Regular Session 
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Introduced by Senator Richard J. Gordon 
EXPLANATORY NOTE 
The development of alternative renewal energy sources like biofuels from biomass 
under a sustainable system is a viable answer to the present oil crisis affecting our country 
today. 
Biofuel is an ideal fuel blend or additive for gasoline and diesel, which is 
environment-friendly. Studies also show that minimal amounts of biodiesel and bioethanol 
may easily be blended with or added to diesel or gasoline without requiring engine 
modification for practically all motor vehicles today. 
Aside from lessening our dependence on imported oil and buffering us from the 
rising oil prices in the world market, the promotion of biofuels will encourage the creation of 
biofuel industries and spur agro-industrial employment. This translates to agro-technology 
development, increased investments, additional employment, increased government 
revenue, and a multiplier effect on support and downstream industries. Biofuels may also 
be a potential export product for our country, just like Brazil which pioneered ethanol fuel in 
the 1970s to combat rising energy costs but now exports to Japan and other countries. 
The proposed Biofuels Act of 2005 will provide the necessary legal framework for the 
establishment of the National Biofuels Program, which shall provide for the mandatory 
blending of biofuels with gasoline and diesel. It also provides for incentives in addition to 
those granted by the Board of Investments, such as reduced excise tax on automobiles that 
run on biofuels, priority in government financing, and local government incentives, to 
encourage investments in biofuels and to promote the extensive use thereof. 
Senator 
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.I, 
THIRTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
1 
tj 
23 
/\, .A 
Second Regular Session 
1 
Introduced by Senator Richard J. Gordon 
AN ACT TO PROMOTE THE USE OF BIOFUELS BY ESTABLISHING THE NATIONAL 
BIOFUELS PROGRAM AND PROVIDING INCENTIVES, APPROPRIATING FUNDS 
THEREFOR, AND FOR OTHER PURPOSES 
Be it enacted by the Senafe and fhe House of Represenfafives of the Philippines in 
Congress assembled: 
SECTION 1, Short Title. -This Act shall be known as the “Biofuels Act of 2005.” 
Sec. 2. Policy. - It is hereby declared to be the policy of the State to develop 
alternative renewable energy sources from biomass under a sustainable system in order to 
promote a balanced and healthful ecology, pursue independence from imported oil, and 
create agro-industrial employment. 
Sec. 3. Definitions. -As used in this Act, 
(1) “Biodiesel” refers to Fatty Acid Methyl Ester (FAME) derived from plant oil, 
(2) “Bioethanol” refers to ethanol (CzH50H) produced from biomass; 
(3) “Biofuel” refers to a liquid fuel made from biomass primarily used to fuel vehicles, 
but can also fuel engines or fuel cells for electricity generation, and may include bioethanol 
and biodiesel, among others; 
(4) “Biomass” refers to any organic matter, particuiarly cellulosic or lignocellulosic 
matter, which is available on a renewable or recurring basis, including trees, crops and 
associated residues, plant fiber, poultry litter and other animal wastes, including industrial 
wastes, and the biodegradable component of municipal solid waste; 
vegetable oil, or animal fat for use in diesel engines; 
(5) ‘IDA refers to the Department of Agriculture; 
(6) “DENR refers to the Department of Environment and Natural Resources; 
(7) “DOE” refers to the Department of Energy; 
(8) “DOF“ refers to the Department of Finance; 
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(9) “DOLE refers to the Department of Labor and Employment; 


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(IO) ”DOST” refers to the Department of Science and Technology; 
(1 1) “DOTC refers to the Dkpartment of Transportation and Communications; 
(12) “DTI” refers to the Department of Trade and Industry; 
(13) “Diesel” refers to a heavy mineral oil used as fuel in diesel engines; 
(14) “Feedstock“ refers to organic sources or biomass used in the production of 
biofuels; 
(15) “Gasoline” refers to a complex mixture of relatively volatile hydrocarbons with or 
without small quantities of additives, blended to form a fuel suitable for use in spark-ignition 
engines and Research Octane Number (RON) of 93 or above; 
(16) “Motor fuel” refers to all volatile and inflammable liquids produced, blended or 
compounded for the purpose of, or which are suitable or practicable for, operating motor 
vehicles; and 
(17) “NBB” refers to the National Biofuels Board created under this Act; 
Sec. 4. Mandafory Use of Biofuels. - In pursuance of the above policy, a National 
Biofuels Program that will mandate the use of biofuels and promote the extensive use 
thereof shall be adopted. As may be determined by the NBB, the National Biofuels 
Program shall provide for: 
(1) the mandatory blending of a minimum of percentage of bioethanol by volume into 
all gasoline to be distributed, sold and used as motor fuel; and 
(2) the mandatory blending of a minimum percentage of biodiesel by volume into all 
diesel to be distributed, sold and used as motor fuel. 
Sec. 5. Incentives. - Subject to the implementing rules and regulations of the Board of 
Investments under Executive Order No. 226 or the Omnibus Investments Code, as 
amended, biofuel industries shall enjoy the optimum fiscal and non-fiscal incentives allowed 
to be granted under the Omnibus Investments Code. 
To encourage investments in biofuels and to promote the extensive use thereof, the 
following additional incentives are hereby granted: 


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(1) Reduced Excise Tax on Automobiles. -Automobiles that have the capacity to use 
higher blends of biofuels of at least thirty percent (30%) shall be subject to a reduced ad 
valorem tax in accordance with the following schedule: 
Engine Displacement (in cc.) 
Gasoline 
Diesel 
Tax Rate 
Up to 1600 
Up to 1800 
7.5% 
1601 to 2000 
1801 to 2300 
17.5% 
2001 to 2700 
2301 to3000 
25% 
2701 or over 
3001 or over 
50% 
(2) friorify in Government Financing. - Government Financial Institutions 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 
biofuels. 
(3) Local Government Incentives. - Local Government Units are called to grant 
additional incentives to entities that shall engage in activities involving biofuels. 
Sec. 6. The National Biofuels Board. - The National Biofuels Board or NBB is hereby 
created and it shall be composed of a representative of the DOE as Chairperson; one (1) 
representative each from the DTI, the DOF, the DOTC, the DOST, the DA, the DENR, the 
DOLE, the Sugar Regulatory Administration (SRA), the Philippine Coconut Authority (PCA); 
one representative from the producers of feedstock for biofuels; one (1) representative from 
the distillery industry; and one (1) representative from the petroleum industry, all duly 
endorsed by their respective departments or industry associations and appointed by the 
President of the Republic of the Philippines, as Members. 


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The Chairperson shall, within one (1) month from the effectivity of this Act, convene 
the NBB. The NBB shall be assisted by a Technical Secretariat whose personnel shall be 
on detail from the DOE andlor other departmentslagencies comprising the NBB. The 
Technical Secretariat shall be attached to the Office of the Secretary or the Undersecretary 
of the DOE. 
Sec. 7. Powers and Functions of the NBB. - The NBB shall have the following 
powers and functions: 
(1) Draft and promulgate, within six months from the effectivity of this Act, the 
implementing rules and regulations of this Act; 
(2) Prepare the National Biofuels Program which shall establish standards for biofuels 
and biofuel blends, and guidelines for the storage, transport and handling of biofuels; 
(3) Monitor and implement the provisions of this Act, its implementing rules and 
regulations, and the National Biofuels Program; and 
(4) Conduct an information and education campaign to promote the use of biofuels. 
Sec. 8. Prohibifed Acts. -The following are prohibited acts: 
(1) Diversion of biofuels, whether locally produced or imported, to non-fuel uses; 
(2) Distribution, sale and use of fuel without the proper biofuel blend mandated by the 
NBB; 
(3) Inappropriate and fallacious labeling of biofuels; and 
(4) Noncompliance with the established rules and regulations, and standards and 
guidelines of the NBB. 
Sec. 9. Penal Provisions. -Any person, whether natural or juridical, who violates Sec. 
8 or any provision of this Act or its implementing rules and regulations, shall suffer the 
penalty of a fine of not less than fifty thousand pesos (P50,OOO.OO) but not more than one 
hundred thousand pesos (PlOO,OOO.OO) per day of violation. 


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Motor fuel that is not compliant with the specifications provided by the NBB pursuant 
to this Act shall be confiscated. The NBB may also close or suspend the operation of any 
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fuel distribution facility for failure to comply with this Act. 
Sec. 10. Repealing Clause. - All laws, decrees, orders, rules and regulations or 
other issuances or park thereof inconsistent with the provisions of this Act are hereby 
repealed or modified accordingly. 
Sec. 11, Appropriation. - The fund necessary for the initial implementation of this Act 
shall be charged against the- current appropriation. Thereafter, it shall be included in the 
General Appropriations Act. 
Sec. 12. Separability Clause. - If any portion or provision of this Act is declared 
unconstitutional, the remainder of this Act or any provision not affected thereby shall remain 
in force and effect. 
Sec. 13. Effecfivify. - This Act shall take effect after fifteen (15) days following the 
completion of its publication either in the Official Gazette or in a newspaper of general 
circulation in the Philippines. 
Approved,