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EIGHTEENTH CONGRESS OF THE )

REPUBLIC OF THE PHILIPPINES )
First Regular Session )
HOUSE OF REPRESENTATIVES
H.B.No, 4550

Introduced by Rep. Vilma Santos-Recto
6" District of Batangas

AN ACT
TO PROMOTE FAIR TRADE IN THE OIL INDUSTRY AND FOR OTHER
PURPOSES, AMENDING REPUBLIC ACT NO. 8479, OTHERWISE KNOWN AS
THE “DOWNSTREAM OIL DEREGULATION ACT OF 1998”

EXPLANATORY NOTE

Republic Act (R.A.) No. 8479, otherwise known as the “Downstream Oil Industry
Deregulation Act of 1998” was enacted to liberalize and deregulate the downstream oil
industry to ensure a truly competitive market under a regime of fair prices, adequate and
continuous supply of environmentally-clean and high-quality petroleum products. Under the
Jaw, the government can no longer interfere with the pricing of oil products except to monitor
which also means that it is freed from providing costly subsidies.

However, R.A. No. 8479 failed to mitigate the effects of a global oil crisis. Worse, it
appeared that the deregulation policy even strengthened the cartelization of oil industry

players since automatic oil price hikes are allowed without control from the government.

Frequent oil price hikes aggravated the hardships of the public especially the
consumer, agriculture, manufacturing and service sectors. Thus, people’s organizations have
been demanding for a review of R.A. No. 8479, These groups have consistently raised
concerns on whether international price movements were accurately considered in the pricing
of petroleum products. It is, therefore, incumbent upon the government to ensure
transparency in the pricing of petroleum products by the local oil industry players and to
determine the computations or assumptions employed in their price adjustments to prevent oil

companies from engaging in unwarranted profiteering.


To achieve this purpose, this measure shall require the submission of financial
documents by local oil companies, which are pertinent in the determination of price
adjustments of petroleum products. Submission of these documents is mandatory and

penalties for non-compliance are increased.

This bill also declares unlawful for oil companies to engage in unwarranted oil price
increases or unreasonable amounts of price increase as may be determined by the Department
of Energy (DOE) and provides for the imposition of heavier penalties against erring oil

companies and officials.

To strengthen the Task Force created under Section 14 of the law, which is tasked to
investigate and file complaints against unreasonable rise in the prices of petroleum products,

this bill seeks the inclusion of representatives from consumer and public transport groups in
the Task Force, together with the Departments of Energy, Justice and Trade and Industry.

Finally, to provide Filipinos the best energy choices and to ensure transparency in the

pricing of oil products, the Task Force is mandated to post twice a month on the DOE’s
official website and publish in at least two (2) national newspapers the prevailing price of

petroleum products in the retail market.
Cp

VILMA SANTOS-RECTO,

With the foregoing considered, the approval



EIGHTEENTH CONGRESS OF THE )

REPUBLIC OF THE PHILIPPINES )
First Regular Session )
HOUSE OF REPRESENTATIVES
4
H.B. No.

Introduced by Rep. Vilma Santos-Recto
6" District of Batangas

AN ACT
TO PROMOTE FAIR TRADE IN THE OIL INDUSTRY AND FOR OTHER
PURPOSES, AMENDING REPUBLIC ACT NO. 8479, OTHERWISE KNOWN AS.
THE “DOWNSTREAM OIL DEREGULATION ACT OF 1998”

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

Section 1. Section 4 of Republic Act No. 8479 is hereby amended to read as
follows:
"Sec. 4. Definition of Terms. — For purposes of this Act, the following terms are
herein below defined:
“XXX

(0) PREVAILING RETAIL PRICE - SHALL REFER TO THE
CURRENT PUMP PRICE OF ALL PETROLEUM PRODUCTS IN THE
COUNTRY;

“f{e}} (P) Singapore Import Parity (SIP) — shall refer to the deemed landed
cost of a petroleum product imported from Singapore at a free-on-board price
‘equal to the average Singapore Posting for that product at the time of loading;

“p} (Q) Singapore Posting — shall refer to the price of petroleum
products periodically posted by oil refineries in Singapore and reported by
independent international publications; [and

“(R) TASK FORCE - SHALL REFER TO THE OIL MONITORING
TASK FORCE CREATED UNDER SECTION 2 OF THIS ACT; AND


“fq (S) Wholesale Posted Price (WPP) — shall refer to the ceiling price of
petroleum products set by the Board based on its duly approved automatic pricing
formula.”

Sec. 2. Creation of the Oil Monitoring Task Force. ~ The Oil Monitoring Task Force
shall be organized within one (1) month from the effectivity of this Act to implement the
Anti-Trust safeguards under Section 11 of Republic Act No. 8479 and ensure fair compet

in the oil industry.

1) Creation and Composition. — The Secretaries of the Departments of Energy
(DOE), Justice (DOJ) and Trade and Industry (DTI) shall jointly appoint the members
of the Task Force which shall be composed of an Undersecretary from Energy and
Justice, as Co-Chair with the following members:

a) One (1) member from the DOE;

b) One (1) member from the DOJ;

©) One (1) member from the DTI;

d) Two (2) members from the consumer and public transport groups
which have been in existence and active for the last five (5) years prior to this

Act; and

€) One (1) industry financial expert.

2) The members of the Task Force shall adopt its rules and guidelines in the
performance of its functions. These guidelines shall ensure the efficiency, promptness,
and effectiveness in the handling of its cases.

Sec. 3, Powers and Functions of the Oil Monitoring Task Force. —

a) To establish stricter and more industry-specific reporting guidelines;

b) To conduct periodic and unannounced inspections of oil depots and facilities;

©) To inspect the books of accounts of companies engaged in the oil industry;

4) To request all records that are deemed necessary to ensure transparency and
compliance of all oil industry participants with the provisions of this Act; and

e) To conduct an annual analysis of oil industry performance, including findings
and issues encountered by the Task Force to be posted in the DOE website.

Sec. 4. Section 10 of Republic Act No. 8479 is hereby amended to read as follows:

“Sec. 10. Promotion of Retail Competition. — THE TASK FORCE SHALL
ADOPT ALL MEASURES TO PROMOTE FAIR TRADE IN THE RETAIL
MARKET AND THE CONSUMERS’ RIGHT OF ACCESS TO ANY AND ALL
INFORMATION REGARDING THE PRICES OF ALL PETROLEUM

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PRODUCTS IN THE RETAIL MARKET. THE TASK FORCE SHALL
CONTINUE TO MONITOR THE MOVEMENT OF OIL PRICES IN THE
RETAIL MARKET AND POST THE PREVAILING RETAIL PRICES ON THE
DOE’S OFFICIAL WEBSITE AND PUBLISH THE SAME IN AT LEAST TWO
(2) NATIONAL NEWSPAPERS OF GENERAL CIRCULATION ON A
BIWEEKLY BASIS. THESE PRACTICES ARE INTENDED TO PROVIDE
THE CONSUMERS WIDER ACCESS TO PETROLEUM PRODUCTS THAT
GIVE BEST VALUE FOR MONEY.”

“To achieve the social and policy objective of fair prices, facilitate the attainment
of a truly competitive product market in the retail level, the DOE shall promote and
encourage by way of information dissemination, networking, and management/skills
training, the active and direct participation of the private sector and cooperatives in the
retailing of petroleum products through joint venture/supply agreements with new
industry participants for the establishment and operation of gasoline stations: Provided,
That the training herein shall include LPG retailing.

“XXX.

“XXX
“XXX
“oon”

Sec. 5. Section 11 of Republic Act No. 8479 is hereby amended to read as follows:

“Sec. 11. Anti-Trust Safeguards. To ensure fair competition and prevent cartels
and monopolies in the Industry, the following acts are hereby prohibited:

“(@) xxx
“(b) xxx.

“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
peses(P1,000,0000.00)-to} Two million pesos (P 2,000,000.00) TO THREE
MILLION PESOS (P 3,000,000.00).”

Sec. 6. Section 12 of Republic Act No. 8479 is hereby amended to read as follows:

“Sec, 12. Other Prohibited Acts. - To ensure compliance with the provisions of

this Act, the refusal to comply with any of the following shall likewise be prohibited:


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“(a) Submission of any reportorial requirements SUCH AS BUT NOT
LIMITED TO BOOKS OF ACCOUNTS, AUDITED FINANCIAL
STATEMENTS, VERIFIED REPORTS OF THE COMPANY’S
ASSUMPTIONS AND COMPUTATIONS IN THE PRICING OF THEIR
PETROLEUM PRODUCTS, WHETHER IN THE PROCESSING,
REFINING, DISTRIBUTING OR SELLING OF SAID PRODUCTS, TO
ENSURE THAT OIL COMPANIES ARE NOT INVOLVED IN
PROFITEERING;

“(b) xxx
“() xxx
“(d) xxx.

“Any person, including but not limited to the chief operating officer or chief
executive officer of the partnership, corporation or any entity involved, who is found
guilty of any of the said prohibited acts shall suffer the penalty of imprisonment for two
(2) years and a fine ranging from [Pwe-hundred fifty thousand-peses-(P-250,000.00}to}
Five hundred thousand pesos (P 500,000.00) TO SEVEN HUNDRED FIFTY
THOUSAND PESOS (P 750,000.00).

“IT SHALL LIKEWISE BE UNLAWFUL TO CAUSE THE
UNNECESSARY INCREASE OR CAUSE AN UNREASONABLE AMOUNT OF
INCREASE IN THE PRICES OF PETROLEUM PRODUCTS UNDER
SECTION 7 OF THIS ACT.”

Sec. 7. Section 14 of Republic Act No. 8479 is hereby amended to read as follows:
“Sec. 14. MONITORING. - (a) The DOE shall monitor ACTIVELY and

publish daily international crude oil prices, as well as follow the movements of

domestic oil prices. IT SHALL DETERMINE THE FACTORS WHICH CAUSE

THE CHANGE IN THE PRICES OF PETROLEUM PRODUCTS, EVALUATE

THE NECESSITY OF THE CHANGE IN THE PRICES AND THE

REASONABILITY OF THE AMOUNTS OF INCREASE OR DECREASE

BASED ON THE ACTUAL CONDITIONS OF THE MARKET AND OTHER

CAUSATIVE AND CONTRIBUTORY FACTORS AS IT MAY DETERMINE. It

shall likewise monitor the quality of petroleum products and stop the operation of

businesses involved in the sale of petroleum products which do not comply with the

national standards of quality that are aligned with the national standards/protocols of

quality. The Bureau of Product Standards of the DTI, together with the Department of
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Environment and Natural Resources (DENR), the DOE, the Department of Science and
Technology (DOST), representatives of the fuel and automotive industries and the
consumers, shall set the specifications for all types of fuel and fuel-related products to
improve fuel composition for increased efficiency and reduced emissions. The BPS
shall also specify the allowable content of additives in all types of fuels and fuel-related
products.

“(b) xxx

“(©) The DOE shall maintain a periodic schedule of present and future total
industry inventory of petroleum products for the purpose of determining the level
of supply FOR THE SUCCEEDING MONTH. To implement this, the
importers, refiners, and marketers are hereby required to submit {monthly}
EVERY THIRD WEDNESDAY OF THE MONTH to the DOE their
FORTY FIVE (45)-DAY INVENTORY of actual importations, local purchases,
sales and/or consumptionf-and inventory} on a per crude/product basis.

“(d) Any report from any person of an unreasonable {rise} CHANGE in the
prices of petroleum products shall be immediately acted upon. For this purpose,
the fereation-of-the-DOE-DO} Task Force is hereby mandated to determine
within thirty (30) days the merits of the report and initiate the necessary actions
warranted under the circumstance: Provided, That nothing herein shall prevent
the said Task Force from investigating and/or filing the necessary complaint with

the proper court or agency motu propio.

“(€) In times of national emergency, when the public interest so requires,

the DOE may, during the emergency and under reasonable terms prescribed by it,
temporarily take over or direct the operation of any person or entity engaged in
the Industry.”

Sec. 8. Implementing Rules and Regulations. — The Department of Energy, in

coordination with the Department of Justice, Department of Trade and Industry, and
representatives from the consumer and transport groups, shall within sixty (60) days from the

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effectivity of this Act, promulgate the rules and regulations to effectively implement the
provisions of this Act.

Sec. 9. Separability Clause. — If any portion or provision of this Act is declared
unconstitutional, the remainder of this Act or any provisions not affected thereby shall remain
in force and effect.

Sec. 10. Repealing Clause. — Any law, presidential decree or issuance, executive order,
letter of instruction, rule or regulation inconsistent with the provisions of this Act is hereby
repealed or modified accordingly.

Sec. 11. Effectivity. — This Act shall take effect after fifteen (15) days following its
complete publication in the Official Gazette or in at least two (2) newspapers of general
circulation.

Approved,