Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
FIFTEENTH (15") CONGRESS,

House Bil No." 4925

Introduced by Representative Amel U. Ty

EXPLANATORY NOTE

It is said that the Philippines long and sad history of underdevelopment can be
traced from lack of competition in the economy. With the advent of trade and
investment liberalization, deregulation and privatization, it has ied to a healthier and
more vibrant market. The enactment of RA No. 8479, otherwise known as the Oil
Deregulation Law revealed gains to the public brought about by the increased
competition on petroleum products and services. Sadly, the fruits expected from the
RA No, 8479 have not been fully satisfied.

The LPG Industry is one vital sector in the oi] industry which received only
partial public fulfillment from the Oil Deregulation Law. This can be gleaned from the
existence of an enormous, disparity of prices of LPG products between Luzon and
those in Visayas and Mindanao.’ To illustrate, the average selling price of one (1) 11
kg of LPG cylinder in Metro Manila as of 08 June 2011 ranges from P650 to P750,
as against the prevailing prices of the same product in the Visayas region, which as
of 15 June 2011 carries a contract price ranging from P795 to P899, and in
Mindanao region, the contract price ranges from P775 to P913 as of 02 June 2011.

Whether it is considered an inadequacy in the Oil Deregulation Law or anti-
trust regulation or the workings of the privilege few, such wide price gap needs to be
rectified immediately for the general welfare of the public. No less than the 1987
Constitution, citing Article XII, Section 13 provides for the pivotal role of the State to
rectify this disparity to sustain its National Economy, to wit: The State shall pursue a
trade policy that serves the general welfare and utilizes all forms and arrangements
of exchange on the basis of equality and reciprocity.

Further, Article XII, Section 19 of the same Constitution prescribes a basis for
regulating and prohibiting anti-competitive behavior in the market. It states: The
State shall regulate or prohibit monopolies when the public interest so requires. No
combinations in restraint of trade or unfair competition shall be allowed.’

To this end, even the Supreme Court has affirmed the need to properly
structure our laws against trust, monopolies, oligopolies, cartels and combinations
injurious to public welfare — to restore a workable competition where it has
disappeared, and to preserve where it still exists. In a word, we need to perpetuate

| hitp:tAwww.doe.gov. ph/opmiipgprices.asp:
? PASCN Discussion Paper No. 2000-09


competition as a system to regulate the economy and achieve global product
quality.

This proposed bill aims to put into effect the comprehensive framework for the
promotion of fair trade practices and anti-trust policy and regulation enshrined in the
RA No. 8479 with the end in view of making LPG price within the reach of
consumers particularly in the Visayas and Mindanao regions. In the event that the
price of LPG goes down in Visayas and Mindanao, Filipino households will be
dissuaded from using woods as fuel in cooking their foads; henceforth, our denuded
forests, which have been the one af the causes of flash floods in the countryside, will
be preserved. In view thereof, immediate approval of this bill is earnestly sought.

LPG PARTY LIST

> PASCN Discussion Paper No. 2000-09


Republic of the Philippines
HOUSE OF REPRESNTATIVES
Quezon City
FIFTEENTH CONGRESS
First Regular Session

House BillNo, 4925

Introduced by Honorable Amel U. Ty

AN ACT
ESTABLISHING A SYSTEM OF LPG PRODUCT ACCOMODATION AMONG
BULK SUPPLIERS IN THE PHILIPPINES TO PROMOTE FAIR COMPETITION IN
THE DOWNSTREAM FOR THE BENEFIT OF CONSUMERS, DEFINE AND
PENALIZE CERTAIN ACTS.

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

CHAPTER!
GENERAL PROVISIONS
SEC. 1. Short Title. - This Act shall be known as the “LPG

Accommodation and Distribution Act of 2011."

SEC. 2. Declaration of Policy. — The State shali promote a national policy of
fair competition in the LPG industry. In order to ensure a truly competitive market
under a regime of fair prices, adequate and continuous supply of environmentally-
clean and high-quality of petroleum products under the regime of R.A. No. 8479,
otherwise known as “Downstream Oil Deregulation Law’, it is the continuing policy of
the State to find measures that will promote and encourage the entry of new
participants in the downstream oil industry, and introduce adequate measures to
ensure the attainment of the said goals.

SEC. 3. Construction and Interpretation Clause. — Any doubts in the
interpretation af any provision in this Act shall be interpreted in favor of the interests
of the consumers particularly to ensure access to reasonably priced LPG and the
safety of the consumers and the general pubiic.

SEC. 4. Definition of Terms. — For the purposes of this Act, the following
terms are defined herein below:

(a) “DILG” shall refer to the Department of Interior and Local Goverment;
1


(b) “DOE” shall refer to the Department of Energy:
(c) “DTI” shall refer to the Department of Trade and Industry;

(d)‘LGU" and “LGUs” shall refer to a local government unit or local
government units, respectively;

(e) “PNP” shall refer to the Philippine National Police;

(f) “Auto LPG" shalt refer to LPG intended to fuel, propel or otherwise provide
power to motor vehicle.

(g) “Bulk Supplier” shail refer to any person who engages in the sale or
distribution of LPG in such large quantities;

(h) “Consumer” shall refer to any person who purchases LPG for one’s own
consumption;

(i) “Cylinder” or "LPG Cylinder” shall refer to any portable pressure-vessel or
container for LPG, designed for the transportation and storage of LPG;

@) “Dealer” shall refer to any person involved in the sale or trading of LPG in
cylinders to consumers and/or retail outlets;

(k) “Industry Participants” shall refer to persons or entities engaged in
activities or businesses related to the manufacture, importation,
transportation, distribution or sale of LPG, including, among others,
Cylinder Industry Participants and LPG Industry Participants as defined in
this Act;

(I) “LPG” shall refer to liquefied petroleum gas, which consists of commercial
propane gas, commercial butane gas or mixture of the two gases, with
properties conforming to the standards set forth in the PNS 22;

{m)"LPG Industry Participants" shall refer to persons or entities engaged in
activities or businesses related to the manufacture, importation,
transportation, sale and distribution of LPG, including but not limited to
LPG ‘refiners, LPG importers, re-fillers; piped LPG providers, haulers,
dealers, service stations, retail outlets and seal manufacturers;

{n} ‘Marketer’ shall refer to any person, whether natural or judicial, engaged in
the sale of LPG, whether in bulk or retail,

(0) “Primary Storage Facilities" shall refer to the plant, depot, underground
caverns, refrigerated tanks, and pressurized steel tanks, and other similar
facilities used for storage of LPG;


(p) “Refiller” shall refer to (1) a service provider authorized by a cylinder
‘owner to refill cylinders on the latter's behalf, or (2) any person or entity
who refills LPG into one’s own cylinders;

(q) “Refilling Plant” shail refer to any installation that is used for refilling LPG
into cylinders and has LPG bulk storage and refilling facilities thereof,

(1) “Refiner’ shall refer to any person who refines LPG through distillation,
conversion and treatment of crude oil and other naturally occurring
petroleum hydrocarbons;

(s) “Retail Outlet” shall refer to any entity that sells LPG cylinders directly to a
consumer in quantities as may be determined by the DOE;

CHAPTER Il
IMPLEMENTING AGENCIES

SEC. 5, Lead Agency. - Unless expressly stated in this Act that a particular
function shall be the responsibility of another government agency, the DOE shall be
the primary goverment agency responsible for the implementation and enforcement
of this Act. The DOE shall supervise and monitor the LPG industry and its
participants to ensure compliance with national product quality, environmental and
worker safety, and consumer welfare standards.

SEC. 6. Additional Powers and Functions of the DOE Secretary. — In
connection with the enforcement of this Act and in addition to his/her powers and
functions under existing laws, the DOE Secretary shall have the following powers
and functions:

a) Administer and supervise the enforcement and implementation of this Act,
including the promulgation of Implementing Rules and Regulations, and
issuance, from time to time, of other regulations, orders or circulars
necessary to implement this Act; and

b) Implement the LPG Accommodation and Distribution System.

SEC. 7. Powers and Functions of DTI. - Under this Act, DTI shall extend ail
necessary assistance to the DOE in the implementation of measures in furtherance
of the objectives of this Act.

SEC. 8. Powers and Functions of DILG. - Under this Act, the DILG shall
have the following powers and functions:

(a) Coordinate with LGUs and the PNP for the orderly and effective
imptementation of this Act, and of the orders, rules, and regulations and
issuances pursuant thereto;


(b) Coordinate with the DOE and the OT! in the dissemination of information
relevant to the implementation of this Act, particularly to the LGUs and the
PNP; and

(c) Extend ail necessary assistance to the DOE with respect to the
enforcement of measures in furtherance of this Act.

SEC. 9. Power and Functions of LGU’s. — LGU's pursuant to their powers
provided by law especially under Republic Act No. 7160, otherwise known as the
Local Government Code, or, upon recommendation of the DOE, and upon due
notice and hearing, shall have the power to suspend or revoke the business permit
or license of any LPG industry participants within their respective areas of jurisdiction
for violation of the provisions of this Act:

CHAPTER Ill
THE LPG ACCOMODATION AND DISTRIBUTION SYSTEM

SEC. 10. LPG Accommodation and Distribution Among Bulk Suppliers
to Promote Fair Competition. - Only bulk suppliers of LPG, that have at least one
primary storage facility, such as terminal or depot in any region in the country, shall
participate in the LPG Accommodation and Distribution System in the Philippines
making all participants Creditor and Debtor of each other, through the sharing-
swapping scheme.

These bulk suppliers shall set aside twenty percent (20%) of their total LPG
inventory in the Philippines, to be used solely in the LPG Accommodation and
Distribution System to serve public interest, achieve efficiency and cost reduction,
ensure continuous supply of LPG products, and enhance environmenta! protection,
particularly in those regions where the price of LPG is very high.

Hence, all bulk suppliers shail accommodate each other by allowing those
bulk suppliers, who do not have LPG primary storage facilities in other regions in the
Philippines, to withdraw LPG from their terminals or depots: Provided, That the LPG
withdrawn shail be made available only to refilling plants that cater to other brands
for distribution to households, commercial, transport and agricultural needs of the
said region in order to promote and ensure competition in the market: Provided
further, That these other brands are not owned by LPG industry participants whose
brands are already available in the market of the said regions.

The volume of LPG withdrawn from each other bulk suppliers shall be
accounted and settled at the end of every month.

Sec. 11. Participation in the LPG Accommodation and Distribution
System. — Pursuant to national development objectives on free enterprise and
consumer welfare, in order to hamess and maximize existing resources in the LPG
industry, participation in the Accommodation and Distribution System as specified in
Sections 10 hereof shall be mandatory, subject to such guidelines, rules and
regulations as may be issued by the supervising government agencies.

4


Deliberate refusal to participate in the system shall be dealt with
administratively.

CHAPTER IV
PROHIBITED ACTS, FINES AND PENALTIES

SEC. 12. Imposition of Administrative Penalty. - A bulk supplier, that has
primary storage facilities in a region, shall be penalized with a fine of One Hundred
Thousand Pesos (Php100,000.00) for every act of refusal to participate in the LPG
Accommodation and Distribution System by refusing to let other bulk supplier to
withdraw from its inventory: Provided, That the maximum fine to be imposed shail be
Five Million Pesos (P5,000,000.00).

The same administrative penalty shall be imposed to a bulk supplier, that
withdraws LPG under the LPG Accommodation and Distribution System, for every
act of refusal to make the said LPG available to refilling plants that cater to other
brands for distribution to households, commercial, transport and agricultural needs of
the said region.

Any person, including but not fimited to the chief operating officer, chief
executive officer or chief finance officer of the partnership, corporation or any entity
involved, shall suffer the penalty of at least six (6) months but not more than two (2)
years, or both fine and imprisonment, at the discretion of the court, who is found
guilty of the following:

1) Deliberate refusal to participate in the LPG Accommodation and Distribution
System;

2)

Deliberate refusal to make the said LPG available to any refilling plants that
cater to other brands for distribution to households, commercial, transport and
agricultural needs; or

3

By any agreement, combination or concerted action of LPG industry
participants circumvent the provision of this law by using the LPG withdrawn
from bulk supplier to distribute the same to refiling plants that cater to owners
of LPG brand already available in the market in the said region.

SEC. 13. Violation of Corporation, Partnership, Association or other
Entity. — Whenever a corporation, partnership, association, firm or other entity,
whether domestic or foreign, shall commit any of the acts declared to be unlawful
under this Act, the Chairmen of the Board of Directors, the President, The General
Manager of the corporation, the general partners of the partnership, and other
officers and employees directly responsible, shall jointly and severally be liable with
the fine imposed therein.

Should the offense be committed by a foreign corporation licensed to do
business in the Philippines, the person or persons, directly responsible in the

5


Philippines for the management and operation thereof, shall be liable. In addition, its
license to do business in the Philippines shall be cancelled.

it shall not be a defense for the Chairman of the Board of Directors, the
President or the General Manager of the corporation, the General Partners of the
partnership, or the persons responsible for the management and operation of a
foreign corporation licensed to do business in the Philippines, that he was unaware
of the violation, unless, he shall have established to the satisfaction of the court that
even with the exercise of due diligence and proper supervision, he could not have
avoided or prevented the violation.

SEC. 14. Prosecution Under Separate Laws. — Prosecution under this Act
shall be without prejudice to any liability for violation of any provision of the Revised
Penal Code, Republic Act No. 9514, otherwise known as the “Revised Fire Code of
the Philippines of 2008,” Republic Act No. 8293, otherwise known as the “Intellectual
Property Code of the Philippines,” and other applicable laws. The fines provided in
this Chapter shall be without prejudice to any legal claims or damages which any
injured party suffers as a result of the refusal to participate or to make available the
LPG withdrawn under the LPG Accommodation and Distribution System to refilling
plants as stated under Section 12 under this Chapter.

CHAPTER VI
FINAL PROVISIONS

SEC. 15. Implementing Rules and Regulations. — Uniess otherwise
provided in this Act, the DOE, in consultation with the DTI, other appropriate
agencies, the LPG industry participants and consumer groups, shall be the lead
agency with the responsibility to formulate, issue and promulgate the necessary
implementing rules and regulations within thirty (30) days from the effectivity of this
Act.

SEC. 16. Transition Phase. - In order to provide a smooth implementation of
the monitoring and supervisory mechanisms provided herein, the industry
participants shall be given a grace period of one hundred thirty (30) days from the
effectivity of this Act, within which to comply with the provision hereof: Provided, That
during the transition period, the industry participants shail continue to be bound and
made liable under the provisions of existing laws, rules and regulations not otherwise
repealed by this Act.

SEC. 17. Joint Congressional Oversight Committee. - There is hereby
created a joint congressional oversight committee to monitor the implementation of
this Act. The committee shall be composed of five (5) senators and five (5)
representatives to be appointed by the Senate President and the Speaker of the
House of Representatives, respectively. The oversight committee shall be chaired by
a senator and a representative designated by the Senate President and the Speaker
of the House of Representatives, respectively.

The mandate given to the joint congressional oversight committee under this
Act shall be without prejudice to the performance of the duties and functions by the


respective existing oversight committees of the Senate and the House of
Representatives.

SEC. 18. Lifetime. — This Act shall take effect for a period not exceeding ten
(10) years, unti! or unless expressly rescinded by law.

SEC. 19. Legal Assistance to Public Officials. - Public officials or other
authorized persons acting under the direction of the Secretaries of the DOE, the DTI,
the DILG and other concemed government agencies shall be provided with free legal
assistance, liability insurance and other forms of protection and indemnification for ali
costs and expenses reasonably incurred by such persons, in connection with any
civil and/or criminal action, suit or proceeding to which they may be or have been
made a party by reason of the performance of their functions or duties, unless they
are finally adjudged in such action or proceeding to be liable for gross negligence or
misconduct or grave abuse of discretion.

Sec. 20. Separability Clause. — If for any reason, any chapter, section or
provision of this Act shall be declared unconstitutional, illegal, or invalid, such parts
not affected thereby shall remain in full force and effect.

SEC. 21. Repealing Clause. - All laws, decrees, executive orders,
proclamations and administrative regulations, or parts thereof inconsistent herewith
are hereby repealed or modified accordingly

SEC. 22. Effectivity Clause. - This Act shall take effect after fifteen (15) days
after its publication in the Official Gazette or in at least two (2) newspapers of
general circulation.

Approved.