I 
THIRTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
EXPLANATORY NOTE 
The condition of the times when the Oil Deregulation Act of 1998 was 
enacted into law is now very different to present conditions. 
Worldwide, 
petroleum prices reached highest in history. 
The political situation in the 
Middle East and the worldwide occurrence of terrorist acts helped constrained 
supply and propelled prices upward. The wars in Kuwait, Iraq, and some 
African nations damaged their oil depots or crippled their supply transport 
structures. In Asia, Indonesia’s oil supply was also affected by the Islamic 
upheaval. In a matter of months, the oversupply enjoyed at the start of the 
century suddenly reversed - and oil prices reacted accordingly. 
In the Philippines, domestic prices have indeed increased at much lower 
and slower rates; remaining the lowest fuel prices of any non oil-exporting 
Asian country. The public complaints though have something to do with the 
absence of relief measures from the government. Real wages in the country 
have been declining. So while prices in the country are relatively low compared 
to the rest of the region, they are high in absolute terms as far as the average 
Filipino is concerned - particularly when his basket of goods shrinks every day. 
The complaints from the Philippine consuming public focus on the 
seemingly unfair trade practices observed by the oil firms -whether new or old 
player in the industry. There is much to be desired in the way government is 
enforcing the policing provisions of the Oil Deregulation Law, such as the price 
monitoring and anti-trust clauses. The Joint Task Force have not been actively 
seen as ensuring that prices remain fair and reasonable, and that the ublic is 
very well advised of any change in oil prices. 
PI 
This proposed Bill, therefore, seeks to provide definitive rules and 
sanctions in the policing of ranks, not only within the oil industry, but also 
among the government agencies tasked under the law to police the industry. 
The proposed Bill also seeks to rationalize the fiscal incentives provided 
to the industry so they will redound to the general economy’s benefit and not 
contribute negatively to public revenue collection. 
Passage of this Bill is earnestly sought. 


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THIRTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
INTRODUCED BY HON. MANUEL B. VILLAR, \JR. 
AN ACT 
PROVIDING FOR FURTHER RESPONSIBILITIES 
ON FAIR TRADE PRACTICE AND INVESTMENT PROMOTION 
WITHIN THE DOWNSTREAM OIL INDUSTRY, 
AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 8749, 
OTHERWISE KNOWN AS THE DOWNSTREAM OIL DEREGULATION 
ACT OF 1998 
Be it enacted b y  tlze Sertuie uitd House of Representutiues of the Philippines in 
Congress assernbled: 
SEC I ION 1 .  Chaptcr 11, Section 7 of Republic Act No. 8749 is hereby amended 
as Chapter 111, Section 10 of the same Act, and the remaining sections shall 
be renumbered accordingly. 
SECTION 2. Section 9 of Chapter I1 is hereby amcnded to read as follo\vs: 
“Sec. 8 191. Incentivesfor New Investments To the extent applicable, 
persons with new investments as determined by the DOE and registered 
with rhc BO1 in rrfining, storage, marketing and distribution of 
pctroleum products, shall be extended the same incentives grant& to 
BOI-registcred enterprises engaged in a prcferred area of investments as 
provided by law. 
.4ny provision of the law to thc contrary notwithstanding, thc said 
incentives may be availed by persons with new investments for a period 
of five (5) years from registrmion with the BOI: Provided, however, That is 
thc storage, marketing and distribution of petroleum products, only the 
investments if new industry participants shall be entitled to incentives 
provided by law. A s  used herein, “marketing ofpetroleurn products”shal1 
include thc establishmenr of gasoline stations. 
For this purpose, the industry shall be included in thc annual 
Investment Priorities Plan (IPP), until otherwise determined by the DOE 
and BOI, and upon which thc incentives to be enjoyed shall be coincided 
with the industry’s new status AS PROVIDED BY LAW. [pursuant to 
Executive Order No. 226, othrmisc known as the “omnibus Investment 
Code of 1987”. 
Such incentives shall include: 
(1) Incomc tax holiday; 
(2) Additional deduction for labor expenses; 


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(3) Minimum tax and duty of three percent (3%) and value-added tax 
(VAT) on imported equipment; 
(4) Tax credit on domestic capital equipment; 
(5) Exemption from contractor’s tax; 
(6) Unrestricted use of consigned equipment; 
(7) Exemption from the real property tax on production equipment or 
(8) Exemption from taxes and duties on imported spare parts; and 
(9) Such other applicable incentives under Article 39 of Executive Order 
machineries; 
No. 226.1 
Any provision of the law to the contrary notwithstanding, the said 
incentives may be availed by persons with new investments for a period 
of five (5) years from registration with the BOI: Provided, however, That in 
the storage, marketing and distribution of petroleum products, only the 
investments of new industry participants shall be entitled to incentives 
provided BY LAW [in the said Code]. As used herein, “marketing of 
petroleum products” shall include the establishment of gasoline stations. 
For this purpose, the industry shall be included in the annual 
Investments Priorities Plan (IPP) , UNTIL OTHERWISE DETERMINED BY 
THE DOE AND BO1 UPON WHICH INCENTIVES TO BE ENJOYED 
SHALL BE COINCIDED WITH THE INDUSTRY’S PRIORITY STATUS 
AS PROVIDED BY LAW. [: Provided, That nothing herein contained shall 
preclude qualified persons or entities as provided under the “Omnibus 
Investments Code” from applying from or continue enjoying incenyves 
and benefits under the said Code.] 
SECTION 3. The title of Chapter 111 is hereby amended to read as follows: 
“REGULATIONS ON FAIR TRADE PRACTICES, Anti-Trust Safeguards, 
AND other Prohibited Acts [and Remedies]. 
SECTION 4. Chapter 111, Section 11 (b) is hereby amended to read as follows: 
“(b) Predatory pricirtgwhich means selling or offering to sell any oil 
product at a price below the seller’s or offeror’s average variable cost for 
the purpose of destroying competition, eliminating a competitor or 
discouraging a potential competitor from entering the market: Provided, 
however, That pricing below average variable cost in order to match the 
lower price of the competitor and not for the purpose of destroying 
competition shall not be deemed predatory pricing. For purposes of this 
provision, “variable cost” as distinguished from ‘ B e d  cost”, refers to 
costs such as utilities or raw materials, which vary as the output 
increases or decreases and “average variable cost”refers to the sum of all 
variable costs divided by the number of units of outputs. 
Any person, including but not limited to the chief operating officer, chief 
executive officer or chief finance officer of the partnership, corporation or 
any entity involved, who is found guilty of any of the said prohibited acts 
shall suffer the penalty of three (3) to seven (7) years imprisonment, and 
a fine ranging from One Million Pesos (Pl,OOO,OOO.OO) 
to TWO Million 
Pesos (P2,000,000.0O) PER VIOLATION PER PERSON.” 


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SECTION 5. Chapter 111, Section 12, last paragraph is hereby amended to read 
as follows: 
“Any person, including but not limited to the chief operating officer or 
chief executive officer of the partnership, corporations or any entity 
involved, who is found guilty of any of the said prohibited acts shall 
suffer the penalty of imprisonment for two (2) years and a fine ranging 
from Two Hundred Fifty Thousand Pesos (P250,OOO.OO) to Five Hundred 
Thousand Pesos (P500,000.00) PER VIOLATION PER PERSON.” 
SECTION 6. Chapter 111, Section 13 is hereby amended as follows: 
“Sec. 13. Remedies. - (a) Government Action. -Whenever it is determined 
by the Joint Task Force created under Section 14 (E) 
[(d)] of this Act that 
there is a threatened or imminent violation or actual violation of Sections 
11 AND/OR 12 of this Act, it shall direct the provincial or city 
prosecutors having jurisdiction to institute an action to prevent or 
restrain such violation with the Regional Trail Court of the place where 
defendants reside or has his place of business. Pending hearing of the 
complaint and before final judgment, the court may at any time is ue a 
the premises, under the same conditions and principles as injunctive 
relief is granted under the Rules of Court. 
Whenever it is determined by the Joint Task Force that the Government 
or any of its instrumentalities or agencies, including government-owned 
or-controlled corporations, shall suffer loss or damage in its business or 
property by reason of violation of Sections 11 AND/OR 12 of this Act, 
such instrumentality, agency or corporation may file an action to recover 
damages and the costs of the suit with the Regional Trial Court which 
has jurisdiction as provided above. 
(b) Pn’uate Complaint.- Any person or entity shall report any violation of 
Sections 11 AND/OR 12 of this Act to the Joint Task Force. The Joint 
Task Force shall investigate such reports in aid of which the DOE 
Secretary may exercise the powers under Section 15 of this Act. The 
Joint Task Force shall prepare a report embodying its final findings and 
recommendations as a result of any such investigation, and the report 
shall be made at the discretion of the Joint Task Force. In the event that 
the Joint Task Force determines that there has been a violation of 
Sections 11 AND/OR 12 of this Act, the private person or entity shall be 
entitled to sue for and obtain injunctive relief, as well as damages, in the 
Regional Trial Court having jurisdiction over any of the parties, under the 
same conditions and principles as injunctive relief is granted under the 
Rules of Court.” 
temporary restraining order or an injunction as shall deemed just f .  
wthm 
. 
SECTION 7. Chapter IV, Section 14 (d) and (e) are hereby amended to read as 
follows: 
“(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 ofl the DOE [-] AND THE DOJ [Task Force is], ARE hereby 
mandated to determine within thirty (30) days the merits of the report 
and initiate the necessary actions warranted under the circumstance: 


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Provided, That nothing herein shall prevent the said AGENCIES [task 
force] from investigating and/or filing the necessary complaint with the 
proper court or agency motu propio[.] ; PROVZDED FURTHER, THAT 
FAILURE OF THE CONCERNED DOE AND DOJ OFFICIALS TO 
PRESCRIBED PERIOD AND/OR FILE THE APPROPRIATE CASE, 
SHALL BE DEEMED A DERELICTION OF DUTY AND THE SAID 
OFFICIALS SHALL BE SUBJECTED TO ADMINISTRATIVE 
SANCTIONS. 
SUBMIT THE INVESTIGATIVE REPORT WITHIN THE 30-DAY 
(e) [Upon the effectivity of this Act,t] 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] 
JOINT Task Force that shall ensure the efficiency, promptness, y d  
effectiveness in the handling of [its] cases AND COMPLAINTS. [The Task 
Force shall be organized and its members appointed within one (1) 
month from the effectivity of this Act.]” 
SECTION 8. Chapter VII, Section 24 is hereby amended to read as follows: 
“Sec. 24 Penal Sanction. - Any person who violates any of the provisions 
of this Act shall suffer the penalty of three (3) months to one (1) year 
imprisonment and a fine raging from Fifty Thousand Pesos (P50,OOO.OO) 
to Three Hundred Thousand Pesos (P300,OOO.OO) PER VIOLATION PER 
PERSON.” 
SECTION 9. Effectivity Clause. -This Act shall take effect fifteen (15) days after 
its publication in a newspaper of general circulation.