FIFTEENTH CONGR! = REPUBLIC)
OF THE PHILIP! )
First Regular Session )

HOUSE OF REPRESENTATIVES

OENo. 789

Introduced by Representative Aurelio “Dong” D. Gonzales, Jr.

Explanatory Note

ed hopes about a

The discovery of natural gas in the country has rais
brighter future for all of us, As an alternative to crude oil, natural gas may
hold the key to the current energy crisis and our over dependence on
petroleum products.

However, this can only happen if we allow the natural gas industry to
flourish and be fully developed. It is therefore imperative that we create

conditions favorable to the establishment of a downstream Natural Gas
Industry ‘that will, among others, accelerate the expansion of natural gas
service for the benefit of the populace. Likewise, it is also important that we
lay down a regulatory framework that will ensure the quality, regularity,
security and reasonableness of charges for the transmission, distribution and
supply of natural gas.

It is about time that we develop the downstream natural gas industry
and transform it from an emerging industry to one that is mature and
competitive. This, ultimately, will redound to the benefit of the country and
will help ensure that power will always be available.

For these reasons, I urge the immediate passage of the bill.

” D. GONZALES, JR.
Aentative
3" District, Pampanga


FIFTEENTH CONGRESS OF THE REPUBLIC)
OF Tr >HILIPPINES )
First Regular Se: )

HOUSE OF REPRESENTATIVES

as

Wo. 789

entative Aurclio “Dong” D. Gonzales, Jr.

Introduced by Repre:

AN ACT
ORDAINING THE DEVELOPMENT OF THE DOWNSTREAM NATURAL GAS
INDUSTRY AND CONSOLIDATING FOR THAT PURPOSE ALL LAWS
RELATING TO THE TRANSMISSION, DISTRIBUTION AND SUPPLY OF
NATURAL GAS AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines
in Congress assembled:

1 CHAPTER i

2 TITLE AND DECLARATION OF POLICY

3 SEC. 1. Short Title. — This Act shal! be known as the “Downstream
4Natural Gas Industry Act of 2010”. It shall hercinafter be referred to as the
SAct.

6 SEC. 2. Declaration of Policy. ~ it is hereby declared the policy of the
7State:

8a) To promote the role of Natural Gas as an environment- friendly and

9 economically efficient source of cnergy by creating favorable conditions
10 for establishing a Downstr ural Gas Industry that will accelerate
i the expansion of Natural Gas service for the benefit of all segments of the
12 nation’s population and all sectors of its economy;

13

14(b) To ensure the

{ety, quality, reliability, security and affordability of the

15 Transmission, Distribution and Supply of Natural Gas:



1(c)

mT
12()
13
4
15(e)
16
7
18(h)
19

20

2

23
24(i)
25

26())

28

To ensure transparent z

nd reasonable rates and prices of Natural Gas
Transmission, Distribution and Supply in a regime of free and fair
competition and full public accountability that will promote greater
operational and economic efficiency and the enhanced competitiveness of
Philippine products in the global market;

‘To encourage the inflow of private capital in providing the infrastructure

and services necessary to develop new gas supplies and increase the

utilization of Natural Gas;

To ensure fair and non-discriminatory treatment of public and private
sector entitics in the development of the Downstream Natural Gas
Industry;

To protect the public interest as it is affected by the quality of, and the
rates charged for, the Transmission, Distribution and Supply of Natural
Gas and related services;

To assure the development of a Downstream Natural Gas Industry
infrastructure that is socially acceptable and compliant with existing
environmental laws;

To ensure that the Downstream Natural Gas Industry shall be regulated
in a manner that will ensure the quality, reliability, security and
reasonableness of charges for the Transmission, Distribution and Supply
of Natural Gas, encourage private investment in the Downstream Natural
Gas Industry and promote the efficient and competitive operation thereof
To develop the necessary trades, technical expertise and skills to support
the development of the Downstream Natural Gas Industry;

To facilitate the development of end-uses of Natural Gas that promotes

fuel dive:

ity and compliance with existing environmental laws

cluding,

but not limited to, the us

of Natural Gas as a vehicular fuel; and


Ik) To encourage equity participation in Gas Transmission Utilities and Gas

Distribution Utilities by the general public.

3 SEC. 3. Scope. - Thi 1 framework for the development

Act shall provide

4of a Downstream Natural Gas Industry and its transition from an emerging to a

smature industry status and competitive Natural Gas market, and define the

Gresponsibilities of various government agencies and private entities in
furtherance of this national goal.

8 All activities of the DO and the ERC relevant to the development and

9regulation of the Downstream Natural Gas Industry shali be in accordance with
10this Act.
ul SEC. 4. Definition of Terms. ~ As used in this Act, the following terms

12shall have the following meanings:

13(a) “Captive Market” refers to Natural Gas End-users who do not have the

14 choice of a transporter or distributor, or Supplier of Natural Gas or other
15 economically competitive energy substitute, as may be determined by the
16 ERC in accordance with this Act;

1%b) “Congress” refers to the Congress of the Philippines;

18(c)  “Contestable Market” is a market which is not a Captive Market;

19d) “Delivery” refers to the Transportation Transmission or Distribution of

20 Natural Gas and the Supply of Natural Gas, at wholesale or retail;

21) “Department of Energy’ or “DOE” refers to the government agency

2 created pursuant to Republic Act No. 7638, as amende
231) “Department of Environment and Natural Resources’ or “DENR”
24 refers to the government agency created pursuant to Executive Orders

25 Nos. 192 and 292, as amende:

26(g) “Distribution” refers to the conveyance of Natural Gas by a Gas

27 Distribution Utility through its Gas Distribution System;



1h)

S(i)

1)

8

10
11 (k)
12

13

18
19

20(n)

8

“Downstream Natural Gas Industry” refers to the Transmission,
Distribution and Supply of Natural Gas and related activities, such as

but not limited to processing

storing, regassification, interconnection,
measurement and/or metering;

“End-user” refers to any person that receives delivery of Natural Gas for
its own use;

“Energy Regulatory Commission” or “ERC” refers to the regulatory
agency created pursuant to Republic Act No. 9136 or the Electric Power
Industry Reform Act of 2001 whose expanded functions are provided in
this Act;

“Franchise” refers to the right, privilege and authority issued by
Congress authorizing a person to engage in the Transmission and/or
Distribution of Natural Gas within a specific geographical area;
“Franchise Area’ refers to a geographical area assigned or granted
under a Franchise;

“Gas Distribution Code’ refers to the code to be formulated by the DOE

as required by the Act that sets the technical performance standards for

operating Gas Distribution  Utiliti and the minimum financial
standards for Gas Distribution Utilities;

“Gas Distribution System’ refers to the system of pipelines, storage and

related facilities extending from the delivery points where the Gas

Distribution System receives the Natural Gas to the point of conn|

to the premises of the End-User;

“Gas Distribution Utility’ refers to any Person that has a Franchise

granted by Congress to operate a Gas Distribution Syste:

“Gas Permit” refers to an author’

ion issued by the DOE for the

construction, operation, expansion and modification of Gas Transmission



3(q),

Sr)

13
14
15(t)
16
17
18

19

25(v)

26

280)

ribution Syste:

Systems and Gas Dis 1s and for the Supply of Natural
Gas.
“Gas Supply Contract” refers to a contract for the Supply of Natural

Gas between a Supplier and a purchaser;

“Gas Transmission Code’ refers to the code to be developed by the

DOE as required by the Act that scts the technical performance

standards for operating Gas Transmission Systems and the minimum

financial standards for Gas Transmission Utilities;

“Gas Transmission System” refers gencrally to the system of pipelines,

storage and related facilities that are used to transport Natural Gas from
the interconnection with Gathering Facilities, LNG regassification

facilities or other Gas Transmission Systems to the interconnections with

Gas Di

ribution Systems, other Gas ‘Transmission Systems, or End-

users;

m that has ise

“Gas Transmission Utility’ refers to any Pers
to operate a Gas Transmission System «nd does not include those who

operate own-use pipelines, storage and related facilities operated

independently of the pipeline or those intending to operate a Gas
Transmission System;
“Gathering Facilities’ efers (0 Natural Gas pipelines and related

faciliti

used to gather gas in the field and bring it to a location for
processing or for delivery at an interconnection with the Gas
Transmission System; the terms “Gather” and “Gathering” shall be
construed accordingly;

“Joule” refers to the unit of energy or work done when the point of
application of a force of one Newion is displaced a distance of one meter
in the direction of the force. It is also equal to one watt-second;

“LNG” refers to Liquefied Natural Gas”;


(x)

ay)

82)

10
iW

ce]

15
16(aa)
7
18

19(bb)

2S(ce)
26
21d)

2k

“Natural Gas” refers to hydrocarbons, primarily methane, which, at

atmospheric temperature and pressure, are in a gaseous phase. For

purposes of this Act, the term “Natural Gas” shall be inclusive of LNG;
“Person” refers to a natural or juridical person, as the case may be,
including the national and local government of the Republic of the

Philippines, its agencies and instrumentaiities, and government-owned

and controlled corporations;

“Petroleum Operations” as defined in PD 87, refers to searching for and

obtaining petroleum within the Philippines through drilling and pressure
or suction or the like, and all other operations incidental thereto, It

includes the transportation, storage, handling and sale (whether for

export or for domestic consumption) of petroleum so obtained but does
not include any: (1) transportation of petroleum outside the Philippines;

(2) processing or refining at a refinery; or (3) any transactions in the

products so refined;
“Philippine Energy Plan” or “PEP” refers to the overall energy program
formulated and updated yearly by the DOB and submitted to Congress

purs

tant to Republic Act No, 7638, as amended;

“Service Contract” refers to the award granted by the Philippine

government to a qualified Person to engage in the exploration,
development and utilization of natural resources through joint venture,
co-production, productign-sharing or other similar arrangement with the
State pursuant to Article XI, Section 2, of the Constitution, including,
Service Contracts under Presidential Decree No. 87, as amended;
“Supplier” refers to any Person authorized by the DOE to engage in the
Supply of Natural Gas;

“Supply” means refers to the domestic trading, and/or sale of Natural

Gas for wholesale or retail;


Hee) “Third Party Access” refers to the system of allowing any qualified

2 Person access to the Gas Transmission Systems and Gas Distribution

bed in Chapter If Sec. 10 hereof;

Systems under the conditions pr
4() “Transmission” refers to the transportation of Natural Gas through a

5 Gas Transmis:

ion System;

6(xg)_ “Unbundled Service’ refers to the pricing of the energy value of Natural
7 Gas separately from the rates charged for natural gas Transmission or
8 Distribution; and

9{bh) “Vehicular Natural Gas” means Natural Gas that is used as a fuel in a

i0self-propelled vehicle.

i CHAPTER If

12 ORGANIZATION AND OPERATION OF THE

13 DOWNSTREAM NATURAL GAS INDUSTRY

14

15 SEC. 5. Organization. - For purposes of this Act, the Downstream

16Natural Gas Industry shall be divided into three (3) sectors, namely

17Transmission, Distribution and Supply of Natural G:

18 SEC. 6. Regulation of Transmission, Distribution and Supply

19Sectors. - The Transmission, Dis'

ribution and Supply of Natural Gas are

20businesses affected with public interest and the regulation of these businesses

2las provided for in this ary in the public interest

otis hereby deemed neces
2 SEC. 7. Franchise Requirement.

23(a) Transmission and Distribution of Natural Gas declared public utilities. The

24 Transmission and Distribution of Natural Gas as provided for in this Act
28 are hereby declared to be public utility operations, requiring a Franchise
26 or similar legislative authorization;

27(b) Congr

ssional Franchise and similar legislative authorization. Any person

f that seeks to operate for commercial purposes a Gas Transmission

29 System or Gas Distribution System shall first be required to hold or


1} obtain a Franchise, any law to the contrary notwithstanding. ‘The

2 Franchise requirement shall apply with respect to all Gas Transmission
3 Systems and Gas Distribution Systems, regardless of the size or pressure
4 of the pipeline. The foregoing, notwithstanding, this Franchise
5 requirement does not apply to operators of facilities for the Transmission
6 and Distribution of Natural Gas for Own-use and related facilities that
7 are operated independently from the pipeline;

8(c) Prior regulatory approvals. ‘The grantce of such Franchise shall also be

Yrequired to secure from the DOK a Gas Permit as provided herein, and to

losecure from the appropriate government agencies all other regulatory
llapprovals, licenses, permits and authorizations applicable to such grantee
I2under- existing laws. The DOE shall not unreasonably withhold or delay the
13grant of any Gas Permit, and may not reopen any legislative determination in
Ithe review and grant of any Franchise.

15 SEC. 8. Philippine Ownership Requirement. - As required under
16Article XI, Section 11, of the Constitution of the Republic of the Philippines, no
17Franchise, certificate, or any other form of authorization of a public utility shall

I8be granted except to ‘citizens of the Philippines or to corporations or

I9associations organized under the laws of the Philippines at leas

t sixty per
20centum (60%) of whose capital is owned by such citizens

21 SEC. 9. Gas Transmission Systems of Service Contract Holders. -
22Any Person who is a holder of a Service Contract that authorizes the
23construction and operation of facilities for the ‘Transmission or Distribution of
24Natural Gas shall not be required to obtain a Franchise or other legislative
25authorizations under this Act only to the extent such facilities are: (a) located
26in the production area and upstream of gas processing or refining facilities and

27are not us

to serve End-users; or (b) used exclusively to provide service to

28existing customers or such Person under a Gas Supply Contract entered into


iprior to the effectivity of this Act, which Gas Supply Contract shall not be
2affected by the enactment of this Act. In all other cases, Service Contract
3holders shall be subject to the Franchise and other regulatory approval
4requirements set forth in this Act.

5 SEC. 10. Third Party Access. - Gas Transmission Systems and Gas

6Distribution Systems excluding those constructed and operated for own use

7shall be available for non-discriminatory access by third party users which may

8include parties to a Service Contract, Suppliers and End-users, with due

Sregard to the economic viability of the operation of such facilities. Such

l0operators shall negotiate in good faith with third-party users the provision and

Ilterms of access in accordance with guidelines to be promulgated by the DOE.
12a) Available Capacity. Third Party Access obligations shall apply only to the
IBavailable capacity of the Gas Transmission Systems and Gas Distribution

14Systems as determined by subtracting the volume of capacity that is:

15 (i) Used by the owner or operator to serve his own customer; and/or
16 (ii) Allocated by the owner or operator to third partics under
17 transportation contracts

I8from the design capacity of the Gas Transmission Systems and Gas
19Distribution Systems.
20 Nondiscriminatory third-party access shall be available to users by

2lcontract with the Gas Transmission or Gas Distribution Utility. If the Gas

22Transmission or Gas Distribution Utility with available capacity refuses service
23to a user or offers discriminatory service, the affected party may request the
24DOE’s intervention, The Gas Transmission or Distribution Utility shall be
25required to file proof that capacity was not available when service was denied

26b) Deferment of Third Party Access Obligation. As a condition imposed by a

27Permit, the DOE may determine that implementation of Third Party Access to


iGas Transmission Systems and Gas Distribution Systems may be deferred

2where

3 (i) It can be demonstrated that such deferment is necessary to enable
4 the efficient planning of the infrastructure and aggregation of the
5 initial demand necessary to justify investments in the Gas
6 Transmission Systems and Gas Distribution Systems ; or

7 (i) kt is im the interest of the End-u erved by the Gas
8 Transmission System and Gas Distribution System to ensure
9 stability of supply.

10 In either ¢, the DOE shall not defer implementation of Third Party Access

Iifor a period longer than three (3) years after completion of construction in the

stems and five (5) years aft

12case of Gas Transmission 5: completion or

I3construetion in the case of Ge tribution Systems. Provided, however, that

IMthe deferment period can be extended on reasonable grounds.
15(¢) Approved Access Conditions for Gas Transmission Utilities and Gas
16Distribution Utilities. Prior to conducting negotiations with third parties, a Gas

17fransmission Utility and a Gas Distribution Utility shall request the DOE to

I8approve its access conditions. The DOE shall approve access conditions after
19it has determined that they are consistent with the guidelines which it shall
20promulgate pursuant to this Act

au SEC. 11, Environmental Protection. ~ Gas Transmission Utilities, Gas
22Distribution Utilities and Suppliers shall comply with all environmental laws,

23rules, regulations and standards promulgated by the DENR and other

24appropriate governmental agencies

25 CHAPTER II
26 POWERS AND FUNCTIONS OF THE DOE
27 SEC. 12. Powers and Functions of the DOE. in addition to its existing

28powers and functions, the DOE shall have the overall responsibility of


isupervising and monitoring the development of the Natural Gas Industry and

2regulation of the construction and operation of Natural Gas pipelines and

3related facilities for the Transmission, Distribution and Supply of Natural Gas.
4Towards this end, the DOE shail have the following powers and functions:

5(a) Issue permits for the construction of pipelines and related facilities for the
6 ‘Transmission, Distribution and Supply of Natural Gas;

7(b) Establish standards setting forth the characteristics for classifying pipeline

ion Systems, Gas Distribution

8 and related facilities either as Gas Transmit:

‘These standards may include both the

9 Systems, or Gathering Facilities.

related to the diame awe of

, size and pre

10 physical

11 pipeline facilities, and the functional characteristics of such facilities;
12(c) Prepare and periodically update a five-year Natural Gas Development Plan
13 and integrate the same into the PEP. The DOE shall consider and integrate

ared and submitted to it by

14 the individual or joint development plans prep

the Downstream Natural Gas industry participants pursuant to this Act.
16 Appropriate mechanisms shali be provided to protect the confidentiality of
17 any information that is commercially sensitive. ‘The DOE shall publish an
18 initial draft of the plan and undertake public consultations thereon prior to

19 its adoption;

20(d) Before the end of April of each year, submit to the Office of the President

21 and Congress an annual report;

22(e) Ensure the safety, reliability, quality and security of supply of Natural Gas.
23 Consistent with the development of the Downstream Natural Gas industry,

24 the DOE shall, among others:

25 () Encourage private sector investments in delivery infrastructure
26 and promote the development of domestic markets for Natural Gas;
27 (ii) In consultation with the .Downstream Natural Gas Industry

28 participants and other government agencies, promote a system of


z incentives to encourage industry participants, including new

2 producers and End-users to provide adequate and reliable supply
3 of Natural Gas; and

4 (ii) Undertake, in coordination with other governmental agencies, as
3 appropriate, an information campaign to educate the public on the
6 benefits of developing the Natural Gas Industry and the potential
7 for utilizing Natural Gas as a source of energy.

a() Within one (1) year from the effectivity of this Act, promulgate rules and
9 regulations to promote competition, encourage market development and
10 customer choice and prohibit/penalize abuse of market power, cartelization
11 and any anti-competitive or discriminatory behavior, in order to further the
12. intent of this Act and protect the public interest.

13Such rules and regulations shall:

4 (i) define the relevant product and geographic markets for purposes of
15 establishing anti-competitive conduct;

16 (ii) __ provide criteria to determine the relevant market structure; and

7 (iii) establish the periodic reportorial requirements of Natural
18 Gas Industry participants as may be necessary to enforce
19 the provisions of this Section

20(g) Within

(6) months frem the effectivity of this Act, the DOE shall,

2ipreparatory to the holding, of public consultations with Natural Gas industry

22participants, issue draft Gas Tran: ssion and Distribution Codes which shall

23contain, among others, the following,

24 (i) Technical performance standards for Gas ‘Transmission and

25 Distribution Utiliti provided, that in the establishment of the

26 performance standards, the nature and function of the

27 shall be considered; and


1 (ii) Minimum financial capability standards for Gas Transmission and
2 Distribution Utilities: provided, that such standards are set to
3 ensure that the Natural Gas Industry participants meet the
4 minimum financial standards to protect the public interest

5In consultation with Natural Gas industry participants, the DOK shall issue
6final Gas Transmission and Distribution Codes within twelve (12) months from
‘Tthe effectivity of this Act.

8(h) By order, revoke, after due notice and hearing, the Gas Permit of any
9Person that fails to comply with the rules and regulations promulgated
l0pursuant to this Act, the Gas Transmission Code, the Gas Distribution Code,
lor any requirement of this Act. The DOE shall allow such Person sufficient
I2time to remedy the violation for an orderly disgorgement, when applicable, but
13in no case shall such remediation period exceed twelve (12) months from the
ladate of issuance of the order.

15(i) Encourage private enterprises in the Downstream Natural Gas Industry to
I6broaden the base of their ownership and thereby encourage the widest public
Mownership thereof;

18G) Formulate, in consultation with the Downstream Natural Gas Industry
19Participants, rules and regulations as may be necessary to implement the
objectives of this Act;

Jental to attain

21(k) Exercise such other powers as may be necessary or inc

22the objectives of this Act; and

23,1) Exercise original and exclusive jurisdiction over all cases dealing with

24issuance of Permits, non-price regulatory measures, fees, fines and penalties

25imposed by the DOF in the exercise of the above-mentioned powers.
26
7 CHAPTER IV

28 POWERS AND FUNCTIONS OF THE ERC


1 SEC. 13. Powers and Functions of the ERC. - in addition to its existing
2powers and functions, ERC shall assume sole regulatory responsibility for
3establishing the rates and related terms and conditions of service for the

ent that cach

ATransmission, Distribution, and Supply of Natural Gas to the

Ssuch activity is regulated pursuant to the requirements set forth in this Ac

6Towards this end, the ERC shall have the following powers and functions;

(a) In the public interest, establish and cnforce a methodology for setting

8Transmission, Distribution, and Supply rates taking into account all relevant
9considerations, including the efficiency or inefficiency of the regulated entities.
10The rates must be such as to allow the recovery of the just and reasonable
licosts and a reasonable return on rate base (RORB) to enable the entity to
operate viably. The ERC may adopt alternative forms or internationally-
accepted rate-setting methodology as it may deem appropriate. The rate-setting
l4methodology so adopted and applied must ensure a reasonable price or tariff.
1SThe rates prescribed shall be non-discriminatory. The ERC shall determine

16such form of rate-setting methodology which shall promote efficiency.

17(b) Determine whether take-or-pay charges, minimum bill payments or
18 similar fixed obligations contained in Gas Sales and Purchase
19 Contracts or pipeline Transmission contracts entered into. by Gas
20 Transmission and Distribution Utilities and electric power industry
2 icipants can be recovered from their tariffs to their own
22 customers;

23(c) Apply administrative procedures that will ensure the Constitutional
24 right to due process.

25 CHAPTER V

26 NATURAL GAS TRANSMISSION SECTOR

7 SEC. 14. Gas Permit Requirement ~ Any Person that holds a Franchise

28granted by Congress authorizing it to serve as a Gas Transmission Utility shall,


Ibefore it operates, maintains or constructs Gas Transmission Systems, secure

2from the DOE a Gas Permit issued pursuant to the standards set forth in this
3Act and the rules and regulations promulgated by the DOE. The DOE shall

ties

4issuc a public notice of all Gas Permit applications and afford interested pa
Sreasonable opportunity to comment upon such applications, The DOE shall
6issue a Gas Permit upon its determination that the construction, control,

7installation, operation and maintenance of the Gas Transmission System would

8be consistent with the policy declarations contained in this Act. Provided,

9however, that if a Gas Permit is sought for new service that would be provided
l0within the Franchise area of Gas Transmission Utility, the DOE shall consider
Ithe economic effects of granting such a Gas Permit upon that Gas
12Transmission Utility and its End-uscrs

13 SEC. 15. Terms and Conditions of Permits, ~ In issuing a Gas Permit,
lathe DOE shall have the power to impose such reasonable terms and conditions
1Sas the public interest may require

16 Among such conditions shall be the requirement that the Permit holder

17complies in full with the Gas Transmission Code promulgated by the DOE
I8pursuant to Section 17 hereof,
19 Gas Transmission Utilities shall not be obligated to undertake, nor may

20DOE require, the expansion of an existing Gas Transmission System to serve

rem for the

2ladditional customers or the sizing of a Gas Transmission

22purpose of increasing capacity to serve load in excess of the maximum design
23capacity of the pipeline proposed by the Gas Transmission Utility;

24 SEC. 16. Functions/Obligations of Gas Transmission Utilities. - A
25Gas Transmission Utility shall have the obligation to provide Transmission
26services and connections to its Gas Transmission System for any End-user

27subject to economic viability. Any Gas Transmission Utility engaged therein


Ishall provide nondiscriminatory access to its Gas Transmission System to any
2Supplier and eligible End-users under Section 10, Chapter Il of this Act
3 SEC. 17. Gas Transmission Code Compliance. ~ Ail Gas Transmission

4Utilities shall be required to ensure and maintain the safety, reliability,

Sadequacy, security, stability and integrity of their Gas ‘Transmission Systems in

6accordance with the performance standards set forth in Gas Transmission
7Code to be promulgated by the DOE. Each Gas Transmission Utility shall

8submit to the DOE a statement of its compliance with the technical

9specifications prescribed in the Gas ‘Transmission Code and the performance
l0standards prescribed in the rules and regulations implementing this Act. A
1iGas Transmission Utility that docs not comply with a prescribed technical
12specification or performance standard shall include within such statement of
I3compliance a plan for achieving compliance with said technical specifications
l4and performance standards within three (3) years or such lesser period as may
ISbe necessary to prevent safety, reliability, or environmental harm. The DOE
\éshall, within sixty (60) days upon receipt of such plan, evaluate the same and
I7notify the Gas Transmission Utility concerned whether its plan is accepted.
18Failure to submit a feasible and credible plan and/or failure to implement the
19same shall serve as grounds for the imposition of appropriate sanctions, fines
200r penalties.

2i SEC. 18. Abandonment of Gas Transmission Systems. - No holder of

22a Permit for the construction, installation, operation or maintenance of a Gas
23Transmission System shall abandon or ‘withdraw from service any portion of

24such Gas Transmi

ssion System without obtaining prior authorization from the

2SDOE, which detertnination shall be made within one hundred eighty (180) days

26from the filing of the application for abandonment. Such abandonment shall be

27done in accordance with existing laws.


1 SEC. 19. Fees. ~ The DOE shall have the authority to prescribe and

2collect fees and charges relating to the issuance and/or review of Permits, and

Bother services related to the supervision and regulation of Gas ‘Transmission

4Systems.
F CHAPTER VI

6 NATURAL GAS RIBUTION SECTOR

7 SEC. 20. Gas Permit Requirement — Any Persc hat holds a Franchise

8granted by Congress authorizing it to serve as a Gas Distribution Utility shall,

secure from

9before it operates, maintains or constructs Distribution Systems
l0the DOE a Gas Permit issued pursuant to the standards set forth in this Act
lland the rules and regukitions promulgated by the DOE. The DOE shall issue a
I2public notice of all Gas Permit applications and afford interested parties
13reasonable opportunity to comment upon such applications. The DOE shall
l4issue a Gas Permit upon its determination that the construction, control,
15installation, operation and maintenance of the Gas Distribution System would
16be consistent with the policy declarations contained in this Act. Provided,
17however, that if a Gas Permit is sought for new service that would be provided
I18within the Franchise area of Gas Distribution Utility, the DOE shall consider

19the economic effects of granting such a Gas Permit upon that Gas Distribution

ty and its End-
2 SEC. 21. Terms and Conditions of Permits. ~ In issuing a Permit, the
22DOE shall have the power to impose such reasonable terms and conditions as
23the public interest. may require. Among such conditions shall be the
24requirement that the Permit holder complies in full with the Gas Distribution
25Code promulgated by the DOE pursuant to Section 23 hereof.

26 SEC. 22. Functions of Gas Distribution Utilities. ~

27(a) A G Distribution Utility shall have the obligation to provide

28 Distribution services and connections to its Gas Distribution System for


14

15

16

within the area covered by its Gas Permit consistent with

any End-use
the Gas Distribution Code. Any Gas Distribution Utility engaged therein
shall provide nondiscriminatory access to its Gas Distribution System to
eligible End-users under Section 10, Chapter If of this Act;

Any Gas Distribution Utility shall be entitled to impose and collect

Distribution charges and conneetion fees from such End-users
approved by the ERC;

A Gas Distribution Utility Il submit to the DOE annually its plan for

maintaining and developing its Gas Distribution System in compliance
with the obligations imposed by this Act;

A Gas Distribution Utility shall provide universal service within the area
covered by its Gas Permit except as provided herein, A Gas Distribution
Utility shall be obliged to develop and maintain an efficient system for
the Supply of Natural Gas at the reasonable request of End-users within
its Franchise Area including:

() The installation of pipes where the connection to the End-user is

within twenty (20) meters of the Gas Distribution System; or

(i) Increasing the capacity of existing Gas Distribution Systems;

provided, however, that no new service shall be required if such

service would not be economically viable. A determination by a
Gas Distribution Uiility that it cannot viably serve a portion of its
Franchise Area shall be subject to review by the DOE upon filing of

@ complaint by the requesting End-user.

24The obligation of the Gas Distribution Utility to provide universal access

25invelves both an obligation to connect End-users within twenty-five (25) meters

26from the main pipeline and an obligation to supply such End-users, to the

27extent that the Gas Distribution Utility is the sole gas Supplier. Upon

28implementation of Third Party Acc

» the utility shall be relieved of his


lobligation to supply End-users cligible for retail access as defined in the
2guidelines to be promulgated by the DOR, but not his obligation to. provide
3connection to his distribution system to such End-users. Whether or not the

4Gas Distribution Utility is the sole gas supplier in the area, prices charged by

Sthe utility for the supply of gas will be negotiated for Contestable Market and

6regulated by the ERC for the Captive Market

He) A Gas Distribution Utility shall submit annually to the DOE its plan for

stem in compliance with the

8maintaining and developing its Gas Distributior
Yobligations prescribed in this Act

10 SEC. 23. Gas Distribution Code Compliance. All Gas Distribution
11Utilities shall be required to ensure and maintain the safety, reliability,
Wadequacy, security, stability and integrity of their Gas Distribution Systems in
I3accordance with the performance standards set forth in Gas Distribution Code
Ito be promulgated by the DOE, Each Gas Distribution Utility shall submit to
Isthe DOE a statement of it compliance with the technical specifications
loprescribed in the Gas Distribution Code and the performance standards
l7prescribed in the rules and regulations implementing this Act. A Gas

18Distribution Utility that does not comply with a prescribed technical

19specification or performance standard shall include within such statement of

20compliance a plan for achieving compliance with said technical specifications
2iand performance standards within three (3) years or such lesser period as may

2be necessary to prevent s

fety, reliability, or environmental harm. ‘The DOE
23shall, within sixty (60) days upon receipt of such plan, cvaluate the same and
Adnotify the Gas Distribution Utility concerned whether its plan is accepted
25Failure to submit a feasible and credible plan and/or failure to implement the
26same shall serve as grounds for the imposition of appropriate sanctions, fines

2Tor penalties.


i SEC. 24. Abandonment of Gas Distribution Systems. — No holder of a

tion or maintenance of a Gas

2Permit for the construction, installation, oper:

stem shall abandon or

38) vithdraw from service any portion of such Gas

4Distribution System without obtaining prior authorization from the DOE,
Swhich determination shall be made within one hundred cighty (180) days from
6the filing of the application for abandonment. Such abandonment shall be done

7in accordance with existing laws

8 SEC. 25. Fees. — The DOE shall have the authority to prescribe and
dcollect fees and charges relating to the issuance and/or review of Permits, and

lWother services related to the supervision and regulation of Gas Distribution

11Systems.

12 CHAPTER VII
13 SUPPLY SECTOR
4 SEC. 26. Gas Permit Requirement. - Any law to the contrary

ISnotwithstanding, no Person may engage in any Supply activity unless it has
16obtained a Permit, as appropriate, from the DOE. For this purpose, the DOE
V7shail promulgate rules and regulations prescribing the qualifications of
18Suppliers which shall include, among other requirements, a demonstration of
19their technical capability, financial capability, and creditworthiness. The DOB
20shall have authority to require Suppliers to furnish a bond or other evidence of
21the ability of a Supplier to withstand market disturbances or other events that
2Wmay inerease the cost of providing service

23 SEC. 27. Condition for Suppliers’ Access to Customers of Gas

24Distribution Systems. ~ Upon the implementation of Third Party Acce:

as

2Sstipulated in the Gas Permit for a particular Gas Distribution Sy:

em, large

26end-users in the geographic area served by that Gas Distribution System which
27meet the criteria set forth in the guidelines promulgated by the DOE pursuant

28to this Act may enter into Gas Supply Contracts with any Supplier.. The DOE


ermine End-users or classes of End-users that are cligible for direct

Ishall det

2aceess by Suppliers, giving consideration to relevant factors including whether

constitute a Contestable Market and the

3such End-users or class of End-users
dfinancial consequences of any assets potentially stranded by expanding Supply

Scompetition

6 CHAPTER Vii
7 OWN-USE FACILITIES
8 SEC. 28. Own-Use Permits, Permits for the Transm!

9Distribution of Natural Gas for own-use shall be granted for a specific capacity
land defined route, and only final users may be the holders of such permits. In
llissuing a Permit, the DOE shail have the power to attach such reasonable
!2terms and conditions to the Permit as the public interest may require. Among
!3such conditions shall be the requirement that the Permit holder comply in full
l4with the Gas Transmission or Distribution Code promulgated by the DOE, as

15such may be amended from time to time, and to ongoing regulation by the DOE

16as provided herein,

7 CHAPTER 1X
I8 RATES AND CHARGES.
19 SEC, 29, Regulation of Rates and Charges. The ERC shall review and

20 approve the rates, charges and other amounts proposed to be charged by Gas

21 Transmission and Distribution Utilities and S: ippliers. Where such rates are

22 applicable to products and sérvices provided to Captive Markets, the
23 ratemaking methodology to be applied by the ERC shall be based on the

24. principle of full recovery of prudent and reasonable costs incurred, including

A reasonable return on rate base that is equal to the rate of retum on
26° investments of comparable risk, or such other principles that will promote the

27 determination of just and reasonable rates, Rates and charges for products



1 and/or services in Contestable Markets shall be deregulated. Rates and

2 charges shall be calculated on the basis of Unbundied Service.

3 SEC. 30. Prohibition of Discriminatory and Unreasonable Rates

4 and Charges. - No Gas ‘Transmission Utility, Gas Distribution Utility or

5 Supplier shall, with respect to the Transmission, ‘Distribution, or Supply of

6 Natural Gas (1) make or grant any undue preference or advantage or (2

vice, facilities, or

7 maintain any unreasonable difierence in rates, charges, ser

s of s

8 in any other respect, between locations , or between clas vice; or

9 types of custome
10 SEC. 31. Prohibition of Cross Subsidies. Gas Transmission and
11 Distribution Utilities shall not, directly or indirectly, subsidize the provision of
12 service with rates for other service or for the marketing of gas, or subsidize
13. the marketing of gas with rates for other service.

14 SEC. 32, Separate Accounting Systems. For purposes of the
15. preceding section, Gas Transmission and Distribution Utilities must separate,
16 if applicable the financial information relevant to the provision of

i7 Transmission, storage and Distribution services, as well as the marketing of

18 gas, in such a. way as to clearly identify income, costs and operational

19 expenses of each item.

20 SEC. 33. Take-or-Pay Obligations. For the purpose of determining

2 their eligibility for a passthrough to End-uscrs, take-or-pay provisions in Gas

22Sales and Purchase Contract shall

23 (i) Index the contract price to the price of competing alternative fuels
24 such as heavy fuel oil and/or gas oil based on internationally
2s accepted reference standards;

%6 (ii) Include re-opener mechanisms to allow for the adjustment of the

27 price and/or volume commitments under _ extraordinary



1 circumstances causing severe economic hardship to cither party

2 such as price movements in competing alternative fuel market or
3 changes in the gas purchaser’s market such as substantial
4 contraction in forecast demand levels;

s Gi) Provide for a reasonable period for recovery of tale-or-pay
6 payments,

7 Potential parties to a Gas Sales and Purchase Contract may, at. their

Soption, and prior to the exccution of such contract, request that the DOE
Sreview their take-or-pay provisions for their consistency with a(i) and a(ii)
I0above;

v1 No party to a Gas Sales and Purchase Contract may be compelled to
l2renegotiate any term or condition of a duly executed Gas Sales and Purchase
13Contract or to incorporate terms or conditions in such contract which are not
l4commercially acceptable to it or its counterparty, it being sufficient that the

Isterms and conditions of the contract as a whole mitigate the potential impact

loupon End-users of take-or-pay provisions.

17 CHAPTER X
18 RATEMAKING PROCEDURES OF THE ERC
19 SEC. 34, Filing of Rate Schedules. - Under such rules and regulations

20as the ERC may prescribe, the ERC may require reports or documents from
21Gas Transmission Utilities, Gas Distribution Utilitics or Suppliers showing all
22rates and charges for the Transmission, Distribution, or Supply of Natural Gas
23and the classifications, practice, and regulations affecting such rates, charges,
2d4and classifications and services, provided that the ERC shall, in the
25implementing rules and regulations of this Act, provide appropriate
2omechanisms to protect the confidentislity of any information that is

27commercially or competitively sensitive;



1 SEC. 35. Changes in Rate and Charges. - Within thirty (30) days of

the ERC s jecting, or

hall issue an order accepting, re

filing for a change in rate:

such change. ‘The ERC may, upon the filing of an

3setting for hea

4application therefore or at any stage thereafter with or without prior hearing,

ing papers duly verified or authenticated, and with such

Son the basis of support

ch parties to make such

6notice to the affected parties and opportunity for
Jsubmissions as the ERC determines to be appropriate in the circumstances,

ion, Distribution or

smi

grant provisional relief fixing interim rates for the ‘Ir

ring on the

9Supply of Natural Gas applicable during the pendency of the hi
l0application, on motion of a party in the case or on its own initiative, without
liprejudice to a final decision after hearing, should the ERC find that the
12pleadings, together with such affidavits, documents and other evidences which
I3may be submitted in support of the motion, substantially support the
l4provisional order. The final order fixing the applicable rates shall provide for
ISover- or under-recovery of costs occasioned by the application of ERC-approved
i6interim rates. At any hearing involving rates adjustment, the burden of proof
17to show that the increased rates are just and reasonable shall be upon the Gas

18Transmission Utility, Gas Distribution Utility or Supplier.

19 CHAPTER XI

20 PROMOTION OF COMPETITION

21 SEC. 36. Market Power Abuse and Anti-Competitive Behavior. - {a}
2 No Gas Transmission Utility, Gas Distribution Utility or Supplier, or

affiliate thereof may abuse its market power. Such abuse may include, but
24shall not be limited to, agreeing with competitors to fix prices, fix output of

2Sproducts or services, or divide markets or c

stomers; tying arrangements;

26unduly di

riminatory or preferential practice:

or misrepresentation or fa

2Tadvertising;


Ib] The DOE shall monitor and, after due notice and hearing upon complaint
2or on its own initiative, penalize any such market power abuse or anti-
3competitive or discriminatory act or behavior. Upon finding that a natural yas
4industry participant has engaged in such act or behavior, the DOE shall stop

Sand redress the same. Such remedies shall, without limitation, include the

6imposition of price controls, issuance of injunctions, or disgorgement of exc

strative fines and penalties pursuant to this

Tprofits and imposition of admini
BACK

9c] ‘The DOE shall, within one (1) year from the effective date of this Act,
10promulgate rules and regulations providing for a complaint procedure that,

Ji without limitation, provides the party alleged to have engaged in anti-
12competitive or abusive activities with notice and an opportunity to be heard.

13 SEC. 37. Affiliated Suppliers. - In order to prevent Anti-

ion Utilitics and Gas

14Competitive Conduct, Service Contractors, Gas Transmi
1SDistribution Utilities that own or control Affiliates that are Suppliers shall

l6conduct their business as follows:

17(a) No preference will be given to the Affiliated Supplier over other Persons
18 through contracting for available capacity, scheduling, balancing,
19 curtailment priority or Tariffs;

20(b) Marketing information provided to the Affiliated Supplier will be provided

21 to any non-Affiliated Supplier that a competitor or potential

2 competitor;

23(c) Employees of the Affiliated Supplier shall, to the maximum extent

24 possible, function independently in making business decisions; and

25(d) Books of accounts and records of the Affiliated Supplicr shall be
26 maintained separately.

27 CHAPTER XI

28 TAXES


1 SEC. 38. Franchise Taxes. - Gas Transmission Utilities and Gas

2Distribution Utilities shall pay a Franchise tax equivalent to two percent (2%) of

3gross revenues obtained from the rendering of Natural Gas Transmission or
‘Distribution services, as appropriate, pursuant to Republic Act No, 8424,

Sotherwise known as the Comprehensive Tax Reform Law, as the same may be

taxes imposed shall be in licu of all

oamended from time to time. Franc!

sed under existing law

8 Excise Tax. - ‘The Supply of Natural Gas to the Contestable

is retail rate which shall be subject

9Mark

shall be the only component of the

10lo excise taxes under the Republic Act No. 8424, otherwise known as the

11Comprehensive Tax Reform Law, as the same may be amended from time to

12time.

ve the declared

13 SEC. 40. Withdrawal of Exemptions. - In order to acl
ldpolicies of this Act, including the promotion of fair and nondiscriminatory
iStreatment of public and private sector entities in. the development of the
i6domestic natural gas delivery infrastructure, all existing tax exemiptions
Mapplicable to Persons engaged in the Transmission or the Distribution of

18Natural Gas, insofar as such exemptions relate to revenues derived from the

19Transmission or the Distribution of Natural Gas, shall, any law to the contrary

20notwithstanding, be deemed revoked as of the effectivity of unis Act.

21 CHAPTER XI
2 ADMINISTRATIVE FINES AND PENALTIES
23 SEC. 41. Administrative Fines and Penalties. -

24{a) The administrative fines and penalties that shall be imposed by the DOE

25 for Sec. 36 and any violation of or non-compliance with this Act or the
26 implementing rules and regulations for this Act shall range from a
7 minimum of fifty thousand pesos (P50,000.00) to a maximum of fifty

28 million pesos (P50,000,000.00);


1(b)

5(c)

6

9
1o(d)
ul
12

13

Any Person who is found to have engaged in any of the prohibited acts

pursuant to Section x hereof shall suffer the administrative penalty or
fine ranging from ten thousand pesos (P10,000.00) to ten million pesos
(P10,000,000.00), at the discretion of the DOB;

The members of the Board of Directors of any Person that violates the

provisions of this Act may be fined by an amount not exceeding double

of the

the amount of damages caused by the offender at the discreti

DOE. This rule shall apply to the members of the Board who knowingly

or by neglect allow the commission or omission under the law;

Any party to an administrative proceeding may, at any time, make an
offer to the DOE, conditionally or otherwise, for a consent decree,
voluntary compliance or desistance and other settlement of the case.
‘The offer and any or all of the ultimate facts upon which the offer is
based shall be considered for settlement purposes only and shall not
constitute an admission by the party making the offer of any violation of
the laws, rules, regulations, orders and resolutions of the DOE, nor as a

waiver to file any warranted criminal actions;

In addition ngress may, Upon recommendation of the DOE, revoke
such Franchise or privilege granted to the party who violated the
provisions of this Act.
CHAPTER XIV
ANTI-PILFERAGE PROVISIONS

SEC. 42. Pilferage. - It is hereby declared unlawful for any Person to:
Tap, make or cause to be made any’ conncetion with any Gas
Transmission System or Gas Distribution System without previous

authority or consent of the Gas Transmission Utility or Gas Distribution

Utility concerned;



i(b)

12

Tamper, install or use tampered meters or any other device which

interferes with proper or accurate registry or metering of Natural Gas
flows or otherwise results in its diversion in a manner whereby Natural
Gas is stolen or wasted;

Damage or destroy any Natural Gas meter, equipment, pipeline or
conduit or any part of a Gas Transmission System or Gas Distribution
System or allow any of them to be so damaged or destroyed as to
interfere with the proper or accurate metering of Natural Gas flows; and
Knowingly use or receive the direct benefit of Natural Gas delivery service
obtained through any of the acts mentioned in subsections (a), (b), and
(6) above.

SEC. 43. Theft of Equipment and Materials. - It is hereby declared

13unlawful for any person to:

14{a)
15
16
7
18

19

20

Cut, saw, slice separate, split, severe, smelt, or remove any portion of a
Gas Transmission System or Gas Distribution System, including pipeline
materials and meters, from any installation or place of installation or any
other place or site where it may be rightfully or lawfully stored,
deposited, kept, stocked, inventoried, situated or located, without the
consent of the Gas Transmission Utility or Gas Distribution Utility
concerned, whether or not the act is done for profit or gain;

Take, carry away or remove or transfer, with or without the use of a
motor vehicle or other means of conveyance, load, carry, ship or move
from one place to another, whether by land, air or sea, any portion of a

Gas Transmission System or Gas Distribution Sy

stem, including pipeline
materials or meters, from any installation or place of installation, or any

place or site where it may be rightfully or lawfully stored, deposited, kept,

stocked, inventoried, situated or located without the consent of the Gas


1 Transmission Utility or Gas Distribution Utility concerned, whether or

not the act is done for profit or gain; and

s or otherwise keep in his premises, custody or control,

3c) Store, pos:

4 without lawful purpose, any portion of a Gas Transmission
5 Gas Distribution System, including pipeline materials or meters, without
6 the consent of the Gas’Transmission Utility or Gas Distribution Utility
gi concerned, whether or not the act is done for profit or gain

8 SEC. 44. Penalties. -

9(a) Violation of Section 42. ‘The penalty of prision mayor or a fine ranging
10 from Ten thousand pesos (P10,000.00) to Twenty thousand pesos
1 (P20,000.00) or both, at the discretion of the court, shall be imposed on
2 any Person found guilty of violating Section 42 hereof.

13(b) Violation of Section 43. The penalty of reclusion temporal or a fine

14 ranging from Fifty thousand pesos (P50, 000.00) to One hundred
15 thousand pesos (P100, 000.00) or both at the discretion of the court,
16 shall be imposed on any person found guilty of violating Section 42
7 hereof.

i8(c) sion_common to violations of Sec of. If the
19 violation of Section 42 and Section 43 hereof is committed by, or in
20 connivance with, an officer or employee of the Gas Transmission Utility
21 or Gas Distribution Utility concerned, such officer or employee than the
2 penalty provided herein, and forthwith be dismissed and perpetually
23 disqualified from employment in any public or private utility or service

4 company and from holding any public office

the violation of Section 42 and

ection 43 hereof is committed by a

26partnership, firm, corporation, association or any other legal entity, including a

Zyeovernment-ownéd or controled corporation, (he penalty shall be imposed on

28the president, manager and cach of the olficers thereof who shall have



iknowingly permitted, failed to prevent or was otherwise resjionsible for the
2commission of the offense.

CHAPTER XV

4 FINAL PROVISIONS
3 SEC, 45. Implementing Rules and Regulations. - ‘The DOE shall, in
6consultation with relevant government agencies, the Natural Gas Industry
Tparticipants, non-government organizations and cnd-users, promulgate

months from its

SImplementing Rules and Regulations of this Act within six (6
Sdate of effectivity.

10 SEC. 46. Separability Clause. - 1! for any reason, any provision of this
I1Act is declared unconstitutiona! or invalid, the other parts or provisions hereof
12which are not affected thereby shall continue to be in full force and effect.

13 SEC. 47. Non-Retroactivity Applicability and Repealing Clause. -The
l4provisions of Republic Act No. 387, otherwise known as the Petroleum Act of
151949, as amended, insofar as said provisions relate to the ‘Transmission and
l6Distribution of Natural Gas by pipeline concessionaires or other
'eoncessionaires, as such terms are defined in the Petroleum Act of 1949,
I8Section 11(b) thereof obligating the Philippine government to grant pipeline

Weoncessions for the Transmission and Distribution of Natural Gas under

20specified circumstances, are hereby repealed or amended. The provisions of

21Presidential Decree No. 87, as amended, insofar as the provisions thereof relate

22to the Transmission and Distribution of Natural Gas by Service Contractors, as

23such term is defined in Presidential Decree No. 87, as amended, are hereby

24amended. All other laws, decrees, executive orders, rules and: regulations,
2scirculars or other governmental issuances referring to the Transmission,
26Distribution, or Supply of Natural Gas, or otherwise authorizing any

2Igovernmental or other entity to issue licens

, permits, certificates or other

28authorizations for the Transm:

ion, Distribution, or Supply of Natural Gas,


lare hereby repealed or amended accordingly. Further, all other laws, decrees,
2executive orders, rules, regulations, circulars or other governmental issuances
3defining the term “Natural Gas” are hereby amended such that the definition of
4Natural Gas in this Act shall be deemed the definition of “Natural Gas” for

Spurposes

of the said laws, deerecs, cxceutive orders, rules, regulations,
ocireulars or other governmental issuances. Notwithstanding the foregoing,
sting

?nothing in this Act shall be dee d to revoke or otherwise modify any e

8concession granted under the Petroleum Act of 1949, as amended, certificate of
Ypublic convenience or certificate of public convenience and necessity granted
l0pursuant to the Public Service Law, as amended, specific congressional
11Franchise for the Transmission, Distribution or Supply of Natural Gas or other
12administrative or regulatory permit or contract, with concession, certificate,
13Franchise, permit or contract shall be allowed to its full term but may not be
l4renewed except pursuant to the provisions of this Act.

15 SEC. 48. Effectivity Clause. - This Aci shall take effect on the fifteenth
16(15") day following its publication in at ieast two (2) national newspapers of
l?7general circulation.

18 Approved,


FIFTEENTH CONGRESS OF THE REPUBLIC)
OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES.

H.NO._

Introduced by Rep. Aurelio “Dong” D. Gonzales, Jr.

EXPLANATORY NOTE

A great number of minor children and dependents of law enforcement
officers killed by insurgents or slain in the line of duty are unable to continue
schooling or to complete their secondary education because of the death of
the breadwinner of the family.

This Act intends to provide educational benefits for such minor-
orphaned children or dependents. Its coverage includes: (a) those who were
orphaned prior to the approval of this Act but are still minors upon its
approval: (b) beneficiaries who reach the age of majority and are unmarried
while enjoying benefits and have not completed their secondary education
shall continue to be entitled to the benefits provided herein until they complete
secondary education: and (C) those who are minors upon the approval of this
Act.

Benefits under this’ proposed bill shall include tuition fee and a
reasonable allowance for books, school supplies, transportation, clothing and
food

As a tribute to our law enforcement officers who are fighting for our
country and who are maintaining peace and order at the risk of their lives,
early enactment of this bill is eamestly solicited

REP, AURELIO “DONG” D. GONZALES, JR.
3” District, Pampanga


FIFTEENTH CONGRESS OF THE REPUBLIC)
OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

H.NO.

Introduced by Rep. Aurelio “Dong” D. Gonzales, Jr.

AN ACT
PROVIDING FOR EDUCATIONAL BENEFITS FOR THE MINOR CHILDREN
OF LAW ENFORCEMENT OFFICERS WHO ARE KILLED BY
INSURGENTS OR SLAIN IN THE LINE OF DUTY, AND FOR OTHER
PURPOSES

Be it enacted by the. Senate and House of Representatives of the Philippines
in Congress assembled:

SECTION 1, Educational Benefits for Orphaned Minor Children
and Dependents. ~ Minor children and dependents of soldiers of the Armed
Forces of the Philippines or members of the Philippine National Police and
other law enforcement agencies, who were killed by insurgents or siain in the
line of duty shall be entitled to educational benefits from the time they are
orphaned up to their completion of secondary education

The benefits shail include tuition fe

reasonable allowance for books,

school supplies, transportation, clothing and food
SECTION 2. Administration of the Education Benefits System. —

The Chief of Staff of the Armed Forces of the Philippines or the head of the



agency concerned shail designate the officer who shall administer the
educational benefits system for the orphaned minor children or dependents
covered under this Act

The Chairman of the National Police Commission shall designate the
office in the Commission, which shall administer the educational benefit
system for the orphaned minor children or dependents of policemen and
promulgate rules and regulations therefore

SECTION 3. Funds for Educational Benefits. — There is hereby
authorized to be appropriated, out of any funds in the National Treasury not
otherwise appropriated, the amount of four million pesos (P4,000,000.00) for
the educational benefits of orphaned minor children and dependents covered
under this Act for the initial year of operation. Thereafter, the amount required
for said educational benefits shall be included in the annual appropriations of
the concerned agency.

SECTION 4, Coverage. — This Act shall cover children whose father or
mother were killed by insurgents or slain in the line of duty prior to the
approval of this Act but who are still minors upon the approval of this Act

Beneficiaries who reach the age of majority and are unmarried while

enjoying the benefits of this Act but have not completed their secondary

education shall continue to be entitied to the benefits until they complete

secondary education.



son any provision of

SECTION 5. Separability Clause. ~ if for any r
this Act is declared unconstitutional or invalid, such parts not affected thereby
‘shall remain in full force and eficet

SECTION 6. Repealing Clause. ~ All laws, orders, decrees, rules and

provisions of this Act are

regulations or part thereof inconsistent with

hereby repealed or modified accordingly

SECTION 7. Effectivity. - This Act shall take effect fifteen (15) days
after its complete publication in at least two (2) newspapers-of general

circulation:

Approved,

STREET ro PN RN rover eee ENRNITe NE emer renererime nn emmecrinntnent ene