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Republic of the Philippines >
HOUSE OF REPRESENTATIVES,

Quezon City

EIGHTEENTH CONGRESS
First Regular Session

m1
HOUSE BILL No.

Introduced by
BAYAN MUNA Party-List Representatives CARLOS ISAGANI T. ZARATE,
FERDINAND R. GAITE and EUFEMIA C. CULLAMAT,
ACT TEACHERS Party-List Representative FRANCE L. CASTRO,
GABRIELA Women’s Party Representative ARLENE D. BROSAS and
KABATAAN Party-List Representative SARAH JANE I. ELAGO

AN ACT
REGULATING THE DOWNSTREAM PETROLEUM INDUSTRY AND FOR
OTHER RELATED PURPOSES

EXPLANATORY NOTE

‘The relentless oil price increases in the country even when worldwide oil prices are going down is
not only a real cause for alarm but even an indictment of the effects of the neoliberal system and
the deregulation of the country’s oil industry. Add to this the undeniable fact that oil prices are
also high because of the control and influence of giant transnational oil corporations on the global
oil industry.

‘The big transnational oil companies: Exxon-Mobil, Royal Dutch Shell, Chevron-Texaco (of which
marketing arm is Caltex), British Petroleum (BP), and CFP-Total have almost complete control
over the oil prices they collusively set worldwide. Even if the largest oil producing countries (Saudi
Arabia, Iran, Venezuela, Mexico, and China) control 90 percent of the world’s oil reserves, the five
transnational oil companics can dictate world prices because they control 60 percent of oil
production and hold all levels of the market through their vast global network of exploration and
exploitation sites, partnerships with nationalized oil companies, refineries, pipelines, tankers, and
stations.

‘The Big Three (or the local subsidiaries of Shell and Caltex plus Petron), claim that they do not
overprice, that they set prices based on the price increases of Dubai oil exchanged in the spot
market and on Peso-Dollar exchange rate fluctuations. Moreover, they deny the existence of a
cartel, alleging that they merely and coincidentally follow the movements of world oil prices. They
claim these even as they are minimally affected by prices in world markets and even as they are
able to trade in the same currency between subsidiaries.


“

Oil companies operating in the Philippines have raised pump prices 18 times as of June 24, 2016.
From February to March 2019, local gasoline prices recorded seven consecutive price hikes
increasing the prices by P6.15 per liter. Diesel, on the other hand, recorded an increase of P3 per
liter on the same period.

Overall, local pump prices were raised 18 times so far this year, bringing unleaded gasoline prices
to between P50.59 to 53.95 a liter and diesel to between P39.94 to 42.74 a liter. Liquefied
petroleum gas (LPG) is priced between P587.00-798.00 per 11-kilogram tank in Metro Manila.

Up to 95 percent of the country’s petroleum requirements are imported, rendering the country
exceedingly vulnerable to the dictates of big transnational corporations. The worst implication of
this is that our severe dependence on such corporations, which control not only the importation,
refining, and retailing of crude and petroleum products from abroad, but also control the
exploration, exploitation, refining, retailing, and even re-exportation of our country’s indigenous
petroleum and petroleum-based products, deprives us the opportunity to be self-sufficient and
earn from the development of our own oil industry.

Even without factoring in the increases in the world demand for oil and the artificial effects of
speculation, world oil prices are unreasonably and unjustifiably high because they are under the
control of monopolistic transnational oil corporations. Given this set-up, government regulation
is warranted since the State has a responsibility to promote social justice and an equitable national
‘economy and patrimony.

Republic Act No. 8479, or the “Downstream Oil Industry Deregulation Act of 1998” holds the
wrong premise that the world pricing of petroleum and petroleum products is fair and justifiable.
Hence, this deregulation Act merely advocates fair pricing through the “mediation” between big
oil companies (refiners and importers) and relatively small dealers, haulers, and LPG distributors,
the opening of the market to new industry participants nonetheless dependent on big transnational
oil corporations; and the relatively insignificant financial and operational support for small-scale
gasoline station retailers.

From the very beginning, R.A. 8479 was bound to fail in implementing fair prices since it ignored
monopoly pricing practices and cartel behavior by the giant transnational oil corporations. Worse,
deregulation had given transnational oil corporations even more room to manipulate prices
through automatic oil price hikes (OPH); less transparency in pricing, profits, and operations; and
virtually no accountability to the consuming public.

Deregulation has allowed oil price increases to go unchecked. With petroleum as a sensitive
commodity, because price directly affects the cost of almost all other commodities and services,
including essentials such as food, housing, social services, as well as transportation, deregulation
has given transnational oil corporations even more leeway to influence the country’s cost of living,
livelihoods, business and commerce, employment, and the National Budget.

‘There is a pressing need to regulate the oil industry to protect the majority of Filipinos from current
runaway increases in oil prices. Regulation can only be effective and truly beneficial if itis part of
a program to institutionalize national oil industriaization, so that local oil prices can be brought
down from unreasonable and unjustifiable levels set by giant transnational oil corporations and
can be prevented from falling prey to further monopoly pricing and manipulation.

‘This Bill therefore requires the regulation of the petroleum industry through the creation of a
petroleum regulatory council and a buffer fund which shall instead solely serve to cushion the


impact on consumers against drastic increases in petroleum prices — unlike the Oil Price
Stabilization Fund (OPSF) that reimbursed oil companies for “cost under-recoveries.”

Immediate approval of this Bill is earnestly sought in the 18" Congress.

Approved,
sas cthdes GH GORE
BAYAN MUXA a

lomat

Re [ANI GAITE Rep. EUFEMIA C. CULLAMAT
BAYAN MUNA BAYAN MUNA

D. BROSAS Rep. FRANCE | CASTRO
GABRIEIL_A Women’s Party A ACHPRS Party-list

Rep. LELAGO
BATAAN Party-list


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL No. 4711

Introduced by
BAYAN MUNA Party-List Representatives CARLOS ISAGANI T. ZARATE,
FERDINAND R. GAITE and EUFEMIA C. CULLAMAT,
ACT TEACHERS Party-List Representative FRANCE L. CASTRO,
GABRIELA Women’s Party Representative ARLENE D. BROSAS and
KABATAAN Party-List Representative SARAH JANE I. ELAGO

AN ACT
REGULATING THE DOWNSTREAM PETROLEUM INDUSTRY AND FOR
OTHER RELATED PURPOSES

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

SECTION 1. Short Title. - This Act shall be known as the “Downstream Oil Industry
Regulation Act of 2019.”

SECTION 2. Declaration of Policy. - It is enshrined in the Philippine Constitution that “the
State shall promote social justice in all phases of national development” (Asticle II, Section X) and
“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” (Article XII, Section XIII).

Moreover, the Constitution also mandates “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” (Article XII, Section XIV).

Consistent with the foregoing, crude oil and socially and economically sensitive refined petroleum
or petroleum products, being vital to national security and their supply at reasonable prices being
essential to the general welfare, it is hereby declared to be the policy of the State that the business
of importing, exporting, re-exporting, marketing, distributing, and selling both at wholesale and
retail of such products, as well as operations and activities of natural and juridical persons, firms,
and entities engaged in such activities, shall be carried out in a manner consistent with the public
interest. This policy aims to attain the following objectives and purposes:

@) To assure thatlocally refined and processed petroleum products, as well as imported crude
oil and processed petroleum, shall be primarily for the benefit of the general welfare; and


To assure the public of reasonable prices for petroleum products and to prevent collusive
pul petroleum pi Pp
practices in the industry, particularly as to prices.

SECTION 3. Coverage. - This Act shall apply to all natural and juridical persons, firms, and
entities engaged in the business of importing, exporting, re-exporting, marketing, distributing, and
selling both at wholesale and retail crude oil and socially and economically sensitive petroleum
products for their own use or for the use of other natural and juridical persons, fiems, and entities
engaged in any and all activities of the petroleum industry.

SECTION 4. Definition of Terms.
(@) “Councif” shall mean the Petroleum Regulatory Council (PRC).
(b) “Fund” shall mean the Oil Price Buffer Fund (OPBF).

(© “Petroleum” shall refer to the naturally occurring mixture of compounds of hydrogen
and carbon with a small proportion of impurities and shall include any mineral oil,
petroleum gas, hydrogen gas, bitumen, asphalt, mineral wax, and all other similar or
naturally-associated substances, with the exception of coal, peat, bituminous shale and/or
other stratified mineral fuel deposits.

@ “Crude oil” or “oi?” shall be used interchangeably with “petroleum.”

(© “Socially and economically sensitive petroleum products” shall refer to liquefied
petroleum gas (LPG), naphtha, gasolines, kerosenes, automatic/industrial diesel oils, and
industrial residual fuel oils.

SECTION 5. Creation of the Petroleum Regulatory Council. - ‘There is hereby created an
independent, quasi-judicial regulatory body to be named the Petroleum Regulatory Council (PRO),
hereafter referred to as the Council.

‘The Council shall be composed of a Chairperson and six (6) Members to be appointed by the
President of the Philippines. The Chairperson and the Council Members shall be natural-born
citizens and residents of the Philippines; persons of good moral character, at least thirty-five (35)
years of age; of recognized competence in any of the following fields: energy, law, economics,
finance, commerce and industry, and management; of the transportation and consumer sectors;
and with at least five (6) years of actual and distinguished experience in their respective fields of
‘expertise or sectors: Provided, That out of the six (6) members of the Council, at least one (1) shall
have had (10) years experience in the fields of management, economics, or commerce and industry;
one (1) shall be a certified public accountant with at least ten (10) years experience in active
practice; and one (1) shall be a sector leader who has been active for at least ten (10) years in the
transportation, consumer, or industrial sector.

‘The term of office of the Chairperson and the Council Members shall be four (4) years: Provided,
‘That for the first appointees, the Chairperson shall hold office for four (4) years, two (2) Members
shall hold office for four (4) years, another two for three (3) years, and the remaining two (2)
‘Members shall hold office for two (2) years: Provided further, That for subsequent appointees, the
successor of each Member shall have the same tenure as his predecessor: Provided further, That
‘appointment to any vacancy shall only be for the unexpired term of the predecessor: Provided finally,
‘That in no case shall any member serve for more than four (4) years in the Council.


Within three (3) months from the creation of the Council, the Chairperson shall submit for the
approval by the President of the Philippines the new organization structure and plantilla positions
necessary to carry out the powers and functions of the Council

‘The Chairperson and Members of the Council shall assume office upon their appointment and the
administration of their respective oaths of office.

‘The Chairperson and the other members of the Council shall not be exempt from administrative
cases. A preventively suspended Chairperson shall be temporarily replaced by the most senior, in
terms of tenure, of the six (6) Members. The preventive suspension of the Chairman shall not toll
the running of his/her term of office. In case of the Chairman’s removal from office prior to the
expiration of his/her term of office, the President shall appoint a new Chairman who shall serve
only for the unexpired portion of the removed Chairman's term of office.

No person who, within four (4) years immediately prior to his appointment, has worked or is
working in any firm engaged in the petroleum industry or any other entity whose main business is
directly ot indirectly related to any such firm shall be appointed to the Council. The Chairperson
and Members of the Council shall be prohibited from holding any interest whatsoever, either as
investor, stockholder, officer, or director, in any company or entity engaged in the business of
exploring, exploiting, importing, exporting, re-exporting, shipping, transporting, processing,
refining, storing, marketing, distributing, and selling both at wholesale and retail any petroleum
resource. In case they do, they must divest through sale or legal disposition of any and all interest
in the petroleum industry upon assumption of office.

‘The presence of at least four (4) members of the Council shall constitute a quorum and the vote
of three (3) members in a meeting where there a quorum is present shall be necessary for the
adoption of any rules, ruling, order, resolution, decision, or other act of the Council in the exercise
of its quasi-judicial functions.

Former Chairpersons and members of the Council are prohibited from working directly or
indirecdy in any firm engaged in the petroleum industry or any other entity whose main business
is directly of indirectly related to any such firm within one (1) year from the time they have ceased
to be officially connected with the Council.

‘The Chairperson and the Council Members shall devote their full time to the Council and shall
not accept any other employment while in office.

SECTION 6. Compensation and Other Emoluments for the Council. - The compensation
and other emoluments for the Chairperson, Members, staff, and personnel of the Council shall be
covered by Republic Act No. 6758, otherwise known as the "Salary Standardization Act".

“Whe Chairperson of the Council shall be entitled to the same salaries, allowances, and benefits
equal to those of a Department Secretary while the Council Members shall receive the same equal
to those of a Department Undersecretary. The Chairperson and the other members of the Council
shall, upon completion of their term or upon becoming eligible for retirement under existing laws,
be entitled to the same retirement benefits and the privileges provided for Department Secretaries
and Department Undersecretaries, respectively.

SECTION 7. Functions, Powers, and Duties of the Council Upon Notice and Hearing. -
At the effectivity of this act, industry averages of prevailing market prices of socially and


economically sensitive petroleum and petroleum products shall be the first set of prices. Any
succeeding modification shall hereby be required to undergo public hearings, convened by the
Couneil, before such become effective.

‘The Council shall revise oil prices only upon proper notice and hearing, in the exercise of its
powers and functions, as follows:

(@) __ In revising prices, the Council shall be guided by the following considerations:

G1) Whether claimed increases or decreases in costs, sales, or profits are real or
simulated;

22) Whether expenses and costs which are claimed to have been incurred, or are being
incurred, or are to be incurred are reasonable;

(23) ‘The impact of the proposed prices or change therein on the economy and on the
consuming public, particularly low-income groups and industries essential to the national
welfare or security, given the daily cost of living and predominant wages;

(a4) The component costs and the profit levels or rates of return not only of the
petroleum industry but also of other manufacturing industries in the country; and

(a5) The ability of the levels of the Oil Price Buffer Fund to maintain, through subsidy
disbursements, current oil price levels until the next resetting.

() Hearings must have in attendance organizations from different sectors affected by the
following regulations, including but not limited to consumer groups, the transport sector, other
epresentative people’s organizations, producers, and sellers, as well as independent experts.

Advance details of these public hearings, as well as for hearings required by Section 7 of this Act,
shall be published in at least two (2) newspapers of major circulation at least two (2) weeks before
the scheduled consultations.

(© _ Inexercise of its duties, the Council shall, for every hearing convened:

(cl) _ Present a concise report on the operations regarding the administration of the Oil
Price Buffer Fund, including its complete sources and disbursements, since the last hearing
or oil price adjustment;

(2) Summarize data justifying and supporting the last oil price adjustments and how
these have changed and contributed to the necessity to revise oil prices; and

(c3) Publish the proceedings of concluded hearings in at least two (2) newspapers of
national circulation at least one month before the implementation of newly set oil prices,
for which period the Council shall be open to petitions ad appeals subject for review by
the Council.

SECTION 8. Petitions for Hearings. - Local oil subsidiaries, wholesalers, and retailers are
hereby required to file a petition with the Council every time they intend to implement oil price
hikes. People’s organizations, non-government organizations, and citizens may as well file petitions
with the Council proposing to decrease oil prices.


SECTION 9. General Jurisdiction, Powers, Functions, and Duties of the Council.
Council shall strictly regulate the pricing of crude oil and socially and economically sensitive
petroleum products at the levels of marketing, distribution, wholesale, and retail in the operations
and activities of natural and juridical persons, firms, and entities engaged in such activities.

For this purpose, the general jurisdiction, powers, functions, and duties of the Council shall include
the following:

(@) Price monitoring and compilation of the prices involved in the movement of raw materials
or finished products in the marketing, distribution, and sale both at wholesale and retail, of
petroleum and socially and economically sensitive petroleum-based resources. In order that 10
unnecessary costs may be included in the pricing of petroleum and its derivatives, price monitoring
and compilation shall also be done at the stages of shipment, transport, and storage. This shall be
conducted in coordination with existing, independent monitoring bodies. ‘These records shall be
submitted weekly, of upon request, for the review of the Council. For cases where persons, firms,
or entities refuse such information, the Council shall issue swbpoenas and subpoenas duces tecum to
compel such parties;

(©) Compilation and analysis of information hereby required from local importers of crude oil
and socially and economically refined petroleum products, refiners, dealers, and petroleum
‘marketing companies on the following:

(1) Comprehensive sales reports;
(62) Inventories;

(b3) Prices of all involved products at various time intervals, as determined by the
Council for petroleum and petroleum products; and

(b4) Demand forecasts for subsequent time intervals, as determined by the Council for
involved petroleum and petroleum products.

(© The Council shall pursue systematized, random statistical sampling surveys to determine
adherence to and violations of price regulation by the Council. These surveys shall be done by
technical groups formed by the Council, in close coordination with Council-accredited
organizations that undertake their own petroleum price surveys;

@ Issue subpoena and subpoena duces tecum in. any inquiry, study, hearing, investigation, or
proceedings which it may decide to undertake in the exercise of its powers, functions, and duties
under this Act; and

(© Promulgate rules and regulations relevant to procedures governing hearings before it and
enforce compliance, through the imposition of penalties, with any rule, ruling, regulation, order,
resolution, decision, or other requirements of this Act or acts of the Council in the exercise of i
quasi-judicial functions; Provided, That said rules and regulations take effect fifteen (15) days after
publication in the Official Gazette.



SECTION 10. Council Staff. - The Chairperson and the Members of the Council shall appoint
and maintain their adequate officers, staff, and personnel, including technical boards, to be
maintained according to the functions, powers, and duties of the Council

SECTION 11. Budget of the Petroleum Regulatory Council. - ‘The amount of one hundred
fifty million pesos (PhP150,000,000.00) is hereby allocated from the General Fund not otherwise
appropriated for the initial operations of the Petroleum Regulatory Council. Thereafter, the annual
budget of the Council shall be included in the regular or special appropriations under the General
Appropriations.

SECTION 12. Procedures of the Council. - All inquiries, studies, hearings, investigations, and
proceedings conducted by the Council shall be governed by rules adopted by the Council, and in
the conduct thereof the Council shall not be bound by the technical rules of evidence: Provided,
‘That the Council may summarily punish for contempt by a fine not exceeding five thousand pesos
or by imprisonment not exceeding thirty (30) days or both, any person guilty of such misconduct
in the presence of the Council or so near thereto as to seriously interrupt any hearing or session
ot any proceedings before it, including cases in which a person willfully fails or refuses, without
just cause, to comply with summons, subpoena ad tesifcandum, subpoena duces cum, decision ot order,
rules and regulations legally issued or promulgated by the Council; or being present at a hearing,
session, of investigation, refuses to be swom as a witness or to answer questions when lawfully
required to do so, of to furnish information required by the Council. The sheriff and other police
agencies of the place where the hearing or investigation is conducted shall, upon request of the
Council, assist it to enforce the provisions of this Section.

‘The Council may, in any inquiry, study, heating, investigation, or proceeding, by order in writing,
cause the deposition of witnesses within or without the Philippines to be taken in the manner
prescribed by the Rules of Court.

SECTION 13. Creation of the Oil Price Buffer Fund, - There is hereby created a trust fund
directly under the custody and administration of the Petrolum Regulatory Couneil as an account
booked underits liabilities. The trust fund shall be designated as the Oil Price Buffer Fund (OPBF),
hereon referred to as the Fund, for the strict and unique purpose of cushioning consumers against
the frequent and drastic price increases of local petroleum and petroleum products.

SECTION 14. Disbursement of the Fund. - The Fund shall solely and strictly release
disbursements to subsidize local market oil price fluctuations between price resettings, as settled
at hearings conducted by the Council under Section 7 of this Act. The Fund shall disburse as
subsidies, initially on the first year upon the effectivity of this Act, 2.5% of cumulative increases in
market prices across all socially and economically sensitive petroleum and petroleum products,
between public hearings, which decide on the modification of previously set prices. Revised
amounts shall become the new basis for Fund disbursements. When world oil prices decrease, the
Council shall retain its existing prices, accrue all differences in set prices and market prices to the
Fund, and maintain current prices until the next hearing modifies such. Modifications of this
subsidy percentage shall likewise undergo public hearings before approval, and shall mainly depend
on the needs of consumers and industries and on the present levels of the Fund.

‘The Oil Price Buffer Fund shall be strictly prohibited from being disbursed for the following
purposes:


(@ To reimburse persons, firms, and entities engaged in the petroleum industry for cost
increases on crude oil and imported petroleum products resulting from exchange rate adjustment
and/or increases in world market prices of crude oil;

(b) Cost “underrecoveries” incurred by persons, firms, and entities engaged in the petroleum
industry as a result of fuel oil sales to the National Power Corporation (NPC);

© Projects relating to the consumption or use of exude oil, gas, and other petroleum products;
(@ For the development of other sources of energy;

(© For exploration and researches on conservation, anti-pollution, and other similar studies
to subsidize importation of crude oil and refined petroleum products by government agencies, or
government-owned or controlled corporations (GOCCs); and

() For any such purpose other than cushioning consumers against the high prices of local
petroleum and petroleum products.

‘The President of the Philippines is hereby prohibited from sourcing from the Oil Price Buffer
Fund, through Executive Order, any projects, programs, and other activities whatsoever.

SECTION 16. Fund Investments. - The Petroleum Regulatory Council may, after the first five
years of the existence of the Fund, invest part of the proceeds from the Fund in secure bank
deposits like regular savings accounts, current accounts, and time deposits: Provided, That these
deposits are insured for the maximum insurable amounts in the banking industry: Provided further,
‘That the Chairperson and all the Members of the Council are informed and approve of each and
every Fund investment, in specific amounts: Provided further, That proceeds from the Fund may
only be invested when the size of the Fund has reached a minimum amount wherein itis ten (10)
times the average disbursement for the preceding five years: Provided finally, That all earnings from
such placements shall strictly and solely redound to the Fund.

SECTION 17. Sources of the Oil Price Buffer Fund. - The Fund shall be sourced from the
following:

I Excise Taxes on Petroleum-based Manufactured Oils and Other Fuels

‘The Oil Price Buffer Fund shall be allocated twenty-five percent (25%) of the proceeds of excise
taxes on covered petroleum-based manufactured oils and other fuels.

Section 148 of Republic Act No. 8424, otherwise known as Tax Reform Act of 1997, as amended
by Republic Act No. 9337, is hereby amended to read:

“SEC. 148. Manufactured Oils and Other Fuels. — There shall be collected on refined and
manufactured mineral oils and motor fuels, the following excise taxes which shall attach to the
goods hereunder enumerated as soon as they are in existence as such:

“(@) XXXX;

“(b) XXXX;

“(© XXXX;


“@ XXXX;

“(© Naphtha, regular gasoline and other similar products of distillation, per liter of volume
capacity, Four pesos and thirty-five (P4.35): [Provided, however, That naphtha, when used as a
raw material in the production of petrochemical produets or as replacement fuel for natural-gas-
fired-combined cycle power plant, in lieu of locally-extracted natural gas during the non-availability
thereof, subject to the rules and regulations to be promulgated by the Secretary of Energy, in
consultation with the Secretary of Finance, per liter of volume capacity, Zero (P0.00);] Provided,
[further,] That the by-product including fuel oil, diesel fuel, kerosene, pyrolysis gasoline, liquefied
petroleum gases and similar oils having more or less the same generating power, which are
produced in the processing of naphtha into petrochemical products shall be subject to the
applicable excise tax specified in this Section, except when such by-products are transferred to any
of the local oil refineries through sale, barter or exchange, for the purpose of further processing
or blending into finished products which are subject to excise tax under this Section;: PROVIDED
FURTHER, THAT OF TOTAL EXCISE TAXES COLLECTED ON NAPHTHA, REGULAR
GASOLINE, AND OTHER SIMILAR PRODUCTS OF DISTILLATION, TWENTY-FIVE
PERCENT (25%) SHALL ACCRUE DIRECTLY TO THE OIL PRICE BUFFER FUND;

“(f) Leaded premium gasoline, per liter of volume capacity, Five pesos and thirty-five centavos
(P5.35); unleaded premium gasoline, per liter of volume capacity, Four pesos and thirty-five
centavos (P4.35): PROVIDED, THAT OF TOTAL EXCISE TAXES COLLECTED ON
LEADED PREMIUM GASOLINE, ‘IWENTY-FIVE PERCENT (25%) SHALL ACCRUE
DIRECTLY TO THE OIL PRICE BUFFER FUND;

“@ XXXX;

“(h) XXXX;

“@ XXXX;

“G) XXX;

“(@) XXXX; and

“@ XXXX.”

ca Value-Added Taxes on the Sale of Petroleum and Petroleum Products

‘The Oil Price Buffer Fund shall be allocated twenty-five percent (25%) of the proceeds of value-
added taxes on petroleum-based manufactured oils and other fuels.

Section 106 of Republic Act No. 8424, otherwise known as Tax Reform Act of 1997, as amended
by Republic Act No. 9337, is hereby amended to read:

“SEC. 106. Value-Added Tax on Sale of Goods or Properties. —
“(A) XXXX:

“@ XXXX; or


“The term “gross selling price” means the total amount of money or its equivalent which the
purchaser pays or is obligated to pay to the seller in consideration of the sale, barter or exchange
of the goods or properties, excluding the value-added tax. The excise tax, if any, on such goods or
properties shall form part of the gross selling price.

PROVIDED, THAT OF THE TOTAL VALUE-ADDED TAXES COLLECTED ON
LIQUEFIED PETROLEUM GAS (LPG), NAPHTHA, GASOLINES, KEROSENES,
AUTOMATIC/INDUSTRIAL DIESEL OILS, AND INDUSTRIAL/RESIDUAL FUEL
OILS, TWENTY-FIVE PERCENT (25%) SHALL ACCRUE DIRECTLY TO THE OIL
PRICE BUFFER FUND;

“(Q) XXXK:

“@) XXXX:

“(1) XXXX;

“@) XXXX;

“@) XXXX;

“(4) XXXX; and

6) XXXX.

“(@) The sale of goods, supplies, AND equipment [and fuel] to persons engaged in international
shipping or international air transport operations: PROVIDED, THAT THE TERM “GOODS”
DOES NOT INCLUDE PETROLEUM AND PETROLEUM PRODUCTS AND BY-
PRODUCTS.

PROVIDED, THAT OF THE TOTAL VALUE-ADDED TAXES COLLECTED ON
LIQUEFIED PETROLEUM GAS (LPG), NAPHTHA, GASOLINES, KEROSENES,
AUTOMATIC/INDUSTRIAL DIESEL OILS, AND INDUSTRIAL/RESIDUAL FUEL
OILS, TWENTY-FIVE PERCENT (25%) SHALL ACCRUE DIRECTLY TO THE OIL
PRICE BUFFER FUND;

“(b) XXXX.
“(¢) XXXX.

PROVIDED, THAT OF THE TOTAL VALUE-ADDED TAXES COLLECTED ON
LIQUEFIED PETROLEUM GAS (LPG), NAPHTHA, GASOLINES, KEROSENES,
AUTOMATIC/INDUSTRIAL DIESEL OILS, AND INDUSTRIAL/RESIDUAL FUEL
OILS, TWENTY-FIVE PERCENT (25%) SHALL ACCRUE DIRECTLY TO THE OIL
PRICE BUFFER FUND.

“@) XXXX:


“(1) XXXX;
“@) XXXX:
“(@ XXXX; or
“(b) XXXX;
“(@) XXXX; and
(4) XXXX.

“© XXXX.”

HI. Value-Added Taxes on the Sale of Services Directly Involving Petroleum and
Petroleum Products

Section 108 of Republic Act No. 8424, otherwise known as Tax Reform Act of 1997, as amended
by Republic Act No. 9337, is hereby amended to read:

“SEC. 108, Value-added Tax on Sale of Services and Use or Lease of Properties. -
“(A) XXXX:

“@) XXXX; or
“@i) XXXX.

“The phrase “sale or exchange of services” means the performance of all kinds or services in the
Philippines for others for a fee, remuneration or consideration, including those performed or
rendered by construction and service contractors; stock, real estate, commercial, customs and
immigration brokers; lessors of property, whether personal or real; warehousing services; lessors
or distributors of cinematographic films; persons engaged in milling processing, manufacturing or
repacking goods for others; proprietors, operators or keepers of hotels, motels, rest houses,
pension houses, inns, resorts; proprietors or operators of restaurants, refreshment parlors, cafes
and other eating places, including clubs and caterers; dealers in securities; lending investors;
transportation contractors on theie transport of goods or cargoes, including persons who transport
g00ds or cargoes for hire another domestic common carriers by land, air and water relative to their
transport of goods or cargoes; common carriers by air and sea relative to their transport of
passengers, goods or cargoes from one place in the Philippines to another place in the Philippines;
sales of electricity by generation companies, transmission, and distribution companies; services of
franchise grantees of telephone and telegraph, radio and television broadcasting and all other
franchise grantees except those under Section 119 of this Code; services of banks, non-bank
financial intermediaries and finance companies; and non-life insurance companies (except their
crop insurances), including surety, fidelity, indemnity and bonding companies; and similar services
regardless of whether or not the performance thereof calls for the exercise or use of the physical
‘ot mental faculties: PROVIDED, THAT OF THE TOTAL VALUE-ADDED TAXES
COLLECTED ON LIQUEFIED PETROLEUM GAS (LPG), NAPHTHA, GASOLINES,
KEROSENES, — AUTOMATTIC/INDUSTRIAL DIESEL OILS, AND
INDUSTRIAL/RESIDUAL FUEL OILS, TWENTY-FIVE PERCENT (25%) SHALL
ACCRUE DIRECTLY TO THE OIL PRICE BUFFER FUND;

“The phrase ‘sale or exchange of services’ shall likewise include:
“(1) XXXX;
“(2) XXXX;
“@) XXXX;
(4) XXXX;


“() XXXX.
“(6) XXXX;
“() XXXX; and
“(@) XXXX.

9.0.54
bp 9.0.0.4

“(B) XXXX;
“(1) XXXX;
“(2) XXXX;
“(@) XXXX;
“(@4) XXXX;
“() XXXX;
“(6 XXXX; and
(1) XXXX.

“(© XXXk.”
IV. Increases in Taxes on Petroleum and Petroleum Products

Of any authorized increases in the tax collection from ad-valorem tax, excise tax, or customs duty
imposed on petroleum and petroleum products, through Executive Orders of the President or
through subsequent Congressional legislation, twenty-five percent (25%) shall hereby directly
accrue to the Oil Price Buffer Fund under the Petroleum Regulatory Council.

V. Extraordinary Gains

Whenever an authorized increase in the prices of petroleum products will result in an extraordinary
gain from existing inventories, the Council is hereby empowered to take measures, including the
Payment in the full amount of the extraordinary gain by the persons, firms, or entities benefited to
the Oil Price Buffer Fund.

VL. Proceeds collected from the penalties for violations, as stated under Section 19 of
this Act.

SECTION 18. Annual Reports of the Council. - The Council shall publish an annual report,
with of without the convening of hearings, on the administration of the Oil Price Buffer Fund,
including its complete sources and disbursements; data that justify and support any and all
adjustments in petroleum prices in the past year, information on the general state and prospects
of the local downstream petroleum industry; and other such vital information derived from
inquities, studies, and investigations by the Council in the exercise of its powers, functions, and
duties.

SECTION 19. Penalties for Violations.

(@ Any person who gives false or misleading data or information or willfully or through gross
negligence, conceals or falsifies a material fact, in any investigation, inquiry, study, or other
proceeding held pursuant to this Act, shall be punished with imprisonment of not less than two
but not more than six months, and with a fine of not less than one thousand but not more than


ten thousand pesos: Provided, however, That if the false or misleading data or information shall
have been given under oath, the maximum penalty for giving false testimony or perjury shall be
imposed;

(b) Any person who violates any provision of this Act or any order, decision, ruling, or
regulation of the Council shall, upon conviction, be sentenced for a period of not less than six
months but not more than five years and a fine of not less than ten thousand pesos but not more
than fifty thousand pesos. If the offender be a corporation, partnership, of juridical person, the
penalty shall be imposed on the officer or officers responsible for permitting or causing a violation
by the corporation, partnership, of juridical person of the provisions of this Act,

(© Ifthe offender is a government official or employee, the maximum penalty prescribed in
paragraph (b) shall be imposed and the offender shall suffer the additional penalty of perpetual
disqualification from public office without prejudice to any administrative action against him;

(@ __ If the offender is a member of the Petroleum Regulatory Council or any of its attached
agencies and companies, and the commission of the offense is attended by clear abuse of discretion
on his part, or by any corrupt practice defined in Republic Act No. 3019, otherwise known as the
“Anti-Graft and Corrupt Practices Act”, or other similar irregularity, the penalty imposed shall be
a fine of one hundred thousand pesos and imprisonment of not less than ten years. A similar
penalty shall be imposed upon any private person, whether in the government service oF not, who
induces, aids, or abets the offender in the commission of the offense;

(©) _Ieshall be an offense, penalized as provided in paragraph (¢) or (d) above, whichever may
be applicable, for any person serving in the Petroleum Regulatory Council or any of its attached
agencies and companies, either as a Chairperson, Member, or as a member of the staff to direcdy
or indirectly be employed by, or to receive any compensation from, or to have any direct or indirect
financial interest in, any firm engaged in the business of exploring, exploiting, importing, exporting,
re-exporting, shipping, transporting, processing, refining, storing, marketing, distributing, and
selling both at wholesale and retail any petroleum resource; and

(Any alien violating this Act shall, in addition to the penalty herein provided, be deported
after service of sentence and shall not be permitted reentry into the Philippines.

(@ _Allmonetary penalties shall directly accrue to the Oil Price Buffer Fund.

SECTION 20. Implementing Rules and Regulations. - The Petroleum Regulatory Council
shall formulate and issue the necessary implementing rules and regulations within thiety (30) days
after the effectivity of this Act.

SECTION 21. General Repealing Clause.

(@ Republic Act No. 8479, also known as the “Downstream Oil Industry Deregulation Act
of 1998” is repealed.

(© Allother laws, decrees, executive orders, rules and regulations, or parts thereof inconsistent
with any of the provisions of this Act, are hereby repealed or amended accordingly.

SECTION 22. Separability Clause. - If, for any reason, any section or provision of this Act is
declared unconstitutional ot invalid, such other sections or provisions not affected thereby shall
remain in full force and effect.


SECTION 23. Effectivity. — This Act shall take effect fifteen days after its complete publication
in two (2) national newspapers of general circulation.

Approved,