Ti$IRT,EENTH CONGRESS OF THE REPUBLIC 
Second Regular Session ~, ,
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OF THE PHILIPPINES 
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1 Introduced by:' SENATOR 
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 ,COMPANERA 
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PIA S. CAYETANO 
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EXPLANATORY 
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NOTE: 
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' .!The ,Philippine Energy Plan '2000 '(PEP) 
~ of! the Department of Energy 
reborted ,that the total primary energy consumption will grow at an average 
annual :rate of 5.6 percent- per year from the year '2002 to 2004 and will further 
inhrease'by 6.5 percent perIyear from, the year 2005 to 2011. In addition, the 
tofal oil, consumption in the' Philippines is projected, to grow from 128 million 
bqrrels~(MM9) in the  year^ 2000 to 224 MMB in the year 2009 (PEP, 2000). Due 
toi this' high demand,# energy shortage poses specific, risks on the transportation 
sdctor 'and 'some industries that are dependent on liquid fuels such as diesel. 
Aside from energy insufficiency, this considerable 'demand for petroleum also 
idplies significant levels of ,
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air pollution. 
One, of the three 'major sources of air pollution in the Philippines is 
emission from' automobiles. In fact, according to the Vehicular Emission Control 
Plhning in Metro Manila Study, motor vehicles were the most significant 
cdntributors of air pollution in the country in 1992. Fuel quality greatly affects the 
amount and type of pollutants released by these vehicles. 
With the risk of energy shortage and the Philippines' worsening air quality, 
it !is high time that efforts be made to address these problems. One of the 
possible solutions is the use of am cleaner fuel such as biodiesel, which is an 
inhigenous and renewable diesel substitute and can be produced from oil- 
bearing hops. The utilization of biodiesel in automotive diesel engines showed 
the reduction in vehicular 'air emissions which greatly contributes to different 
efivironmental and health problems. Moreover, as biodiesel is proven to make a 
vehicle fuel efficient, consumption of imported diesel fuel will be greatly 
m,inimized. Lastly, economic benefits can be expected upon its use since local 
copra producers and farmers will be confident enough that their product will be in 
gceat dem,and and not oversupp1,ied since both the local and the international 
,This bill focuses, on' the efforts to ,introduce and require ,the .use of 
For these re,asons,'approval of this Bill is urgently sought. 
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m'arket will require coconut oil. 
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biodiesel in vehicles to reduce harmful emissions and diesel fuel importation. 
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THIRTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
)5 AUG 18 A9:Y 
Second Regular Session 
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', ANACT 
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RGGULATING THE USE' OF ' 
' DIESEL ' FUEL BY REQUIRING THE 
MhNDATORY USE OF MORE ' EFFICIENT AND ENVIRONMENT-FRIENDLY 
BI~DIESEL, AND FOR OTHER PURPOSES. 
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' Be it enacted by the,Senate and fhe House of Represenfafives of fhe 
Piilippines,in Congress assembled: 
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Section 1. - Title. - This Act shall be known as "THE BlODElSEL ACT 
OF 2005." 
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Section 2. - Declaration of Policy: 
Pursuant to Section 15 of Article II of the.Constitution, it shall be the policy 
of .the State to protect and advance the right of the people to a balanced 
and healthful ecology in accord with the rhythm and harmony of nature. 
Pursuant to Section 16 of Article ll of,the Constitution, it shall be the policy 
of the,State to protect 
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and promote the right to health of the people. 
Pursuant to Section!'l'2 of' Article XI1 .of the 'Constitution, it shall be the 
policy of the State to promote/ the ,preferential use of Filipino labor, 
domestic materials and locally produced goods, and adopt measures that 
help make them cqmpetitive. : 
Put 'into practice 'energy efficiency and, lessen energy consumption to 
address the risk of energy source shortage. 
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Promote the production:'and, development ofl, indigenous and renewable 
fuels,!specifically coconut biodiesel in the Philippines and reinvigorate the 
Philippine coconut industry through the creation of a new domestic market 
and increased productivity,,:thereby improving the lives of coconut farmers 
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,Section 3. - Definition'of Terms. - 
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~ a) ''Coconut Methyl Esters,or'CME"- shall refer to fatty ester derived from 
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coconut oil whoselalkyl group range in varying percentage suitable for 
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compression ignition engines and other similar types of engines. 
~ b) ,3!egistered CME"i-:'stiall refer fo CME intended as fuel additive which is 
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' registered :as' required ,under Section 12,'of R. A. No. 8479 or the 
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,,Downstream Oil'lndustry Deregulation Law of 1998 and in accordance 
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with Section 27 of R. A. , No. 
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8749 or the Philippine Clean Air Act of'l999. 
~ c) '%ME Diesel or Biodiesel" - shall refer to diesel fuel with at least one 
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, percent (1%) blend:of.Registered CME. 
~ d) "Diesel Fuel" - shall refer to fossil fuel for diesel engines representing 
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1, ' the' middle distillate component of crude oil produced through fractional 
I e) '."DENR" - shall refer, to the Department of, Environment and Natural 
'! 9 :';DOE" 
-shall refer to the Department of Energy. 
i g) "DA" - shall refer to the Department of Agriculture. 
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distillation.' 
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Resources. 
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Section 4. -'MandatoryUse of CME Diesel or Biodiesel. -The,use of 
C$E' Diesel or' Biodiesel on all motor vehicles shall be mandatory nationwide. 
Sthrting :January 1, 2007, ,all'Diesel Fuel shall have a mandatory one percent 
(1%) Registered CME blend. This 'shall be increased to two percent (2%) 
Rqgistered 
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 CME blend by January~l, 2010. 
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Section 5. - Prohibited Act. -!To ensure faithful compliance with the 
prdvision on the mandatory use of CME Diesel or Biodiesel, importers and 
refineries 'are prohibited from selling or distributing Diesel Fuel which is not 
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cokpliant with the requiremenbof this Act. 
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Section ' 6. -, 
Penalty for: Violation. - any person found violating the 
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the First Offense',,; ' 
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,A fine ' of not less than Fifty 
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more ,than:' One Hundred Thousand 
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b)'For the Second Offense 
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A ,.fine of not less than One 
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 , ' :  Hundred Fifty'ihqusand Pesos but not more than Two Hundred 
A fine of not less than Three 
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':Hundred Thousand Pesos but not more than Five Hundred 
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Thousand Pesos plus permanent revocation of business license. 
prdvisions of this Act shall' be, penalized as follows: 
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' ,Thousand Pesos; but, 'n 
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,, ' Fifty Thousand Pesos. 
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, c):For'theThird offensb ' 
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, 'Section' 7. Duty of the;DA. -,The DA shall ensure increased productivity 
abd ' sustainable supply :of'', 
GME.' It , shall ,institute a program which 'would 
gbarantee that a certain 
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percentage,of coconut oil production shall be allocated 
fdr CME production. 
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 Section 8. - Duty'of DENR and DOE. - Within six months from the 
pfomulgation of this Act, the DENR and 
~ DOE' in consultation with various 
stakeholders shall formulate the necessary implementing rules and regulation for 
tH,e complete and proper implementation of this Act. 
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' Section. 9. Separability Clause.- If any part, section, or provision of this 
A&, shall be ' held invalid 'or unconstitutional, the other provisions shall not be 
affected .. .thereby. 
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' Section. 10. Repealing Clause.- All other acts, laws, executive orders, 
presidential issuances, rules, and ' regulations or"any part thereof which are 
inhonsistent herewith are hereby deemed repealed 
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or modified accordingly. 
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', 'Section. 11.' Effectivity. -The provisions of this Act, shall take effect 
fifteen days 'from its publication' in the Official Gazette or in at- least: two (2) 
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national newspapers of general circulation, 
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Approved. 
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