03 - DOE Compendium of Energy Laws and Other Issuances - Volume 3 - Downstream Oil Industry PDF

DEPARTMENT OF ENERGY
COMPENDIUM OF ENERGY LAWS

AND OTHER ISSUANCES
VOLUME 3
DOWNSTREAM
FOREWORD
by the Secretary
Greetings!
The Department is pleased to present this Compendium of Energy Laws and Other
Issuances. Included in this publication are those covering the creation of the
Department and its attached agencies, as well as the laws and IRRs in the upstream,
and power industries.
We commend our Legal Services for its efforts to come up with a digest, giving us
access to much needed information for energy-related endeavors. We also thank
the Gender and Development (GAD) Committee for their support of this project.
This compendium will serve as a reminder of how our agency evolved through the
years and serve as basis of what the agency can further achieve. This publication
also shows us the changes and additions we can make to present laws and
regulations to improve our policies and subsequently, the lives of our people.
As members and affiliates of this agency, we should be proud of our accomplishments

and strive to always maintain our reputation as one of the most professional
agencies in the government. We should remember the things we have already
done so we can be guided to address our country’s energy requirements. Our task
today is to come up with new, if not better guidelines for generations ahead.
Let us make this publication a useful guide in fulfilling our duties as public servants
and productive members of the Energy Department and its attached agencies.
JOSE RENE D. ALMENDRAS

PREFACE
by the UnderSecretary
An important commitment of the Department of Energy involves the mainstreaming

of Gender and Development (GAD) in its policies, plans, and programs to ensure
increased participation of women not only in the energy sector’s activities but in
the decision-making as well.
A valuable tool in achieving this goal comes in the form of a comprehensive

compilation designed to provide energy laws and regulations which date as far
back as 1971, that help shape today’s vibrant energy industry. This is a venue to
look into the energy laws and circulars and come to a determination if women are
indeed empowered and given such opportunities.
We, therefore, laud the significant efforts of the DOE Legal Service for embarking
on the publication of four volumes of the Compendium of Energy Laws and Circulars
as a project of the DOE GAD Focal Point. This Compendium serves as a useful
reference for energy stakeholders and professionals, researchers, students, and for
all those who share our vision of expanding energy services for women in order that
they may equally participate in the country’s economic development and also enjoy
the benefits of energy towards better quality of life.
Mabuhay!
LORETA G. AYSON, CESO I

TABLE OF CONTENTS
i. FOREWORD BY THE SECRETARY
ii. PREFACE BY THE UNDERSECRETARY LORETA G. AYSON
VOLUME III. DOWNSTREAM
CHAPTER I
BATAS PAMBANSA BLG. 33 1
AN ACT DEFINING AND PENALIZING CERTAIN PROHIBITED ACTS INIMICAL TO
THE PUBLIC INTEREST AND NATIONAL SECURITY INVOLVING PETROLEUM AND/
OR PETROLEUM PRODUCTS, PRESCRIBING PENALTIES THEREFOR AND FOR OTHER
PURPOSES
 PRESIDENTIAL DECREE NO. 1865 3
AMENDING BATAS PAMBANSA BLG. 33, ENTITLED “AN ACT DEFINING AND
PENALIZING CERTAIN PROHIBITED ACTS INIMICAL TO THE PUBLIC INTERESTS
AND NATIONAL SECURITY INVOLVING PETROLEUM AND/OR PETROLEUM
PRODUCTS, PRESCRIBING PENALTIES THEREFOR AND FOR OTHER PURPOSES”,
BY INCLUDING SHORTSELLING AND ADULTERATION OF PETROLEUM AND
PETROLEUM PRODUCTS AND OTHER ACTS IN THE DEFINITION OF PROHIBITED
ACTS, INCREASING THE PENALTIES THEREIN, AND FOR OTHER PURPOSES
 IRR OF BATAS PAMBANSA BLG. 33, AS AMENDED BY 7
PRESIDENTIAL DECREE NO. 1865
• BEU MEMORANDUM CIRCULAR NO. 85-3-348 16
AMENDMENT TO RULE IV, SECTION 2a (UNDERFILLING OF LPG CYLINDER)
OF THE RULES AND REGULATIONS ON THE IMPLEMENTATION OF BATAS
PAMBANSA BLG. 33, AS AMENDED BY PRESIDENTIAL DECREE NO. 1865
ISSUED ON MAY 25, 1983
• EIAB MEMORANDUM CIRCULAR NO. 95-03-001 16
[SUBJECT: A. INSTALLATION OF CYLINDER VALVE PROTECTIVE CAP OR COVER
AND CYLINDER HEAD COLLAR ON 50 KG LPG CYLINDERS; B. PROHIBITION
ON THE SALE AND DELIVERY OF LPG WHICH HAVE NO BRAND NAMES
(UNBRANDED)]
• DEPARTMENT CIRCULAR NO. 2000-05-007 18
EMBOSSED IDENTIFYING MARK ON LPG CYLINDERS AND INSTALLATION
OF COLLARS WITH DISTINCTIVE DESIGN OR MARKINGS ON EXISTING LPG
CYLINDERS DURING REQUALIFICATION
o The Honorable Secretary Vincent S. Perez in his capacity as the
Secretary of DOE vs. LPG Refillers Association of the Philippines (GR
No. 159149, June 26, 2006) 24
PROHIBITION ON THE REFILLING OF LPG CYLINDERS COVERED BY THE
RECALL AND REPLACEMENT ORDER OR THE DEPARTMENT OF TRADE AND
INDUSTRY (DTI) – BUREAU OF PRODUCT STANDARDS (BPS), AND THE SALE
OF SUBJECT CYLINDERS, WHETHER REFILLED OR NOT.
o NBI Supervising Agent E. Marvin De Jemil, et al. vs. Hon. Raul M.
Gonzalez, et. al. (CA-GR SP No. 98054, September 24, 2007) 34
CHAPTER II
A. REPUBLIC ACT NO. 8479 47
AN ACT DEREGULATING THE DOWNSTREAM OIL INDUSTRY AND FOR OTHER
PURPOSES
 CASES
o Ernesto Maceda vs. ERB, et. al. ( G.R. No. 96266, July 18, 1991) 58
o ERB vs. Court of Appeals, et. al. ( G.R. No. 113079, April 20, 2001) 67
o Petron Corporation vs. Mayor Tobias M. Tiangco, et. al.
(G.R. No. 158881, April 16, 2008) 79
o Congressman Enrique T. Garcia of the 2nd District of Bataan
vs. The Executive Secretary, et. al. ( G.R. No.157584, April 2, 2009) 89
o Francisco M. Tatad vs. The Secretary of the Department of Energy, et. al.
(G.R. No. 124360, November 5, 1997) 99
 EXECUTIVE ORDER NO. 377 118

PROVIDING THE INSTITUTIONAL FRAMEWORK FOR THE ADMINISTRATION OF
THE DEREGULATED DOWNSTREAM OIL INDUSTRY
• MEMORANDUM OF UNDERSTANDING BETWEEN THE DEPARTMENT OF
ENERGY (DOE) AND THE DEPARTMENT OF TRADE AND INDUSTRY (DTI),
DATED JANUARY 18, 2001 122
 EIAB MEMORANDUM CIRCULAR NO. 97-04-003 125
DIRECTING ALL OIL COMPANIES, ALL LPG INDEPENDENT MARKETERS AND
DEALERS, ALL CONCERNED TO SUBMT LPG PRICE LIST
 DOE-DOJ TASK FORCE RESOLUTION NO. 98-01 126
RULES AND REGULATIONS OF THE DOE-DOJ TASK FORCE
• DOE-DOJ TASK FORCE RESOLUTION NO. 2008-01 128
AMENDING RESOLUTION NO. 98-01, OTHERWISE KNOWN AS “RULES AND
REGULATIONS OF THE DOE-DOJ TASK FORCE
 DEPARTMENT CIRCULAR NO. 98-02-003 130
AMENDING DEPARTMENT CIRCULAR NO. 95-10-008, DIRECTING ALL OPERATORS
OF OIL RIGS OR PLATFORMS, POWERPLANTS, OIL TANKERS AND BARGES
CARRYING, PRODUCING AND/OR UTILIZING CRUDE OIL-BASED PRODUCTS TO
REPORT ALL OIL SPILLS OR ENVIRONMENTAL INCIDENTS TO THE DEPARTMENT
OF ENERGY
RULES AND REGULATIONS IMPLEMENTING REPUBLIC ACT NO. 8479,
“DOWNSTREAM OIL INDUSTRY DEREGULATION ACT OF 1998”
AMENDING SECTION 14 OF DEPARTMENT CIRCULAR NO. 98-03-004
ENTITLED “RULES AND REGULATIONS IMPLEMENTING REPUBLIC ACT
8479, DOWNSTREAM OIL INDUSTRY DEREGULATION ACT OF 1998
FURTHER AMENDING SECTION 14 OF DEPARTMENT CIRCULAR NO. 98-03-
004 ENTITLED “RULES AND REGULATIONS IMPLEMENTING REPUBLIC ACT
8479, DOWNSTREAM OIL INDUSTRY DEREGULATION ACT OF 1998,” AS
AMENDED
SUPPLEMENTING RULES AND REGULATIONS IMPLEMENTING REPUBLIC
ACT 8479, “DOWNSTREAM OIL INDUSTRY DEREGULATION ACT OF 1998,”
PARTICULARLY SECTION 15 THEREOF
 MEMORANDUM CIRCLUAR NO. 2001-05-002 164
PRIOR NOTICE ON PRICE ADJUSTMENTS
GUIDELINES IMPLEMENTING THE REQUIREMENT OF A PRIOR NOTICE ON
PRICE ADJUSTMENTS PURSUANT TO MEMORANDUM CIRCULAR NO. 2001-
05-002
PROVIDING FOR THE RULES AND REGULATIONS GOVERNING THE BUSINESS OF
RETAILING LIQUID PETROLEUM PRODUCTS
• MEMORANDUM CIRCULAR NO. 2001-02-001 176
PROPER RETENTION OF PETROLEUM SAMPLES IN RETAIL OUTLETS
OCTANE POSTING AT THE PUMP
REQUIRING DEALERS AND/OF OPERATORS OF GASOLINE STATIONS TO POST
A WARNING SIGN AGAINST THE USE AND/OR OPERATION OF CELLULAR
PHONES WHILE GASSING-UP IN GASOLINE STATIONS
IMPLEMENTING THE PHILIPPINE NATIONAL STANDARD SPECIFICATION FOR
BUNKER FUEL OILS (PNS/DOE QS 006:2005)
• SUMMARY OF DEPARTMENT OF ENERGY/PHILIPPINE NATIONAL
STANDARDS (DOE/PNS) FUEL QUALITY STANDARDS DEVELOPMENT 181
• CHART ON PROCESSING OF CERTIFICATE OF COMPLIANCE (COC) 184
 DEPARTMENT ORDER NO. 2003-10-014 185
CREATING A DOE GASOLINE STATION LOAN REVIEW COMMITTEE AND
DEFINING THE FUNCTIONS THEREOF AND THOSE OF THE DOE BUREAU/
UNITS INVOLVED
PROVIDING FOR THE RULES AND REGULATIONS GOVERNING THE BUSINESS
OF SUPPLYING, HAULING, STORAGE, HANDLING, MARKETING AND
DISTRIBUTION OF LIQUIFIED PETROLEUM GAS (LPG) FOR AUTOMOTIVE
USE.
 CHARTS
• CHART ON PROCESSING OF STANDARDS COMPLIANCE CERTIFICATE (SCC) &
CERTIFICATE OF NON-COMPLIANCE (CNC) 198
• CHART ON ACKNOWLEDGEMENT OF NOTICES 199
• CHART ON PROCESSING OF APPLICATION FOR DOE ENDORSEMENT 200
FOR BOI-REGISTRATION OF PROJECTS UNDER RA NO. 8479
• CHART ON PROCESSING OF APPLICATION FOR DOE ENDORSEMENT TO 201
AVAIL OF INCENTIVES FOR BOI-REGISTERED PROJECTS UNDER RA NO. 8479
• CHART ON ISSUANCE OF CERTIFICATE OF COMPLIANCE FOR NOTICE OF 202
IMPORTATION/EXPORTATION OF CRUDE OIL, FINISHED PETROLEUM
PRODUCTS, LUBES AND SPECIALTY PRODUCTS
• CHART ON REGISTRATION OF FUEL ADDITIVES 203
• CHART ON PROCESSING OF REGISTRATION OF FUEL ADDITIVES WITH 204
INTERIM STATUS PERMIT (ISP)
• CHART ON GASOLINE STATION LENDING AND FINANCIAL ASSISTANCE 205
PROGRAM
• CHART ON CONDUCT OF COMPLAINT RELATED INSPECTIONS 206
FOR ALL PETROLEUM PRODUCTS OF RETAIL OUTLETS
(LPG AND GASOLINE STATIONS)
CHAPTER III
EXECUTIVE ORDER NO. 134 207
REQUIRING OIL COMPANIES AND BULK SUPPLIERS TO MAINTAIN A SUFFICIENT
MINIMUM INVENTORY OF PETROLEUM, FOR PURPOSES OF ENSURING
CONTINUITY, ADEQUACY AND STABILITY OF CRUDE AND FUEL SUPPLY
GUIDELINES IMPLEMENTING THE MINIMUM INVENTORY REQUIREMENTS
OF OIL COMPANIES AND BULK SUPPLIERS AS PROVIDED UNDER EXECUTIVE
ORDER NO. 134
PROVIDING FOR THE RELAXATION OF THE MINIMUM INVENTORY
REQUIREMENTS OF ALL OIL COMPANIES AND BULK SUPPLIERS OPERATING
IN THE COUNTRY
CHAPTER IV
REPUBLIC ACT NO. 9367 215

AN ACT TO DIRECT THE USE OF BIOFUELS, ESTABLISHING FOR THIS PURPOSE
THE BIOFUEL PROGRAM, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER
PURPOSES

INTERIM GUIDELINES FOR THE ACCREDITATION OF OIL INDUSTRY PARTICIPANTS
IN THE BIOETHANOL PROGRAM
• CHART ON PROCESSING OF APPLICATION FOR ACCREDITATION OF A 228
BIOFUEL MANUFACTURER
ANHYDROUS BIOETHANOL FUEL (PNS/DOE QS 007:2005)
RULES AND REGULATIONS IMPLEMENTING REPUBLIC ACT NO. 9367
 JOINT ADMINISTRATIVE ORDER NO. 2008-1, SERIES OF 2008 247
GUIDELINES GOVERNING THE BIOFUEL FEEDSTOCKS PRODUCTION,
DISTRIBUTION AND SALE UNDER REPUBLIC ACT NO. 9367
BIODIESEL AND BIOFUEL BLENDS PURSUANT TO REPUBLIC ACT NO. 9367,
OTHERWISE KNOWN AS THE “BIOFUELS ACT OF 2006”
MANDATING A MINIMUM OF 2% BLEND OF BIODIESEL IN ALL DIESEL AND 5%
BIOETHANOL IN ANNUAL TOTAL VOLUME OF GASOLINE
CHAPTER V
OFFICE OF THE PRESIDENT MEMORANDUM CIRCULAR NO. 55 269
DIRECTING ALL DEPARTMENTS, BUREAUS, OFFICES AND INSTRUMENTALITIES
OF THE GOVERNMENT, INCLUDING GOVERNMENT-OWNED AND CONTROLLED
CORPORATIONS, TO INCORPORATE THE USE OF ONE PERCENT (1%) BY VOLUME
COCONUT METHYL ESTER IN THEIR DIESEL REQUIREMENTS
 DOE DEPARTMENT CIRCULAR NO. 2004-04-003 270
RULES AND REGULATIONS IMPLEMENTING MEMORANDUM CIRCULAR NO. 55
 DOE DEPARTMENT CIRCULAR NO. 2005-04-003 275
PROMOTING THE USE OF COCO-BIODIESEL AS AN ALTERNATIVE CLEAN FUEL
 SUPREME COURT MEMORANDUM CIRCULAR NO. 07-2004 276
IN RE: USE OF COCONUT METHYL ESTER (CME) IN THE DIESEL REQUIREMENTS
OF THE COURTS
OFFICE OF THE PRESIDENT MEMORANDUM CIRCULAR NO. 184 277
DIRECTING ALL DEPARTMENTS, BUREAUS, OFFICES AND INSTRUMENTALITIES
OF THE GOVERNMENT, INCLUDING GOVERNMENT-OWNED AND CONTROLLED
CORPORATIONS, TO USE TEN PERCENT (10%) BY VOLUME BIOETHANOL IN THEIR
GASOLINE REQUIREMENTS
CHAPTER VI
ADMINISTRATIVE ORDER NO. 228 279
ADDRESSING THE RISING COST OF ENERGY
CHAPTER VII
PHILIPPINE CLEAN AIR ACT OF 1999
MANDATING THE PHASE-OUT OF LEADED GASOLINE AS ONE OF THE MEANS
OF SOLVING AIR POLLUTION
• DENR ADMINISTRATIVE ORDER NO. 47, SERIES OF 1998 305
IMPLEMENTING RULES AND REGULATIONS FOR MANDATING THE PHASE-
OUT OF LEADED GASOLINE AS ONE OF THE MEANS OF SOLVING AIR
POLLUTION
 DENR ADMINISTRATIVE ORDER NO. 81, SERIES OF 2000 309
IMPLEMENTING RULES AND REGULATIONS FOR RA 8749
 DOE MEMORANDUM CIRCULAR NO. 2002-12-001 382
IMPLEMENTING THE CLEAN AIR ACT GASOLINE SPECIFICATION FOR 2003
UNLEADED MOTOR GASOLINE [PNS/DOE QS 001:2009]
CHAPTER VIII
AN ACT ESTABLISHING A COMPREHENSIVE FIRE CODE OF THE PHILIPPINES,
REPEALING PRESIDENTIAL DECREE NO. 1185 AND FOR OTHER PURPOSES
CHAPTER IX
PRESIDENTIAL DECREE NO. 87 399
AMENDING PRESIDENTIAL DECREE NO. 8 ISSUED ON OCTOBER 2, 1972, AND
PROMULGATING AN AMENDED ACT TO PROMOTE THE DISCOVERY AND
PRODUCTION OF INDIGENOUS PETROLEUM AND APPROPRIATE FUNDS
THEREFOR
DESIGNATING THE DEPARTMENT OF ENERGY AS THE LEAD AGENCY IN
DEVELOPING THE PHILIPPINE NATURAL GAS INDUSTRY
POLICY GUIDELINES ON THE OVERALL DEVELOPMENT AND UTILIZATION OF
NATURAL GAS
INTERIM RULES REGULATIONS GOVERNING THE TRANSMISSION, DISTRIBUTION
AND SUPPLY OF NATURAL GAS
IMPLEMENTING THE NATURAL GAS VEHICLE PROGRAM FOR PUBLIC
TRANSPORT
 DEPARTMENT ORDER NO. 2004-02-001 443
CREATING A NATURAL GAS VEHICLE-TECHNICAL WORKING GROUP FOR
COMPRESSED NATURAL GAS (CNG) VEHICLES
GUIDELINES ON THE ISSUANCE OF CERTIFICATE OF ACCREDITATION AND
CERTIFICATE OF AUTHORITY TO IMPORT UNDER THE NATURAL GAS VEHICLE
PROGRAM FOR PUBLIC TRANSPORT AS THE IMPLEMENTING RULES AND
REGULATIONS OF EXECUTIVE ORDER NOS. 396 AND 488 DATED DECEMBER 31,
2004 AND JANUARY 12, 2006, RESPECTIVELY AND DEPARTMENT CIRCULAR NO.
2005-07-006 DATED JULY 5, 2005 AND AMENDING CERTAIN PROVISIONS OF THE
SAID D.C. NO. 2004-04-004
CHAPTER X
DEPARTMENT CIRCULAR NO. 2002-07-004 455
RULES OF PRACTICE AND PROCEDURE BEFORE THE DEPARTMENT OF ENERGY
CHAPTER XI
AN ACT PRESCRIBING THE INTELLECTUAL PROPERTY CODE AND ESTABLISHING THE
INTELLECTUAL PROPERTY OFFICE, PROVIDING FOR ITS POWERS AND FUNCTIONS,
AND FOR OTHER PURPOSES.
Chapter 1
BATAS PAMBANSA BILANG 33
AN ACT DEFINING AND PENALIZING CERTAIN PROHIBITED ACTS INIMICAL TO THE PUBLIC INTEREST
AND NATIONAL SECURITY INVOLVING PETROLEUM AND/OR PETROLEUM PRODUCTS, PRESCRIBING
PENALTIES THEREFOR AND FOR OTHER PURPOSES
SECTION 1. Declaration of Policy. – It is the (e) Speed contests and rallies involving
declared policy of the State to institutionalize mainly the use of motor vehicles, motor-
as a national way of life energy conservation driven watercraft or aircraft utilizing
geared towards the judicious and efficient petroleum-derived fuels, including car
use of energy in order to enhance availability and motorcycle rallies and drag racing;
of energy supplies required to support and
economic, social and developmental goals.
In view of the continuing uncertainty of the (f) Sky-diving and water-skiing.
international oil supply, it is imperative that
measures to conserve energy be strengthened SECTION 3. Definition of terms. – For the
and/or petroleum products contrary to purposes of this Act, the following terms shall
the intent and spirit of judicious usage and be understood to mean:
conservation of energy, which are inimical to
the public interest and national security, be “Illegal trading in petroleum and/or
prohibited and appropriate sanction therefor petroleum products” – the sale or distribution
be imposed. of petroleum products for profit without
license or authority from the Government;
SECTION 2. Prohibited Acts. – The following non-issuance of receipts by licensed
acts are prohibited and penalized: traders; misrepresentation as to quality
and/or quantity; and sale by oil companies,
(a) Illegal trading in petroleum and/or distributors and/or dealers violative of
petroleum products; government rules and regulations.

(b) Hoarding of petroleum and/or petroleum “Hoarding” – the undue accumulation by
products; a trader of petroleum and/or petroleum
products beyond his or its normal inventory
(c) Overpricing in the sale of petroleum and/ levels and/or the unjustified refusal to dispose
or petroleum products; of, sell or distribute the same to consumers;
or the unreasonable accumulation by a
(d) Misuse of petroleum allocations; person other than a trader of petroleum and/
or petroleum products.

VOLUME 3 DOWNSTREAM 1
“Overpricing” – the sale of petroleum and/ cancellation of his license.
or petroleum products at prices in excess of
those duly authorized by the Government. Trials of cases arising under this Act shall
be terminated within thirty (30) days after
“Misuse of allocation” – the sale, transfer arraignment.
or diversion of mandated petroleum fuel
allocations by oil companies, distributors, When the offender is a corporation,
dealers of consumers contrary to the declared partnership, or other juridical person, the
intent of the Government in making such president, general manager, managing
allocation. partner, or such other officer charged with
the management of the business affairs
SEC. 4.Penalties.– Any person who commits thereof shall be criminally liable.
any act herein prohibited shall, upon
conviction, be punished with a fine of not less If the offender is a government official or
than Two Thousand Pesos (P 2,000) but not employee, he shall perpetually be disqualified
more than Ten Thousand Pesos (P 10,000), from office.
or imprisonment of at least two (2) months
but not more than one (1) year, or both, in SEC. 5.Repealing Clause.– All laws, decrees,
the discretion of the court. Furthermore, orders, instructions, rules and regulations
the petroleum and/or petroleum products, which are inconsistent with, or contrary to,
subject-matter of the illegal trading, hoarding, the provisions of this Act are hereby repealed
overpricing and misuse, shall be forfeited in or modified accordingly.
favor of the Government: Provided, That if
the petroleum and/or petroleum products SEC. 6.Effectivity.– Upon its approval, this
have already been delivered and paid, the Act shall take effect after five days from its
payment made shall be the subject of the publication in at least two newspapers of
forfeiture, and if the seller who has not general circulation.
yet delivered has been fully paid, the price
received shall be returned to the buyer, and
in addition, if the offender is a trader, the Approved, June 6, 1979
2 DOWNSTREAM VOLUME 3

AMENDING BATAS PAMBANSA BILANG 33, ENTITLED “AN ACT DEFINING AND PENALIZING CERTAIN
PROHIBITED ACTS INIMICAL TO THE PUBLIC INTERESTS AND NATIONAL SECURITY INVOLVING
PETROLEUM AND/OR PETROLEUM PRODUCTS, PRESCRIBING PENALTIES THEREFOR AND FOR
OTHER PURPOSES”, BY INCLUDING SHORTSELLING AND ADULTERATION OF PETROLEUM AND
PETROLEUM PRODUCTS AND OTHER ACTS IN THE DEFINITION OF PROHIBITED ACTS, INCREASING
THE PENALTIES THEREIN, AND FOR OTHER PURPOSES”.

WHEREAS, Batas Pambansa Bilang 33, defines NOW, THEREFORE, I, FERDINAND E. MARCOS,
and penalizes certain prohibited acts inimical President of the Philippines, by virtue of the
to the public interest and national security powers vested in me by the Constitution, do
involving petroleum and/or petroleum hereby order and decree as follows:
products;
SECTION 1. Section two of Batas Pambansa
WHEREAS, adulteration of finished petroleum Bilang 33, as amended, is further amended to
products or possession of adulterated read as follows:
finished petroleum products for the purpose
of sale, distribution, transportation, exchange “SEC. 2. Prohibited Acts. – The
or barter; and underdelivery or underfilling following acts are prohibited and
beyond authorized limits in the sale of penalized:
petroleum products or liquefied petroleum
gas cylinders are pernicious practices that are “(a) Illegal trading in petroleum and/
rampant and widespread; or petroleum products :

WHEREAS, there is an urgent need to curb, if “(b) Adulteration of finished
not totally eliminate, such nefarious practices petroleum products, or possession
in the industry in order to better protect the of adulterated finished petroleum
consuming public; products for the purpose of sale,
distribution, transportation,
WHEREAS, it is necessary to provide the exchange or barter;
implementing government agencies with
increased administrative and criminal “(c) Under delivery or underfilling
penalties with which it can effectively beyond authorized limits in the sale
curtail petroleum product adulteration and of petroleum products or possession
shortselling as well as other prohibited acts of underfilled liquefied petroleum
and activities involving petroleum and/or gas cylinder for the purpose of
petroleum products which are inimical to sale, distribution, transportation,
public interest and national security; exchange or barter;

WHEREAS, in view of the foregoing “The oil company, petroleum refiller,
considerations, it has become necessary marketer, dealer and retailer, as the
to amend certain provisions of Batas case may be, and the hauler shall
PambansaBilang 33, as well as to provide new be responsible for the quantity and
provisions in the law; quality of the petroleum products
delivered when the same is sold on
delivered basis. “[(b)] (D) Hoarding of petroleum
and/or petroleum products;
“For the purpose of this
subparagraph, the existence of the “[(c)] (E) Overpricing in the sale of
facts hereunder shall give rise to the petroleum products;
following presumptions:
“[(d)] (F) Misuse of petroleum
“(1) That cylinders containing allocations;
less than the required quantity of
liquefied petroleum gas which are “[(e) (G) Speed contests and rallies
not properly identified, tagged and involving mainly the use of motor
set apart and removed or taken vehicles, motor-driven watercraft or
out from the display are and made aircraft utilizing petroleum-derived
accessible to the public by marketers, fuels, including car and motorcycle
dealers, sub-dealers or retail outlets rallies and drag racing, without the
are presumed to be for sale; permit from the bureau of energy
utilization; and
“(2) In the case of a dispensing pump
in a petroleum product retail outlet “[(f)] (H) Sky-diving, and water
selling such products to the public, skiing except when methanol is used
the absence of an out-of-order sign, for the power- boat operation.”
or padlock, attached or affixed to
the pump to prevent delivery of SEC. 2. Section three of the same Act is
petroleum products therefrom shall hereby amended to read as follows:
constitute a presumption of the
actual use of the pump in the sale or “SEC. 3. Definition of Terms. – For
delivery of such petroleum products; the purpose of this Act, the following
and terms shall be construed to mean:

“(3) Where the seal, whether official “Illegal trading in petroleum and/or
or of the oil company, affixed to petroleum products” –
the dispensing pump, tank truck or
liquefied petroleum gas cylinder, is “(a) the sale or distribution of
broken, or is absent or removed, it petroleum products [for profit]
shall give rise to the presumption without license or authority from
that the dispensing pump is under the [Government] Bureau of Energy
delivering, or that the liquefied Utilization;
petroleum gas cylinder is underfilled,
or that the tank truck contains “(b) non-issuance of receipts by
adulterated finished petroleum licensed [traders] oil companies,
products or is underfilled; marketers, distributors, dealers, sub-
dealers and other retail outlets, to
“The use of such pumps, cylinders final consumers; provided: that such
or containers referred to in sub- receipts, in the case of gas cylinders,
paragraph (1), (2), and (3) of this sub- shall indicate therein the brand
paragraph, to deliver products for name, tare weight, gross weight, and
sale or distribution shall constitute the price thereof;
prima facie evidence of intent of
the hauler, marketer, refiller, dealer, “(c) Refilling of liquefied petroleum
retailer outlet operator to defraud; gas cylinders without authority from
said bureau, or refilling of another “Petroleum fuel product
company’s or firm’s cylinders without adulteration” – the mixing of any
such company’s or firm’s written petroleum product with another
authorization; finished or unfinished petroleum
product or stock or with any non-
“(D) Making or using in such cylinders petroleum substance or material
a tare weight other than the actual that will result in product quality
or true tare weight thereof; change, or resulting in the failure
of such finished petroleum product
“(E) Violation of rules and regulations to meet the required product
of said bureau regarding the specifications as prescribed by the
implementation of this Act; products standards agency of the
Ministry of Trade and Industry, for the
“(F) Removal or unloading of purpose of this definition, finished
petroleum products from any lorry, petroleum products refers to any of
tank truck or delivery vehicle by any the following: Premium gasoline,
person other than the contracted regular gasoline, aviation gasoline,
purchaser, or in premises of the aviation turbo fuel, kerosene, diesel
purchaser’s retail outlet or business fuel, industrial fuel or packaged lube
establishment; oils. This definition shall not apply to
alcogas mixture and oil emulsions.
“(G) Use of a pump metering
unit which has not been properly “Underfilling or underdelivery” –
calibrated and sealed by the office of Refers to a sale, transfer, delivery
the city or municipal treasurer where or filling of petroleum products of
the station or outlet is located, or by a quantity that is actually beyond
the National Science and Technology authorized limits than the quantity
Authority (NSTA), or by any other indicated or registered on the
government agency authorized metering device of container. This
therefor, or in the absence thereof refers, among others, to the quantity
by the oil company; and of petroleum products delivered
by metered dispensing pumps
“(H) Use of a tank truck, lorry, hauling in petroleum retail outlets or to
vehicle, or other conveyor other than liquefied petroleum gas in cylinder
vessels or barges for the delivery of or to lube oils in packages.
petroleum products which has not
been registered with the Bureau “Hoarding” – the undue accumulation
of Energy Utilization and the tanks, of a trader of petroleum and/or
containers, or compartment thereof petroleum products beyond his or
are not properly calibrated and its normal inventory levels, and/or
sealed by the national science and unjustified refusal to dispose of, sell
technology authority or any other or distribute the same to consumers;
government agency authorized or the unreasonable accumulation
therefor [misrepresentation as to by a person other than a trader
the quality and/or quantity; and sale of petroleum and/or petroleum
by oil companies, distributors and/or products.
dealers violative of government rules
and regulations]. “Overpricing” – the sale of petroleum
and/or petroleum products at prices
in excess of those duly authorized by
the [Government] Board of Energy. Administrative proceedings shall be
decided within thirty (30) days after
“Misuse of allocation” – the sale, filing of the last responsive pleading
transfer or diversion of mandated by the respondent, or termination
petroleum fuel allocation by oil and completion of the administrative
companies, distributors, dealers or proceeding.
consumers contrary to the declared
intent of the Government in making “All law enforcement and other
such allocation.” concerned agencies of the
government shall assist the
SEC. 3. The same Act is further amended by Bureau of Energy Utilization in the
inserting between Sections three and four implementation of this section.
thereof, a new Section which shall read as
follows: “The administrative sanction that
may be imposed shall be without
“SEC. 3-A. Rules and Regulations; prejudice to the filing of a criminal
Administrative Sanctions for violation action as the case may warrant.”
thereof. – The Bureau of Energy
Utilization shall issue such rules and SEC. 4. Section four of the same Act is
regulations as are necessary to carry amended to read as follows:
into effect the provisions of this
act, subject to the approval of the “SEC. 4. Penalties – Any person who
Minister of Energy, after consultation commits any act herein prohibited
with the affected industry sectors. shall, upon conviction, be punished
Said rules and regulations shall take with a fine of not less than (two)
effect fifteen (15) days from the TWENTY thousand pesos (P2,000.00)
date of its publication in two (2) (P20,000.00) but not more than (ten)
newspapers of general circulation. FIFTY thousand pesos (P10,000.00)
(P50,000.00), or imprisonment of at
“The Bureau of Energy Utilization least two (2) [months] YEARS but not
is empowered to impose in an more than [one (1)] FIVE (5) years, or
administrative proceeding, after due both, in the discretion of the court.
notice and hearing, upon any person In cases of second and subsequent
who violates any provision of such conviction under this act, the penalty
rules and regulations, a fine of not shall be both fine and imprisonment
more than ten thousand pesos (P as provided herein. Furthermore,
10,000.00) or to suspend or remove the petroleum and/or petroleum
the license or permit of a hauler, products subject imprisonment
marketer, refiller, dealer, sub-dealer as provided herein. Furthermore,
or retail outlet: Provided, that hearing the petroleum and/or petroleum
in any administrative proceedings products subject matter of the illegal
may be waived by respondent: trading, adulteration, shortselling,
Provided, further, that during the hoarding, overpricing [and] OR
pendency of such administrative misuse, shall be forfeited in favor
proceeding, the bureau may suspend of the Government: Provided, That
the business operations of such if the petroleum and/or petroleum
hauler, marketer, refiller, dealer, products have already been
sub-dealer or retailer or retail outlet delivered and paid for, the offended
operator when the suspension is party [the payment made] shall be
consistent with the public interest. indemnified twice the amount paid
[the subject of forfeiture] and if the he shall be subject to deportation
seller who has not yet delivered has after serving the sentence.
been fully paid, the price received
shall be returned to the buyer with “If the offender is a government
an additional amount equivalent to official or employee, he shall be
such price; and in addition, if the perpetually disqualified from office.”
offender is [a trader] an oil company,
marketer, distributor, refiller, dealer, SEC. 5. All laws, decrees, orders, instructions,
sub-dealer and other retail outlets, rules and regulations which are inconsistent
or hauler, the cancellation of his with, or contrary to, the provisions of this Act
license. are hereby repealed or modified accordingly.

“Trials of cases arising under this Act SEC. 6. This decree shall take effect upon its
shall be terminated within the thirty approval.
(30) days after arraignment.
Done in the City of Manila, this 25th day
“When the offender is a corporation, of May in the year of Our Lord, nineteen
partnership, or other juridical hundred and eighty-three.
person, the president, general
manager, managing partner, or (sgd) FERDINAND E. MARCOS
such other officer charged with the President, Republic of the Philippines
management of the business affairs
thereof, or employee responsible By the President:
for the violation, shall be criminally
liable, in case the offender is an alien, (sgd.) JUAN C. TUVERA
Presidential Executive Assistant
RULES AND REGULATIONS

ON THE IMPLEMENTATION OF BATAS PAMBANSA BLG. 33,
AS AMENDED BY PRESIDENTIAL DECREE NO. 1865, ISSUED ON MAY 25, 1983
RULE I (1) “Bureau” shall mean the Bureau of

GENERAL PROVISIONS Energy Utilization.

SECTION 1. Coverage. – (2) “Ministry” shall mean the Ministry of
Energy.
These rules and regulations shall apply in the
implementation of Batas PambansaBilang 33, (3) “Board” shall mean the Board of Energy.
as amended by Presidential Decree No. 1865
issued on May 25, 1983. (4) “Act” shall refer to Batas PambansaBlg.
33, as amended by Presidential Decree
SEC. 2. Definition of Terms. – No. 1865, issued on May 25, 1983.

For the purposes of these rules and (5) An “Oil Company” is one that
regulations: manufactures, processes and sells a
broad range of petroleum products.
It shall refer to any of the following SECTION 1. Bureau of Energy Utilization
companies and such other companies Licensing. –
that may be organized for this purpose or
business: No person or entity may produce, sell,
transport, process, or manufacture, blend or
(i) Caltex Philippines, Inc. package petroleum products for business or
(ii) Mobil Oil Philippines, Inc. profit without prior registration and license
(iii) Petrophil Corporation from the Bureau of Energy Utilization. The
(iv) Pilipinas Shell Petroleum Corporation registration and licensing requirements are/
shall be specified in BEU administrative rules
(6) A “Marketer” is one that is engaged in and regulations in this regard.
the sale or trading of petroleum products
including LPG. A marketer may or may Annual license renewal is required.
not manufacture or process the products
sold. A marketer is differentiated from SEC. 2. Issuance of Receipts. –
an oil company in that marketers include
companies dealing in one product only, All transactions involving the sale or transfer
such as LPG. An oil company is also a of petroleum products to final consumers
marketer. or end-users must be covered by an official
receipt bearing the registered name and
(7) A “Dealer” refers to one involved in the address of the seller and detailing the quantity,
sale or trading of petroleum products price and type or petroleum product sold and
under contract with an oil company or the date of the transaction. In the case of the
marketer. The dealer shall sell only the sale of LPG in cylinders, the receipt shall also
products of the marketer. indicate the brand of the product, the gross
weight of the cylinder including its contents,
(8) A “Retail Outlet” refers to one who the tare weight of the cylinder, excluding the
sells petroleum products directly to a contents, the net weight of the LPG contained,
consumer. the total price and the unit price per cylinder.

(9) A “Hauler” is one engaged in the SEC. 3. Refilling of LPG Cylinders. –
transportation of petroleum products as
a business. Refilling of LPG cylinders for purposes of sale
or distribution for business or profit must
(10) “NSTA” shall refer to the National Science have prior registration and license from the
and Technology Authority. Bureau as provided for in BEU rules and
regulations in this regard. Refilling of LPG
(11) “PSA” shall refer to the Products cylinders not owned by the refilling entity
Standards Agency. may be performed only with the written
authorization of the cylinder owner or the
entity that has entitlement to such cylinders.
RULE II
ILLEGAL TRADING SEC. 4. Marking of LPG Cylinder. –

Non-compliance with or violation of the Within ninety (90) days of the effectivity of
following provisions of this rule shall these Rules and Regulations, all LPG cylinders
constitute ILLEGAL TRADING and shall be must be properly marked with the weight of
punishable under the Act. the cylinder either engraved or embossed.
The weight shall be expressed in kilograms
and shall be indicated to the last one-tenth The calibration shall be performed as often
(0.1) of one kilogram. The marking must be as may be necessary to correct any deviation
in a conspicuous spot in the cylinder and shall from the appropriate delivered quantity as
not be less than 0.6 cm in height. All LPG measured by a calibration bucket certified
cylinders must also have the owner’s trade and sealed by the NSTA. Such a calibration
name, a distinguishing color and distinctive bucket shall be maintained at all times in the
serial number marked on every cylinder. retail outlet premises.
SEC. 5. Unloading of Petroleum Products. – SEC. 7. Calibration, Registration and Sealing
of Petroleum Product Transport Containers. –
Petroleum products may be unloaded only
by/or in the presence of the buyer, or his All tank trucks, tank trailers and other mobile
authorized representative, as named on containers used to transport measured
the sales invoice. Moreover, unloading amounts of petroleum products in bulk must
of the product may be performed only at be registered with the Bureau. Moreover, the
the premises designated by the buyer and capacity of such transport containers must
indicated on the sales invoice. For this be certified and calibrated by the National
purpose, the supplier must indicate on the Science and Technology Authority or by
sales invoice the name of the buyer and eh an other government agency authorized
delivery point of every shipment. therefor. Calibration markers shall be fixed
and provided with seal by the calibrating
SEC. 6. Calibration and Sealing of Dispensing agency. Removal, tampering or absence of
Pumps. – such seals shall disqualify such containers
from further use until recalibration and
All fuel pumps used in petroleum retail outlets resealing by the proper authorities is
to dispense petroleum products sold to the performed. In the absence or incapacity of
public must be properly calibrated and after a properly constituted authority to perform
calibration immediately sealed by authorized this requirement, calibration and sealing by
calibrating entity. A dispensing pump that is the oil company shall suffice.
not calibrated or sealed or one that goes off
calibration shall be marked with an “out-of- To guard against pilferage in transit, tank
order” sign and shall not be used until the trucks, tank trailers and other mobile
said pump is recalibrated and resealed. containers of petroleum products in bulk
shall have all the valves, hatches, and other
The authorized calibrating entities are the openings sealed closed by the marketer
Municipal or City Treasurer, or in their before leaving the source depot. Such seal
absence or incapacity, the NSTA or, in their may not be removed, tampered or broken
absence or incapacity, any other government except by buyer or his representative, or the
agency authorized therefor, or in their supplier, and only at their respective places of
absence, the oil company. In locations where business.
the Municipal or City Treasurer is capable of
calibration, a calibration by other authorized A broken or tampered valve or hatch seal,
entities shall be provisional and subject or the absence of one, shall give rise to the
to final calibration by the Treasurer. The presumption that the container is underfilled
authority performing the calibration shall or that the product contained is adulterated
install a seal after calibration to guard against and the shipment may be refused by the
unauthorized adjustment of the dispensing buyer.
pump meter which seal may not be broken
until the next calibration by an authorized SEC. 8. LPG Cylinder Sealing. –
entity.
Within one hundred eighty (180) days from been tested, and found to meet the PSA
the effectivity of these rules and regulations, specifications in which case the results of
all LPG cylinders shall be provided with seal the test shall be duly recorded and kept
after every filling. LPG in cylinders with in the depot for at least one year. Each
broken seal or without seal shall not be sold sample shall be clearly identified as to
or distributed thereafter. source tank and date of sampling. The
sample shall be kept for at least three
The seal must be of the type that must be weeks more after the next shipment.
broken or destroyed before the product can
flow out of the cylinder. The seal shall be (b) Oil companies shall expeditiously respond
subject to approval of the Bureau. to dealer request for confirmatory
or verification testing of petroleum
The marketer and the filling plant, if the latter products.
is a different entity, shall be jointly responsible
for providing the seal required under the Act. (c) Oil companies shall also periodically take
samples and test premium and regular
RULE III gasoline stock of their retail outlets at
PETROLEUM PRODUCT ADULTERATION least once every three (3) months. The
test results shall include octane number
SECTION 1. Petroleum products not meeting and shall be reported to the Bureau on a
the pertinent PSA specifications shall be monthly basis.
deemed adulterated: Provided, That in the
case of the octane number specifications for SEC. 3. Testing or Retention of Sample of
gasoline, a deviation of one (1) octane or less Petroleum Products by the Dealer/Operator.
below the minimum shall be considered as –
meeting specifications for the purpose of the
Act. As a measure against delivery of adulterated
products, dealers are required to do either (a)
Mixing water or other substances not miscible or (b) below:
and forming a separate layer from the
petroleum product, in quantities exceeding (a) The dealer/operator shall take one (1)
the PSA allowable water and sediments liter sample each of the premium and/or
content, shall constitute adulteration. regular gasoline delivered. The samples
shall be placed in a suitable container
The sale, distribution, transportation, and sealed in the presence of the tank
exchange or barter of adulterated products truck driver who shall verify the sample-
as defined in this Section or possession taking by so indicating on the invoice.
thereof for any of the above purposes, shall The sample shall be kept by the dealer for
constitute an act of adulteration prohibited at least one (1) month or until the third
and penalized under the Act. delivery thereafter, whichever is shorter.

SEC. 2. Sampling and Testing of Petroleum (b) Using a hydrometer, take the API gravity
Products by Oil Companies. – or density and obtain the corrected
API gravity at 60 degrees Fahrenheit or
(a) Oil companies shall take storage tank specific gravity at 15 degrees Celsius and
samples after every shipment of premium compare this against the API gravity at 60
and regular gasoline to their depots/bulk degrees.
plants and shall keep such samples except
where such storage tank samples have (c) Fahrenheit or density at 15 degrees
Celsius as indicated in the product invoice.
For this purpose, oil companies shall 50 millimeters for every 10 liters as measured
indicated the API gravity at 60 degrees by a calibrating bucket certified by the NSTA.
Fahrenheit or density at 15 degrees The calibrating bucket shall be filled to the 10
Celsius of all deliveries of premium and liter mark three (3) times as low, medium and
regular gasoline the corresponding fast flow rates and the average quantity as
invoice. A dealer may refuse to accept measured by the pump meter shall constitute
the shipment if the API gravity difference the quantity to be compared with the actual
exceeds by 0.6 degrees API or the density quantity. Use of such pumps n the sale of
difference exceeds by 0.0024. Both oil petroleum products shall be punishable
company and dealer specific gravity or under the Act. The absence of an “out-of-
density readings should be recorded in a order” sign or padlock on the pump that is
logbook kept for this purpose. found under-delivering shall constitute a
presumption of actual use of the pump in the
Dealers may require their oil company sale of the petroleum product. A dispensing
supplier to perform verificatory quality tests pump found with broken or no seal shall be
on products received. presumed to be under delivering and absence
of “out-of-order” notice or padlock shall
SEC. 4. Sample Taking by the Bureau. – likewise give rise to a presumption of actual
use of the pump in the sale of the product.
Bureau inspectors and other law enforcement
agents may require oil companies, marketers, SEC. 1b. Daily Testing of Dispensing Pumps
dealers, haulers and retail outlets to provide by Dealer. –
one (1) liter sample of petroleum products for
sale for laboratory test purposes. All retail outlets shall test dispensing pump
meters daily before opening for business
SEC. 5. Removal of Water Phase in using an NSTA calibrated bucket. Any pump
Underground Tank by Dealer/Operator of not delivering the correct quantity shall be
Petroleum Product Retail Outlet. – marked with an “out-of-order” sign and shall
not be used until said pump is recalibrated
The oil company supplier of dealers and and resealed by a proper authority.
operators of petroleum retail outlets should
ensure that the product suction line of their Retail outlets are given thirty (30) days from
storage tanks is elevated at least four (4) the date of effectivity of these Rules to secure
inches from the bottom of the tank and the an NSTA certified calibrating bucket and
dealers and operators of petroleum retail comply with the requirement of this Section.
outlets should periodically remove the water The oil companies shall be responsible for
phase to avoid water draw off with the informing their respective dealers of the
product. requirements of this Section and of reporting
to the Bureau their dealer’s compliance.
RULE IV
UNDERDELIVERY AND UNDERFILLING The dealer calibration bucket must be
recalibrated and resealed once every twelve
SECTION 1a. Underdelivery in Dispensing (12) months by the NSTA.
Pumps. –
The dealer shall keep a written record or
The quantity of petroleum products delivered logbook of the daily testing required herein
by dispensing pumps in retail outlets as shall be made available to Bureau inspectors
measured by the dispensing pump meter shall and to the public upon demand.
not be less than actual quantity by more than
SEC. 1c. Calibration of Dispensing Pumps by area accessible to the public, gives rise to
Oil Companies. – presumption that they are for sale.

Oil companies shall respond expeditiously LPG cylinders with water capacity of twenty-
to their dealer’s request for calibration of one (21) liters to twenty-nine (29) liters shall
pumps subject to the provisions of Section 6, contain eleven (11) kilograms.
Rule 12 hereof.
SEC. 2b. Weighing Devices Required. –
All oil companies shall also periodically
calibrate all of the dispensing pumps of their All LPG marketers, dealers and retail outlets
dealers and check their calibration bucket at selling directly to end-users shall maintain at
least once every sixty (60) days. The results all times in their premises a suitable weighing
of these calibrations must be reported to the scale for LPG cylinders calibrated ands sealed
Bureau every three (3) months. by the proper authority. Such devices shall
meet the required contents before selling or
All calibrations shall be duly documented and delivering these in its sales area accessible to
signed by the mechanic who performed the its customers.
calibration and check their calibration bucket
and countersigned by the retail outlet dealer. SEC. 2c. Checking of LPG Cylinder Content by
A copy of this document shall be kept on file Dealers and Retail Outlets. –
at the retail outlet.
All marketers, dealers and retail outlets selling
After the calibration, a sticker of at least one- directly to end-users shall check by weighing
half (1/2) inch by two (2) inches bearing the that the LPG in its cylinders meet the required
date of the calibration and the initials of the contents before selling or delivering or placing
mechanic who calibrated the pump shall be these in its sales or pick-up area accessible to
posted on the face of the pump calibrated. its customers.

SEC. 1d. Testing of Dispensing Pumps by SEC. 2d.
Bureau Personnel and/or by Other Law
Enforcement Agents. – Oil companies, marketers and dealers shall
periodically sample and check the LPG sold
The dealer shall allow and cooperate with by their respective dealers and/or retail
Bureau inspectors and other law enforcement outlets to verify compliance with the LPG
agents in testing the calibration of dispensing contents requirement at least once every
pumps. ninety (90) days. They shall likewise check
whether dealers’ and/or retail outlets’
SEC. 2a. Underfilling of LPG Cylinders. – weighing devices are calibrated and sealed
in accordance with Section 2b above. The
In case of LPG for sale in cylinders, the net results of such test shall be recorded and kept
LPG quantity contained shall not be more by the oil company, marketer or dealer for at
than three tenths (0.3) of one kilogram less least one (1) year and shall be made available
than the required cylinder content. Shortage to the Bureau on demand.
in the quantity contained exceeding this
quantity shall constitute underfilling. A RULE V
broken or tampered seal, or the absence of HOARDING
one, shall give rise to the presumption that
the LPG cylinder is underfilled. Possession SECTION 1. All oil companies and marketers
of underfilled LPG cylinders not properly shall be open during normal business hours
so identified or taken out from the sales
herein set to be from eight in the morning ceiling price in the nearest locality where a
(8:00 A.M.) to four-thirty in the afternoon Board of Energy price is set. A retailer may,
(4:30 P.M.), Monday through Friday. for reasonable cause, request the Board of
Energy to set a different price for his locality.
All dealers of gasoline products shall be
open daily and during normal business hours RULE VII
herein set to be from seven in the morning MISUSE OF PETROLEUM ALLOCATION
(7:00 A.M.) to seven in the evening (7:00
P.M.). Dealers and retail outlets of liquefied SECTION 1. In times of short supply of
petroleum gas shall be open during normal petroleum products, the Minister of Energy
business hours set to be from eight in the and/or any other authority created for
morning (8:00 A.M.) to five in the afternoon this purpose may, with the approval of the
(5:00 P.M.), Monday through Friday. President of the Philippines allocate or
ration the available supplies. Any consumer
Except for good cause, all oil companies, or marketer who sells, exchanges, disposes
marketers, dealers and retail outlets may not or uses such allocation or ration other than
refuse to sell petroleum products. Refusal for the purpose of which granted by the
to sell when the product is available and the authority shall be in violation of the Act. Any
consumer is paying in cash shall constitute misrepresentation for the purpose of gaining
hoarding except when the available product subject allocation shall likewise be a violation
consists of unusable bottoms usually of the Act.
consisting of the bottom four inches content
of the storage tank in the case of gasoline RULE VIII
dealers. SPEED CONTESTS OR RALLIES

SEC. 2. Undue accumulation of petroleum SECTION 1. Speed contests or rallies involving
products in times of tight supply and shortly mainly the use of motor powered vehicles,
before an anticipated price increase by watercraft or aircraft may not be held without
marketers, retail outlets or consumers shall prior authorization and permit from the
constitute hoarding. Undue accumulation Bureau.
shall mean quantities beyond the normal
inventory levels maintained during the RULE IX
immediately preceding thirty (30) days for SKYDIVING AND WATERSKIING
marketers or retail outlets, and in the case of
consumers. SECTION 1. Skydiving and waterskiing for
pleasure or sports requiring the use of
motorized aircraft or watercraft, respectively,
RULE VI shall not be allowed except when the fuel
OVERPRICING used in the aircraft or watercraft is methanol.

SECTION 1. Petroleum products whose prices RULE X
are set by the Board of Energy may not be sold IMPOUNDING OF EVIDENCE
above such fixed prices. Sale of petroleum
products at prices in excess of the fixed prices SECTION 1. Impounding of petroleum
shall constitute overpricing punishable under and/or petroleum products constituting
the Act. evidence of illegal trading, adulteration, short
selling, hoarding, overpricing and misuse of
SEC. 2. In outlying areas where no price is petroleum allocation shall be applicable in
published by the Board of Energy, the retailer the following cases:
shall not sell at a price not more than the
(1) Adulterated petroleum products in bulk Through the administrative proceedings,
depots, retail outlets, or in transit. the Bureau is empowered to impose, after
due notice and hearing, the penalties stated
(2) LPG in cylinders found to be underfilled. hereunder for violation of any provision of
the Act and these implementing rules and
(3) Petroleum products held in violation of regulations: Provided, however, That hearing
the Anti-Hoarding provisions of the Act. in any administrative proceedings may be
waived by respondent.
(4) Petroleum product allocations obtained
or disposed in violation of the Misuse of SEC. 2. Duration of Administrative Proceeding.
Allocation provisions of the Act. –
Administrative proceeding shall be decided
(5) Petroleum products sold at a price within thirty (30) days after filing of the last
exceeding the authorized price including responsive pleading by the respondent,
all stocks still in possession of the seller. or the termination and completion of the
administrative proceedings.
(6) Petroleum products diverted from
buyer’s designated delivery point. SEC. 3. Effect of Imposition of Administrative
Sanction. –
(7) Petroleum products sold without Bureau’s
license or transported by haulers without The administrative sanction that may be
Bureau license. imposed shall be without prejudice to the
filing of a criminal action as the case may
(8) Petroleum products sold without warrant.
receipts.
SEC. 4. Administrative Penalties. –
(9) LPG filled into cylinders by filling plants
without license from the Bureau and/or Pursuant to the power of the Bureau to
filled in cylinders not owned by the filling issue, suspend or revoke licenses, and in
plant or marketer and who do not have order to protect the public from short selling
written authorization by the owner to and adulteration of petroleum products,
use or fill the cylinder. the following administrative actions may be
taken:
(10) LPG in cylinders without tare weight, or
without seal after the sealing requirement (a) Preventive Suspension – During
goes into effect. the pendency of an administrative
proceeding, the Bureau may suspend the
During the pendency of the criminal or operations of an oil company, marketer,
administrative proceedings, the petroleum dealer, hauler, LPG refiller or retail
products stored in fixed tanks and which outlet where any one of the following
constitute evidence may be impounded in circumstances are present:
site by the appropriate authorities.
(1) Where at least three pumps in a
RULE XI retail outlet are found to be under
ADMINISTRATIVE PROCEEDINGS delivering by 100 milliliters or greater
per 10 liters;
SECTION 1. Requirement of Notice and
Hearing and Waiver Thereof. – (2) Where more than fifty (50) percent
of the pumps in an outlet are under
delivering by 100 milliliters or greater took effect on October 18, 1982, shall be
per 10 liters; applicable in the administrative proceedings
under the Act.
(3) Where the under delivering pump or
pumps are without seal or the seal is RULE XII
broken or tampered; REPEALING CLAUSE

(4) Where the product sold is found SECTION 1. Any rule or regulation inconsistent
adulterated by BEU inspectors, as to with the provisions of these Rules is hereby
the tank and pump involved; repealed or modified accordingly.

(5) Where more than twenty (20) RULE XIII
percent of the LPG cylinders SEPARABILITY
inspected and tested are underfilled;
SECTION 1. If, for any reason or reasons,
(6) Where an LPG marketer, refiller, any part of these Rules be declared
dealer or retail outlet sells LPG in unconstitutional or invalid, no other part of
cylinders without the required seal; provisions hereof shall be affected thereby.

(7) Where tank truck, lorry, hauling RULE XIV
vehicle and other conveyors are not EFFECTIVITY
calibrated and sealed as required by
the Act. SECTION 1. These Rules and Regulations shall
take effect fifteen (15) days from the date
(b) The preventive suspension shall not of its publication in two (2) newspapers of
exceed thirty (30) days. general circulation.

(8) Fine or suspension of not more than Makati, Metro Manila, 3 August 1983.
Ten Thousand Pesos (P 10,000.00);
or
ORLANDO GALANG
(9) Suspension of license; or Acting Director
Bureau of Energy Utilization
(10) Revocation of license.

SEC. 5. Bureau Rules of Practices and APPROVED:
Procedures Applicable. –

Whenever practicable and convenient, the GERONIMO Z. VELASCO
provisions of Bureau Rules of Practice and Minister of Energy
Procedures Governing Hearings Before the
Bureau issued on August 2, 1982, and which
REPUBLIC OF THE PHILIPPINES
MINISTRY OF ENERGY
BUREAU OF ENERGY UTILIZATION
BEU MEMORANDUM CIRCULAR 85-3-348
TO: ALL AUTHORIZED LIQUIFIED PETROLEUM GAS (LPG) REFILLERS
SUBJECT: AMENDMENT TO RULE IV, SECTION 2a (UNDERFILLING OF LPG CYLINDER) OF THE

RULES AND REGULATIONS ON THE IMPLEMENTATION OF BATAS PAMBANSA BLG. 33, AS
AMENDED BY PRESIDENTIAL DECREE NO. 1865 ISSUED ON MAY 25,1983
Section 1. Rule [V, Section 2a is hereby out from sales area accessible to the public
amended to read as follows: gives rise to the presumption that they are
for sale. Moreover, the allowable deviation
Section 2a. UNDERFILLING OF LPG CYLINDERS in the contents of other cylinder sizes shall
not exceed three tenths (0.3) of one kilogram
The net LPG content sold in LPG cylinders with from the indicated net weight.
water capacity of twenty one (21) liters to
twenty-nine (29) liters shall not be less than Section 2. This amendment shall take
11.0 kilograms when measured at the refilling effect fifteen (15) days from the date of its
plants. The net quantity contained when sold publication in two newspapers of general
to the consumer shall not be more than three circulation.
tenths (0.3) of one kilogram less than 11.0
kilograms, a shortage of more than three Makati, Metro Manila, 04 March 1985.
tenths (0.3) of one kilogram per cylinder shall
constitute an act of underfilling. A broken or
tampered seal, or the absence of one, shall give ORLANDO L. GALANG
rise to the presumption that the LPG cylinder Acting Director
is underfilled. Possession of underfilled LPG Bureau of Energy Utilization
cylinders not properly so identified or taken
EIAB MEMORANDUM CIRCULAR NO. 95-03-001
WHEREAS, pursuant to Sec. 12 (c) and Sec. 17 WHEREAS, it has come to the knowledge of
of R.A. No. 7638, the Department of Energy the Bureau that a number of 50 kg. cylinders
through the Energy Industry Administration presently used in the market do not have
Bureau is mandated by law to regulate any cylinder head collar making it difficult
among others the trade and business, sale, to handle and/or hold these cylinders, thus
marketing, and distribution of Liquefied incidents of dropping of cylinders during
Petroleum Gas (LPG); deliveries are not far-fetched, which result to
leakages of gas, endangering human lives and
properties;

WHEREAS, as a precautionary measure, all of said cylinder collar should be made
LPG cylinders, especially the 50 kg. cylinders, only by government accredited LPG tank
must have cylinder head collars for better manufacturer or installer. To ensure
handling and for safety reasons; compliance with the safety standards
on repair of LPG tanks, the accredited
WHEREAS, the installation of cylinder manufacturer/installer must submit a
head collars by duly accredited LPG tank certification to this Bureau as soon as
manufacturers or repair service entities said repair and installation is completed,
cannot be done on a short period without attesting to such compliance.
adversely affecting the LPG supply to
consumers, thus in the interim the use of (2) Pending completion of the installation
an LPG valve protective cap on all 50 kg. of the required cylinder collar, all LPG
cylinders would suffice until such time that refillers and/or marketers shall install
the required LPG tank collar is installed; protective cylinder valve cap or cover on
all 50 kg. cylinders, immediately upon
WHEREAS, the Bureau is also aware of notice of this Circular. Said valve cap
instances wherein refilled LPG cylinders shall always be used especially during
comes out or are released from the refilling deliveries of cylinders and while the same
plant with no brand name indicated on the is in transit unless the cylinder collar has
refilled cylinders, thus making it difficult already been installed, in which case the
to identify the source or owner of the tank protective valve cap can be dispensed
for purposes of pinpointing responsibility in with.
cases of underfilling and/;or unsafe condition
of the tank; (3) Immediately upon notice of this Circular,
all LPG refillers and/or marketers are
WHEREAS, reports have also been received by strictly prohibited from releasing; or
this Bureau from the LPG refillers/marketers discharging from their refilling plants
of the existence of several LPG delivery and/or selling to the consumers any
trucks with different brand-names and/or LPG tanks whether 11 kg. or 50 kg.
unbranded for refilling with no signboard with no brand name indicated on the
or name indicated on the delivery truck tanks (unbranded). Accordingly, upon
showing the specific LPG brand name which effectivity of this Circular, all LPG cylinders
the truck represents or is authorized by this released from the refilling plant or LPG
Bureau to carry, resulting in the problem of depots should bear clearly the brand
distinguishing the legitimate LPG truck hauler name of the refiller or marketer as the
from those haulers that are unauthorized or case may be.
not duly registered with this Bureau;
(4) Furthermore, all LPG refillers and/or
WHEREFORE, premises considered, and by marketers are prohibited from refilling
virtue of the powers vested in this Bureau, LPG tanks coming from LPG trucks or
it is ordered, as it is hereby ordered, the haulers that do not have clear and legible
following: signboard attached to said delivery trucks
showing the specific LPG brand name
(1) Within one (1) year from the date of this that it represents or sells to the general
Circular, all LPG refillers and/or marketers public. The absence of the signboard or
shall cause the installation of cylinder LPG brand name on the delivery trucks
head collar on all LPG tanks especially gives rise to the presumption that said
the 50 kg. tanks owned by them or hauler is not duly registered or authorized
which have come to their possession by this Bureau. Corollary thereto, all
for refilling and/or use. The installation owners of LPG truck haulers are directed
to strictly observe the requirement on (6) This Circular shall take effect fifteen (15)
the display of a signboard on the delivery days after its publication in the Official
trucks as aforementioned. Gazette.

(5) Any violation of the directives in this
Circular shall be subject to administrative NEPTALI S. FRANCO
sanctions: Director

First violation Warning and fine of Three Thousand Approved by:
Pesos (P 3,000.00)
Second Fifteen (15) days suspension of
Violation operation and fine of Five Thousand
Pesos (P 5,000.00) FRANCISCO L. VIRAY
Third Violation Thirty (30) days suspension of Secretary
operation and fine of Five Thousand
Pesos (P 5,0000.00)
Fourth Revocation and/or cancellation of
Violation license.
DEPARTMENT CIRCULAR NO. 2000-05-007

EMBOSSED IDENTIFYING MARK ON LPG CYLINDERS AND INSTILLATION OF COLLARS WITH
DISTINCTIVE DESIGN OR MARKINGS ON EXISTING LPG CYLINDERS DURING REQUALIFICATION

FOR :
- LPG REFILLERS ASSOCIATION (LPGRA) WHEREAS, pursuant to Section 2 and Section
- PHILIPPINE LPG ASSOCIATION 5 (k) of Chapter 1 of RA No. 7638, the
(PLGPA) Department of Energy (DOE) shall formulate
- SOUTHERN ISLAND TASK FORCE rules and regulations as may be necessary to
(SILTF) guide the operations of both government and
- LIQUIGAZ PHILIPPINES private entities involved in energy resource
CORPORATION (LPC) supply and distribution;
- PETRONAS ENERGY PHILIPPINES,
INC. (PEPPI) WHEREAS, it has come to the attention of this
- PRYCE GASES INCORPORATED (PGI) Office that there is a substantial number of
- NATION GAS (NATION) LPG cylinders circulating without appropriate
- TOTAL LPG PHILIPPINES (TOTAL) distinguishing marks to identify the owner
- PETRON CORPORATION (PETRON) or source for purpose of pinpointing
- PILIPINAS SHELL PETROLEUM CORP. responsibility in cases of underfilling and
(PSPC) other violations related to said cylinders;
- CALTEX (PHILIPPINES), INC. (CPI)
- ISLAND AIR PRODUCTS (ISLAND) WHEREAS, with the intensified drive against
- CAPITOL ALLIED TRADING CORP. violators in the conduct of the downstream
(CATGAS) LPG industry the DOE finds that there is
- MANILA GAS CORPORATION (MGC) a need to address the problem of proper
- PHILIPPINE ASSOCIATION OF LPG identification;
CYLINDERRS MANUFACTURERS, INC.
(PALCMI) WHEREFORE, premises considered, all
- ALL OTHERS CONCERNED concerned LPG players are hereby directed to
strictly comply with the following: to local circulation, as the case may be.

(1) In the manufacture of new LPG cylinders (5) The installation of the required collar
the body shall be embossed with clear or distinctive markings of permanent
markings or signs indicating ownership. character shall be made only by
government accredited cylinders
(2) New and locally manufactured cylinders manufacturers or requalifiers with the
shall conform to the required Product date of installation properly indicated
Standard (PS) mark. thereon.

(3) For imported cylinders the same shall This Department Circular shall take effect on
be marked with the appropriate Import (1) month after its complete publication in
Commodity Clearance (ICC) prior to local two (2) newspapers of general circulation.
circulation.
Fort Bonifacio, Taguig, Metro Manila, May 26,
(4) For existing LPG cylinders without the 2000.
embossed markings or signs, including
all imported cylinders, distinctive collars
or collars with distinctive designs or MARIO V. TIAOQUI
markings of permanent character shall Secretary
be installed upon requalification or prior
DEPARTMENT CIRCULAR 2000-06-010
REVISED SCHEDULE OF PENALTIES IN THE LPG INDUSTRY OF 2000
Whereas, Batas Pambansa Blg. 33, as Whereas, Section 15 of Republic Act No.
amended by P.D. 1865 defined certain 8479 provides for additional powers for the
prohibited acts inimical to the public interest DOE Secretary which may readily be availed
and national security involving petroleum of to deter, restrain, and/or penalize any and
and/or petroleum products, prescribing all illegal, irregular, and anomalies business
penalties therefore and for other purposes; practice or activity, with the end in view of
cultivating and instilling discipline, honesty,
Whereas, in 1983, the Bureau of Energy and fair trade practices in the consciousness
Utilization of the then Ministry of Energy of each and every player in all levels of the
issued rules and regulations on the downstream oil industry.
implementation of Batas Pambansa Blg. 33,
as amended by P.D. 1865; Whereas, the recent development in the
downstream oil industry more particularly
Whereas, D.C. No. 2000-03-003 issued on the transition and shift from regulation
17 March 2000, emended certain provisions to deregulation, the entry of new players
of E.R. 1-94 and its attendant rules and in the industry, the growing concerns of
procedures; consumers, relative to unfair trade practices,
and the pressing need for government to
protect and safeguard public interests has (d) Retail Outlet - refers to one who sells
made it imperative for the Department of LPG bottled into cylinders directly to a
Energy (DOE) to draw and formulate a new consumer, with maximum floor stock of
set of penalties for the various offenses twenty (20) LPG cylinders.
relative to the LPG industry as outlined in the
Implementing Rules and Regulations (IRR) of (e) Tare-weight - refers to the weight of
Batas Pambansa Bilang 33, as amended by the LPG cylinder engraved in the collar
the Presidential Decree No. 1865. and shall be expressed in kilograms
indicated to at least one-tenth (0.1) of
Wherefore, premises considered, the one kilogram. The marking shall not be
foregoing schedule of penalties shall less than 2.0 cm. in height.
complement said IRR and is hereby adopted
for implementation subject to the pertinent (f) Authorized of Appropriate LPG Seal -
provisions on procedures prescribed in the refers to the protective cover placed on
latter. the gas outlet of an LPG cylinder, of the
type that must be broken or destroyed
ARTICLE I before the LPG can flow out of the
GENERAL PROVISIONS cylinder. It shall have a distinctive design,
symbol, emblem or mark, identifying the
owner of the LPG cylinder. The seal shall
SECTION 1. SHORT TITLE - This Department be subject to approval by the Department
Circular shall be known as the “Revised of Energy.
Schedule of Penalties in the LPG Industry of
2000.”
ARTICLE II
SECTION 2. COVERAGE - This Department TABLE OF OFFENSES AND THEIR
Circular shall apply to all persons or entities CORRESPONDING PENALTIES
engaged in any and all activities involving the
commerce of Liquefied Petroleum Gas (LPG). SECTION 4. NO PRICE DISPLAY BOARD -
SECTION 3. DEFINITION OF TERMS - LPG Marketer/LPG Dealer/LPG Retail Outlet

1st Offense - Reprimand/warning letter
(a) Refiller - refers to any person, whether 2nd Offense - Recommend suspension of
natural or juridical, who buys LPG in business operation to the
bulk from bulk suppliers, refills LPG into proper local government
cylinders under his own brand name or unit
that of other LPG marketers. 3rd Offense - Recommend business
closure to the proper local
(b) Marketer - refers to any person, whether government unit and initiate
natural or juridical, engaged in the sale of criminal proceedings
LPG, whether in bulk or retail, under his
own brand name. SECTION 5. NO WEIGHING SCALE –
(c) Dealer - refers to any person, whether A. LPG REFILLER/MARKETER
natural or juridical, engaged in the sale of
LPG bottled into cylinders under contract 1st Offense - Fine of P 5,000
with an oil company or marketer who 2nd Offense - Fine of P 10,000
owns the brand. 3rd Offense - Recommend business
government unit
B. DEALER SECTION 7. NO APPROPRIATE OR
AUTHORIZED LPG SEAL
1st Offense - Fine of P3,000
2nd Offense - Fine of P7,000 A. LPG REFILLER/MARKETER
3rd Offense - Recommend business 1st Offense - Fine of P3,000 for each
closure to the proper local cylinder
government unit 2nd Offense - Fine of P5,000 for each
cylinder
C. LPG RETAIL OUTLET 3rd Offense - Recommend business
1st Offense - Reprimand government unit
2nd Offense - Fine of P500.00
3rd Offense - Fine of P1,000.00
B. DEALER
SECTION 6. NO TARE WEIGHT OR INCORRECT 1st Offense - Fine of P2,000 for each
TARE WEIGHT MARKINGS (REQUIREMENT cylinder
ON ENGRAVED TARE WEIGHT SHALL TAKE 2nd Offense - Fine of P4,000 for each
EFFECT TWO (2) YEARS AFTER EFFECTIVITY cylinder
OF THIS CIRCULAR) 3rd Offense - Recommend business
A. LPG REFILLER/MARKETER government unit
1st Offense - Fine of P3,000 for each C. LPG RETAIL OUTLET

cylinder
1st Offense - Fine of P1,000 for each
2nd Offense - Fine of P5,000 for each
cylinder
cylinder
3rd Offense - Recommend business
cylinder
government unit
government unit
B. DEALER
SECTION 8. NO TRADE NAME, UNBRANDED
LPG CYLINDERS, NO SERIAL NUMBER, NO
cylinder
DISTINGUISHING COLOR, NO EMBOSSED
IDENTIFYING MARKINGS ON CYLINDER
cylinder
OR DISTINCTIVE COLLAR OR DESIGN
(REQUIREMENT ON SERIAL NUMBER AND
DISTINCTIVE COLLAR OR DESIGN SHALL TAKE
government unit
EFFECT TWO (2) YEARS AFTER EFFECTIVITY
OF THIS CIRCULAR).
C. LPG RETAIL OUTLET
A. LPG REFILLER/MARKETER
1st Offense - Fine of P1,000 for each 1st Offense - Fine of P4,000 for each
cylinder cylinder
2nd Offense - Fine of P2,000 for each 2nd Offense - Fine of P5,000 for each
cylinder cylinder
3rd Offense - Recommend business 3rd Offense - Recommend business
closure to the proper local closure to the proper local
government unit. government unit
B. DEALER SECTION 10. TAMPERING, ALTERING,
OR MODIFYING OF LPG CYLINDER THRU
1st Offense - Fine of P3,000 for each ANY MEANS SUCH AS BUT NOT LIMITED
cylinder TO CHANGING THE VALVE, REPAINTING,
2nd Offense - Fine of P4,000 for each AND RELABELLING BY ANY PERSON OR
cylinder ENTITY OTHER THAN THE LEGITIMATE AND
3rd Offense - Recommend business REGISTERED OWNER OF THE SAME. FOR
closure to the proper local THIS PURPOSE, LPG REFILLER, MARKETER,
government unit DEALER, OR RETAIL OUTLET, AS THE
PURPOSE, LPG REFILLER, MARKETER,
C. LPG RETAIL OUTLET DEALER, OR RETAIL OUTLET, AS THE CASE
MAY BE, WHO HAS POSSESSION OF SUCH
ILLEGALLY TAMPERED, ALTERED, OR
cylinder
OTHERWISE MODIFIED LPG CYLINDER SHALL
BE HELD LIABLE FOR THIS OFFENSE.
cylinder
A. LPG REFILLER/MARKETER
government unit
cylinder
SECTION 9. UNDERFILLED LPG CYLINDERS
cylinder
A. LPG REFILLER/MARKETER 3rd Offense - Recommend business
1st Offense - Fine of P4,000 for each closure to the proper local
cylinder government unit
cylinder B. DEALER
closure to the proper local 1st Offense - Fine of P3,000 for each
government unit cylinder
B. DEALER cylinder
cylinder C. LPG RETAIL OUTLET
closure to the proper local 1st Offense - Fine of P1,500 for each
government unit cylinder
C. LPG RETAIL OUTLET cylinder
cylinder SECTION 11. UNAUTHORIZED DECANTING
3rd Offense - Recommend business OR REFILLING OF LPG CYLINDERS
government unit
1st Offense - Fine of P5,000 for each ARTICLE III
cylinder FINAL PROVISION
cylinder SECTION 15. SUCCESSION OF OFFENSES
3rd Offense - Recommend business – For purposes of determining the First,
closure to the proper local Second, and Third offenses the lapse of five
government unit (5) years of fifteen (15) official inspections of
the Department of Energy, which ever comes
SECTION 12. HOARDING OF PETROLEUM first, from the time of the commission of the
PRODUCTS INCLUDING LIQUEFIED previous offense, shall be indicative of good
PETROLEUM GAS business conduct and thus operate to give a
new and clean record to the former offender.
1st Offense - Fine of P10,000 per This, however, shall have no application in the
cylinder event that the offender’s LPG business has
2nd Offense - Recommend business been previously closed by the proper local
closure to the proper local government unit pursuant to the provisions
government unit plus of this Circular.
the filing of appropriate
criminal action. SECTION 16. MAXIMUM TOTAL PENALTY –
In the imposition of pecuniary penalties the
SECTION 13. REFUSAL TO ALLOW OR total fine shall not exceed Twenty Thousand
COOPERATE WITH DULY AUTHORIZED Pesos (P20,000.00) for retail outlets.
INSPECTORS OF THE ENERGY INDUSTRY
ADMINISTRATION BUREAU (EIAB) OF THE SECTION 17. SEPARABILITY CLAUSE – If,
DEPARTMENT OF ENERGY IN THE CONDUCT for any reason, any part or parts of these
OF THEIR INSPECTION/INVESTIGATION, provisions be declared unconstitutional or
WHETHER REGULAR AND ROUTINARY OR invalid, no other part of the provisions hereof
COMPLAINT-INITIATED. shall be affected thereby.
1st Offense - Fine of P10,000 SECTION 18. EFFECTIVITY – This Department

2nd Offense - Recommend business Circular which supersedes Department
closure to the proper local Circular No. 2000-05-008 shall take effect
government unit one (1) month after its complete publication
in two (2) newspapers of general circulation.
However, the requirements of “Engraved
SECTION 14. REFUSAL OR FAILURE TO PAY Tare Weight Marking” referred to in Section
FINE – The Department of Energy shall 6 and “Serial Number and Distinctive Collar
recommend to the proper local government or Design” referred to in Section 8 shall take
unit the closure of business of a respondent effect two (2) years after effectivity of this
who refuses or fails to pay any administrative circular.
fine without prejudice to the filing of an
appropriate criminal action if warranted.
(SGD)
MARIO V. TIAOQUI
Secretary
RELATED CASE: 1st Offense - Reprimand/warning letter
2nd Offense - Recommend suspension
Republic of the Philippines of business operation
SUPREME COURT to the proper local
Manila government unit
THIRD DIVISION closure to the proper
G.R. No. 159149 local government unit
June 26, 2006 and initiate criminal
proceedings
The HONORABLE SECRETARY VINCENT S. SECTION 5. NO WEIGHING SCALE –

PEREZ, in his capacity as the Secretary of the
Department of Energy, petitioner, A. LPG Refiller/Marketer
vs. 1st Offense - Fine of P5,000

2nd Offense - Fine of P10,000
LPG REFILLERS ASSOCIATION OF THE
PHILIPPINES, INC., respondent

government unit
QUISUMBING, J.:
B. Dealer
Before us is a petition for review on certiorari
under Rule 45, assailing the Decision1 and
2nd Offense - Fine of P7,000
Order2 of the Regional Trial Court of Pasig
City, Branch 161, in SCA Case No. 2318, which
nullified Circular No. 2000-06-010 of the
government unit
Department of Energy (DOE).

C. LPG Retail Outlet
The facts are undisputed.

1st Offense - Reprimand
Batas Pambansa Blg. 33, as amended,
2nd Offense - Fine of P500.00
penalizes illegal trading, hoarding, overpricing,
3rd Offense - Fine of P1,000.00
adulteration, underdelivery, and underfilling
of petroleum products, as well as possession
for trade of adulterated petroleum products SECTION 6. NO TARE WEIGHT OR INCORRECT
and of underfilled liquefied petroleum TARE WEIGHT MARKINGS. (REQUIREMENT
gas (LPG) cylinders.3 The said law sets the ON ENGRAVED TARE WEIGHT SHALL TAKE
monetary penalty for violators to a minimum EFFECT TWO (2) YEARS AFTER EFFECTIVITY
of P20,000 and a maximum of P50,000.4 OF THIS CIRCULAR)

On June 9, 2000, Circular No. 2000-06-010 A. LPG Refiller/Marketer
was issued by the DOE to implement B.P. Blg.
33, thus: 1st Offense - Fine of P3,000 for each
cylinder
SECTION 4. NO PRICE DISPLAY BOARD – 2nd Offense - Fine of P5,000 for each
cylinder
LPG Marketer/LPG Dealer/LPG Retail Outlet 3rd Offense - Recommend business
government unit

B. Dealer 3rd Offense - Recommend business
1st Offense - Fine of P2,000 for each government unit
cylinder
2nd Offense - Fine of P4,000 for each SECTION 8. NO TRADE NAME, UNBRANDED
cylinder LPG CYLINDERS, NO SERIAL NUMBER, NO
3 Offense - Recommend
rd
business DISTINGUISHING COLOR, NO EMBOSSED
closure to the proper local IDENTIFYING MARKINGS ON CYLINDER
government unit OR DISTINCTIVE COLLAR OR DESIGN
(REQUIREMENT ON SERIAL NUMBER AND
C. LPG Retail Outlet DISTINCTIVE COLLAR OR DESIGN SHALL TAKE
EFFECT TWO (2) YEARS AFTER EFFECTIVITY
1st Offense - Fine of P1,000 for each OF THIS CIRCULAR)
cylinder
2nd Offense - Fine of P2,000 for each A. LPG Refiller/Marketer
cylinder
3rd Offense - Recommend business 1st Offense - Fine of P4,000 for each
closure to the proper local cylinder
government unit 2nd Offense - Fine of P5,000 for each
cylinder
SECTION 7. NO APPROPRIATE OR 3rd Offense - Recommend business
AUTHORIZED LPG SEAL closure to the proper local
government unit
A. LPG Refiller/Marketer
B. Dealer
cylinder 1st Offense - Fine of P3,000 for each
2 Offense - Fine of P5,000 for each
nd cylinder
cylinder 2nd Offense - Fine of P4,000 for each
3rd Offense - Recommend business cylinder
closure to the proper local 3 Offense - Recommend
rd
business
government unit closure to the proper local
government unit
B. Dealer
st
cylinder 1st Offense - Fine of P1,000 for each

2nd Offense - Fine of P4,000 for each cylinder
cylinder 2nd Offense - Fine of P2,000 for each
rd
business cylinder
closure to the proper local 3rd Offense - Recommend business
government unit closure to the proper local
government unit

cylinder
cylinder
SECTION 9. UNDERFILLED LPG CYLINDERS A. LPG Refiller/Marketer
A. LPG REFILLER/MARKETER 1st Offense - Fine of P5,000 for each

cylinder
1st Offense - Fine of P4,000 for each 2nd Offense - Fine of P10,000 for each
cylinder cylinder
nd
cylinder closure to the proper local
3rd Offense - Recommend business government unit
government unit B. Dealer
B. DEALER 1st Offense - Fine of P3,000 for each

cylinder
cylinder cylinder
2nd Offense - Fine of P4,000 for each 3 Offense - Recommend
rd
business
rd
business government unit
government unit C. LPG Retail Outlet
C. LPG RETAIL OUTLET 1st Offense - Fine of P1,500 for each

cylinder
cylinder cylinder
2nd Offense - Fine of P2,000 for each 3rd Offense - Recommend business
3rd Offense - Recommend business government unit
government unit
SECTION 11. UNAUTHORIZED DECANTING
SECTION 10. TAMPERING, ALTERING, OR REFILLING OF LPG CYLINDERS
OR MODIFYING OF LPG CYLINDER THRU
ANY MEANS SUCH AS BUT NOT LIMITED 1st Offense - Fine of P5,000 for each
TO CHANGING THE VALVE, REPAINTING, cylinder
AND RELABELLING BY ANY PERSON OR 2nd Offense - Fine of P10,000 for each
ENTITY OTHER THAN THE LEGITIMATE AND cylinder
REGISTERED OWNER OF THE SAME. FOR 3rd Offense - Recommend business
THIS PURPOSE, LPG REFILLER, MARKETER, closure to the proper local
DEALER, OR RETAIL OUTLET, AS THE CASE government unit
MAY BE, WHO HAS POSSESSION OF SUCH
ILLEGALLY TAMPERED, ALTERED, OR SECTION 12. HOARDING OF PETROLEUM
OTHERWISE MODIFIED LPG CYLINDER SHALL PRODUCTS INCLUDING LIQUEFIED
BE HELD LIABLE FOR THIS OFFENSE PETROLEUM GAS
1st Offense - Fine of P10,000 per

cylinder
2nd Offense - Recommend business IN VIEW OF THE FOREGOING, this
closure to the proper local Court renders judgment declaring
government unit plus DOE Circular No. 2000-06-010
the filing of appropriate null and void and prohibits the
criminal action respondent from implementing the
same.
SECTION 13. REFUSAL TO ALLOW OR
COOPERATE WITH DULY AUTHORIZED SO ORDERED.7
INSPECTORS OF THE ENERGY INDUSTRY
ADMINISTRATION BUREAU (EIAB) OF THE
DEPARTMENT OF ENERGY IN THE CONDUCT The trial court denied for lack of merit
OF THEIR INSPECTION/INVESTIGATION, petitioner’s motion for reconsideration.
Hence this petition, raising the following
WHETHER REGULAR AND ROUTINARY OR
issues:
COMPLAINT-INITIATED
I
2nd Offense - Recommend business WHETHER OR NOT THE COURT A
closure to the proper local QUO GRAVELY ERRED IN HOLDING
government unit THAT “A CLOSE SCRUTINY OF BP 33,
PD 1865 AND R.A. NO. 8479 SHOWS
SECTION 14. REFUSAL OR FAILURE TO PAY THAT OFFENSES LIKE NO PRICE
FINE – The Department of Energy shall DISPLAY [BOARD], NO WEIGHING
recommend to the proper local government SCALE, ETC. SET FORTH IN THE
unit the closure of business of a respondent CIRCULAR ARE NOT PROVIDED FOR
who refuses or fails to pay any administrative IN ANY OF THE THREE (3) LAWS”.
fine without prejudice to the filing of an
appropriate criminal action if warranted.5 II

Respondent LPG Refillers Association of the WHETHER OR NOT THE COURT A
Philippines, Inc. asked the DOE to set aside QUO GRAVELY ERRED IN HOLDING
the Circular for being contrary to law. The THAT “A SCRUTINY OF THE NEW
DOE, however, denied the request for lack of SET OF PENALTIES PROVIDED BY
merit. THE CIRCULAR SHOWS THAT THE
PENALTIES THIS TIME ARE BASED ON
Respondent then filed a petition for PER CYLINDER BASIS”; THAT “BEING
prohibition and annulment with prayer for SUCH, NO CEILING WAS PROVIDED
temporary restraining order and/or writ of FOR AS TO THE ADMINISTRATIVE
preliminary injunction before the trial court. FINES”; THAT “AS ILLUSTRATED BY
THE PETITIONER, FOR JUST ONE LPG
After trial on the merits, the trial court CYLINDER FOUND VIOLATING AT
nullified the Circular on the ground that it LEAST SEC[TIONS] 6, 7, 8, 9, 10 AND
introduced new offenses not included in the 11 OF THE [CIRCULAR], A FINE OF
law.6 The court intimated that the Circular, in P24,000.00 IS IMPOSED;” AND THAT
providing penalties on a per cylinder basis for “THIS WILL CLEARLY BE BEYOND
each violation, might exceed the maximum THE P10,000.00 PROVIDED BY THE
penalty under the law. The decretal part of LAWS.”
its Decision reads:

III FINE THAT MAY BE IMPOSED ON
AN ERRING PERSON OR ENTITY TO
WHETHER OR NOT THE COURT A WHICH FACT MOVANT CONCEDES.
QUO GRAVELY ERRED IN HOLDING FOR ONE (1) CYLINDER ALONE, NOT
THAT SECTION 16 OF PETITIONER’S ONLY DOES THE CIRCULAR MAKE THE
CIRCULAR WHICH AUTHORIZES FINE EXCESSIVE TO THE EXTENT OF
THE IMPOSITION OF PECUNIARY BEING CONFISCATORY, BUT IT EVEN
PENALTIES WITH THE TOTAL FINE IMPOSES A PENALTY WHICH MAY
NOT EXCEEDING P20,000.00 FOR EVEN GO BEYOND THAT MAXIMUM
RETAIL OUTLETS VIOLATES THE IMPOSABLE FINE OF P50,000.00 SET
PENALTY CEILING OF P10,000.00 SET BY P.D. 1865 IN ITS SEC. 4 AFTER A
UNDER BP BLG. 33, AS AMENDED. CRIMINAL PROCEEDING.”8

IV To our mind, the issue raised by petitioner
may be reduced to the sole issue of whether
WHETHER OR NOT THE COURT A the Regional Trial Court of Pasig erred in
QUO GRAVELY ERRED IN HOLDING declaring the provisions of the Circular null
THAT SINCE SECTION 5 (g) OF R.A. and void, and prohibiting the Circular’s
7638 FINDS NO REFERENCE IN DOE implementation.
CIRCULAR NO. 2000-06-010, THE
SAME SHOULD BE DISREGARDED. Petitioner argues that the penalties for the
acts and omissions enumerated in the Circular
V are sanctioned by Sections 19 and 3-A10 of B.P.
Blg. 33 and Section 2311 of Republic Act No.
WHETHER OR NOT THE COURT A 8479.12 Petitioner adds that Sections 5(g)13
QUO GRAVELY ERRED IN HOLDING and 2114 of Republic Act No. 7638 15 also
THAT “ON THE NEW OFFENSES authorize the DOE to impose the penalties
INTRODUCED IN THE CIRCULAR provided in the Circular.
SUCH AS SECTIONS 4, 5, 10, 13
AND 14 AND THE IMPOSITION OF Respondent counters that the enabling laws,
THE GRADUATED PENALTIES ON ‘A B.P. Blg. 33 and R.A. No. 8479, do not expressly
PER CYLINDER BASIS’, THIS COURT penalize the acts and omissions enumerated
FINDS [NO] REASON TO DISTURB in the Circular. Neither is the Circular
ITS FINDINGS THAT RESPONDENT- supported by R.A. No. 7638, respondent
MOVANT EXCEEDED ITS AUTHORITY. claims, since the said law does not pertain to
X XX IT SHOULD BE REMEMBERED LPG traders. Respondent maintains that the
THAT BP BLG. 33 AS AMENDED AND Circular is not in conformity with the law it
P.D. 1865 ARE CRIMINAL STATUTES seeks to implement.
AND MUST BE CONSTRUED WITH
SUCH STRICTNESS AS TO CAREFULLY We resolve to grant the petition.
SAFEGUARD THE RIGHTS OF THE
DEFENDANT.” For an administrative regulation, such as the
Circular in this case, to have the force of penal
VI law, (1) the violation of the administrative
regulation must be made a crime by the
WHETHER OR NOT THE COURT delegating statute itself; and (2) the penalty
A QUO ERRED IN HOLDING THAT for such violation must be provided by the
“THE ASSAILED CIRCULAR SETS statute itself.16
NO MAXIMUM LIMIT AS TO THE
The Circular satisfies the first requirement. Noteworthy, the enabling laws on which the
B.P. Blg. 33, as amended, criminalizes illegal Circular is based were specifically intended to
trading, adulteration, underfilling, hoarding, provide the DOE with increased administrative
and overpricing of petroleum products. and penal measures with which to effectively
Under this general description of what curtail rampant adulteration and shortselling,
constitutes criminal acts involving petroleum as well as other acts involving petroleum
products, the Circular merely lists the various products, which are inimical to public interest.
modes by which the said criminal acts may be To nullify the Circular in this case would be to
perpetrated, namely: no price display board, render inutile government efforts to protect
no weighing scale, no tare weight or incorrect the general consuming public against the
tare weight markings, no authorized LPG seal, nefarious practices of some unscrupulous
no trade name, unbranded LPG cylinders, LPG traders.
no serial number, no distinguishing color, no
embossed identifying markings on cylinder, WHEREFORE, the petition is GRANTED. The
underfilling LPG cylinders, tampering LPG assailed Circular No. 2000-06-010 of DOE is
cylinders, and unauthorized decanting of LPG declared valid. The Decision and Order of
cylinders. These specific acts and omissions the Regional Trial Court of Pasig City, Branch
are obviously within the contemplation of 161, in SCA Case No. 2318, nullifying said
the law, which seeks to curb the pernicious Circular and prohibiting its implementation
practices of some petroleum merchants. are hereby REVERSED and SET ASIDE.

As for the second requirement, we find that No pronouncement as to costs.
the Circular is in accord with the law. Under
B.P. Blg. 33, as amended, the monetary SO ORDERED.
penalty for any person who commits any of
the acts aforestated is limited to a minimum LEONARDO A. QUISUMBING
of P20,000 and a maximum of P50,000. Under Associate Justice
the Circular, the maximum pecuniary penalty
for retail outlets is P20,000,17 an amount within WE CONCUR:
the range allowed by law. However, for the
refillers, marketers, and dealers, the Circular is
silent as to any maximum moneetary penalty. ANTONIO T. CARPIO
This mere silence, nonetheless, does not Associate Justice
amount to violation of the aforesaid statutory
maximum limit. Further, the mere fact that
the Circular provides penalties on a per CONCHITA CARPIO MORALES
cylinder basis does not in itself run counter Associate Justice
to the law since all that B.P. Blg. 33 prescribes
are the minimum and the maximum limits of
penalties. DANTE O. TIÑGA
Associate Justice
Clearly, it is B.P. Blg. 33, as amended, which
defines what constitute punishable acts
involving petroleum products and which set PRESBITERO J. VELASCO, JR.
the minimum and maximum limits for the Associate Justice
corresponding penalties. The Circular merely
implements the said law, albeit it is silent on
the maximum pecuniary penalty for refillers,
marketers, and dealers. Nothing in the
Circular contravenes the law.
ATTESTATION CERTIFICATION

I attest that the conclusions in the above Pursuant to Section 13, Article VIII of the
Decision had been reached in consultation Constitution, and the Division Chairperson’s
before the case was assigned to the writer of Attestation, I certify that the conclusions
the opinion of the Court’s Division. in the above Decision had been reached in
consultation before the case was assigned
to the writer of the opinion of the Court’s
LEONARDO A. QUISUMBING Division.
Associate Justice
Chairperson
ARTEMIO V. PANGANIBAN
Chief Justice
_____________________ 6
Batas PambansaBlg. 33 (1979), Presidential Decree No.
1865 (1983), or Republic Act No. 8479 (1998).
1
Rollo, pp. 64-72. Penned by Judge Alicia P. Mariño-Co. Rollo, p. 72.
7
2
Id. at 73-77. Id. at 500-502.
8
3
SEC. 2. Prohibited Acts. – The following acts are prohibited 9
SECTION 1.Declaration of Policy. – It is the declared
and penalized: policy of the State to institutionalize as a national way of
(a) Illegal trading in petroleum and/or petroleum life energy conservation geared towards the judicious and
efficient use of energy in order to enhance availability of
products; energy supplies required to support economic, social and
developmental goals. In view of the continuing uncertainty
(b) Adulteration of finished petroleum products, or of the international oil supply, it is imperative that measures
possession of adulterated finished petroleum products to conserve energy be strengthened and that acts and
for the purpose of sale, distribution, transportation, activities involving petroleum and/or petroleum products
exchange or barter; contrary to the intent and spirit of judicious usage and
conservation of energy, which are inimical to the public
(c) Underdelivery or underfilling beyond authorized interest and national security, be prohibited and appropriate
limits in the sale of petroleum products or possession sanction therefor be imposed.
of underfilled liquefied petroleum gas cylinder for the
purpose of sale, distribution, transportation, exchange
10
Section 3-A (inserted by Section 3 of PD No. 1865) reads:
or barter;
“SEC. 3-A. Rules and Regulations; Administrative sanctions
xxxx for violation thereof. – The Bureau of Energy Utilization shall
issue such rules and regulations as are necessary to carry
[(b)] (D) Hoarding of petroleum and/or petroleum into effect the provisions of this Act, subject to the approval
products; of the Minister of Energy, after consultation with the
affected industry sectors. Said rules and regulations shall
[(c)] (E) Overpricing in the sale of petroleum products; take effect fifteen (15) days from the date of its publication
in two (2) newspapers of general circulation.
[(d)] (F) Misuse of petroleum allocations;
“The Bureau of Energy Utilization is empowered to impose
[(e)] (G) Speed contests and rallies involving mainly in an administrative proceeding, after due notice and
the use of motor vehicles, motor-driven watercraft or hearing, upon any person who violates any provision of
aircraft utilizing petroleum-derived fuels, including car such rules and regulations, a fine of not more than ten
and motorcycle rallies and drag racing, without the thousand pesos (P10,000.00) or to suspend or remove
permit from the Bureau of Energy Utilization; and the license or permit of a hauler, marketer, refiller, dealer,
sub-dealer or retail outlet: Provided, That hearing in any
[(f)] (H) Sky-diving, and water-skiing except when
administrative proceedings may be waived by respondent.
methanol is used for the power-boat operation.
Provided, Further, That during the pendency of such
4
SEC. 4.Penalties. – Any person who commits any act herein administrative proceeding, the Bureau may suspend the
prohibited shall, upon conviction, be punished with a fine business operations of such hauler, marketer, refiller, dealer,
of not less than [two] TWENTY thousand pesos [(P 2,000)] (P sub-dealer or retailer or retail outlet operator when the
20,000) but not more than [Ten] FIFTY thousand pesos [(P suspension is consistent with public interest.…
10,000)] (P 50,000)….
xxxx
5
Rollo, pp. 274-280.
“The administrative sanction that may be imposed 14
SEC. 21. Appropriations. –
shall be without prejudice to the filing of a criminal
action as the case may warrant.” xxx
11
SEC. 23.Implementing Rules and Regulations. – The Subject to existing rules and regulations, the funds
DOE, in coordination with the Board, the DENR, and monies collected or which otherwise come into
DFA, Department of Labor and Employment (DOLE), the possession of the Department and its bureaus
Department of Health (DOH), DOF, DTI, National from fees, surcharges, fines and penalties which the
Economic and Development Authority (NEDA) Department and its bureaus may impose and collect
and TLRC, shall formulate and issue the necessary under this Act, x xx shall be disbursed for expenses
implementing rules and regulations within sixty (60) necessary for the effective discharge of the powers
days after the effectivity of this Act. and functions of the Department under this Act.
AN ACT DEREGULATING THE DOWNSTREAM OIL

12 15
AN ACT CREATING THE DEPARTMENT OF ENERGY,
INDUSTRY,AND FOR OTHER PURPOSES. RATIONALIZING THE ORGANIZATION AND
FUNCTIONS OF GOVERNMENT AGENCIES RELATED
SEC. 5.Powers and Functions. – The Department shall have
13
TO ENERGY, AND FOR OTHER PURPOSES.
the following powers and functions:
16
SeeUnited States vs. Panlilio, 28 Phil. 608, 613-614 (1914).
xxxx
17
DOE Circular No. 2000-06-010.
(g) Formulate and implement programs, including a
system of providing incentives and penalties, for the SEC. 16.Maximum Total Penalty. In the imposition of
judicious and efficient use of energy in all energy- pecuniary penalties the total fine shall not exceed Twenty
consuming sectors of the economy; Thousand Pesos (P 20,000.00) for retail outlets.
PROHIBITION ON THE REFILLING OF LPG CYLINDERS COVERED BY THE RECALL AND REPLACEMENT
ORDER OF THE DEPARTMENT OF TRADE AND INDUSTRY (DTI) – BUREAU OF PRODUCTS STANDARDS
(BPS), AND THE SALE OF SUBJECT CYLINDERS, WHETHER REFILLED OR NOT
WHEREAS, pursuant to Section 2 and and fair trade practices in the consciousness
Section 5 (k) of Chapter 1 of RA No. 7638, of each and every player in all levels of the
the Department of Energy shall formulate downstream oil industry;
rules and regulations as may be necessary to
guide the operations of both government and WHEREAS, Section 7 of Republic Act No. 8479
private entities involved in energy resource requires DTI and DOE to take all measures to
supply and distribution; promote fair trade, among other;

WHEREAS, Section 14 of Republic Act No. WHEREAS, the DOE and DTI forged a
8479 mandates the DOE to monitor refining, Memorandum of Agreement on 18 January
manufacturing and marketing processes of 2001 to provide a mechanism for close
petroleum products to ensure that clean and coordination and enforcement of quality
safe technologies are applied; standards for LPG cylinders to avert the
proliferation and use of LPG cylinders which
WHEREAS, Section 15 of Republic Act No. pose continuous hazard and threat to the
8479 provides for additional powers for the health and safety of consumers;
DOE Secretary which may be readily be availed
of to deter, restrain, and/or penalize any and WHEREAS, to ensure consumers’ safety
all illegal, irregular, and anomalous business the DTI-BPS issued on 24 September 2001
practice or activity, with the end in view of a product recall & replacement order to
cultivating and instilling discipline, honesty, PILIPINAS DAECHANG STEEL., INC. (PDSI)
and subsequently published a NOTICE to the Any person, whether natural or juridical,
Public, for 11-kg. cylinders produced from found to have violated this directive shall be
01 December 2000 to 30 April 2001 with the subject to an administrative penalty of Five
following serial numbers and date of testing: Thousand Pesos (P 5,000.00) per cylinder
refilled, sold, or offered for sale without
Serial Numbers Date Tested prejudice to any other criminal or civil action
00001 – 09574 12-00
that may be filed under existing applicable
00001 – 09504 01-01
00001 – 11000 02-01 laws, rules and regulations.
00001 – 13681 03-01
00001 – 00250 04-01 This Circular shall be effective fifteen (15) days
after its publication in two (2) newspapers of
WHEREFORE, premises considered, all general circulation.
concerned LPG industry players are hereby
directed NOT to refill the LPG cylinders which Fort Bonifacio, Taguig, Metro Manila, 9
are subject to the recall order of the DTI-BPS, November 2001.
nor to sell or offer to sell LPG contained in
subject cylinders whether refilled or not;
VINCENT S. PEREZ, JR.
Disposition of the recalled cylinders shall be Secretary
pursuant to the DTI-BPS guidelines.

LPG CYLINDER OWNERSHIP AND OBLIGATIONS RELATED THERETO
WHEREAS, pursuant to Republic Act Nos. 7638 alike, and the inordinate indifference of
(Department of Energy Act of 1992) and 8479 industry players to address this particular
(Downstream Oil Industry Deregulation Act of concern amongst themselves;
1998), Batas Pambansa Blg. 33 as amended
by Presidential Decree 1865 (Defining and WHEREAS, the DOE has already issued
penalizing certain prohibited acts involving Department Circular No. DC 2000-05-007,
petroleum/petroleum products), and under requiring among others that the owners or
pertinent rules and regulations, the DOE sources of LPG cylinders to emboss their brand
has the power to monitor, supervise and and ownership markings on LPG cylinders, in
regulate the petroleum industry and impose an attempt to identify the owners thereof for
corresponding administrative penalties for purposes of accountability;
violations thereof;
WHEREAS, illegal practices in LPG industry are
WHEREAS, disputes and disagreements escalating, more particularly in the refilling
among industry players have increased LPG cylinders without the prior approval or
in the recent years regarding generally, consent of the owner of the LPG cylinders, in
the ownership of liquefied petroleum gas the process depriving the latter of reasonable
(LPG) cylinders, owing to the absence of business return, fomenting unsafe handling
clear guidelines defining such ownership, practice, and thus increasing risk and danger
misunderstanding by consumers and dealers to the consuming public;
WHEREAS, there is now a pressing need to any loss, stolen or missing LPG cylinders shall
establish clear directives in order to diminish, prima facie relieve the cylinder owner of the
if not totally eliminate, illegal practices and obligation to ensure the quality, safety and
abuses such as above, to prevent evasion of exact net content of such LPG cylinders. Such
liability on the part of LPG industry players, report may be rebutted by contrary evidence.
and to provide clear guidelines and reference
on the ownership of LPG cylinders, to enable, SEC. 3. The brand owner shall issue
the Department to identify the proper liable authorization to entity/firm authorized to
persons and impose the appropriate penalty, refill their LPG cylinders. Consequently, an
thereof; entity/firm who shall refill LPG cylinders
without authority from the brand owner
WHEREAS, in, consideration of the foregoing, shall be charged with “Illegal Refilling” and
the following guidelines are hereby corresponding sanctions shall be applied.
promulgated to govern these concerns:
SEC. 4. Upon notice of this Circular, all brand
SECTION 1. The brand owner whose owners shall immediately commence LPG
permanent mark/markings appear/s on the cylinder audit and recovery program for a
LPG cylinder shall be presumed the owner period not exceeding six (6) months from
thereof irrespective of the party in custody effectivity of this Circular, and report the
or possession of the cylinder, and regardless same to OIMB.
of whether such cylinder is, or continues to
be, properly marked, stamped or identified Provisions to complement this definition may
to contain its LPG brand, or whether such be issued subsequently, as necessary.
cylinder is in compliance, or continues to
comply with any other product or quality Penalties and sanctions for violations of
standard prescribed under law, by the DOE this Circular, shall be covered by existing
or by the Department of Trade and Industry regulations, including DOE D.C. No. 2000-06-
(DTI), unless there is any unequivocal proof 010 or amendments thereto.
or indication that such cylinder was sold, This Memorandum Circular shall take effect
alienated, or otherwise disposed of by the immediately upon its publication in two (2)
brand owner to an unrelated third party newspapers of general circulation
under a written instrument.
Fort Bonifacio, Taguig City, Oct. 13, 2007.
SEC. 2. The brand owner shall have the
obligation to ensure that its cylinders comply
with all required product quality, quantity
and safety standards and specifications ANGELO T. REYES
before they are released for sale/distribution Secretary
and while they are in circulation: Provided,
That receipt by the DOE of a verified notice
or report from the brand owner regarding
RELATED CASE: The facts of the case are as follows:
Republic of the Philippines On March 22, 2004, The National Bureau

COURT OF APPEALS of Investigation (NBI) received a letter-
Manila complaint from Atty. Genesis M. Adario
on behalf of several Liquefied Petroleum
SPECIAL SIXTH DIVISION Gas Dealers Association, Inc., Petron Gasul
Dealers Association, Inc., and Totalgaz Dealers
NBI SUPERVISING CA-G.R. SP Association, Inc., requesting assistance in the
AGENT E. MARVIN NO. 98054 surveillance investigation and, if warranted,
DE JEMIL, ET. AL., apprehension and prosecution of certain
persons and/or establishments who/
Petitioners which are engaged in the illegal trading of
establishments who/which are engaged in
- versus- the illegal trading of petroleum products or
possession of underfilled LPG cylinders in
HONORABLE RAUL violation of BP 33, as amended. One of the
M. GONZALES, SECRETARY, establishments suspected of violating said
ET. AL., law is Omni Gas Corporation (OMNI), owned
Respondents. and controlled by private respondents Arnel
Ty, Marie Antonette Ty, Jason Ong, Willy Dy,
Promulgated: and Alvin Ty.
SEP 20, 2007
Acting on the complaint, the NBI Field
Operations Division-Intelligence Service
x--------------------------------------------------x (NBI FOD-IS) conducted surveillance on
OMNI’s refilling plant during the months of
DECISION
March and April 2004.4 On April 15, 2004,
a test-buy was conducted where (8) empty
BATO, JR., J.: LPG cylinders branded as Shellane, Gasul,
Totalgaz,and Superkalan Gaz, were refilled
Assailed in this Petition for Certiorari under at OMNI’s refilling plant for a consideration
Rule 65 of the Revised Rules o Court is the of One Thousand Five Hundred Twenty Eight
October 9, 2006 Resolution1 of Honorable Pesos (P1,528.00) with Sales Invoice5 No.
Ernesto L. Pineda, Undersecretary of the 90040 dated April 15, 2004.
Department of Justice, which directed the
withdrawal of the Informations against herein
On April 23, 2004, Noel N. Navio, Inspectorof
private respondents for violations of Section
the Liquefied Petroleum Gas Industry
2(a) and 2(c) of B.P. Blg. 33,2 as amended by
Association (LPGIA), inspected the eight
P.D. 1865; as well as the December 14, 2006
(8) LPG cylinders refilled by OMNI.6 The
Resolution3 of Honorable Raul M. Gonzalez
Inspection revealed that the LPG cylinders
Secretary of the Department of Justice,
had no LPG valve seals, and one (1) cylinder
which denied the motion for reconsideration
was underfilled.7
thereof.
1
Acting Senior Member vice Justice Jose C. Mendoza, who is on
leave, per Office Order No. 36-07-CMV dated September 13,
2007 Annex “A” of the Petition, pp. 043-046. 4
Complaint-affidavit, Rollo, pp. 076-080
2
BP Blg. 33, otherwise known as “An act Defining and Penalizing 5
Rollo, p. 097.
Certain Prohibited Acts Inimical To The Public Interest And 6
Supre, Note 3
National Security Involving Petroleum 7
Rollo, p. 099.
3
Products, Prescribing Penalties Therefor And For Other Purposes.”
Annex “B” of the Petition, pp. 049-050.
Consequently, on application by the Toatalgaz and Superkalan Gaz, without the
operatives of the NBI FODIS, the Regional Trial respective companies’ written authorization,
Court of Pasig City, Branch 167 issued Search a clear violation of Section 2(a) in relation to
Warrant Nos. 26248 and 26259 against the Sections 3(c) and 4 of BP 33, amended.13
private respondents. Upon implementation
of the search warrants on the premises of In their Joint Counter-Affidavit,14 private
OMNI in Sandoval Avenue, San Miguel, Pasig respondents vehemently denied ownership
City, the following items were seized,10 to wit: of the LPG cylinders seized from OMNI’s
premises, maintaining that the empty LPG
QUANTITY/ cylinders were taken from the swapping
DESCRIPTION
UNIT
7 Totalgaz LPG cylinders1.0 kg. (filled)
section while the filled ones from the
1 Petron Gasul LPG cylinder 11.0 kg. (filled)
trucks belonged to their customers. Private
1 Shellane LPG cylinder 11.0 kg.(filled)
respondents contended that OMNI is a
Superkalan Gaz LPG corporation duly licensed to engage in
29 cylinder 2.7 kg. (empty) trading and refilling of LPG cylinders with
17 Petron Gasul LPG cylinder 2.7 kg (empty) adequate facilities and equipment. They
Shellane LPG cylinders marked as further contended that there is no probable
8 “Omnigas” 11.0 kg. (empty)
Totalgaz LPG cylinders markedas cause that OMNI refilled the eight (8) LPG
5 “Omnigas” 11.0 kg. (empty) cylinders of Shell, Petron,Totalgaz and
23 Shellane LPG cylinders 11.0 kg. (empty) Superkalan Gaz as the receipt presented by
Petron Gasul LPG cylinders but remarked NBI FOD-IS did not state with particularity
3 as “Omnigas” 11.0 kg. (empty)
21 Totalgaz LPG cylinders (empty)
the brand of LPG cylinders refilled by OMNI
during the alleged “test-buy” operation and
Accordingly, two (2) criminal complaints11 that there is no sufficient evidence that the
one for violation of Section 2 (a) of BP 33, as eight (8) LPG cylinders supposedly refilled by
amended, in relation to Sections 3 (c) and 4 OMNI are underfilled. Private respondents
thereof, and the other for violation of Section posited that before any violation of Section
2 (c) of BP 33, in relation to Sections 3 and 4 2(a) in relation to Section 3(c) of BP 33, as
thereof, were filled by petitioner Marvin E. De amended (illegal trading and refilling of LPG
Jemil (“Agent De Jemil” for brevity) with the cylinders of another company) would lie,
Prosecution Division of the Department of ownership of the subject cylinders must be
Justice (DOJ) against the private respondents. determined. Such a requirement is wanting
in the present case since they are not the
The complaint for violation of Section 2 owners of the LPG cylinders in question but
(c) which was docketed as I.S. No.2004- mere dealers of the brand or trademark they
616, alleged that private respondents are carry. Private respondents further posited
criminally liable of underfilling LPG products that the LPG cylinders brought to OMNI by
and/or possession of underfilled LPG household customers are already owned by
cylinders for the purpose of sale, distribution, said household users, thus, they can use it
transportation, exchange of barter.12 The for whatever purpose they like including the
second complaint, which was docketed purchase of another LPG brand. The private
as I.S. No. 2004-618, alleged that private respondents also pointed out that the industry
respondents are criminally liable of illegal practice of cylinder swapping is that customers
trading of LPG cylinders, i.e. refilling LPG would bring their own empty LPG cylinders
cylinders branded as Shellane, Petron Gasul, and exchanges them for already filled LPG
cylinders. Lastly, private respondents posited
Ibid., pp. 337-338.
that being mere directors or officers of OMNI,
8
9
Ibid, pp. 339-340.
10
Ibid, p. 268.
11
Ibid, pp. 076-080; pp.289-294. Ibid, pp. 076-080; p. 079.
13
12
Rollo, pp. 289-294; p. 292. Ibid, pp. 345-348.
14
they cannot be held liable as provided for by finding probable cause against the private
the said law because they are not in-charge of respondents. The pertinent portions thereof
the management of the business affairs of the read:
said corporation.
“After evaluation of the evidence submitted
In his Reply-Affidavit, Agent De Jemil
15 by both parties, this Office finds probable
retorted that despite the fact that private cause to hold all the respondents criminally
respondents’ corporation is duly licensed to liable for violation of Section 2 [a] (illegal
operate a refilling plant or station, it does not trading of LPG cylinders) and Section 2 [c]
necessarily follow that they can no longer (underfilling of LPG cylinders), both of BP33,
violate the provisions of BP 33, as amended. as amended.
He pointed out that notwithstanding the
fact that the receipt presented by NBI FOD- Section 2[a] of BP33, as amended, prohibits
IS did not state with particularly the brand the illegal trading in petroleum and/or
names of the LPG cylinders, he personally petroleum products, which is specifically
witnessed the illegal refilling of the same defined by Section 3[c] of the same law, to
by OMNI employees. He posited further wit:
that the question as to whether or not the
customers of OMNI would bring their own (c) Refilling of liquefied petroleum
empty LPG cylinders to exchange them for gas cylinders without authority form
another refilled LPG cylinder is not the crux said Bureau, or refilling of another
of the matter, but it is whether or not OMNI company’s of firm’s cylinders without
has refilled, is refilling and/or continues to such company’s of firm’s written
refill Petron Gasul, Shellane, Superkalan authorization’ (Underscoring and
Gaz, and Totalgaz LPG cylinders without the emphasis supplied).
permission of the said companies. He also
posited that while some LPG cylinders taken Based on the foregoing, taking into
during the raid were from a marked section consideration the surveillance and
of the premises of OMNI, a good number investigation conducted by the NBI FOD-IS
of LPG cylinders were done. There were and the documentary evidence submitted by
taken from the place where the refilling of complainants LPGDA, it clearly established
the cylinders were done. There were even the fact that respondents and/or OMNI
walk-in customers who entered OMNI’s Gas is not an authorized refiller of Shellane,
premises to have their empty branded LPG Petron Gasul, Totalgaz, and Superkalan LPG
cylinders refilled which all the more proves cylinders andin the absence of the required
that OMNI is known to be refilling branded written authorization proceeded to refill
LPG cylinders. As to the last contention of complainant’s LPG cylinders in wanton
the private respondents, Agent De Jemil violation of the law.
countered that it would be highly incredible
and preposterous for anyone to believe that Respondents claim that the ownership of
private respondents, who are all directors the LPG cylinders does not belong either
and at the same time majority of them are to the above-named LPG companies or to
the highest ranking officials of OMNI, are complainants LPGDA but to the household
not in-charge with the management of the users who have already purchased the
business affairs of the said company. same is without merit, considering that the
ownership of the LPG cylinders are shown
On November 7, 2005, the Office of the Chief by the stamp markings appearing on the
State Prosecutor issued a Joint Resolution16 LPG cylinders themselves, which provide
15 Rollo, pp. 350-356.
that said LPG cylinders are properties of
16 Ibid, pp. 357-362.
their respective companies. Obviously, there Prosecutor. Consequently, public respondent
is prima facie evidence that respondents DOJ Undersecretary directed the withdrawal
violated Section 2 [a], in relation to Sections of the Informations against the respondents.
3[c], and 4, of BPO33, as amended. Quoted hereunder are the salient portions of
the said resolution:
The allegation in the criminal complaint of
underfilling under Section 2[c] of BP33, as “Verily, there is no basis in finding
amended, finds support in the uncontroverted probable cause for underfilling
Inspection Report of LPGIA, Inspector Noel N. against respondents. One of the eight
Navio. (8) cylinders allegedly filled during
the alleged “test buy”, only one was
“WHEREFORE, premises considered, it said to be underfilled. Such one and
is hereby recommended that two (2) isolated instance of underfilling,
Informations for violations of Section 2[c] even if true, cannot give rise to a
(illegal trading in petroleum and/or petroleum sweeping conclusion that Omni had
products) and Section2 [c] (underfilling of LPG indeed willfully and illegally engaged
cylinders), both of Batas Pambansa Bilang 33, itself in underfilling LPG cylinders for
as amended, be filled against respondents sale as part of its business practices.
ARNEL TY, MARIE ANTONETTE TY, JASON Such isolated underfilling can be said
ONG, WILLY DY and ALVIN TY.” to have been caused by an oversight
or technical or honest human
A Motion for Reconsideration17 of the error, unless other circumstances
aforestated Resolution was filled by private show a clear pattern of deliberate
respondents on February 9, 2006, which underfilling. Other than the one
was duly opposed18 by the petitioners. A and only underfilled LPG cylinder,
Reply19 thereto was then filled by petitioners. there is no indication of a pattern of
However, the said motion was not favorably underfilling that would show a willful
acted upon20 prompting the private act of deception or fraud on the part
respondents to file a Petition for Review21 of Omni. In fact, not one of those
with the Office of the DOJ Secretary on June more numerous filled LPG cylinders
1, 2000. subsequently seized from Omni by
virtue of the search warrants was
Meanwhile, two (2) separate Informations shown to be underfilled.
for violation of BP33, as amended were filled
against private respondents before the Office A mere underfilling, even of
of the Clerk of Court of the Regional Trial more than one gas cylinder, if not
Court of Pasig City.22 substantial and deliberate, is not
necessarily a violation of Batas
On October 9, 2006 public respondent DOJ Blg 33, as amended. Not even
Undersecretary Ernesto Pineda, issued the the most advanced machine or
assailed 1st Resolution23 granting private equipment or the most diligent and
respondents’ Petition for Review and prudent person could precisely and
thereby reversing and setting aside the consistently comply with a given
joint resolution of the Office of the State measurement or standard, especially
in a numerous and successive but
17
Rollo, pp. 363-377.
18
Ibid, pp. 378-389.
similar and repetitive activities such
19
Ibid, pp. 390-398. as LPG cylinder refillings. Overfilling
20
Ibid, pp. 399-401.
21
Ibid, pp. 390-402-413.
or underfilling may happen under
22
Petition for Certiorari, Rollo, pp. 002-042; p. 008. these circumstances. This is precisely
23
Ibid, pp. 043-048
the reason why section 2 (c) of Batas

Blg. 33, as amended, only punishes repainting, in the same way that
“underfilling beyond authorized marks and brands printed thereon,
limits” and not otherwise. may be conveniently altered or
Insubstantial or insignificant changed, In short ownership of these
underfillings of LPG cylinders for LPG cylinders cannot be based solely
sale, especially if done innocently, is and reliably on the brands and marks
not punishable under the said law. or statements printed or stamped
Remarkably, complainant NBI and thereon because they are susceptible
LPGIA did not state to what extent to tampering. The said company or
did the LPG cylinder was underfilled firm should have provided some kind
in the alleged “test buy” operation. of scientific or technical foolproof
way of identifying their LPG cylinders,
Complainant NBI’s plain declaration such as serial numbers engraved on
of underfilling by respondent’s is the cylinders backed up by official
even clouded with doubt as the records or inventories of these
volume or weight verification or serialized cylinders. This however,
inspection on the eight (8) LPG does not obtain in the case at bar.
cylinders was solely anchored on the
inspection and discovery of Noel V. Even then, as rightly argued by
Navio, an inspector of LPGIA, which respondents, even assuming that
stands in this case as on of the private the LPG cylinders were initially
complainants. Without doubt, such distributed and owned by another
declaration is self serving which is company or firm, or bear their
not impressed with merit. brands or marks, there is no proof
that they remain the owners thereof,
There is likewise no sufficient basis to as ownership had been transferred
hold respondents liable for violation to consumers and the others by way
of Section 2 (c) (sic) of Batas Blg. of sale or other mode of disposition.
33, as amended, which prohibits
the refilling of another company of It is common and time honored
firm’s LPG cylinder without is written practice that when a consumer
authorization. Before one could be initially buys a liquefied petroleum
charged with this offense, it must be gas in an LPG cylinder. The consumer
proven that the LPG cylinder without then takes full control, ownership
its written authorization. Before and possession of both the gas and
one could be charged with this LPG cylinder. He may thereafter
offense, it must be proven that the keep, resell, swap reuse it to his
LPG cylinder that was filled belongs liking or even destroy the same. The
to another company or firm. Other contract between the consumer
than the marks or brands appearing and the distributor is, for all intents
on the LPG cylinders and the written and purposes, evidently a sale of
statement of ownership stamped both the gas and LPG cylinder. The
or printed thereon, it could not be consumers may than (sic) exercise
conclusively proven that the said all the attributes of ownership over
cylinders that were claimed to have the LPG cylinder and the original
been filled by Omni belong to another owner, which is the gas company,
company or firm. The appearances looses the (sic) complete control
and colors of LPG cylinders can and ownership of the same,
be changed, altered or modified notwithstanding any statement
by simple manual reformation or
printed on the purchase receipt or petitioners argued that the customers pay
on the LPG cylinder or demanding an additional amount for the said branded
the return thereof after purchase transfer ownership from the manufacturer
except probably in exchange for and/or distribution only by way of “deposit”
a new filled up cylinder upon which can be refunded in exchange of the
repurchase of liquefied petroleum said branded LPG cylinders. They declared
gas. Consequently, the LPG that if any of those branded LPG cylinders
cylinders that were found in Omni, fall short of the standard requirements
though initially owned and bearing imposed by the State and if the same caused
by any damage, it is not the end-consumers
the marks of another company or
that are held liable, but he distributors and/
firm, belonged to the consumers
or manufacturers themselves, therefore,
who brought them into Omni’s
ownership thereof is retained by the LPG
premises, or Omni itself, which may companies. They also contended that
have, in turn acquired ownership probable cause for commission of underfilling
therefore through swapping. of LPG products by the private respondents
was sufficiently established as the law does
WHEREFORE, the assailed resolution not contemplate that the underfilling be
is hereby REVERSED and SET ASIDE. substantial, deliberate and repetitive.
The Chief State Prosecutor is
directed to cause the withdrawal After private respondents filed their
of the informations for violations of Comment/Opposition26 to the petitioners’
Sections 2 (a) and 2 (c) of B.P. Blg. Motion for Reconsideration, the second
33, as amended by PD1865, against assailed Resolution dated December 14, 2006
respondents Arnel Ty, Mari Antonette was issued, this time by public respondent
Ty, Jason Ong Willy Dy and Alvin Ty DOJ Secretary Raul M. Gonzalez. The second
and report the action taken within assailed Resolution denied petitioners’
ten (10) days from receipt hereof. Motion for Reconsideration on the premise
that the issues raised therein were duly
SO ORDERED.24 considered and passed upon in the October
9, 2006 Resolution.
Petitioners then filed a Motion for
Reconsideration25 of the aforementioned Hence, the instant petition for certiorari
resolution, arguing that the conclusion based on the following grounds:
reached as regards the susceptibility of
tampering of the embossed brands and I.
markings are speculative and argumentative.
The stressed that the LPG cylinders used THE PUBLIC RESPONDENTS GRAVELY ABUSED
by the NBI operatives during the test-buy THEIR DISCRETION AMOUNTING TO LACK
operation were not tampered as evidenced OR IN EXCESS OF JURISDICTION WHEN THEY
by the photographs taken therefrom. The RULED ON THE ISSUE OF OWNERSHIP OF LPG
contended that there were also tampered CYLINDERS CONTRARY TO EXISTING LAWS,
LPG cylinders carrying the brands of Totalgaz, RULES AND REGULATIONS AND USURPING
Petron, Gasul, Superkalan Gaz and Shellane THE FUNCTIONS AND AUTHORITY OF THE
that were seized by them from the refilling DEPARTMENT OF ENERGY.
plant of OMNI. As to the ruling that the
customers become the owners of the LPG
cylinders upon purchase of their contents,
Rollo, pp. 045-047.
24
Ibid, pp. 460-468.
26
Rollo, pp. 053-071.

25
II. aggrieved party if the Secretary of Justice
commits grave abuse of discretion amounting
THE PUBLIC RESPONDENTS GRAVELY ABUSED to lack or excess of jurisdiction.31
THEIR DISCRETION AMOUNTING TO LACK
OR IN EXCESS OF JURISDICTION WHEN THEY Going now to the merits of case at bar.
RULED THAT THERE IS NO BASIS FOR FINDING
PROBABLE CAUSE AGAINST THE PRIVATE The pivotal issue to be resolved is whether or
RESPONDENTS FOR VIOLATION OF ILLEGAL not he public respondents committed grave
TRADING OF LPG PRODUCTS PUNISHABLE abuse of discretion amounting to lack or
UNDER SECTION 2 (A). IN RELATION TO excess of jurisdiction in reversing the findings
SECTIONS 3 (C) AND 4, OF BP 33, AS AMENDED. of the Office of the Chief State Prosecutor
on the existence of profitable cause against
III. private respondents for violations of Section
2(a), in relation to Sections 3(c) and 4, and
THE PUBLIC RESPONDENTS GRAVELY ABUSED Section 2(c) in relation to Sections 3 and 4, of
THEIR DISCRETION AMOUNTING TO LACK BP 33, as amended.
OR IN EXCESS OF JURISDICTION WHEN
THEY RULED THAT THERE IS NO BASIS FOR We hold that public respondents, indeed,
FINDING PROBABLE CAUSE AGAINST THE acted with grave abuse of discretion
PRIVATE RESPONDENTS FOR VIOLATION amounting to lack or excess of jurisdiction.
OF UNDERFILLING OF LPG PRODUCTS Otherwise stated, the instant petition is
PUNISHABLE UNDER SECTION 2 (C), IN impressed with merit.
RELATION TO SECTIONS 3 AND 4, OF BP, AS
AMENDED. Traditionally, grave abuse of discretion
is confined to capricious and whimsical
By way of Comment,27 private respondents exercise of judgment as is equivalent to
question the propriety of this petition lack of jurisdiction.32 There is grave abuse
contending that it is not the adequate nor the of discretion where the power is exercised
appropriate remedy provided by law to assail in arbitrary or despotic manner by reason
the questioned DOJ resolutions. of passion, prejudice or personal hostility
amounting to an evasion of a positive duty
We do not, however, agree with the above or to a virtual refusal to perform the duty
contention of the private respondents. It enjoined or to act all in contemplation of
bears stressing that a writ certiorari is of the law.33 However, the meaning of grave abuse
highest utility and importance of curbing of discretion has been expanded to include
excessive jurisdiction and correcting errors any action done contrary to the constitution,
and most essential to the safety of the people the law or jurisprudence.34
and the public welfare.28 Its scope has been
broadened and extended, and is now one It must be stressed that the City Prosecutor in
of the recognized modes for the correction determining probable cause is required only
of errors by this Court.29 The cases in which to determine whether or not the person or
it will lie cannot be defined. To do so would persons against whom a specific complaint
be to destroy its comprehensiveness and is filed has performed specific acts, or
limit its usefulness.30 Hence, certiorari under committed specific omissions, in violation
Rule 65 of the 1997 Rules of Civil Procedure of existing provisions of law. In determining
is the appropriate remedy available to the probable cause for the filing of information
27
Rollo, pp. 530-541.
31
Ibid.
28
Preferred Home Specialists, Inc. vs. Court of Appeals, 478 SCRA
32
Benito vs. Comelec, 349 SCRA 705.
387, [December 16,2005].
33
People vs. Marave, 11 SCRA 618; Panaligan vs, Adolfo, 67 SCRA
29
Supra, note 28. 176.
30
Ibid.
31
Republicvs. Cocofed, 423 Phil. 735.
in court, the City Prosecutor is not required whether there is sufficient evidence
that all reasonable doubt of the guilt of the to procure a conviction. It is enough
accused must be removed. Thus, in Trocio vs. that it is believed that the act or
Manta35, the Supreme Court held that: omission complained of constitutes
the offense charged. Precisely,
“When a fiscal investigates a there is a trial for the reception of
complaint in order to determine the evidence of the prosecution in
whether he should file charges support of the charge.” (Emphasis
with the court against the person supplied)
complained of, the scope of the
investigation is far short of a trail of In the case of Webb vs. De Leon,37 the Supreme
an accused before the court. It is not Court declared that:
required that all reasonable doubt
of the guilt of the accused must be “A finding of probable cause needs
removed; It is only required that the only to rest on evidence showing
evidence be sufficient to establish that more likely than not a crime has
probable cause that the accused been committed and was committed
committed the crime charged. xxx by the suspects. Probable cause need
“(Emphasis supplied.) not be based on clear and convincing
evidence of guilt, neither on
Pertinent also is the following pronouncement evidence establishing guilt beyond
of the Supreme Court in the case of Pilapil vs. reasonable doubt and definitely, not
Sandiganbayan:36 an evidence establishing absolute
certainty of guilt. As well put in
“Probable cause has been defined in Brinegar v. United States, while
the leading case of Buchanan vs. Vda. probable cause demands more
De Esteban as the existence of such than “bare suspicion,” it requires
facts and circumstances as would “less than evidence which would
excite the belief, in a reasonable justify x x x conviction.” A finding of
mind, acting on the facts within the probable cause merely binds over
knowledge of the prosecutor, that the suspect to stand trail. It is not a
the person charged was guilty of the pronouncement of guilt.”
crime for which he was prosecuted.
In I.S. No. 2004-616, private respondents
Probable cause is a reasonable are being prosecuted for underfilling of
ground of presumption that a matter LPG cylinders in violation of Section 2(c) in
is, or may be, well founded, such as relation to Sections 3 and 4 of BP Blg. 33,
a state of facts in the mind of the as amended. However, public respondent
prosecutor as would lead a person DOJ Undersecretary Ernesto Pineda resolved
of ordinary caution and prudence that there is no basis in finding probable
to believe, or entertain an honest cause for the violation thereof by the private
or strong suspicion that a thins is so. respondents because it was only an isolated
The term does not mean ‘actual and instance of underfilling. He further ruled that
positive cause’ nor does it import insubstantial or insignificant underfillings of
absolute certainty. It is merely based LPG for sale, especially if done innocently, is
on opinion and reasonable belief. not punishable under the said law.
Thus, a finding of probable cause
does not require an inquiry as to We do not agree.
118 SCRA, 241.
35
221 SCRA 349 [April 7, 1993].

36
G.R. No. 1211234, 247 SCRA 652.
37
Section 1 of Presidential Decree No. 1865, metering device of the container.
which amended BP 33 provides that: This refers among others, to the
quantity of petroleum retail outlets
“SECTION 1. Section 2 of Batas or to liquefied petroleum gas in
Pambansa Blg. 33, as amended is cylinder or lube oils in packages.
further amended to read as follows: “(Emphasis supplied)
“Sec. 2. Prohibited Acts. The Nowhere can it be found in the

following acts are prohibited and aforementioned provisions of the law that for
penalized: underfilling or underdelivery of LPG cylinder
to be punished thereby, it must be shown
(a) Illegal trading in petroleum and/ to be substantial and deliberate. Conversely,
or petroleum products; what is readily apparent in the said provisions
is that even a single or isolated instance of
(b) Adulteration of finished underfilling or underdelivery of LPG cylinder
petroleum products, or possession is punishable under BP Blg. 33 as amended by
of adulterated finished petroleum PD No. 1865.
products for the purpose of sale,
distribution, transportation, In the case at Bench, contrary to the findings
exchange or barter. of the public respondents, there is probable
cause to believe that private respondents
(c) Underdelivery or underfilling violated the above quoted provisions of BP
beyond authorized limits in the sale Blg. 33 as amended by PD No. 1865. After
of petroleum products or possession the conduct of the test-buy operation of the
of underfilled liquefied petroleum NBI FODI-IS, the refilled cylinders bought at
gas cylinder for the purpose of Omni was thereafter weighed, Inspected
sale, distribution, transportation, and examined by Inspector Noel N, Navio.
exchange or barter;” (Emphasis This fact was witnessed by Agent De Jemil as
supplied) categorically narrated by him in his Complaint-
Affidavit.38 The inspection revealed thereof
Section 2 of the aforementioned law further revealed that the eight (8) refilled cylinders
provides that: without seals and one (1) refilled cylinders was
underfilled. This was shown by the Inspection
SECTION 2. Section 3 of the same Report39 of Inspector Noel N. Navio which the
Act is hereby amended to read as petitioners presented during the preliminary
follows: investigation. Pictures40 of the refilled LPG
cylinders were also taken after the test-buy
‘Section 3. Definition of terms. - For operation and were also presented. The
the purpose of this Act, the following pieces of evidence are more than sufficient
terms shall be construed to mean: to engender a well-founded belief that the
private respondents committed underfilling
xxx xxx of LPG cylinder punishable by Blg. Pp.33, as
amended.
‘Underfilling or Underdelivery –
Refers to a sale, transfer, delivery Furthermore, Section1 of BP Blg. 33, as
or filling of petroleum products of amended, provides for presumptions of
a quantity that is actually beyond underdelivery or underfilling of LPG cylinders,
anthorizes limits than the quantity 38
Rollo, pp. 289-294.
indicated or registered on the 39
Ibid, pp. 314-315
40
Ibid, p. 313.
thus: De Jemil and his companion, NBI confidential
asset Edgardo C. Kawada, during the test-
“xxx xxx xxx buy operation as shown by their affidavits,41
would strongly support a finding of probable
cause that private respondents committed
For the purpose of this subparagraph, the crime of underfilling of LPG cylinders.
the existence of the facts hereunder
shall give rise to the following Anent I.S. No. 2004-618, private respondents
presumptions: are being prosecuted for illegal trading
by refilling LPG cylinders without written
1) That cylinders containing less authorization from the concerned company,
than the required quantity of in violation of Section 2(a) in relation to
liquefied petroleum gas which are Sections 3(c) and 4 of BP Blg.33, as amended.
not properly identified, tagged IN reversing the finding of probable cause
and set apart and remove and of the Office of the Chief State Prosecutor,
taken out from display area and public respondent DOJ Undersecretary
made accessible to the public by Pineda postulated that private respondents
marketers, dealers, sub-dealers, should not be held liable for violation of the
outlets are presumed to be on sale; aforestated law as there was no showing
that the refilled LPG cylinders were owned
“xxx xxx xxx by another company or even assuming
that the ownership thereof was sufficiently
3) When the seal, whether official established, such ownership had already
or of the Oil Company, affixed to been transferred to consumers by way of
the dispensing pump, tank trunk sale, citing the industry practice of cylinder
or liquefied gas cylinder, is broken swapping.
or absent or removed, it shall give
rise to the presumption that the Again, we do not agree with public
dispensing pump is underdelivering, respondent’s ratiocination.
or that the liquefied petroleum gas
cylinder is underfilled, or that the Quoted hereunder are the pertinent
tank truck contains adulterated provisions of PD No. 1856, which amended
finished petroleum products or BP Blg. 33, the law under which private
underfilled; respondents are being indicted, viz:
The use of such pumps, cylinders, “SECTION 1.Section two of Batas

or containers referred to in sub- Pambansa Blg. 33, as amended is
paragraph (1), (2) and (3) of this further amended to read as follows:
paragraph, to deliver products for
sale or distribution shall constitute ‘Sec. 2. Prohibited Acts.-The following
prima facie evidence of intent of are prohibited and penalized:
the hauler, marketer, refiller, dealer,
retailer outlet operator to defraud;” (a) Illegal trading in petroleum and/
(Emphasis supplied). or petroleum products;
Prescinding from the foregoing, the fact xxx xxx xxx

that the eight (8) refilled cylinders taken at
OMNI were found to be without seals not “(Emphasis added)
only by Inspector Navio, but also by Agent
41 Rollo, pp. 289-294; pp. 324-326.
“SECTION 2. Section three of the written authorization by the aforementioned
same Act is hereby amended to read companies were also produced bolstering
as follows: the fact that OMNI refilled the branded LPG
cylinders without the written authorizations
‘Sec. 3. Definition of terms- For the of the said companies. What is more, the
purpose of this Act, the following search and seizure operation conducted by
terms shall be construed to mean: the NBI FOD-IS by virtue of search warrants
is issued by the RTC of Pasig City, Branch
Illegal trading in petroleum and/or 167, yielded several filled and empty branded
petroleum products’- LPG cylinders owned by the said companies.
In sum, there is probable cause to indict
xxx xxx xxx private respondents for the crime of illegal
trading punished by Section 2(a) in relation to
(c) Refilling of liquefied petroleum Sections 3(c) snd 4 of BP Blg. 33, as amended.
gas cylinders without authority
from the said Bureau, or refilling of DOJ Undersecretary Pineda’s postulation that
another company’s or firm’s cylinders there was no showing that the refilled LPG
without such company’s or firm’s cylinders were owned by another company is
written authorization;” (Emphasis belied by the evidence presented, particularly
added) the LPG cylinders which do not show any
markings showing OMNI’s ownership and is
Evidently, what is being punished under the instead bear the marking Shellane, Petron
aforementioned provisions of the law is the Gasul, Totalagz and Superkalan Gaz, brands
act of refilling another company’s or firm’s LPG owned by companies other than OMNI. As
cylinder without the written authorization of ruled by the Office of the Chief Prosecutor
the said company or firm. In the instant case, “the ownership of the LPG cylinders are shown
there are pieces of evidence that will prove by the stamp markings appearing on the LPG
the existence of probable cause to indict cylinders themselves, which provide that the
private respondents for violation of the said said LPG cylinders are properties of their
law. The Affidavits42 of Agent De Jemil and NBI respective companies.”46 This is consistent
confidential asset Edgardo C. Kawada were with the Republic Act No. 4109, otherwise
presented to prove that a test-buy operation known as the Product Standards Law, and
was conducted at OMNI and to further prove the Philippine National Standard (PNS) 03-
that OMNI is engaged in the refilling of LPG 1, Series of 2000, which requires that LPG
cylinders without the written authorization cylinders bear the permanent markings of
of the owners of the LPG branded cylinders their respective owners.
like Shellane, Petron Gasul. Totalgaz, and
Superkalan Gaz. Agent De Jemil and NBI Simply relying on private respondents’
confidential asset Edgardo Kawada personally unsupported and bare allegation, DOJ
witnessed that OMNI employees refilled the Undersecretary Pineda further postulated
eight (8) branded LPG cylinders that they that even assuming the ownership of the
brought during the test-buy operation. In LPG cylinders have been established, such
fact, a receipt43 or sales invoice was issued by ownership had already been transferred to
OMNI after the eight (8) LPG cylinders were consumers by way of sale, citing the supposed
filled by them. Moreover, photograph44 of industry practice of cylinder swapping.
the LPG branded cylinders that were filled
was also taken. Certifications45 of lack of We are not persuaded. No less than the
42
Rollo, pp. 076-080; pp. 105-107; pp. 108-109; p. 265. Department of Energy, the government
43
Rollo, p. 097. agency tasked to regulate the LPG industry
44
Rollo, p. 098.
45
Rollo, pp. 090-095. Rollo, pp. 357-361; p. 360-361.
46
and which has the technical expertise to
decide issues regarding the LPG industry, has
held that the sale of LPG cylinders and its …ORDERED.
content merely transfers the possession and
actual use of LPG cylinders and its content
to consumers. The Department of Energy
has promulgated rules and regulations RAMON M. BATO, JR.
and letter-opinions confirming that LPG Associate Justice
cylinders are considered properties of the
companies whose stamp markings appear
on the LPG cylinders.47 The Department of WE CONCUR:
Energy further held that the acts of refilling
or modifying the appearance of LPG cylinders
are reserved for the owners of the LPG ANDRES B. REYES, JR.
cylinders as shown in the markings thereon. Associate Justice
As a consequence, the possession of the LPG
cylinders by another, such as the consumer,
does “not relieve the brand owner thereof ARCANGELITA ROMILLA LONTOK
of its obligations to the public under the Associate Justice
Rules and Regulations implementing R.A. No.
8479.”48 Such is the industry practice in order
to pinpoint responsibility for substantial and
underfilled LPG cylinders for the protection
CERT I FI CATION
of the consuming public.49 This Court gives
great weight and respect to the rulings of
Pursuant to Article VII, Section13 of the
the Department of Energy because the LPG
Constitution, it is hereby certified that the
industry is an area within its competence and
conclusions in the above decision were
technical expertise.
reached in consultation before the case was
assigned to the writer of the opinion of the
The Motions to Intervene and to Admit
court.
Petitions-In-Intervention dated 24 August
2007 and 31 August 2007, filled by Nationwide
Association of Consumers Inc. and Petron ANDRES B. REYES, JR.
Corporation, respectively, are noted. Associate Justice
Chairman, Special Sixth Edition
WHEREFORE, the instant petition is
GRANTED. The assailed resolutions dated
October 9, 2006 and December 14, 2006 are
hereby REVERSED and SET ASIDE. The joint
resolution dated November 7, 2005 of the
Office of the Chief State Prosecutor finding
probable cause against private respondents
Arnel Ty, Marie Antonette Ty, Jason Ong, Wily
Dy and Alvin Ty is hereby REINSTATED.
SO ORDERED.
47
Rollo, pp. 443-446, Opinion of then Secretary Vincent S. Perez
embodied in his letter dated December 9, 2004 addressed to
Pilipinas Shell Petroleum Corporation.
47
Rollo, Ibid, p.445.
49
Rollo, p. 442, Department Circular No. 2000-05-007.
Chapter 2
REPUBLIC ACT NO. 8479

AN ACT DEREGULATING THE DOWNSTREAM OIL INDUSTRY AND FOR OTHER PURPOSES
CHAPTER I toxic wastes across borders;

GENERAL PROVISIONS
(b) Board shall refer to the Energy Regulatory
SECTION 1. Short Title. – This Act shall be Board;
known as the “Downstream Oil Industry
Deregulation Act of 1998.” (c) BOI shall refer to the Board of
Investments;
SECTION 2. Declaration of Policy. – It shall
be the policy of the State to liberalize and (d) Crude Oil shall refer to oil in its natural
deregulate the downstream oil industry in state before the same has been refined
order to ensure a truly competitive market or otherwise treated, but excluding
under a regime of fair prices, adequate water, bottoms, sediments and foreign
and continuous supply of environmentally- substances;
clean and high-quality petroleum products.
To this end, the State shall promote and (e) Dealer shall refer to any person, whether
encourage the entry of new participants in natural or juridical, who is engaged in the
the downstream oil industry, and introduce marketing and direct selling of petroleum
adequate measures to ensure the attainment products to motorists, end users, and
of these goals. other consumers;

SECTION 3. Coverage. – This Act shall apply (f) DOE shall refer to the Department of
to all persons or entities engaged in any and Energy;
all activities of the domestic downstream oil
industry, as well as persons or companies (g) DOJ shall refer to the Department of
directly importing refined petroleum products Justice;
for their own use.
(h) Downstream Oil Industry (DOI) or
SECTION 4. Definition of Terms. – For Industry shall refer to the business of
purposes of this Act, the following terms are importing; exporting, re-exporting,
hereinbelow defined: shipping, transporting, processing,
refining, storing, distributing, marketing
(a) Basel Convention shall refer to the and/or selling crude oil, gasoline, diesel,
international accord which governs the liquefied petroleum gas (LPG), kerosene,
trade or movement of hazardous and and other petroleum products;
(i) Hauler shall refer to any person, whether or treatment as to produce separate
natural or juridical, engaged in the chemically-defined compounds in a pure
transport, distribution, hauling, and or commercially pure state and to which
carriage of petroleum products, whether various substances may have been added
in bulk or packed form, from the oil to render them suitable for particular
companies and independent marketers uses: Provided, That the resultant product
to the petroleum dealers and other contains not less than fifty percent (50%)
consumers; by weight of such petroleum products;

(j) LPG Distributor shall refer to any (o) Singapore Import Parity (SIP) shall refer to
person or entity, whether natural or the deemed landed cost of a petroleum
juridical, engaged in exporting, refilling, product imported from Singapore at a
transporting, marketing, and/or selling of free-on-board price equal to the average
LPG to end users and other consumers; Singapore Posting for that product at the
time of loading;
(k) New Industry Participants shall refer
to new participants in a particular sub- (p) Singapore Posting shall refer to the
sector of the downstream oil industry price of petroleum products periodically
with investments and initial business posted by oil refineries in Singapore and
operations commencing after January 1, reported by independent international
1994; publications; and
(l) Person shall refer to any person, whether (q) Wholesale Posted Price (WPP) shall
natural or juridical, who is engaged in any refer to the ceiling price of petroleum
activity of the downstream oil industry; products set by the Board based on its
duly approved automatic pricing formula.
(m) Petroleum shall refer to the naturally
occurring mixture of compounds of
hydrogen and carbon with a small CHAPTER II
proportion of impurities and shall include LIBERALIZATION OF THE DOWNSTREAM
any mineral oil, petroleum gas, hydrogen OIL INDUSTRY AND PROMOTION OF FREE
gas, bitumen, asphalt, mineral wax, and COMPETITION
all other similar or naturally-associated
substances, with the exception of coal, SEC. 5. Liberalization of the Industry. – Any
peat, bituminous shale and/or other law to the contrary notwithstanding, any
stratified mineral fuel deposits; person or entity may import or purchase any
quantity of crude oil and petroleum products
(n) Petroleum Products shall refer to from a foreign or domestic source, lease
products formed in the case of refining or own and operate refineries and other
crude petroleum through distillation, downstream oil facilities and market such
cracking, solvent refining and chemical crude oil and petroleum products either in a
treatment coming out as primary stocks generic name or his or its own trade name, or
from the refinery such as, but not limited use the same for his or its own requirement:
to: LPG, naphtha, gasolines, solvents, Provided, That any person who shall engage
kerosenes, aviation fuels, diesel oils, fuel in any such activity shall give prior notice
oils, waxes and petrolatums, asphalt, thereof to the DOE for monitoring purposes:
bitumens, coke and refinery sludges, or Provided, further, That such notice shall
other such refinery petroleum fractions exempt such person or entity from securing
which have not undergone any process certificates of quality, health and safety
and environmental clearance from the
proper governmental agencies: Provided, achieve efficiency and cost reduction, ensure
furthermore, That such person or entity shall, continuous supply of petroleum products,
for monitoring purposes, report to the DOE and enhance environmental protection.
his or its every importation/exportation: These practices may include borrow-and-
Provided, finally, That all oil importations shall loan agreements, rationalized depot and
be in accordance with the Basel Convention. manufacturing operations, hospitality
agreements, joint tanker and pipeline
SEC. 6. Tariff Treatment. – (a) Any law to the utilization, and joint actions on spill control
contrary notwithstanding and starting with and fire prevention.
the effectivity of this Act, a single and uniform
tariff duty shall be imposed and collected The DOE shall monitor the relationship
both on imported crude oil and imported between the oil companies (refiners and
refined petroleum products at the rate of importers) and their dealers, haulers and LPG
three percent (3%): Provided, however, That distributors to help ensure the observance of
the President of the Philippines may, in the fair and equitable practices and to ensure the
exercise of his powers, reduce such tariff enforcement of existing contracts: Provided,
rate when in his judgment such reduction That the DOE shall conciliate and arbitrate
is warranted, pursuant to Republic Act No. any dispute that may arise with respect to
1937, as amended, otherwise known as the contractual relationship between the oil
the Tariff and Customs Code: Provided, companies and the dealers, haulers and LPG
further, That beginning January 1, 2004 or distributors involving the dealers’ mark-up,
upon implementation of the Uniform Tariff the freight rate in transporting petroleum
Program under the World Trade Organization products and the margins of LPG distributors
and ASEAN Free Trade Area commitments, for the protection of the public and to prevent
the tariff rate shall be automatically adjusted ruinous competition: Provided, further, That
to the appropriate level notwithstanding the the arbitration award of the DOE shall be
provisions under this Section. subject to judicial review under existing law.

(b) For as long as the National Power SEC. 8. Program to Encourage the Entry of
Corporation (NPC) enjoys exemptions from New Participants in the Industry. – The DOE,
taxes and duties on petroleum products the Department of Foreign Affairs (DFA) and
used for power generation, the exemption the DTI shall jointly formulate and establish a
shall apply to purchases through the local program that will promote the entry of new
refineries and to the importation of fuel oil participants in the Industry. Such program
and diesel. shall, among others, include a strategic
international information campaign to be
SEC. 7. Promotion of Fair Trade Practices. implemented through selected embassies
– The Department of Trade and Industry and consular offices of the Philippines. This
(DTI) and DOE shall take all measures to program shall commence implementation
promote fair trade and prevent cartelization, after three (3) months from the effectivity of
monopolies, combinations in restraint of this Act.
trade, and any unfair competition in the
Industry as defined in Article 186 of the In this regard, the DOE shall provide a
Revised Penal Code, and Articles 168 and 169 “Philippine Downstream Oil Industry
of Republic Act No. 8293, otherwise known Investment Guide” to new industry
as the “Intellectual Property Law”. The DOE participants and prospective participants.
shall continue to encourage certain practices This guide, shall, among others, contain:
in the industry which continue to encourage
certain practices in the Industry which serve (a) An introduction to the Philippine
the public interest and are intended to Downstream Oil Industry and the
government’s unwavering commitment (9) Such other applicable incentives under
to deregulation; Article 39 of Executive Order No. 226.

(b) The entry requirements; Any provision of the law to the contrary
notwithstanding, the said incentives may be
(c) Information on the benefits and availed by persons with new investments for
incentives for new industry participants a period of five (5) years from registration
which shall specify: (i) all the incentives with the BOI: Provided, however, That in
and benefits they can enjoy, and (ii) the the storage, marketing and distribution of
procedural and substantive requirements petroleum products, only the investments of
needed for entitlement; and new industry participants shall be entitled to
incentives provided in the said Code. As used
(d) Such other information the DOE may herein, “marketing of petroleum products”
deem necessary to promote the entry of shall include the establishment of gasoline
new participants. stations.

SEC. 9. Incentives for New Investments. – For this purpose, the industry shall be
To the extent applicable, persons with new included in the annual Investment Priorities
investments as determined by the DOE Plan (IPP): Provided, That nothing in herein
and registered with the BOI in refining, contained shall preclude qualified persons
storage, marketing and distribution of or entities as provided under the “Omnibus
petroleum products, shall be extended the Investments Code” from applying from or
same incentives granted to BOI-registered continue enjoying incentives and benefits
enterprises engaged in a preferred area of under the said Code.
investments pursuant to Executive Order
No. 226, otherwise known as the “Omnibus SEC. 10. Promotion of Retail Competition. –
Investments Code of 1987”. To achieve the social and policy objective of
fair prices, facilitate the attainment of a truly
Such incentives shall include: competitive product market in the retail level,
the DOE shall promote and encourage by way
(1) Income tax holiday; of information dissemination, networking,
and management/skills training, the active
(2) Additional deduction for labor expenses; and direct participation of the private sector
and cooperatives in the retailing of petroleum
(3) Minimum tax and duty of three percent products through joint venture/supply
(3%) and value-added tax (VAT) on agreements with new industry participants
imported capital equipment; for the establishment and operation of
gasoline stations: Provided, That the training
(4) Tax credit on domestic capital equipment; herein shall include LPG retailing.

(5) Exemption from contractor’s tax; To this end, the DOE shall, in accordance
with the Technology and Livelihood Resource
(6) Unrestricted use of consigned equipment; Center (TLRC) and Technical Education
and Skills Development Authority (TESDA),
(7) Exemption from the real property tax on coordinate with new industry participants
production equipment or machineries; and existing petroleum dealers’ associations
in the formulation and implementation of a
(8) Exemption from taxes and duties on two-fold program on management and skills
imported spare parts; and training for the establishment, operation, and
maintenance of gasoline stations.
Persons who successfully complete the two- prices, restrict outputs or divide markets,
fold program shall be entitled to government either by products or by areas, or allocate
assistance being extended by government markets, either by products or by areas,
lending agencies, in the form of medium- to in restraint of trade or free competition,
long-term loans with low interest rates and including any contractual stipulation
to the gasoline training station training and which prescribes pricing levels and profit
loan fund provided hereunder, to serve as margins;
capital for the establishment and operation
of gasoline stations. (b) Predatory pricing which means selling
or offering to sell any oil product at
For these purposes, there is hereby established a price below the seller’s or offeror’s
a gasoline station and loan fund with the average variable cost for the purpose of
initial amount of Three hundred million destroying competition, eliminating a
pesos (P 300,000,000.00) to be provided competitor or discouraging a potential
by the Philippine Amusement and Gaming competitor from entering the market:
Corporation (PAGCOR) and administered by Provided, however, That pricing below
the DOE under a separate account. average variable cost in order to match
the lower price of the competitor and not
Of this amount, two percent (2%) plus any for the purpose of destroying competition
additional funding shall be allocated for the shall not be deemed predatory pricing.
two-fold program; one percent (1%) plus For purposes of this provision, “variable
any additional funding shall be set aside cost” as distinguished from “fixed cost”,
for administrative, maintenance, and other refers to costs such as utilities or raw
operating expenses; ninety-four percent materials, which vary as the output
(94%) shall be used exclusively for lending increases or decreases and “average
and financial assistance; the remaining three variable cost” refers to the sum of all
percent (3%) shall be utilized in accordance variable costs divided by the number of
with the provisions of Section 26 of this Act: units of outputs.
Provided, That the loans to be awarded herein
shall be from short- to medium-term with low Any person, including but not limited to the
interest rates; Provided, further, That these chief operating officer, chief executive officer
loans shall be awarded to qualified persons or chief finance officer of the partnership,
who are able to comply with the conditions corporation or any entity involved, who is
set forth in the next two (2) preceding found guilty of any of the said prohibited acts
paragraphs. shall suffer the penalty of three (3) to seven
(7) years imprisonment, and a fine ranging
CHAPTER III from One million pesos (P 1,000,000.00) to
ANTI-TRUST SAFEGUARDS, OTHER Two million pesos (P 2,000,000.00).
PROHIBITED ACTS AND REMEDIES
SEC. 12. Other Prohibited Acts. – To ensure
SEC. 11. Anti-Trust Safeguards. – To ensure compliance with the provisions of this Act, the
fair competition and prevent cartels and refusal to comply with any of the following
monopolies in the Industry, the following acts shall likewise be prohibited:
are hereby prohibited:
(a) submission of any reportorial
(a) Cartelization which means any requirements;
agreement, combination or concerted
action by refiners, importers and/or (b) use of clean and safe (environment and
dealers, or their representatives, to fix worker-benign) technologies;

(c) any order or instruction of the DOE Act to the Joint Task Force. The Joint Task Force
Secretary issued in the exercise of his shall investigate such reports in aid of which
enforcement powers under Section 15 of the DOE Secretary may exercise the powers
this Act; and under Section 15 of this Act. The Joint Task
Force shall prepare a report embodying its
(d) registration of any fuel additive with the findings and recommendations as a result of
DOE prior to its use as an additive. any such investigation, and the report shall be
made public at the discretion of the Joint Task
Any person, including but not limited to the Force. In the event that the Joint Task Force
chief operating officer or chief executive determines that there has been a violation of
officer of the partnership, corporation or Section 11 of this Act, the private person or
any entity involved, who is found guilty of entity shall be entitled to sue for and obtain
any of the said prohibited acts shall suffer injunctive relief, as well as damages, in the
the penalty of imprisonment for two (2) Regional Trial Court having jurisdiction over
years and a fine ranging from Two hundred any of the parties, under the same conditions
fifty thousand pesos (P 250,000.00) to Five and principles as injunctive relief is granted
hundred thousand pesos (P 500,000.00). under the Rules of Court.

SEC. 13. Remedies. – (a) Government Action. CHAPTER IV
– Whenever it is determined by the Joint Task POWERS AND FUNCTIONS OF THE DOE
Force created under Section 14 (d) of this Act, AND DOE SECRETARY
there is a threatened or imminent or actual
violation of Section 11 of this Act, it shall SEC. 14. Monitoring. – (a) The DOE shall
direct the provincial or city prosecutors having monitor and publish daily international crude
jurisdiction to institute an action to prevent oil prices, as well as follow the movements of
or restrain such violation with the Regional domestic oil prices. It shall likewise monitor
Trial Court of the place where the defendants the quality of petroleum products and stop the
reside or has his place of business. Pending operation of businesses involved in the sale
hearing of the complaint and before final of petroleum products which do not comply
judgment, the court may at any time issue a with the national standards of quality that are
temporary restraining order or an injunction aligned with the national standards/protocols
as shall be deemed just within the premises, of quality. The Bureau of Product Standards
under the same conditions and principles as of the DTI, together with the Department of
injunctive relief is granted under the Rules of Environment and Natural Resources (DENR),
Court. the DOE, the Department of Science and
Technology (DOST), representatives of the
Whenever it is determined by the Joint fuel and automotive industries and the
Task Force that the Government or any of consumers, shall set the specifications for
its instrumentalities or agencies, including all types of fuel and fuel-related products
government-owned or –controlled to improve fuel composition for increased
corporations, shall suffer loss or damage in its efficiency and reduced emissions. The BPS
business or property by reason of violation of shall also specify the allowable content of
Section 11 of this Act, such instrumentality, additives in all types of fuels and fuel-related
agency or corporation may file an action products.
to recover damages and the costs of the
suit with the Regional Trial Court which has (b) The DOE shall monitor the refining
jurisdiction as provided above. and manufacturing processes of local
petroleum products to ensure that clean
(b) Private Complaint. – Any person or entity and safe (environment and worker-benign)
shall report any violation of Section 11 of this technologies are applied. This shall also
apply to the process of marketing local and (a) To gather and compile appropriate
imported petroleum products. information concerning, and to investigate
from time to time the organization, business,
(c) The DOE shall maintain a periodic conduct, practices, and management of any
schedule of present and future total industry person or entity in the Industry;
inventory of petroleum products for the
purpose of determining the level of supply. (b) To require, by general or special orders,
To implement this, the importers, refiners, persons or entities engaged in a particular
and marketers are hereby required to submit activity of the industry: (i) to file an annual
monthly to the DOE their actual importations, or special report, or both in such form as the
local purchases, sales and/or consumption, Secretary may prescribe; or (ii) to answer
and inventory on a per crude/product basis. specific questions in writing, furnishing to the
Secretary such information as he may require
(d) Any report from any person of an as to the organization, business, conduct,
unreasonable rise in the prices of petroleum practices, management, and relation to other
products shall be immediately acted upon. corporations, partnerships, and individuals
For this purpose, the creation of the DOE-DOJ of the respective persons or entities filing
Task Force is hereby mandated to determine such reports or answer. Such reports and/or
within thirty (30) days the merits of the answer shall be filed with the Secretary under
report and initiate the necessary actions oath and within such reasonable time as the
warranted under the circumstance: Provided, Secretary may prescribe;
That nothing herein shall prevent the said
task force from investigating and/or filing the (c) Upon the direction of the President or
necessary complaint with the proper court or either House of Congress, to investigate
agency motu propio. and report the facts relating to any alleged
violation of this Act by any person or
Upon the effectivity of this Act, the Secretaries corporation;
of Energy and Justice shall jointly appoint
the members of a committee who shall be (d) Upon the application of the Secretary
tasked with the drafting of the rules and of Justice, to investigate and make
guidelines to be adopted by the Task Force in recommendations for the readjustment of
the performance of its duty. These guidelines the business of any person or entity alleged to
shall ensure the efficiency, promptness, and be violating this Act in order that such person
effectiveness in the handling of its cases. The or entity may thereafter maintain his or its
Task Force shall be organized and its members organization, management, and conduct of
appointed within one (1) month from the business in accordance with law;
effectivity of this Act.
(e) To recommend to the proper government
(e) In times of national emergency, when agency the suspension or revocation and
the public interest so requires, the DOE may, termination of the business permit of an
during the emergency and under reasonable offender;
terms prescribed by it, temporarily take over
or direct the operation of any person or entity (f) Concomitant with the policy of ensuring a
engaged in the Industry. continuous, adequate and economic supply
of energy to exercise his powers and functions
SEC. 15. Additional Powers of the DOE provided under Section 5 (c) of Republic Act
Secretary. – In connection with the No. 7638;
enforcement of this Act, the DOE Secretary
shall have the following powers: (g) To make public from time to time such
portions of the information obtained by him
hereunder as are in the public interest; and to the “Reserve Control Account” as a buffer fund
make annual and special reports to Congress in an amount not exceeding Two billion nine
and to submit therewith recommendations hundred million pesos (P 2,900,000,000.00)
for additional legislation; and to provide for to cover increases in the prices of petroleum
the publication of his reports and decisions products, except premium gasoline, during
in such form and manner as may be best the Transition Phase over the prices prevailing
adapted for public information and use: as of the date of the effectivity of this Act.
Provided, That the Secretary shall have any The “Reserve Control Account” refers to a
authority to make public any trade secret lump sum collation of reserve impositions
or any commercial or financial information deducted from the appropriations approved
which is obtained from any person or entity by Congress for the operation of the
which is privileged or confidential, except that government and the implementation of
the Secretary may disclose such information projects and programs.
to officers and employees of appropriate
law enforcement agencies or to any officer SEC. 18. Automatic Oil Pricing Mechanism.
or employee of any such law enforcement – To enable the domestic price of petroleum
agency upon the prior certification by an products to approximate and promptly reflect
officer of any such law enforcement agency the prices of oil in the international market,
that such information will be maintained in an automatic pricing mechanism shall be
confidence and will be used only for official established. To this end, the following laws
law enforcement purposes; and are hereby amended:

(h) Whenever a final order has been entered (a) Paragraph (a), Section 8 of Republic
against any defendant in any suit brought by Act No. 6173, as amended by Section 3 of
the government to prevent and restrain any Executive Order No. 172, to read as follows:
violation of the anti-trust provisions of this
Act to make investigation, upon his initiative, “SEC. 8. Powers of the Board Upon
of the manner in which the decree has been or Notice and Hearing. – The Board
is being carried out, and upon the application shall have the power:
of the Secretary of Justice, it shall be his duty
to make such investigation. He shall transmit “(a) To set the wholesale posted
to the Secretary of Justice a report embodying price of petroleum products during
his findings and recommendations as a result the Transition Phase.
of any such investigation, and the report
shall be made public at the discretion of the “For this purpose and for the
Secretary. protection of the public interest,
the Board shall, after due notice
CHAPTER V and hearing, at which any consumer
TRANSITION PHASE of petroleum products and other
parties who may be affected may
SEC. 16. Phases of Deregulation. – In order appear and be heard, and within
to provide a smooth implementation of one (1) month after the effectivity of
deregulation, the policy shift shall be done this Act, approve a market-oriented
in two (2) phases: Phase I (Transition Phase) formula to determine the WPP of
and Phase II (Full Deregulation Phase). petroleum products based solely on
the changes of either the Singapore
Section 17. Buffer Fund. – The President Posting of refined petroleum
may, when the interest of the consumers so products, the SIP or the crude landed
requires, taking into account the rise in the cost.
domestic prices of petroleum products, use
“Thereafter, the Board shall at the which will automatically set the margins
proper times automatically adjust of marketers and dealers, and the rates
the WPP of petroleum products charged by water transport operators,
based on the approved formula, haulers and pipeline concessionaires:
through appropriate orders, without Provided, That such formula shall take
the need for notice and hearing. effect simultaneously with the effectivity
of the automatic oil pricing formula.
“The Board shall, on the dates Thereafter, the Board shall set the said
of effectivity of the automatic oil margins and rates based on the approved
pricing formula, the initial WPP or formula without the necessity for public
the adjusted WPP, publish the same, notice and hearing.
together with the corresponding
computation in two (2) national The Board shall, on the day of the effectivity
newspapers of general circulation.” of the aforesaid formula, publish in at least
two (2) newspapers of general circulation the
(b) Paragraph 1 of Letter of Instructions No. mechanics of the formula for the information
1441, to read as follows: of the public.

“1. To review and reset the prices CHAPTER VI
of domestic petroleum products FULL DEREGULATION PHASE
up or down as necessary on or
before the third Monday of each SEC. 19. Start of Full Deregulation. – Full
month to reflect the new WPP of deregulation of the Industry shall start five
refined petroleum products based (5) months following the effectivity of this
on the approved automatic pricing Act: Provided, however, That when the
formula.” public interest so requires, the President
may accelerate the start of full deregulation
(c) Paragraph 2 of Letter of Instructions No. upon the recommendation of the DOE and
1441 is hereby deleted. In lieu thereof the Department of Finance when the prices
a new paragraph is inserted to read as of crude oil and petroleum products in the
follows: world market are declining and the value of
the peso in relation to the US dollar is stable,
“2. The price adjustment shall taking into account the relevant trends
be reflected automatically in the and prospects: Provided, further, That the
approved WPP of each petroleum foregoing provisions notwithstanding, the five
product.” (5)-month Transition Phase shall continue to
apply to LPG, regular gasoline, and kerosene
(d) The provisions of Section 3 (a) and (c) as socially-sensitive petroleum products and
and Section 5 of Executive Order No. said petroleum products shall be covered by
172 to the contrary notwithstanding, the automatic pricing mechanism during the
the Board shall, during the Transition said period.
Phase, maintain the current margin
of dealers and rates charged by water Upon the implementation of full deregulation
transport operators, haulers and pipeline as provided herein, the Transition Phase is
concessionaires. Depending on the deemed terminated and the following laws
basis of the APM, the Board shall, within are repealed:
one (1) month after the effectivity of
this Act and after proper notice and (a) Republic Act No. 6173, as amended;
full public hearing, prescribe a formula
(b) Section 5 of Executive Order No. 172, as said outstanding claims shall be honored and
amended; accepted by the Bureau of Customs and the
Bureau of Internal Revenue as payment to
(c) Letter of Instruction No. 1431, dated the extent of ten percent (10%) per payment
October 15, 1984; of the tariff duties and specific taxes from
the creditor-claimants against the OPSF until
(d) Letter of Instruction No. 1441, dated such claims are settled in full: Provided, That
November 15, 1984; the reimbursement certificates shall not be
transferable.
(e) Letter of Instruction No. 1460, dated May
9, 1985; Section 22. Initial Public Offering. – In
compliance with the constitutional mandate
(f) Presidential Decree No. 1889; and to encourage private enterprises to broaden
their base of ownership and in recognition of
(g) Presidential Decree No. 1956, as the vital role of oil in the national economy,
amended by Executive Order No. 137: any person or entity engaged in the oil
refinery business shall make a public offering
Provided, however, That in case full through the stock exchange of at least ten
deregulation is started by the President in percent (10%) of its common stock within a
exercise of the authority provided in this period of three (3) years from the effectivity
Section, the foregoing laws shall continue to of this Act or the commencement of its
be in force and effect with respect to LPG, refinery operations: Provided, That no single
regular gasoline and kerosene for the rest of person or entity shall be allowed to own more
the five (5)-month period. than five percent (5%) of the stock offering:
Provided, further, That any crude oil refining
Section 20. Jurisdiction on Pricing of Piped company and any stockholder thereof shall
Gas. – Section 3 of Executive Order No. 172, not acquire, directly or indirectly, any share of
is hereby amended to read as follows: stock offered by any other crude oil refining
company pursuant to his Section: Provided,
“SEC. 3. Jurisdiction, Powers and Functions finally, That any such company which made
of the Board. – The Board shall, upon proper the requisite public offering before the
notice and hearing, fix and regulate the rate of effectivity of this Act shall be exempted from
schedule or prices of piped gas to be charged the requirement.
by duly franchised gas companies which
distribute gas by means of underground pipe Section 23. Implementing Rules and
system.” Regulations. – The DOE, in coordination with
the Board, the DENR, DFA, Department of
CHAPTER VII Labor and Employment (DOLE), Department
FINAL PROVISIONS of Health (DOH), DOF, DTI, National Economic
and Development Authority (NEDA) and
Section 21. OPSF Balance. – All outstanding TLRC, shall formulate and issue the necessary
claims against OPSF as of the effectivity of implementing rules and regulations within
this Act, subject to the existing auditing sixty (60) days after the effectivity of this Act.
rules and regulations of the Commission on Section 24. Penal Sanction. – Any person who
Audit (COA), shall be considered as accounts violates any of the provisions of this Act shall
payable of the National Government. For suffer the penalty of three (3) months to one
this purpose, and any law to the contrary (1) year imprisonment and a fine ranging from
notwithstanding, the reimbursement Fifty thousand pesos (P 50,000.00) to Three
certificates issued by the DOE covering the hundred thousand pesos (P 300,000.00).
Section 25. Public Information Campaign. Section 29. Effectivity. – This Act shall take
– The DOE, in coordination with the Board effect upon its complete publication in at
and the Philippine Information Agency (PIA), least two (2) national newspapers of general
shall undertake an information campaign circulation.
to educate the public on the deregulation
program of the Industry. Approved,
Section 26. Budgetary Appropriations. (Sgd.) JOSE DE VENECIA, JR.

– Such amount as may be necessary to Speaker of the House of Representatives
effectively implement this Act shall be taken
by the DOE form its annual appropriations, (Sgd.) NEPTALI A. GONZALES
the DOE’ Special Fund created under Section President of the Senate
8 of Presidential Decree No. 910, as amended,
and such amount allocated under Section 10 This Act, which is a consolidation of the Senate
of this Act. Bill No. 2388 and House Bill No. 10363 was
finally passed by the Senate and the House of
Section 27. Separability Clause. – If, for any Representatives on February 6, 1998.
reason, any section or provision of this Act
is declared unconstitutional or invalid, such (Sgd.) ROBERTO P. NAZARENO
parts not affected thereby shall remain in full Secretary General
force and effect.
(Sgd.) REZEL P. GACUTAN
Section 28. Repealing Clause. – All laws, Secretary of the Senate
Presidential decrees, executive orders, House of Representatives
issuances, rules and regulations or parts
thereof, which are inconsistent with the Approved:
provisions of this Act are hereby repealed or 10 February 1998
immediately modified accordingly.
FIDEL V. RAMOS
President of the Philippines
RELATED CASES: The facts of the case are as follows:
Case No. 1: Upon the outbreak of the Persian Gulf conflict

on August 2, 1990, private respondents oil
Republic of the Philippines companies filed with the ERB their respective
SUPREME COURT applications on oil price increases (docketed
Manila as ERB Case Nos. 90-106, 90-382 and 90-384,
respectively).
EN BANC
On September 21, 1990, the ERB issued an
G.R. No. 96266 July 18, 1991 order granting a provisional increase of P1.42
per liter. Petitioner Maceda filed a petition
ERNESTO M. MACEDA, for Prohibition on September 26, 1990
petitioner, (E. Maceda v. ERB, et al., G.R. No. 95203),
vs. seeking to nullify the provisional increase.
We dismissed the petition on December 18,
ENERGY REGULATORY BOARD, ET.AL., 1990, reaffirming ERB’s authority to grant
Respondents. provisional increase even without prior
hearing, pursuant to Sec. 8 of E.O. No. 172,
G.R. No. 96349 July 18, 1991 clarifying as follows:
EUGENIO O. ORIGINAL, ET. AL., Petitioners, What must be stressed is that while
vs. under Executive Order No. 172, a
hearing is indispensable, it does not
ENERGY REGULATORY BOARD, ET. AL., preclude the Board from ordering, ex-
Respondents. parte, a provisional increase, as it did
here, subject to its final disposition
G.R. No. 96284 July 18, 1991 of whether or not: (1) to make it
permanent; (2) to reduce or increase it
CEFERINO S. PAREDES, JR., further; or (3) to deny the application.
Petitioner, Section 3, paragraph (e) is akin to a
vs. temporary restraining order or a writ
of preliminary attachment issued by
ENERGY REGULATORY BOARD, ET. AL., the courts, which are given ex-parte
Respondents. and which are subject to the resolution
of the main case.
RESOLUTION
Section 3, paragraph (e) and Section
MEDIALDEA, J.:p 8 do not negate each other, or
otherwise, operate exclusively of the
In G.R. No. 96266, petitioner Maceda seeks other, in that the Board may resort to
nullification of the Energy Regulatory Board one but not to both at the same time.
(ERB) Orders dated December 5 and 6, 1990 Section 3(e) outlines the jurisdiction of
on the ground that the hearings conducted the Board and the grounds for which
on the second provisional increase in oil it may decree a price adjustment,
subject to the requirements of notice
prices did not allow him substantial cross-
and hearing. Pending that, however,
examination, in effect, allegedly, a denial of
it may order, under Section 8, an
due process.
authority to increase provisionally,
without need of a hearing, subject to
the final outcome of the proceeding.
The Board, of course, is not prevented the Board’s wish that for purposes of
from conducting a hearing on the good order in the presentation of the
grant of provisional authority-which evidence considering that these are
is of course, the better procedure — being heard together, we will defer the
however, it cannot be stigmatized later cross-examination of applicant Caltex’s
if it failed to conduct one. (pp. 129- witness and ask the other applicants to
130, Rollo) (Emphasis supplied) present their evidence-in-chief so that
the oppositors will have a better Idea
In the same order of September 21, 1990, of what all of these will lead to because
authorizing provisional increase, the ERB set as I mentioned earlier, it has been
the applications for hearing with due notice traditional and it is the intention of
to all interested parties on October 16, 1990. the Board to act on these applications
Petitioner Maceda failed to appear at said on an industry-wide basis, whether to
hearing as well as on the second hearing on accept, reject, modify or whatever, the
October 17, 1990. Board will do it on an industry wide
basis, so, the best way to have (sic)
the oppositors and the Board a clear
To afford registered oppositors the
picture of what the applicants are
opportunity to cross-examine the witnesses,
asking for is to have all the evidence-
the ERB set the continuation of the hearing in-chief to be placed on record first and
to October 24, 1990. This was postponed then the examination will come later,
to November 5, 1990, on written notice of the cross-examination will come later.
petitioner Maceda. . . . (pp. 5-6, tsn., November 23, 1990,
ERB Cases Nos. 90-106, 90382 and 90-
On November 5, 1990, the three oil 384). (p. 162, Rollo)
companies filed their respective motions for
leave to file or admit amended/supplemental Petitioner Maceda maintains that this order
applications to further increase the prices of of proof deprived him of his right to finish his
petroleum products. cross-examination of Petron’s witnesses and
denied him his right to cross-examine each of
The ERB admitted the respective the witnesses of Caltex and Shell. He points
supplemental/amended petitions on out that this relaxed procedure resulted in
November 6, 1990 at the same time requiring the denial of due process.
applicants to publish the corresponding
Notices of Public Hearing in two newspapers We disagree. The Solicitor General has
of general circulation (p. 4, Rollo and Annexes pointed out:
“F” and “G,” pp. 60 and 62, Rollo).
. . . The order of testimony both with
Hearing for the presentation of the evidence- respect to the examination of the
in-chief commenced on November 21, 1990 particular witness and to the general
with ERB ruling that testimonies of witnesses course of the trial is within the
were to be in the form of Affidavits (p. discretion of the court and the exercise
6, Rollo). ERB subsequently outlined the of this discretion in permitting to be
procedure to be observed in the reception of introduced out of the order prescribed
evidence, as follows: by the rules is not improper (88 C.J.S.
206-207).
CHAIRMAN FERNANDO:
Such a relaxed procedure is especially
Well, at the last hearing, applicant true in administrative bodies, such as
Caltex presented its evidence-in-chief the ERB which in matters of rate or
and there is an understanding or it is price fixing is considered as exercising
a quasi-legislative, not quasi-judicial, (1) certified copies of bills of lading
function. As such administrative issued by crude oil suppliers to the
agency, it is not bound by the strict or private respondents; (2) reports of the
technical rules of evidence governing Bankers Association of the Philippines
court proceedings (Sec. 29, Public on the peso-dollar exchange rate at
Service Act; Dickenson v. United States, the BAP oil pit; and (3) OPSF status
346, U.S. 389, 98 L. ed. 132, 74 S. St. reports of the Office of Energy Affairs.
152). (Emphasis supplied) The ERB was likewise guided in the
determination of international crude
In fact, Section 2, Rule I of the Rules oil prices by traditional authoritative
of Practice and Procedure Governing sources of information on crude oil and
Hearings Before the ERB provides that: petroleum products, such as Platt’s
— Oilgram and Petroleum Intelligence
Weekly. (p. 158, Rollo)
These Rules shall govern pleadings,
practice and procedure before the Thus, We concede ERB’s authority to grant
Energy Regulatory Board in all matters the provisional increase in oil price, as We
of inquiry, study, hearing, investigation note that the Order of December 5, 1990
and/or any other proceedings within explicitly stated:
the jurisdiction of the Board. However,
in the broader interest of justice, the In the light, therefore, of the rise in
Board may, in any particular matter, crude oil importation costs, which as
except itself from these rules and earlier mentioned, reached an average
apply such suitable procedure as shall of $30.3318 per barrel at $25.551/US $
promote the objectives of the Order. in September-October 1990; the huge
(pp. 163-164, Rollo) OPSF deficit which, as reported by the
Office of Energy Affairs, has amounted
Petitioner Maceda also claims that there is no to P5.7 Billion (based on filed claims
substantial evidence on record to support the only and net of the P5 Billion OPSF)
provisional relief. as of September 30, 1990, and is
estimated to further increase to over
We have, in G.R. Nos. 95203-05, previously P10 Billion by end December 1990;
taken judicial notice of matters and events the decision of the government to
related to the oil industry, as follows: discontinue subsidizing oil prices in
view of inflationary pressures; the
. . . (1) as of June 30, 1990, the OPSF apparent inadequacy of the proposed
has incurred a deficit of P6.1 Billion; (2) additional P5.1 Billion government
the exchange rate has fallen to P28.00 appropriation for the OPSF and the
to $1.00; (3) the country’s balance sharp drop in the value of the peso
of payments is expected to reach $1 in relation to the US dollar to P28/
Billion; (4) our trade deficit is at P2.855 US $, this Board is left with no other
Billion as of the first nine months of the recourse but to grant applicants oil
year. companies further relief by increasing
the prices of petroleum products sold
. . . (p. 150, Rollo) by them. (p. 161, Rollo)
The Solicitor General likewise commented: Petitioner Maceda together with petitioner
Original (G.R. No. 96349) also claim that the
Among the pieces of evidence provisional increase involved amounts over
considered by ERB in the grant of the and above that sought by the petitioning oil
contested provisional relief were: companies.
The Solicitor General has pointed out that increases in Premium and Regular gasoline to
aside from the increase in crude oil prices, the levels mandated by the December 5, 1990
all the applications of the respondent oil Order (P6.9600 and P6.3900, respectively), as
companies filed with the ERB covered claims follows:
from the OPSF.
Product In Pesos Per Liter
We shall thus respect the ERB’s Order of OPSF
December 5, 1990 granting a provisional price Premium Gasoline 6.9600
increase on petroleum products premised on Regular Gasoline 6.3900
the oil companies’ OPSF claims, crude cost Avturbo 4.9950
peso differentials, forex risk for a subsidy Kerosene 1.4100
on sale to NPC (p. 167, Rollo), since the oil Diesel Oil 1.4100
companies are “entitled to as much relief as Fuel Oil/Feedstock 0.2405
the fact alleged constituting the course of LPG 1.2200
action may warrant,” (Javellana v. D.O. Plaza Asphalt 2.5000
Enterprises, Inc., G.R. No. L-28297, March 30, Thinner 2.5000
1970, 32 SCRA 261 citing Rosales v. Reyes, 25
Phil. 495; Aguilar v. Rubiato, 40 Phil. 470) as In G.R. No. 96349, petitioner Original
follows: additionally claims that if the price increase
will be used to augment the OPSF this will
Per Liter constitute illegal taxation. In the Maceda
Weighted case, (G.R. Nos. 95203-05, supra) this Court
Petron Shell Caltex Average has already ruled that “the Board Order
Crude Cost P3.11 P3.6047 P2.9248 P3.1523 authorizing the proceeds generated by
Peso Cost the increase to be deposited to the OPSF is
Diffn’l 2.1747 1.5203 1.5669 1.8123 not an act of taxation but is authorized by
Forex Risk Presidential Decree No. 1956, as amended by
Fee -0.1089 -0,0719 -0.0790 -0.0896 Executive Order No. 137.
Subsidy on
Sales to NPC 0.1955 0.0685 0.0590 0.1203 The petitions of E.O. Original et al. (G.R. No.
Total Price 96349) and C.S. Povedas, Jr. (G.R. No. 96284),
Increase insofar as they question the ERB’s authority
Applied for P59.3713 P5.1216 P4.4717 under Sec. 8 of E.O. 172, have become moot
P4.9954 and academic.
Less: September 21 Price
Relief We lament Our helplessness over this second
Actual Price Increase P1.42 provisional increase in oil price. We have
Actual Tax Reduction: stated that this “is a question best judged by
Ad Valorem Tax the political leadership” (G.R. Nos. 95203-
(per Sept. 1, 1990 05, G.R. Nos. 95119-21, supra). We wish
price build-up) P1.3333 to reiterate Our previous pronouncements
Specific Tax (per therein that while the government is able to
Oct. 5, 1990 price justify a provisional increase, these findings
build-up) .6264 .7069 2.1269 “are not final, and it is up to petitioners to
Net Price Increase demonstrate that the present economic
Applied for 2.8685 picture does not warrant a permanent
increase.”
Nonetheless, it is relevant to point out that
on December 10, 1990, the ERB, in response In this regard, We also note the Solicitor
to the President’s appeal, brought back the General’s comments that “the ERB is not
averse to the idea of a presidential review I regret that I cannot concur in the majority
of its decision,” except that there is no law opinion.
at present authorizing the same. Perhaps,
as pointed out by Justice Padilla, our In the matter of price increases of oil products,
lawmakers may see the wisdom of allowing which vitally affect the people, especially
presidential review of the decisions of the those in the middle and low income groups,
ERB since, despite its being a quasi-judicial any increase, provisional or otherwise, should
body, it is still “an administrative body under be allowed only after the Energy Regulatory
the Office of the President whose decisions Board (ERB) shall have fully determined,
should be appealed to the President under through bona fide and full-dress hearings, that
the established principle of exhaustion of it is absolutely necessary and by how much it
administrative remedies,” especially on a shall be effected. The people, represented by
matter as transcendental as oil price increases reputable oppositors, deserve to be given full
which affect the lives of almost all Filipinos. opportunity to be heard in their opposition
to any increase in the prices of fuel. The right
ACCORDINGLY, the petitions are hereby to be heard includes not only the right to
DISMISSED. present one’s case and submit evidence in
support thereof, but also the right to confront
SO ORDERED. and cross-examine the witnesses of the
adverse parties.
Narvasa, Melencio-Herrera, Feliciano,
Gancayco, Bidin, Griño-Aquino and Regalado, Because of the procedure adopted by the ERB
JJ., concur. in the reception of evidence leading to the
price increases of 5 and 6 December 1990,
Davide, J., concurs in the result. petitioner Maceda was not able to finish his
cross-examination of Petron’s sole witness.
Fernan, C.J., took no part. And, even before each of the witnesses of
Shell and Caltex could be cross-examined by
Separate Opinions petitioners and before they could present
evidence in support of their opposition to
PARAS, J., dissenting: the increase, the ERB had already issued its 5
December 1990 order allowing a “provisional
I dissent. As I have long previously indicated, increase” sought by the oil companies in their
the ERB has absolutely no power to tax which respective supplemental applications.
is solely the prerogative of Congress. This is
what the ERB is precisely doing by getting That there were postponements of scheduled
money from the people to ultimately subsidize hearings before the ERB, at the instance of
the ravenous oil companies. Additionally, the oppositor Maceda, did not justify a denial
stubborn refusal of the ERB to effectively of the right of oppositors to be heard. The
rollback oil prices is a continuing bestial insult postponements were not intended to delay
to the intelligence of our countrymen, and the proceedings. In fact, the resetting of the
a gross abandonment of the people in their scheduled hearings on November 14, 15 and
hour of economic misery. I therefore vote 16 to a later date, upon motion of petitioner
for a complete and effective rollback of all oil Maceda, was to enable him to file a written
prices. opposition to the supplemental applications
filed by the oil companies.
Cruz, J., concurs.
The ERB acted hastily in granting the
PADILLA, J., dissenting: provisional increases sought by the oil
companies even before the oppositors cope with their prices with “built-in-margins”.
could submit evidence in support of their A reduction of profits during these crucial and
opposition. The fact that the questioned trying times, is certainly in order considering
orders merely allowed a provisional increase that in the past, the oil companies had
is beside the point, for past experiences have unquestionably made tremendous profits.
shown that so-called provisional increases”
allowed by the ERB ultimately became In view of the foregoing, I vote to GRANT the
permanent. petition for the nullification of the 5 and 6
December 1990 orders of the ERB and for a
ERB’s claim that the second provisional roll-back of the prices of oil products to levels
increase was duly supported by evidence, is existing before 5 and 6 December 1990 until
belied by its own act of modifying said order (of hearings before the ERB are finally concluded.
provisional increase) not only once but twice,
upon the “request” of the President. First, the Before closing, I also would like to submit for
ERB rolled back the prices of fuel just a day congressional consideration two (2) proposals
after it issued the questioned order, altering in the public interest. They are:
the allocation of the increase. Second, on 10
December 1990, the ERB further modified (1) to do away with the present scheme of
the price of petroleum products resulting in allowing provisional price increases of
reduction of the weighted average provisional oil products. This scheme, to my mind,
increase from P2.82 to P2.05 per liter, but is misleading and serves as an excuse
only after the President had announced that for unilateral and arbitrary ERB-action.
she would meet with the leaders of both As already noted, these provisional price
Houses of Congress, to discuss the creation increases are, to all intents and purposes,
of a special fund to be raised from additional permanent when fixed. To that extent,
taxes, to subsidize the prices of petroleum the scheme is a fraud on the people.
products. 1
(2) all decisions and orders of the ERB should
These acts of the ERB ostensibly sparked by be expressly made appealable by statute
“presidential requests” clearly demonstrate to the President of the Philippines whose
that the evidence did not, in the first place, decisions shall be final, except in cases
justify the price increases it had ordered on involving questions of law or grave abuse
5 and 6 December 1990. Furthermore, the of discretion which may be elevated to
ERB never came out with a categorical and the Supreme Court in a special civil action
official declaration of how much was the for certiorari under Rule 65 of the Rules
so-called deficit of the Oil Price Stabilization of Court.
Fund (OPSF) and how much of the oil price
increases was intended to cover such deficit. While at present, decisions and orders of the
ERB are, in my considered opinion, appealable
In the midst of a national crisis related to oil to the President under the principle of
price increases, each and every one is called “exhaustion of administrative remedies”, it is
upon to assume his/its share of continuing nevertheless desirable that the appealability
sacrifices. The public, the government, as well of ERB decisions and orders to the President
as the oil companies should work hand in hand be placed beyond any and all doubts. In
in solving the present problem that confronts this way, the President of the Philippines
us. We are not unmindful of the fact that the has to assume full responsibility for all price
oil companies are profit-oriented. However, increases in oil products, which should be the
profits should not be their only concern in case because the matter involved is not only
times of deepening inability of the people to one of national interest but profoundly one of
people’s survival.
Gutierrez, Jr. and Cruz, JJ., concur. The Government intends to continue
with the floating exchange rate
SARMIENTO, J., separate opinion: system established in October 1984
...3
I would like to point out a few things in view
of the majority’s reliance on the first Maceda Since exchange control was abolished and
case. 1 the floating rate system was established,
the Philippine peso has seen a series of
The first Maceda case was a challenge on devaluations that have progressively pushed
provisional oil price increases decreed by the up prices, significantly, prices of petroleum.
Energy Regulatory Board (ERB). This Court According to one authority, devaluation has
sustained the Board, as it is sustaining the been a “standard prescription” to correct
Board in this case, on a few economic outputs, balance of payments (BOP) deficits. 4 It
namely, the Oil Price Stabilization Fund (OPSF) makes dollars expensive, discourages import
deficit, the deteriorating exchange rate, and and encourages exports, and forces dollars
the balance of payments and trade gaps. conservation. 5
As I held in my dissent in yet another Maceda It is a matter of opinion whether or not

case, Maceda v. Macaraig, 2 the current oil devaluation has been good for the country
price increases were (are) also the result and whether or not it has realized these
of the devaluation of the currency, since a objectives. The truth is that, whatever it has
devalued peso forced oil companies to pay accomplished, oil — which is imported — has
more pesos for oil worth in dollars. been subject to the effects of devaluation.
I simply wish to state what has apparently Early this year, Governor Jose Cuisia of the
been left unstated in the course of debate Central Bank, Secretary Jesus Estanislao of
and perhaps, the real score behind recurring the Department of Finance, and Secretary
oil price hikes and why the ERB has been very Guillermo Carague of the Budget and
quick in granting them. Management Department, wrote Mr. Michael
Camdessus of the International Monetary
The truth is that petroleum prices have been Fund (the letter of intent) and informed
dictated by the Government’s economic him of the country’s “Economic Stabilization
maneuvers, and not rather the vagaries of Plan, 1991-92”. The Plan recognized certain
the world market. The truth is that the recent economic imbalances that have supposedly
oil hikes have nothing to do with Saddam inhibited growth, in particular, inflation and
Hussein or the Gulf crisis (during which oil an increasing balance of payments deficit,
prices in fact dropped) and are, rather, the and drew a program centered on “a strong
natural consequences of calculated moves by effort to bring down the overall fiscal deficit
the Government in its effort to meet so-called “through, among other things, “the gradual
International Monetary Fund (IMF) targets. elimination of the deficit of the Oil Price
Stabilization Fund.” 6 It spelled out, among
In 1989, the Government of the Republic of other things, a “[r]estoration of a sustainable
the Philippines submitted its letter of intent external position requir[ing] the continuation
to the IMF outlining the country’s economic of a flexible exchange rate policy . . . “ 7 and
program from 1989 through 1992. In its 3
Memorandum on Economic Policy of the Government of the
paragraph 19, it states that: Phils, March 6, 1989, Bulletin Today, March 15, 1989, p. 35, col. 5.
4
Henares, Hilarion, “Devaluation, the last resort,” Bulletin Today,
June 1, 1984.
5
Id.
6
Memorandum on Philippine Economic Stabilization Plan; 1991-
Padilla Dissenting 92, February, 1991, Daily Globe February 4, 1991, p. 10.
1
Comment by Public Respondent ERB, Rollo, p. 152. Sarmiento 7
Id., emphasis supplied.
described in detail an “Oil Price and Energy measures; and (ii) the elimination of
Policy” focused on wiping out the OPSF distortions in every resource allocation
deficit, to wit: through appropriate pricing policies. 8
xxx xxx xxx xxx xxx xxx
A substantial erosion in the overall As I said, Philippine oil prices today have
fiscal position occurred in 1989 and nothing to do with the law on supply and
1990 as a result of official price support demand, if they had anything to do with
for oil products provided through the it in recent years. (I also gather that the
OPSF. Despite a lowering of the excise Government is intending to re-adjust the
tax on oil in September 1990 and prices of gasoline and diesel fuel soon
average domestic oil price increases since apparently, low diesel prices have
of about 30 percent in September reduced the demand for gasoline resulting in
and 32 percent in December 1990, “distortions”.)
the fund continued to incur a deficit
during the second half of 1990. The
As the Court held in the first Maceda v. Energy
cumulative OPSF deficit (excluding
Regulatory Board, 9 oil pricing “is a question
unfiled claims) at end December 1990
best judged by the political leadership” and
is estimated at P8.8 billion, and this
deficit will rise in the first part of 1991.
oil prices are (and have been apparently),
However the cumulative OPSF deficit political, rather than economic, decisions.
is to be eliminated by the end of the
third quarter of 1991. To this end, I am not to be mistaken as accepting the
the Government intends to follow a “letter of intent” as a correct prescription ––
pricing policy that ensures attainment much less a necessary medicine — although
of zero balance within the specific I will be lacking in candor if I did not say that
time. In particular, the Government it is a bitter pill to swallow. What I must be
will maintain present price levels understood as saying is that “oil” is a political
despite projected world price declines. card to be played on a political board rather
In addition, a budgetary transfer of than the courts, so long, of course, as nobody
P5 billion will be provided in 1991 to has done anything illegal.
settle outstanding claim of the OPSF.
The “politics of oil” as spelled out in the
15. Full deregulation of oil prices Government’s letter of intent likewise bring
continues to be an important objective to light the true nature of the ERB Under
of the Government once calm has the Memorandum on Philippine Economic
been restored to world oil markets. Stabilization Plan:
Meanwhile the technical and legal
groundwork is being laid with a view to
xxx xxx xxx
full deregulation as soon as practicable.
In the past, energy prices had been
16. The principal objectives of the
set to broadly reflect the average
Government’s policy in the energy
cost of supply. However, the lack of
sector are: (i) the development of
transparency of the pricing mechanism
economically viable indigenous energy
and subsidization of consumption
resources, mainly thermal, geothermal
have increasingly become a cause
and hydro-electric power, together
for concern. To alleviate some of
with ensuring adequate maintenance
these problems, in mid-1987, the
of existing facilities; (ii) promoting
more efficient use of energy resources 8
Id., emphasis supplied.
through various energy conservation 9
Supra, see fn. 1.
Government established the Energy a hearing thereafter was necessary only to
Regulatory Board (ERB) a quasi- see whether or not the ERB determined the
judicial body empowered with the rates correctly.
setting and regulation of the pricing
of petroleum products and electricity This likewise brings to light the necessity for
tariffs, the regulation of additions an ERB to fix rates since it does not, after
to oil refining capacity, and the all, fix (meaning decide) rates but merely
regulation of importing, transporting, announces their imminence on demonstrable
processing and distributing all energy
figures of higher rates. The Court, however,
resources. (Petroleum pricing policy
cannot question the wisdom of a statute and
is described in paragraphs 14 and 15.)
after all, I suppose the Government can make
In addition to the full pass-through of
changes in oil prices to power tariffs,
use of an accountant.
the Government is committed to the
adoption of longrun marginal cost I agree with Justice Padilla insofar as he refers
pricing for electricity. To this end, NPC to the “present scheme of allowing provisional
intends to introduce a marginal cost price increase” as a “scheme [to defraud]
imported-has tariff structure to ensure the people.” I would like to go further. As I
that it meets its target of achieving a indicated the ERB does no more than to punch
rate of return of eight percent on its calculators for the Government-which decides
rate base. 10 oil price increases. The comedy of December,
1990, when the Board adjusted prices in a
It is apparent that the Board, in spite of matter of days, is a confirmation of this point.
its “independence” (from the Office of As Justice Padilla noted, the re-adjustment
the President), is bound by the terms of of December 10, 1990 was in fact prompted
the program and that it has, after all, no by “presidential requests” which does not
genuine discretion to deny requests for price speak well of the Board’s independence
adjustments by oil companies. I seriously and which in fact bares the truth as to who
doubt whether or not it is possessed of that really makes the decision. (The readjustment,
discretion judging, first, from its performance consisting in the reduction in diesel fuel and a
since 1987 (in which it has not overruled the corresponding increase in gasoline, sought to
Government on “oil cases”) and the fact that mollify the indignation of the public.)
the exchange rate, the balance of payment
deficit, and the OPSF deficiency are matters I agree with Justice Padilla that it amounts
of simple arithmetic. to fraud on the people to make them believe
that the ERB can give them a fair hearing,
And certainly, the Board cannot possibly indeed, if it can do anything at all.
overrule the Government’s “letter of intent.”
I agree, finally, with Justice Padilla that the
The first Maceda case sustained the grant of nation is one in crisis, and evidently, the
provisional price increases ex parte not only “ravenous” oil companies Justice Paras refers
because Section 8 of Executive Order No. to, have not helped any. I submit, however,
172 authorized the grant of provisional relief that we have not succeeded in fingering
without a hearing but because fluctuations the real villain the letter of intent. Saddam’s
in the foreign exchange rates, for instance, Middle East folly has nothing to do with that.
were, and are, a matter of judicial notice, and
Memorandum on Philippine Economic Stabilization Plan, Id.

10
Case No. 2: Private respondent Petroleum Distributors
and Service Corporation (PDSC) owns and
Republic of the Philippines operates a Caltex service station at the corner
SUPREME COURT of the MIA and Domestic Roads in Pasay City.
Manila
FIRST DIVISION On June 30, 1983, Shell filed with the

G.R. No. 113079 quondam Bureau of Energy Utilization (BEU)
an application for authority to relocate its Shell
April 20, 2001 Service Station at Tambo, Parañaque, Metro
Manila, to Imelda Marcos Avenue of the same
ENERGY REGULATORY BOARD, petitioner, municipality. The application, which was
vs. COURT OF APPEALS and PETROLEUM docketed as BEU Case No. 83-09-1319, was
DISTRIBUTORS AND SERVICES CORPORATION, initially rejected by the BEU because Shell’s
respondents. old site had been closed for five (5) years
such that the relocation of the same to a new
G.R. No. 114923 site would amount to a new construction of a
gasoline outlet, which construction was then
April 20, 2001 the subject of a moratorium. Subsequently,
however, BEU relaxed its position and gave
PILIPINAS SHELL PETROLEUM CORPORATION, due course to the application.
petitioner, vs. COURT OF APPEALS and
PETROLEUM DISTRIBUTORS AND SERVICES PDSC filed an opposition to the application
CORPORATION, respondents. on the grounds that: (1) there are adequate
service stations attending to the motorists’
requirements in the trading area covered by
DECISION
the application; (2) ruinous competition will
result from the establishment of the proposed
YNARES-SANTIAGO, J.:
new service station; and (3) there is a decline
not an increase in the volume of sales in the
The propriety of building a state-of-the-art
area. Two other companies, namely Petrophil
gasoline service station along Benigno Aquino,
and Caltex, also opposed the application on
Jr. Avenue in Parañaque, Metro Manila is the
the ground that Shell failed to comply with
bone of contention in these consolidated
the jurisdictional requirements.
petitions for certiorari under Rule 45 of the

Rules of Court. Petitioners assert that the
In a Resolution dated March 6, 1984, the BEU
construction of such a modern edifice is a
dismissed the application on jurisdictional
necessity dictated by the “emerging economic
grounds and for lack of “full title” of the lessor
landscapes.” Respondents say otherwise.
over the proposed site. However, on May 7,

1984, the BEU reinstated the same application
The factual antecedents of the case
and thereafter conducted a hearing thereon.
are matters of record or are otherwise

uncontroverted.
On June 3, 1986, the BEU rendered a decision

denying Shell’s application on a finding that
Petitioner Pilipinas Shell Petroleum
there was “no necessity for an additional
Corporation (Shell) is engaged in the business
petroleum products retail outlet in Imelda
of importing crude oil, refining the same and
Marcos Avenue, Parañaque.” Dissatisfied,
selling various petroleum products through
Shell appealed to the Office of Energy Affairs
a network of service stations throughout the
(OEA).
country.

Meanwhile, on May 8, 1987, Executive Order appearing in the vicinity map
No. 172 was issued creating the Energy previously submitted to the
Regulatory Board (ERB) and transferring to it Board within one (1) year, from
the regulatory and adjudicatory functions of the finality of this Decision
the BEU. and thereafter submit a sworn
document of compliance
On May 9, 1988, the OEA rendered a decision therewith;
denying the appeal of Shell and affirming the
BEU decision. Shell moved for reconsideration (2) Submit photographs showing
and prayed for a new hearing or the remand the left side, right side and
of the case for further proceedings. In a front view of the retail outlet
supplement to said motion, Shell submitted a within fifteen (15) days from
new feasibility study to justify its application. completion of the construction
work;
The OEA issued an order on July 11, 1988,
remanding the case to the ERB for further (3) Submit to the Board a report on
evaluation and consideration, noting therein the total volume of petroleum
that the “updated survey conducted by products sold each month
Shell” cited new developments such as the during the first six (6) months of
accessibility of Imelda Marcos Avenue, now the operation of the station. The
Benigno Aquino, Jr. Avenue, to Parañaque report shall be submitted in the
residents along Sucat Road and the population form of an affidavit within ten
growth in the trading area. (10) days after the end of the six-
month period;
After the records of BEU Case No. 83-09-
1319 was remanded to the ERB, Shell filed (4) Inform the Board in writing and
on March 3, 1989 an amended application, the general public through a
intended for the same purpose as its original notice posted conspicuously
application, which was docketed as ERB Case within the premises of the
No. 89-57. This amended application was station of the (a) intention of
likewise opposed by PDSC. applicant or its dealer to stop
operation of the retail outlet for
On September 17, 1991, the ERB rendered a period longer than ninety (90)
a Decision allowing Shell to establish the days; or (b) notice of shutdown
service station in Benigno Aquino, Jr. Avenue. of operation of the retail outlet
The dispositive portion of the Decision reads: that will likely extend beyond
thirty (30) days. Such notice
WHEREFORE, premises considered, must be given fifteen (15) days
the application for authority to before the actual cessation of
relocate a Shell service station from operations in the case of (a) and
Tambo to Benigno Aquino Avenue, in the case of (b) within the first
Parañaque, Metro Manila is hereby five (5) days of an unplanned
approved. stoppage of operations.

Applicant is hereby directed to: SO ORDERED.

(1) Start the construction and PDSC filed a motion for reconsideration of
operation of the retail outlet the foregoing Decision. The motion was,
at the actual approved site however, denied by ERB in an Order dated
February 14, 1992.
Aggrieved, PDSC elevated its cause on April No. 27661, in a petition for review filed with
1, 1992 to the Court of Appeals, where the the Court of Appeals, where the same was
same was docketed as CA-G.R. SP No. 27661. docketed as CA-G.R. SP No. 29099.

Thereafter, in a Decision dated November 8, Subsequently, the appellate court’s Sixteenth
1993,[i][1] the appellate court’s Tenth Division Division dismissed PDSC’s petition in a
reversed the ERB judgment thus: Decision dated May 14, 1993.[iv][4]

WHEREFORE, the challenged As grounds for the petition in the instant case,
Decision dated September 17, 1991, ERB asserts that –
as well as the Order dated February
14, 1992, both of the respondent (1) THE EVIDENCE UPON WHICH THE ERB
Energy Regulatory Board in ERB Case BASED ITS DECISION IS NEITHER STALE
No. 89-57, are hereby REVERSED NOR IRRELEVANT AND THE SAME
and SET ASIDE. Correspondingly, the JUSTIFIES THE ESTABLISHMENT OF THE
application of respondent Pilipinas PROPOSED PETROLEUM OUTLET.
Shell Petroleum Corporation to
construct and operate the petroleum (2) THE EVIDENCE PRESENTED BY APPLICANT
retail outlet in question is DENIED. SHELL REGARDING VEHICLE VOLUME
AND FUEL DEMAND SUPPORTS THE
SO ORDERED. CONSTRUCTION OF THE PROPOSED
OUTLET.
A motion for reconsideration was denied by
the Court of Appeals in a Resolution dated (3) THE ESTABLISHMENT OF THE SERVICE
6 April 1994.[ii][2] Dissatisfied, both Shell and STATION WILL NOT LEAD TO RUINOUS
ERB elevated the matter to this Court by COMPETITION.
way of these petitions, which were ordered
consolidated by the Court in a Resolution For its part, Shell avers that –
dated July 25,1994.[iii][3]
I.
It appears, however, from the record that even
as the proceedings in CA-G.R. SP No. 27661 THE HONORABLE COURT OF APPEALS
were pending in the appellate court, Caltex GRAVELY ERRED IN MAKING FINDINGS OF
filed on January 24, 1992 a similar application FACTS CONTRARY TO THOSE OF THE ENERGY
for the construction of a service station in REGULATORY BOARD WHOSE FINDINGS
the same area with the ERB, docketed as WERE BASED ON SUBSTANTIAL EVIDENCE.
ERB Case No. 87-393. This application was
likewise opposed by respondent PDSC, citing II.
the same grounds it raised in opposing Shell’s
application in ERB Case No. 89-57. THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN FINDING THAT
In the aforesaid case, petitioner ERB THE FEASIBILITY STUDY SUPPORTING
thereafter rendered a Decision dated June 19, PETITIONER’S APPLICATION TO CONSTRUCT
1992 approving the application of Caltex. This A SERVICE STATION BEFORE THE ENERGY
ERB Decision was challenged by PDSC, again REGULATORY BOARD HAS BECOME
on the same grounds it raised in CA-G.R. SP “IRRELEVANT” FOR HAVING BEEN PRESENTED
IN EVIDENCE ABOUT TWO (2) YEARS AFTER IT
WAS PREPARED.
[i][1]
G.R. No. 114923 Rollo, pp. 37-46.
[ii][2]2
Ibid., pp. 48-50.
[iii][3]
G.R. No. 113079 Rollo, p. 75. [iv][4]
Ibid., p. 21.
III. The policy of the government in this regard
has been to allow a free interplay of market
THE HONORABLE COURT OF APPEALS forces with minimal government supervision.
GRAVELY ERRED IN PASSING JUDGMENT The purpose of governing legislation is to
AND MAKING PRONOUNCEMENTS ON liberalize the downstream oil industry in
PURELY ECONOMIC AND POLICY ISSUES ON order to ensure a truly competitive market
PETROLEUM BUSINESS WHICH ARE WITHIN under a regime of fair prices, adequate and
THE REALM OF THE ENERGY REGULATORY continuous supply, environmentally clean
BOARD WHICH HAS A RECOGNIZED EXPERTISE and high-quality petroleum products.[v]
IN OIL ECONOMICS. [5]
Indeed, exclusivity of any franchise has
not been favored by the Court,[vi][6] which is
IV. keen on promoting free competition and the
development of a free market consistent with
THE HONORABLE COURT OF APPEALS the legislative policy of deregulation as an
GRAVELY ERRED IN FINDING THAT THE answer to the problems of the oil industry.[vii]
PROPOSED SERVICE STATION OF PETITIONER [7]
WOULD POSE RUINOUS COMPETITION TO

PRIVATE RESPONDENT’S SERVICE STATION The Court finds the petitions impressed with
BASED MAINLY ON EVIDENCE SUBMITTED merit.
FOR THE FIRST TIME WITH THE SAID COURT
AND WITHOUT CONDUCTING A HEARING The interpretation of an administrative
THEREON. government agency like the ERB, which is
tasked to implement a statute, is accorded
V. great respect and ordinarily controls the
construction of the courts.[viii][8] A long line
ASSUMING THE HONORABLE COURT OF of cases establish the basic rule that the
APPEALS HAS THE POWER TO CONSIDER courts will not interfere in matters which
NEW EVIDENCE PRESENTED FOR THE FIRST are addressed to the sound discretion of
TIME BEFORE SAID COURT, IT SHOULD HAVE government agencies entrusted with the
REFERRED SUCH MATTER TO THE ENERGY regulation of activities coming under the
REGULATORY BOARD UNDER THE DOCTRINE special technical knowledge and training of
OF PRIOR RESORT OR PRIMARY JURISDICTION. such agencies.[ix][9] More explicitly –

The issues raised by the parties in these Generally, the interpretation of an
consolidated cases bring to the fore the administrative government agency, which is
necessity of rationalizing or reconciling tasked to implement a statute, is accorded
two apparently conflicting decisions of the great respect and ordinarily controls the
appellate court on the propriety of building construction of the courts.[x][10] The reason
gasoline service stations along Benigno behind this rule was explained in Nestle
Aquino, Jr. Avenue in Parañaque, Metro Philippines, Inc. vs. Court of Appeals,[xi][11] in
Manila. Considering that the questions raised this wise:
concern within the oil industry, whose impact
on the nation’s economy is pervasive and
far-reaching, the Court is constrained to look [v][5]
Garcia vs. Corona, 321 SCRA 218 [1999], Concurring
Opinion of Mr. Justice Quisumbing, p. 263.
into the policy and purposes of its governing [vi][6]
NPC vs. CA, 279 SCRA 506 [1997].
[vii][7]
Garcia vs. Corona, supra, pp. 229, 231.
statutes to resolve this dilemma. [viii][8]
Republic vs. Sandiganbayan, 293 SCRA 440 [1998]
[ix][9]
First Lepanto Ceramics, Inc. vs. Court of Appeals, 253 SCRA
552 [1996], citing Ysmael, Jr. & Co. vs. Deputy Executive
Secretary, 190 SCRA 673 [1990].
[x][10]
Nestle Philippines, Inc. vs. Court of Appeals, 203 SCRA 504
[1991], citing In re Allen, 2 Phil. 630 [1903].
[xi][11]
Ibid., pp. 510-511.
“The rationale for this rule relates statement of policy, it merely interprets
not only to the emergence of a pre-existing law and the administrative
the multifarious needs of a interpretation is at best advisory for it is
modern or modernizing society the courts that finally determine what the
and the establishment of diverse law means.[xvi][16] Thus, an action by an
administrative agencies for administrative agency may be set aside by the
addressing and satisfying those judicial department if there is an error of law,
needs; it also relates to the abuse of power, lack of jurisdiction or grave
accumulation of experience and abuse of discretion clearly conflicting with
growth of specialized capabilities by the letter and spirit of the law.[xvii][17]
the administrative agency charged
with implementing a particular However, there is no cogent reason to depart
statute. In Asturias Sugar Central, from the general rule because the findings of
Inc. v. Commissioner of Customs,[xii] the ERB conform to, rather than conflict with,
[12]
the Court stressed that executive the governing statutes and controlling case
officials are presumed to have law on the matter.
familiarized themselves with all
the considerations pertinent to the Prior to Republic Act No. 8479, the
meaning and purpose of the law, downstream oil industry was regulated by
and to have formed an independent, the ERB and from 1993 onwards, the Energy
conscientious and competent expert Industry Regulation Board. These regulatory
opinion thereon. The courts give bodies were empowered, among others,
much weight to the government to entertain and act on applications for the
agency or officials charged with the establishment of gasoline stations in the
implementation of the law, their Philippines. The ERB, which used to be the
competence, expertness, experience Board of Energy (BOE), is tasked with the
and informed judgment, and the fact following powers and functions by Executive
that they frequently are drafters of Order No. 172, which took effect immediately
the law they interpret.” after its issuance on May 8, 1987:

As a general rule, contemporaneous SEC. 3. Jurisdiction, Powers and
construction is resorted to for certainty and Functions of the Board. – When
predictability in the laws,[xiii][13] especially warranted and only when public
those involving specific terms having technical necessity requires, the Board may
meanings. regulate the business of importing,
exporting, re-exporting, shipping,
However, courts will not hesitate to set aside transporting, processing, refining,
such executive interpretation when it is clearly marketing and distributing energy
erroneous, or when there is no ambiguity resources. Xxx
in the rule,[xiv][14] or when the language or
words used are clear and plain or readily The Board shall, upon prior notice
understandable to any ordinary reader.[xv][15] and hearing, exercise the following,
among other powers and functions:
Stated differently, when an administrative
agency renders an opinion or issues a (a) Fix and regulate the prices of
petroleum products;
29 SCRA 617 [1969].
[xii][12]
[xiii][13]
Lim Hoa Ting vs. Central Bank of the Philippines, 104 Phil.
573 [1958], citing Erwin N. Griswold of Harvard Law School.
[xvi][16]
Peralta vs. Civil Service Commission, 212 SCRA 425 [1992],
[xiv][14]
Divinagracia, Jr. vs. Sto. Tomas, 244 SCRA 595 [1995]. citing Victorias Milling Co., Inc. vs. SSS, 114 Phil. 555
[xv][15]
Melendres, Jr. vs. Comelec, 319 SCRA 262 [1999], citing [1962].
Leveriza vs. IAC, 153 SCRA 282 [1988].
[xvii][17]
Ibid., citing Sagun vs. PHHC, 162 SCRA 411 [1988].
(b) Fix and regulate the rate countries have seriously considered and
schedule or prices of piped gas extensively adopted various measures
to be charged by duly franchised for this purpose. The country has been
gas companies which distribute no exception. Indeed, the buzzwords of
gas by means of underground the third millennium are “deregulation”,
pipe systems; “globalization” and “liberalization.”[xix][19] It
need not be overemphasized that this trend
(c) Fix and regulate the rates of is reflected in our policy considerations,
pipeline concessionaires under statutes and jurisprudence. Thus, in Garcia v.
the provisions of Republic Act Corona,[xx][20] the Court said:
No. 387, as amended, otherwise
know as the ‘Petroleum Act R.A. 8479, the present deregulation
of 1949,’ as amended by law, was enacted to implement
Presidential Decree No. 1700; Article XII, Section 19 of the
Constitution which provides:
(d) Regulate the capacities of
new refineries or additional The State shall regulate or prohibit
capacities of existing refineries monopolies when the public interest
and license refineries that may so requires. No combinations
be organized after the issuance in restraint of trade or unfair
of this Executive Order, under competition shall be allowed.
such terms and conditions as
are consistent with the national
interest; This is so because the Government
believes that deregulation will
(e) Whenever the Board has eventually prevent monopoly. The
determined that there is a simplest form of monopoly exists
shortage of any petroleum when there is only one seller or
product, or when public interest producer of a product or service for
so requires, it may take such steps which there are no substitutes. In
as it may consider necessary, its more complex form, monopoly
including the temporary is defined as the joint acquisition
adjustment of the levels of or maintenance by members of a
prices of petroleum products conspiracy, formed for that purpose,
and the payment to the Oil Price of the power to control and dominate
Stabilization Fund created under trade and commerce in a commodity
Presidential Decree No. 1956 by to such an extent that they are able,
persons or entities engaged in as a group, to exclude actual or
the petroleum industry of such potential competitors from the field,
amounts as may be determined accompanied with the intention and
by the Board, which will enable purpose to exercise such power.[xxi][21]
the importer to recover its costs
of importation.xviii[18] xxx xxx xxx xxx

A distinct worldwide trend towards economic It bears reiterating at the outset that
deregulation has been evident in the past deregulation of the oil industry is
decade. Both developed and developing policy determination of the highest
[xix][19]
Garcia vs. Corona, supra; See Separate Opinion of Mr.
[xviii][18]
R.A. No. 7638 has since transferred the non-price Justice Panganiban.
regulatory jurisdiction, powers and functions of the ERB to [xx][20]
Ibid.
the Department of Energy. [xxi][21]
American Tobacco Co. vs. U.S., 328 U.S. 781; 90 L Ed. 1575.
order. It is unquestionably a priority with appropriateness that there is a
program of Government. The reliance upon “the operation of the
Department of Energy Act of 1992[xxii] ‘market’ system (free enterprise) to
[22]
expressly mandates that the decide what shall be produced, how
development and updating of the resources shall be allocated in the
existing Philippine energy program production process, and to whom
“shall include a policy direction various products will be distributed.
towards deregulation of the power The market system relies on the
and energy industry.” consumer to decide what and how
much shall be produced, and on
xxx xxx xxx xxx competition, among producers who
will manufacture it.”[xxiv][24]
Our ruling in Tatad[xxiii][23] is categorical that
the Constitution’s Article XII, Section 19, is Tested against the foregoing legal yardsticks,
anti-trust in history and spirit. It espouses it becomes readily apparent that the reasons
competition. We have stated that only relied upon by the appellate court in rejecting
competition which is fair can release the petitioner’s application to set up a gasoline
creative forces of the market. We ruled service station becomes tenuous. This is
that the principle which underlies the especially clear in the face of such recent
constitutional provision is competition. developments in the oil industry, in relation
Thus: to controlling case law on the matter recently
promulgated to address the legal issues
Section 19, Article XII of our spawned by these events. In other words,
Constitution is anti-trust in history recent developments in the oil industry as well
and spirit. It espouses competition. as legislative enactments and jurisprudential
The desirability of competition is the pronouncements have overtaken and
reason for the prohibition against rendered stale the view espoused by the
restraint of trade, the reason for the appellate court in denying Shell’s application
interdiction of unfair competition, to put up the gasoline station.
and the reason for regulation
of unmitigated monopolies. In reversing the ERB, the Court of Appeals
Competition is thus the underlying first avers in sum that there is no substantial
principle of Section 19, Article XII evidence to support ERB’s finding of public
of our Constitution which cannot necessity to warrant approval of Shell’s
be violated by R.A. No. 8180. We application.
subscribe to the observation of Prof.
Gellhorn that the objective of anti- The Court disagrees.
trust law is “to assure a competitive
economy based upon the belief that On the contrary, the record discloses that the
through competition producers will ERB Decision approving Shell’s application
strive to satisfy consumer wants at in ERB Case No. 89-57 was based on hard
the lowest price with the sacrifice of economic data on developmental projects,
the fewest resources. Competition residential subdivision listings, population
among producers allows consumers count, public conveyances, commercial
to bid for goods and services and, establishments, traffic count, fuel demand,
thus matches their desires with growth of private cars, public utility vehicles
society’s opportunity costs.” He adds and commercial vehicles, etc.,[xxv][25] rather
[xxii][22]
R.A. No. 7638.
[xxiv][24]
Id., p. 358, citing Gellhorn, Anti Trust Law and Economics in
[xxiii][23]
Tatad vs. Secretary of the Department of Energy, 281 SCRA a Nutshell, 1986 ed. p. 45.
330 [1997].
[xxv][25]
G.R. No. 114923 Rollo, pp. 122-147.
than empirical evidence to support its annum and presumably expects to
conclusions. In approving Shell’s application, make a corresponding profit thereof.
the ERB made the following factual findings Oppositor PDSC, on the other hand,
and, on the basis thereof, justified its ruling with its lone Caltex Service Station,
thus: expects to suffer income loss even
with a projected volume of 600,000
In evaluating the merits of the to 800,000 liters per month (Exhibit
application, the first question that 5).
comes to mind is whether there
is indeed an increase in market Considering this premise, it should
potential from the time this very be noted that the Board is tasked to
same application was disapproved protect existing petroleum stations
by the then Bureau of Energy from ruinous competition and not to
Utilization up to the present time protect existing establishments from
that would warrant a reversal of the its own ghost. The Board does not
former decision. The history of this exist for the benefit of any individual
case serves to justify applicant Shell’s station but for the interest of the
position on the matter. After a little public and the industry as a whole.
over a year from vigorously opposing
the original application, Caltex In its first application, the applicant’s
and Petron filed their respective projection was to realize only 255,000
applications to construct their own liters per month or some 20 percent
service station within the same of the total potential demand.
vicinity. With its amended application, the
460,151 liters it hopes to realize is
The figures in the applicant’s almost twice the former volume
feasibility study projects a scenario representing a smaller percentage
of growth well up to the year 1994. of the present overall potential
Where the applicant listed only thirty- demand.
five commercial establishments,
oppositor is servicing sixty-five. The With further growth and
development of subdivisions along development of the businesses
the area provides for a buffer of in the area, the fuel potential will
market potential that could readily tremendously increase and the
be tapped by the applicant service. presence of strategically located
service stations will greatly benefit
Although the applicant’s witness the local community as well as the
could have done better in transient motoring public.
accentuating this fact, the oppositor
did not do well either in downplaying The Board believes that the
the potentials of the area. The construction and operation of the
main gist of PDSC’s contention is Shell Station will not lead to ruinous
premised on the rising overhead cost competition since [the] additional
of (increase in salaries and rent) in retail outlet is necessary.
relation to the establishment of new
competition. The proposed station Time and again this Court has ruled that
expects to target a total volume in reviewing administrative decisions, the
of 460,151 liters per month with findings of fact made therein must be
a projected increase of 2.6% per respected as long as they are supported
by substantial evidence, even if not
overwhelming or preponderant; that it is In denying Shell’s application, the Court
not for the reviewing court to weigh the of Appeals next pointed to the alleged
conflicting evidence, determine the credibility ‘staleness’ of Shell’s feasibility study because
of the witnesses or otherwise substitute its it was submitted in evidence about two (2)
own judgment for that of the administrative years after it was prepared in early 1988.[xxx][30]
agency on the sufficiency of evidence; that
the administrative decision in matters within Again, this Court is not persuaded.
the executive jurisdiction can only be set
aside on proof of grave abuse of discretion, The record shows that the feasibility study[xxxi]
fraud or error of law.[xxvi][26] Petitioner ERB [31]
is accompanied by the following data,
is in a better position to resolve petitioner namely: (1) Annual Projection of Estimated
Shell’s application, being primarily the agency Fuel Demand, Base Area; (2) Projected Volume
possessing the necessary expertise on the of the Proposed Shell Station; (3) Projected
matter. The power to determine whether the Fuel Volume Derived From Base Area; (4)
building of a gasoline retail outlet in a trading Estimated Fuel Demand Base Projection
area would benefit public interest and the oil – 1993; (5) Estimated Fuel Demand Base
industry lies with the ERB not the appellate Projection – 1994; (6) Annual Projection of
courts. Population; (7) Annual Projection Growth of
Private Cars in the Area; (8) Annual Projection
In the hierarchy of evidentiary values, proof Growth of Public Utilities in the Area; and
beyond reasonable doubt is at the highest (9) Annual Projected Growth of Commercial
level, followed by clear and convincing Vehicles in the Area[xxxii][32] – projects a market
evidence, preponderance of evidence and scenario from 1989 to 1994.
substantial evidence, in that order.[xxvii][27] A
litany of cases has consistently held that While the Court of Appeals was initially
substantial evidence is all that is needed to unconvinced that Shell’s feasibility study
support an administrative finding of fact. was up-to-date and proceeded to render
[xxviii][28]
It means such relevant evidence as a the assailed judgment, its attention was
reasonable mind might accept to support a subsequently called, in Shell’s motion for
conclusion.[xxix][29] reconsideration, to the ERB’s Decision dated
June 19, 1992[xxxiii][33] approving a similar
Suffice it to state in this regard that the factual application by Caltex to build a gasoline retail
landscape, measured within the context outlet in the same vicinity. Said decision was
of such an evidentiary matrix, is strewn appealed by PDSC to the Court of Appeals
with well-nigh overwhelming proof of the (CA-G.R. SP No. 29099), and was affirmed by
necessity to build such a gasoline retail outlet the latter in a Decision dated May 14, 1993.
in the vicinity subject of the application. [xxxiv][34]
The Decision in Caltex’s application,
where PDSC was the lone oppositor, was
[xxvi][26]
Lo vs. CA, G.R. No. 128667, 17 December 1999, 321 SCRA challenged before the appellate court on the
190, citing Timbancaya vs. Vicente, 9 SCRA 854 [1963];
Itogon-Suyoc Mines vs. Office of the President, 270 SCRA 63 very same grounds it proffered in opposing
[1997]. Shell’s application.[xxxv][35] In rejecting PDSC’s
[xxvii][27]
Manalo vs. Roldan-Confesor, 215 SCRA 808 [1992].
[xxviii][28]
Atlas Consolidated Mining & Development Corporation contentions in CA-G.R. SP No. 29099, the
vs. Factoran, 154 SCRA 49 [1987]; Naval vs. Panday, 321
SCRA 290 [1999], citing Lachica vs. Flordeliza, 254 SCRA 278
Court of Appeals’ Sixteenth Division ruled:
[1996], citing Santos vs. CA, 229 SCRA 524 [1994]; Trans-
Asia, Phils. Employee’s Association vs. NLRC, 320 SCRA
547 [1999]; Benguet Corporation vs. NLRC, 318 SCRA 106
[1999]; Phil. Veteran’s Bank vs. NLRC, 317 SCRA 510 [1999];
Consolidated Food Corp. vs. NLRC, 315 SCRA 129 [1999];
GSIS vs. Gabriel, 308 SCRA 705 [1999]; Pimentel vs. CA, 307 [xxx][30]
CA Decision, p. 5, par. 4.
SCRA 38 [1999]. [xxxi][31]
G.R. No. 114923 Rollo, pp. 122-124.
[xxix][29]
Gonzales vs. NLRC, 313 SCRA 169 [1999], citing Ang Tibay [xxxii][32]
Ibid., pp. 125-147 passim.
vs. CIR, 69 Phil. 635 [1940]; Audion Electric Co., Inc. vs. [xxxiii][33]
Id., pp. 253-259.
NLRC, 308 SCRA 340 [1999]; Association of Independent [xxxiv][34]
Id., pp. 244-252.
Unions in the Phils. vs. NLRC, 305 SCRA 219 [1999]. [xxxv][35]
Id., p. 247.
As to the first ground – Assuming in gratia argumenti that
the entirety of the above-specified
xxx xxx xxx xxx road/avenues may be considered as
a single trading area, the petitioner
The petitioner had assumed that the had failed to show why Caltex’s 9.7%
entire Sucat Road (starting from as share of the total market potential,
far away as its intersection with the as found in Alvarez’s Market Study,
South Expressway going towards is not attainable or that it would
Alabang and further South), Quirino result in ruinous competition. As
Avenue, Domestic Road (which pointed by the respondents (citing
passes in front of the Domestic MD Transit & Taxi Co., Inc. vs. Pepito,
Terminal), MIA Road, and Ninoy 6 SCRA 140 and Raymundo Trans. Co.
Aquino Avenue, constitute what it vs. Cervo, 91 Phil. 313), even if a new
refers to as the “trading area.” Thus, station would bring about a decline
the herein petitioner invites attention in the sales of the existing outlets,
to the fact that in Sucat Road there it need not necessarily result
are five existing gasoline stations; in ruinous competition, absent
two along Quirino Avenue (from adequate proof to that effect.
Sucat Road); four along Domestic
Road; and two along MIA Road, one As to the second and third grounds –
of which is the Caltex-Nayong Pilipino
station at the corner of MIA Road and Concerning the averment that the
Benigno Aquino Avenue. Except for evidence of Caltex is stale, this Court
the gas station at one end of Benigno notes that the said evidence refers
Aquino Avenue (located in front of principally to a revalidation study
the Nayong Filipino), the petitioner conducted by ERB’s Alvarez who
admits that there has been as yet no undertook an ocular inspection of
gasoline station existing along the the proposed site on November 23
entire stretch of the said Benigno to 27, 1987. The hearings of the
Aquino Avenue, although the ERB instant case continued up to early
had recently approved Shell’s 1992 (ERB Decision, p. 4). The
application to put up one therein. Decision was rendered on June
19, 1992 (Rollo, p. 36). It may be
This court is of the view that the conceded that substantial time
aforementioned assumption had elapsed since the time of the
adopted by petitioner is fallacious or aforementioned revalidation study.
incorrect considering the conclusion However, it is this court’s view
of ERB’s Manuel Alvarez in his “Ocular that unless the petitioner is able to
Inspection Report and In-Depth prove by competent evidence that
Analysis of Feasibility Study” that significant changes have occurred
no outlet presently exists along the sufficient to invalidate the afore-
whole stretch of the Ninoy Aquino stated study, the presumption is
Avenue (Rollo, p. 126) and that the that the said study remains valid,
outlets along Sucat Road are “far as found by the ERB in its decision.
from the proposed site, a distant Bare and self-serving manifestations
several kilometers away along Dr. A. cannot be accepted by Us as proof;
Santos Avenue in Sucat which can especially if We take into account
already be considered a different that hearings (as in the case at
trading area” (ibid., – underscoring bar) would take time and it would
supplied) be quite absurd if what was once
applicable and acceptable evidence paragraph 2 of the above-mentioned
would be ipso facto rendered stale ERB Rules provides as follows:
through mere lapse of time absent
any controverting evidence. Sound The Board may, in the disposition of
procedural policy requires that cases, before it, take judicial notice
the burden of proof relative to the of any data or information existing
present invalidity of the Alvarez in its judicial records, that may be
report rests not with Caltex but on relevant, pertinent or material to the
the herein petitioner. issues involved,

The petitioner had attempted to x x x x
make comparisons between the
figures specified in the 1987 study The Board may also, on its own
and those of the Bureau of Energy initiative or upon a motion of a party,
Utilization or BEU (which were given conduct such investigation or studies
earlier in 1986). Thus, the petitioner on any matter pertinent, related or
points out that while the BEU’s material to the issues involved in
decision indicated that 9,034 cars a case the results of which may be
on the average passed by going in sued by the Board as bases for the
both directions along Ninoy Aquino proper evaluation of the said issues.
Avenue, the Alvarez revalidation (Rollo, pp. 205-207 – underscoring
study gave an average car traffic of supplied)
only 8,395 resulting in a decline of
639 cars. The petitioner, however, The petitioner asserts that the
conveniently ignored or failed to island divider along Benigno Aquino
note that the 9,034 figure was that Avenue in front of the proposed site
given by applicant Shell and not by was not taken into consideration
the government agency itself. The in the 1987 survey. It could not be
BEU refers to the said figure as the denied that the construction of such
applicant’s estimated potential divider could have an effect on the
demand. It is natural to expect that matter of potential demand. Neither
an applicant would try to give up as can it be denied however that the gas
high an estimated potential demand station that would be affected would
as possible to support its application. be Caltex itself. It is not alleged that
there exists a divider along the whole
The contention of the petitioner that of Sucat Road for example. Hence,
the Alvarez study/report is hearsay on the existing outlets have no reason
the ground inter alia that Alvarez was to complain about the divider.
not presented as a witness deserves
scant consideration by this Court. In The contention that when
the first place, the ERB is not bound construction is completed
by technical rules of procedure as (connecting Sucat Road to the
contained in the Rules of Court, the coastal road), a good number of
latter being made applicable to ERB vehicles would pass through the
only “in a suppletory character” coastal road instead of along Benigno
(Rule 16 of the Rules of Practice Aquino [Avenue] appears to Us as
and Procedure Governing Hearings speculative. There is no need for the
Before the ERB). More importantly, petitioner, which it failed to do, to
Section 2, paragraph 2 and Section 7, show qualitatively and convincingly
that the effect would be such as to (c) The establishment and
make the sales level go down to such operation thereof will not result
an extent that the viability of the in a monopoly, combination in
existing outlets would be seriously restraint of trade and ruinous
endangered or threatened. competition.

The foregoing pronouncement of the Court of (d) The requirements of public
Appeals’ Sixteenth Division is more in keeping safety and sanitation are
with the policy of the State and the rationale properly observed.
of the statutes enacted to govern the industry.
(e) Generally, the establishment
In denying Shell’s application, the Court of and operation thereof will
Appeals finally states that the proposed help promote and achieve the
service station would cause ruinous purposes of Republic Act No.
competition to respondent PDSC’s outlet in 6173.[xxxvii][37]
the subject vicinity.
While it is probable that the operation of the
We remain unconvinced. proposed Shell outlet may, to a certain extent,
affect PDSC’s business, private respondent
It must be pointed out that in determining the nevertheless failed to show that its business
allowance or disallowance of an application would not have sufficient profit to have a fair
for the construction of a service station, the return of its investment. The mere possibility
appellate court confined the factors thereof of reduction in the earnings of a business is
within the rigid standards governing public not sufficient to prove ruinous competition.
utility regulation, where exclusivity, upon [xxxviii][38]
Indeed –
the satisfaction of certain requirements, is
allowed. However, exclusivity is more the In order that the opposition based
exception rather than the rule in the gasoline on ruinous competition may prosper,
service station business. Thus, Rule V, Section it must be shown that the opponent
1, of the Rules and Regulations Governing would be deprived of fair profits on
the Establishment, Construction, Operation, the capital invested in its business.
Remodeling and/or Refurbishing of Petroleum The mere possibility of reduction
Products Retail Outlets issued by the Oil in the earnings of a business is
Industry Commission,[xxxvi][36] and adopted by not sufficient to prove ruinous
the ERB, enumerates the following factors competition. It must be shown
determining the allowance or disallowance of that the business would not have
an application for outlet construction, to wit: sufficient gains to pay a fair rate of
interest on its capital investment.
(a) The operation of the proposed [xxxix][39]
Mere allegations by the
petroleum products retail outlet oppositor that its business would be
will promote public interest in ruined by the establishment of the
a proper and suitable manner ice plants proposed by the applicants
considering the need and are not sufficient to warrant this
convenience of the end-users. Court to revoke the order of the
Public Service Commission.[xl][40]
(b) Reasonable expectation of a
[xxxvii][37]
Id., p. 263.
commercially viable operation. [xxxviii][38]
Meralco vs. Pasay Transportation Co., 66 Phil. 36 [1938].
[xxxix][39]
Ibid.
[xl][40]
Ice and Cold Storage vs. Valero, 85 Phil. 10 [1949], citing
Santos Vda. de Pilares vs. Arranze, G.R. No. 45462, 28 July
[xxxvi][36]
Id., pp. 260-266. 1938.
It would not be remiss to point out that Caltex, Case No. 3:
PDSC’s principal, whose products are being
retailed by private respondent in the service
outlet it operates along the MIA/Domestic Republic of the Philippines
Road in Pasay City, never filed any opposition SUPREME COURT
to Shell’s application. All told, a climate of fear Manila
and pessimism generated by unsubstantiated
claims of ruinous competition already rejected SECOND DIVISION
in the past should not be made to retard free

competition, consistently with legislative
policy of deregulating and liberalizing the oil PETRON CORPORATION, G.R. No. 158881
industry to ensure a truly competitive market Petitioner Present:
under a regime of fair prices, adequate and
continuous supply, environmentally clean - versus - QUISUMBING, J.,
and high-quality petroleum products.
Chairperson
WHEREFORE, in view of all the foregoing, MAYOR TOBIAS M. CARPIO MORALES,
the challenged Decision of the Court of TIANGCO, ET. AL., TIÑGA, VELASCO, JR,
Appeals dated November 8, 1993, as well Respondents and BRION, JJ.
as the subsequent Resolution dated April 6,
1994, in CA-G.R. SP No. 27661, is REVERSED Promulgated:
and SET ASIDE, and another one rendered April 16, 2008
REINSTATING the Order dated September
x------------------------------------------x
17, 1991 of the Energy Regulatory Board in

ERB Case No. 89-57, granting the amended
application of Pilipinas Shell Petroleum D E C I S I O N
Corporation to relocate its service station
to Benigno Aquino Jr., Avenue, Paranaque, TINGA, J.:
Metro Manila.
The novel but important issue before
SO ORDERED. us is whether a local government unit is
empowered under the Local Government
Davide, Jr., C.J. (Chairman), Puno, Kapunan, Code (the LGC) to impose business taxes on
and Pardo, JJ., concur. persons or entities engaged in the sale of
petroleum products.

I.

The present Petition for Review on Certiorari
under Rule 45 filed by petitioner Petron
Corporation (Petron) directly assails the
Decision of the Regional Trial Court (RTC)
of Malabon, Branch 74, which dismissed
petitioner’s complaint for cancellation of
assessment made by the then municipality
(now City) of Navotas (Navotas) for
deficiency taxes, and ordering the payment
of P 10,204,916.17 pesos in business taxes
to Navotas. As the issues raised are pure
questions of law, we need not dwell on the Thus, on 20 May 2002, Petron filed with the
facts at length. Malabon RTC a Complaint for Cancellation
of Assessment for Deficiency Taxes with
Petron maintains a depot or bulk plant at Prayer for the Issuance of a Temporary
the Navotas Fishport Complex in Navotas. Restraining Order (TRO) and/or Preliminary
Through that depot, it has engaged in the Injunction. The quested TRO was not issued
selling of diesel fuels to vessels used in by the Malabon RTC upon manifestation of
commercial fishing in and around Manila Bay. respondents that they would not proceed
[1][1]
On 1 March 2002, Petron received a letter with the closure of Petron’s Navotas bulk
from the office of Navotas Mayor, respondent plant until after the RTC shall have decided
Toby Tiangco, wherein the corporation the case on the merits.[7][7] However, while
was assessed taxes “relative to the figures the case was pending decision, respondents
covering sale of diesel declared by your refused to issue a business permit to Petron,
Navotas Terminal from 1997 to 2001.”[2][2] The thus prompting Petron to file a Supplemental
stated total amount due was P 6,259,087.62, Complaint with Prayer for Preliminary
a figure derived from the gross sales of the Mandatory Injunction against respondents.
depot during the years in question. The [8][8]
computation sheets[3][3] that were attached to

the letter made reference to Ordinance 92-03, On 5 May 2003, the Malabon RTC rendered
or the New Navotas Revenue Code (Navotas its Decision dismissing Petron’s complaint
Revenue Code), though such enactment was and ordering the payment of the assessed
not cited in the letter itself. amount.[9][9] Eleven days later, Petron received
a Closure Order from the Mayor, directing
Petron duly filed with Navotas a letter-protest Petron to cease and desist from operating
to the notice of assessment pursuant to the bulk plant. Petron sought a TRO from
Section 195 of the Code. It argued that it the Malabon RTC, but this was denied.[10][10]
was exempt from local business taxes in view Petron also filed a motion for reconsideration
of Art. 232 (h) of the Implementing Rules of the order of denial, but this was likewise
(IRR) of the Code, as well as a ruling of the denied.[11][11]
Bureau of Local Government Finance of the
Department of Finance dated 31 July 1995, On 4 August 2003, this Court issued a TRO,
the latter stating that sales of petroleum fuels enjoining the respondents from closing
are not subject to local taxation. The letter- Petron’s Navotas bulk plant or otherwise
protest was denied by the Navotas Municipal interfering in its operations.[12][12]
Treasurer, respondent Manuel T. Enriquez,
in a letter dated 8 May 2002.[4][4] This was II.
followed by a letter from the Mayor dated
15 May 2002, captioned “Final Demand to As earlier stated, Petron has opted to assail the
Pay,” requiring that Petron pay the assessed RTC Decision directly before this Court since
amount within five (5) days from receipt the matter at hand involves pure questions of
thereof, with a threat of closure of Petron’s law, a characterization conceded by the RTC
operations within Navotas should there be Decision itself. Particularly, the controversy
no payment.[5][5] Petron, through counsel, hinges on the correct interpretation of Section
replied to the Mayor by another letter posing 133 (h) of the LGC, and the applicability of
objections to the threat of closure. The Article 232 (h) of the IRR.
Mayor did not respond to this last letter.[6][6]
Rollo, p. 60.
[1][1] [7][7]
Id. at 19.
[2][2]
Id. at 200. [8][8]
Id. at 158-164.
[3][3]
Id. at 201-205. [9][9]
Id. at 60-69.
[4][4]
See Rollo, p. 26. [10][10]
In an Order dated 19 June 2003.
[5][5]
Id. at 210. [11][11]
In an Order dated 2 July 2003.
[6][6]
Id. at 27. [12][12]
Rollo, p. 213-215.
Section 133 (h) of the LGC reads as follows: of local business taxes “[o]n any business
not otherwise specified in the preceding
SEC. 133. Common Limitations on the paragraphs which the sanggunian concerned
Taxing Powers of Local Government may deem proper to tax,” but subject to this
Units. – Unless otherwise provided important qualification, thus:
herein, the exercise of the taxing
powers of provinces, cities, “xxx provided further, that in line
municipalities, and Barangays with existing national policy, any
shall not extend to the levy of the business engaged in the production,
following: manufacture, refining, distribution
or sale of oil, gasoline and other
xxx petroleum products shall not be
subject to any local tax imposed on
(h) Excise taxes on articles this article.
enumerated under the National
Internal Revenue Code, as amended, Notably, the Malabon RTC declared Art.
and taxes, fees or charges on 232 (h) of the IRR void because the Code
petroleum products; purportedly does not contain a provision
prohibiting the imposition of business taxes
Evidently, Section 133 prescribes the on petroleum products.[13][13] This submission
limitations on the capacity of local warrants close examination as well.
government units to exercise their taxing
powers otherwise granted to them under the With all the relevant provisions of law laid
LGC. Apparently, paragraph (h) of the Section out, we address the core issues submitted
mentions two kinds of taxes which cannot be by Petron, namely: first, is the challenged
imposed by local government units, namely: tax on sale of the diesel fuels an excise tax
“excise taxes on articles enumerated under on an article enumerated under the NIRC,
the National Internal Revenue Code [(NIRC)], thusly prohibited under Section 133 (h) of
as amended;” and “taxes, fees or charges on the Code?; second, is the challenged tax
petroleum products.” prohibited by Section 133 (h) under the
proviso, “taxes, fees or charges on petroleum
The power of a municipality to impose products”?; and third, does Art. 232 (h) of the
business taxes is provided for in Section 143 of IRR similarly prohibit the imposition of the
the LGC. Under the provision, a municipality challenged tax?
is authorized to impose business taxes on a
whole host of business activities. Suffice it to III.
say, unless there is another provision of law
which states otherwise, Section 143, broad in As earlier observed, Section 133 (h) provides
scope as it is, would undoubtedly cover the two kinds of taxes which cannot be imposed
business of selling diesel fuels, or any other by local government units: “excise taxes
petroleum product for that matter. on articles enumerated” under the NIRC,
as amended; and “taxes, fees or charges
Nonetheless, Article 232 of the IRR defines on petroleum products.” There is no doubt
with more particularity the capacity of a that among the excise taxes on articles
municipality to impose taxes on businesses. enumerated under the NIRC are those levied
The enumeration that follows is generally on petroleum products, per Section 148 of
a positive list of businesses which may be the NIRC.
subjected to business taxes, and paragraph
(h) of Article 232 does allow the imposition
[13][13]
Id. at 66.
We first consider Petron’s argument that the including those cited by Petron itself. Such
“business taxes” on its sale of diesel fuels a definition would not have been inconsistent
partakes of an excise tax, which if true, could with previous incarnations of our Tax Code,
invalidate the challenged tax solely on the such as the NIRC of 1939,[26][26] as amended,
basis of the phrase “excise taxes on articles or the NIRC of 1977[27][27] because in those
enumerated under the [NIRC].” To support laws the term “excise tax” was not used at all.
this argument, it cites Cordero v. Conda,[14] In contrast, the nomenclature used in those
[14]
Allied Thread Co. Inc. v. City Mayor of prior laws in referring to taxes imposed on
Manila,[15][15] and Iloilo Bottlers, Inc. vs. City of specific articles was “specific tax.”[28][28] Yet
Iloilo,[16][16] as having explained that “an excise beginning with the National Internal Revenue
tax is a tax upon the performance, carrying Code of 1986, as amended, the term “excise
on, or the exercise of an activity.”[17][17] taxes” was used and defined as applicable
Respondents, on the other hand, argue that “to goods manufactured or produced in
what the provision prohibits is the imposition the Philippines…and to things imported.”[29]
of excise taxes on petroleum products, but not [29]
This definition was carried over into the
the imposition of business taxes on the same. present NIRC of 1997.[30][30] Further, these two
They cite Philippine Petroleum Corporation vs. latest codes categorize two different kinds of
Municipality of Pililia,[18][18] where the Court excise taxes: “specific tax” which is imposed
had noted, “[a] tax on business is distinct and based on weight or volume capacity or
from a tax on the article itself.”[19][19] any other physical unit of measurement; and
“ad valorem tax” which is imposed and based
Petron’s argument is fraught with far- on the selling price or other specified value
reaching implications, for if it were sustained, of the goods. In other words, the meaning of
it would mean that local government units “excise tax” has undergone a transformation,
are barred from imposing business taxes on morphing from the Am Jur definition to its
any of the articles subject to excise taxes current signification which is a tax on certain
under the NIRC. These would include alcohol specified goods or articles.
products,[20][20] tobacco products,[21][21] mineral
products[22][22] automobiles,[23][23] and such The change in perspective brought forth
non-essential goods as jewelry, goods made by the use of the term “excise tax” in a
of precious metals, perfumes, and yachts and different connotation was not lost on the
other vessels intended for pleasure or sports. departed author Jose Nolledo as he accorded
[24][24] divergent treatments in his 1973 and 1994
commentaries on our tax laws. Writing in
Admittedly, the proffered definition of an 1973, and essentially alluding to the Am Jur
excise tax as “a tax upon the performance, definition of “excise tax,” Nolledo observed:
carrying on, or exercise of some right, privilege,
activity, calling or occupation” derives from Are specific taxes, taxes on property or excise
the compendium American Jurisprudence, taxes –
popularly referred to as Am Jur,,[25][25] and has
been cited in previous decisions of this Court, In the case of Meralco vs. Trinidad
([G.R.] 16738, 1925) it was held that
[14][14]
124 Phil 926 (1966).
[15][15]
218 Phil 308 (1984). specific taxes are property taxes, a
G.R. No. L-52019, 19 August 1988, 164 SCRA 607. ruling which seems to be erroneous.
[16][16]
[17][17]
Rollo, p. 31.
[18][18]
G.R. No. 90776, 3 June 1991, 198 SCRA 82.
[19][19]
Id., at 89.
[20][20]
See Sections 141-143, NIRC. [26][26]
COMMONWEALTH ACT NO. 466, as amended.
[21][21]
See Sections 144-147, NIRC. [27][27]
Pres. Decree No. 1158.
[22][22]
See Section 151, NIRC. [28][28]
See Title IV, COMMONWEALTH ACT NO. 466; Title IV, Pres.
[23][23]
See Section 149, NIRC. Decree No. 1158.
[24][24]
See Section 150, NIRC. [29][29]
See Sec. 126, Pres. Decree No. 1994, establishing National
[25][25]
See Footnote No. 27, Cordero vs. Conda, 124 Phil 926, 937 Internal Revenue Code of 1986.
(1966); citing 51 Am. Jur., p. 1068-1069. [30][30]
See Sec. 129, National Internal Revenue Code of 1997.
Specific taxes are truly excise taxes that “[e]xcise tax, as [defined by Am Jur], is
for the fact that the value of the not to be confused with excise tax imposed
property taxed is taken into account [by the NIRC] on certain specified articles
will not change the nature of the tax. manufactured or produced in, or imported
It is correct to say that specific taxes into, the Philippines, ‘for domestic sale or
are taxes on the privilege to import, consumption or for any other disposition.’”[34]
manufacture and remove from [34]
storage certain articles specified by

law.[31][31] It is evident that Am Jur aside, the current
definition of an excise tax is that of a tax levied
In contrast, after the tax code was amended on a specific article, rather than one “upon
to classify specific taxes as a subset of excise the performance, carrying on, or the exercise
taxes, Nolledo, in his 1994 commentaries, of an activity.” This current definition was
wrote: already in place when the Code was enacted
in 1991, and we can only presume that it was
1. Excise taxes, as used in the Tax what the Congress had intended as it specified
Code, refers to taxes applicable that local government units could not impose
to certain specified goods “excise taxes on articles enumerated under
or articles manufactured or the [NIRC].” This prohibition must pertain to
produced in the Philippines for the same kind of excise taxes as imposed by
domestic sale or consumption the NIRC, and not those previously defined
or for any other disposition “excise taxes” which were not integrated or
and to things imported into the denominated as such in our present tax law.
Philippines. They are either
specific or ad valorem. It is quite apparent, therefore, that our current
body of taxation law does not explicitly
2. Nature of excise taxes. – They accommodate the traditional definition of
are imposed directly on certain excise tax offered by Petron. In fact, absent
specified goods. (infra) They any statutory adoption of the traditional
are, therefore, taxes on property. definition, it may be said that starting in
(See Medina vs. City of Baguio, 1986 excise taxes in this jurisdiction refer
91 Phil 854.) exclusively to specific or ad valorem taxes
imposed under the NIRC. At the very least,
A tax is not excise where it does not it is this concept of excise tax which we can
subject directly the produce or goods reasonably assume that Congress had in
to tax but indirectly as an incident to, mind and actually adopted when it crafted
or in connection with, the business the Code. The palpable absurdity that ensues
to be taxed.[32][32] should the alternative interpretation prevail
all but strengthens this position.
In their 2004 commentaries, De Leon and
De Leon restate the Am Jur definition of Thus, Petron’s argument concerning excise
excise tax, and observe that the term is taxes is founded not on what the NIRC or the
“synonymous with ‘privilege tax’ and [both Code actually provides, but on a non-statutory
terms] are often used interchangeably.”[33] definition sourced from a legal paradigm that
[33]
At the same time, they offer a caveat is no longer applicable in this jurisdiction.
That such definition was referred to again in
[31][31]
J. NOLLEDO, NATIONAL INTERNAL REVENUE CODE OF THE our 1998 decision in Province of Bulacan vs.
PHILIPPINES (1973 ed.), at 678-679.
[32][32]
J. NOLLEDO, THE NATIONAL INTERNAL REVENUE CODE Court of Appeals[35][35] is ultimately of little
ANNOTATED (5th ed., 1994), at 471-472.
[33][33]
H. DE LEON & H. DE LEON, JR., THE FUNDAMENTALS OF [34][34]
Id. at 13.
TAXATion (14th ed., 2004), at 12-13. [35][35]
359 Phil 779 (1998).
consequence, and so is Petron’s reliance on IV.
such ruling. The Court therein had correctly
nullified, on the basis of Section 133 (h) of We next consider whether the clause “taxes,
the Code, a province-imposed tax “of 10% of fees or charges on petroleum products” in
the fair market value in the locality per cubic Section 133 (h) precludes local government
meter of ordinary stones, sand, gravel, earth units from imposing business taxes based on
and other quarry resources xxx extracted the sale of petroleum products.
from public lands,” because it noted that
under Section 151 of the NIRC, all nonmetallic The power of a municipality to impose
minerals and quarry resources were assessed business taxes derives from Section 143
with excise taxes of “two percent (2%) based of the Code that specifically enumerates
on the actual market value of the gross several types of business on which it may
output thereof at the time of removal, in case impose taxes, including manufacturers,
of those locally extracted or produced”.[36][36] wholesalers, distributors, dealers of any
Additionally, the Court also observed that article of commerce of whatever nature;[38]
the case had emanated from an attempt to [38]
those engaged in the export or commerce
impose the said tax on quarry resources from of essential commodities;[39][39] retailers;[40]
private lands, despite the clear language of [40]
contractors and other independent
the tax ordinance limiting the tax to such contractors;[41][41] banks and financial
resources extracted from public lands.[37][37] institutions;[42][42] and peddlers engaged in
On that score alone, the case could have been the sale of any merchandise or article of
correctly decided. commerce.[43][43] This obviously broad power
is further supplemented by paragraph (h) of
It is true that the Court had additionally Section 143 which authorizes the sanggunian
reasoned in Province of Bulacan that “[t]he to impose taxes on any other businesses not
tax imposed by the Province of Bulacan is an otherwise specified under Section 143 which
excise tax, being a tax upon the performance, the sanggunian concerned may deem proper
carrying on, or exercise of an activity.” As to tax.[44][44]
earlier noted, such definition of excise tax
however was not explicitly carried over into This ability of local government units to
the NIRC and was even superseded beginning impose business or other local taxes is
with the 1986 amendments thereto. To insist ultimately rooted in the 1987 Constitution.
on utilizing this definition simply because it Section 5, Article X assures that “[e]ach local
had been reiterated in Province of Bulacan, government unit shall have the power to
unnecessary as such reiteration may have create its own sources of revenues and to levy
been to the resolution of that case, would taxes, fees and charges,” though the power is
have the unfortunate effect of infusing life into “subject to such guidelines and limitations
a concept that is diametrically inconsistent as the Congress may provide.” There is no
with the present state of the law. doubt that following the 1987 Constitution
and the Code, the fiscal autonomy of local
We thus can assert with clear comfort that government units has received greater
excise taxes, as imposed under the NIRC, do affirmation than ever. Previous decisions that
not pertain to “the performance, carrying on, have been skeptical of the viability, if not the
or exercise of an activity,” at least not to the
extent of equating excise with business taxes. [38][38]
See Section 143 (a) & (b), Local Government Code.
[39][39]
See Section 143(c), Local Government Code.
[40][40]
See Section 143(d), Local Government Code.
[41][41]
See Section 143(e), Local Government Code.
[42][42]
See Section 143(f), Local Government Code.
[43][43]
See Section 143(g), Local Government Code.
[36][36]
Id. at 794-795. [44][44]
See Yamane vs. BA Lepanto, G.R. No. 154993, 25 October 2005,
[37][37]
Id. at 795. 474 SCRA 258, 272-273.
wisdom of reposing fiscal autonomy to local period of six (6) and (4) four years, respectively
government units have fallen by the wayside. from the date of registration.”

Respondents cite our declaration in City Section 133 (h) states that local government
Government of San Pablo vs. Reyes[45][45] units “shall not extend to the levy of xxx taxes,
that following the 1987 Constitution the fees or charges on petroleum products.”
rule thenceforth “in interpreting statutory Respondents assert that the phrase “taxes,
provisions on municipal fiscal powers, doubts fees or charges on petroleum products”
will have to be resolved in favor of municipal pertains to the imposition of direct or
corporations.”[46][46] Such policy is also echoed excise taxes on petroleum products, and not
in Section 5 (a) of the Code, which states business taxes. If the phrase actually pertains
that “[a]ny provision on a power of a local to excise taxes, then it would be an exercise
government unit shall be liberally interpreted in utter redundancy, since the preceding
in its favor, and in case of doubt, any phrase already prohibits the imposition of
question thereon shall be resolved in favor of excise taxes on articles already subject to
devolution of powers and of the lower local such taxes under the NIRC, such as petroleum
government unit.” But somewhat conversely, products. There would be no sense on the
Section 5 (b) then proceeds to assert that “[i] part of the legislature to twice emphasize
n case of doubt, any tax ordinance or revenue in the same sentence that excise taxes on
measure shall be construed strictly against petroleum products are beyond the pale of
the local government unit enacting it, and local government taxation.
liberally in favor of the taxpayer.”[47][47] And
this latter qualification has to be respected as It appears that this argument of respondents
a constitutionally authorized limitation which was fashioned on the basis of the
Congress has seen fit to provide. Evidently, pronouncement of the Court in Philippine
local fiscal autonomy should not necessarily Petroleum Corporation vs. Municipality of
translate into abject deference to the power Pililla, thus:[48][48]
of local government units to impose taxes.
xxx [W]hile Section 2 of P.D. 436
Congress has the constitutional authority to prohibits the imposition of local
impose limitations on the power to tax of taxes on petroleum products, said
local government units, and Section 133 of decree did not amend Sections 19
the Code is one such limitation. Indeed, the and 19 (a) of P.D. 231 as amended
provision is the explicit statutory impediment by P.D. 426, wherein the municipality
to the enjoyment of absolute taxing power by is granted the right to levy taxes
local government units, not to mention the on business of manufacturers,
reality that such power is a delegated power. importers, producers of any article
To cite one example, under Section 133 of commerce of whatever kind or
(g), local government units are disallowed nature. A tax on business is distinct
from levying business taxes on “business from a tax on the article itself. Thus,
enterprises certified to by the Board of if the imposition of tax on business
Investments as pioneer or non-pioneer for a of manufacturers, etc. in petroleum
products contravenes a declared
national policy, it should have been
[45][45]
364 Phil 842 (1999). expressly stated in P.D. No. 436.
[46][46]
Id. at 857.
[47][47]
Section 5(b) also provides, “Any tax exemption, incentive or
relief granted by any local government unit pursuant to the
provisions of this Code shall be construed strictly against the
person claiming it; xxx” This proviso should find no application
to this case, since the tax exemption invoked by Petron was
not granted or legislated by Navotas, but bestowed by the
Congress through the Local Government Code. [48][48]
Supra note 18 at 89.
The dicta that “[a] tax on a business is distinct only straw Pililla provides that respondents
from a tax on the article itself” might at first can still grasp at is the bare statement that
blush somehow lend support to respondents’ “[a] tax on a business is distinct from a tax
position, yet that dicta has not since been on the article itself,”[51][51] a sentence which
reprised by this Court. It is likewise worth could have been omitted from that decision
observing that Pililla did involve a tax without any effect.
ordinance that imposed business taxes on an
enterprise engaged in the manufacture and We can concede that a tax on a business is
storage of petroleum products. distinct from a tax on the article itself, or for
that matter, that a business tax is distinct from
Significantly, the legal milieu governing Pililla an excise tax. However, such distinction is
is vastly different from that existing at bar, to immaterial insofar as the latter part of Section
the extent that the earlier case could not be 133 (h) is concerned, for the phrase “taxes,
presently controlling. fees or charges on petroleum products” does
not qualify the kind of taxes, fees or charges
At the time the taxes sought to be collected that could withstand the absolute prohibition
in Pililla were imposed, there was no national imposed by the provision. It would have been
law in place similar to Section 133 (h) of a different matter had Congress, in crafting
the Code that barred local “taxes, fees or Section 133 (h), barred “excise taxes” or
charges on petroleum products.” There “direct taxes,” or any category of taxes only,
were circulars to that effect issued by the for then it would be understood that only
Finance Department, yet the Court could not such specified taxes on petroleum products
validate such issuances since under the tax could not be imposed under the prohibition.
laws then in place “no exemptions were given The absence of such a qualification leads
to manufacturers, wholesalers, retailers, to the conclusion that all sorts of taxes on
or dealers in petroleum products.”[49][49] petroleum products, including business taxes,
In fact, the Court tellingly observed that are prohibited by Section 133 (h). Where
“if the imposition of tax on business of the law does not distinguish, we should not
manufacturers, etc. in petroleum products distinguish.
contravenes a declared national policy, it
should have been expressly stated in P.D. No. The language of Section 133 (h) makes
436.”[50][50] Such expression conspicuously plain that the prohibition with respect to
missing in P.D. No. 436 is now found in Section petroleum products extends not only to
133 (h). excise taxes thereon, but all “taxes, fees and
charges.” The earlier reference in paragraph
In view of the difference in statutory paradigm (h) to excise taxes comprehends a wider range
between this case and Pililla, the latter case is of subjects of taxation: all articles already
severely diminished as applicable precedent covered by excise taxation under the NIRC,
at bar. The Court then was correct in such as alcohol products, tobacco products,
observing that a mere administrative circular mineral products, automobiles, and such
could not prohibit a local tax that is not non-essential goods as jewelry, goods made
otherwise barred under a national statute, yet of precious metals, perfumes, and yachts
in this case that conflict is not present since and other vessels intended for pleasure or
the Code explicitly prohibits the imposition sports. In contrast, the later reference to
of several classes of local taxes, including “taxes, fees and charges” pertains only to one
those on petroleum products. The final and class of articles of the many subjects of excise
taxes, specifically, “petroleum products”.
[49][49]
Id. at 89.
[50][50]
Id. [51][51]
Supra note 19.
While local government units are authorized down to its essence, the argument is that
to burden all such other class of goods with since the oil industry is presently deregulated
“taxes, fees and charges,” excepting excise the basis for exempting petroleum products
taxes, a specific prohibition is imposed from business taxes no longer exists.
barring the levying of any other type of taxes
with respect to petroleum products. Of course, the starting premise for this
argument, that the IRR can establish a tax
V. or an exemption, is false and has been flatly
rejected by this Court before.[52][52] The
We no longer need to dwell on the arguments Code itself does not connect its prohibition
centering on Article 232 of the IRR. As earlier on taxation of petroleum products with
stated, the provision explicitly stipulates any existing or future national oil policy, so
that “in line with existing national policy, the change in such national policy with the
any business engaged in the production, regime of oil deregulation is ultimately of no
manufacture, refining, distribution or sale of moment. Still, we can divine the reasoning
oil, gasoline and other petroleum products behind singling out petroleum products,
shall not be subject to any local tax imposed among all other commodities, as beyond the
on this article [on business taxes].” The power of local government units to levy local
RTC went as far as to declare Article 232 as taxes.
“invalid” on the premise that the prohibition
was not similarly warranted under the Code. Why the special concern over petroleum
products? The answer is quite evident
Assuming that the Code does not, in fact, to all sentient persons. In this age where
prohibit the imposition of business taxes on unfortunately dependence on petroleum as
petroleum products, we would agree that the fuel has yet no equally feasible alternative,
IRR could not impose such a prohibition. With the cost of petroleum products, though fully
our ruling that Section 133 (h) does indeed controlled by private enterprise, remains an
prohibit the imposition of local business area of public concern. To be blunt about
taxes on petroleum products, however, the it, there is an inevitable link between the
RTC declaration that Article 232 was invalid fluctuation of oil prices and the prices of
is, in turn, itself invalid. Even absent Article every other commodity. The reality, indeed,
232, local government units cannot impose is oil is a political commodity. Such fact has
business taxes on petroleum products. If received recognition from this Court. “[O]
anything, Article 232 merely reiterates what il [is] a commodity whose supply and price
the Code itself already provides, with the affect the ebb and flow of the lifeblood
additional explanation that such prohibition of the nation. Its shortage of supply or a
was “in line with existing national policy.” slight, upward spiral in its price shakes our
economic foundation. Studies show that
VI. the areas most impacted by the movement
of oil are food manufacture, land transport,
We have said all that need be said for the trade, electricity and water.”[53][53] “[T]he
resolution of this case, but there is one more upswing and downswing of our economy
line of argument raised by respondents that materially depend on the oscillation of oil.”[54]
deserves a remark. Respondents argue, [54]
“Fluctuations in the supply and price of oil
“assuming...that the Oversight Committee products have a dramatic effect on economic
[that drafted the IRR] can legislate, that the development and public welfare.”[55][55]
“existing national policy” referred to in Article
[52][52]
See e.g., John Hay People’s Alternative Coalition vs. Lim, 460
232 had been superseded by Republic Act Phil 530, 551 (2003).
No. 8479, or the Oil Deregulation Law. Boiled Tatad vs. Secretary of Energy, 346 Phil 321, 379 (1997).
[53][53]
[54][54]
Id. at 348.
[55][55]
Garcia vs. Corona, 378 Phil 848, 859 (1999).
It can be reasonably presumed that if it would be utter indolence to reflexively
municipalities, cities and provinces were affirm such policy when the inevitable effect
authorized to impose business taxes on is an increase in oil prices. Any prudent
manufacturers and retailers of petroleum adjudication should fully ascertain the
products, the resulting losses to these mandate of local government units to impose
enterprises would be passed on to the taxes on petroleum products, and such
consumers, triggering the chain of increases mandate should be cast in so specific terms
that normally accompany the increase in oil as to leave no dispute as to the legislative
prices. No similarly massive trigger effect intendment to extend such power in the
would ensue upon the imposition of business name of local autonomy. What we have
taxes on other commodities, including those found instead, from the plain letter of the
already subject to excise taxation under the law is an explicit disinclination on the part of
NIRC. the legislature to impart that particular taxing
power to local government units.
It may very well be that the policy of
deregulation, which was not yet in effect
at the time of the enactment of the Local While Section 133 (h) does not generally bar
Government Code, has changed the the imposition of business taxes on articles
complexion of the issue, for unlike before, burdened by excise taxes under the NIRC, it
oil companies are free at will to increase oil specifically prohibits local government units
prices, thus mitigating the similarly arbitrary from extending the levy of any kind of “taxes,
consequences that could develop if petroleum fees or charges on petroleum products.”
products were subject to local taxes. Still, it Accordingly, the subject tax assessment is
cannot be denied that subjecting petroleum ultra vires and void.
products to business taxes apart from the
taxes already imposed by Congress in this WHEREFORE, the Petition is GRANTED.
age of deregulation would lead to the same The Decision of the Regional Trial Court
result had they been so taxed during the era of Malabon City in Civil Case No. 3380-
of oil regulation – the increase of oil prices. MN is REVERSED and SET ASIDE and the
We do not discount the authority of Congress subject assessment for deficiency taxes
to enact measures that facilitate the increase on petitioner is ordered CANCELLED. The
in oil prices; witness the Oil Deregulation Temporary Restraining Order dated 4 August
Law and the most recent Expanded VAT 2003 is hereby made PERMANENT. No
Law. Yet these hard choices are presumably pronouncement as to costs.
made by Congress with the expectation that
the negative effects of increased oil prices SO ORDERED.
are offset by the other economic benefits
promised by those new laws (i.e., a more
DANTE O. TIÑGA
vibrant oil industry; increased government
Associate Justice
revenue).

WE CONCUR:
The Court defers to the other branches of
government in the formulation of oil policy,
but when the choices are made through
legislation, the Court expects that the choices LEONARDO A. QUISUMBING
are deliberate, considering that the stakes are Associate Justice
virtually all-in. Herein, respondents may be Chairperson
bolstered by the constitutional and statutory
policy favoring local fiscal autonomy, but
CONCHITA CARPIO MORALES Case No. 4:
Associate Justice
Republic of the Philippines
PRESBITERO J. VELASCO, JR. SUPREME COURT
Associate Justice Manila

ARTURO D. BRION EN BANC
Associate Justice
CONGRESSMAN ENRIQUE T. GARCIA,
Petitioner, G.R. No. 157584
ATTESTATION
Present:
I attest that the conclusions in the above
Decision had been reached in consultation PUNO, C.J.,
before the case was assigned to the writer of QUISUMBING,
the opinion of the Court’s Division. YNARES-SANTIAGO,
CARPIO,
AUSTRIA-MARTINEZ,
LEONARDO A. QUISUMBING CORONA,
Associate Justice CARPIO MORALES,
Chairperson, Second Division - versus - TIÑGA,
CHICO-NAZARIO,
VELASCO, JR.,
CERTIFICATION NACHURA,
LEONARDO-DE CASTRO,
Pursuant to Section 13, Article VIII of the BRION, and PERA LTA, JJ.
Constitution, and the Division Chairperson’s
Attestation, it is hereby certified that the
conclusions in the above Decision had been THE EXECUTIVE SECRETARY, ET. AL.,
reached in consultation before the case was Respondents.
assigned to the writer of the opinion of the
Promulgated:
Court’s Division. April 2, 2009

REYNATO S. PUNO

DECISION
Chief Justice

x-------------------------------------------------x

BRION, J.:

For the second time, petitioner Enrique T.
Garcia, Jr. (petitioner Garcia) asks this Court
to examine the constitutionality of Section
19 of Republic Act No. 8479 (R.A. No. 8479),
otherwise known as the Oil Deregulation Law
of 1998) through this petition for certiorari.
[1][1]
He raises once again before us the
propriety of implementing full deregulation
[1]
Filed under Rule 65 of the Rules of Court.
by removing the system of price controls in can be manipulated by oligopolies.
the local downstream oil industry – a matter [3][3]

that we have ruled upon in the past.
Notwithstanding the existence of a
THE FACTS separability clause among its provisions, we
struck down R.A. No. 8180 in its entirety
After years of imposing significant controls because its offensive provisions permeated
over the downstream oil industry in the the whole law and were the principal tools to
Philippines, the government decided in carry deregulation into effect.
March 1996 to pursue a policy of deregulation
by enacting Republic Act No. 8180 (R.A. Congress responded to our Decision in Tatad
No. 8180) or the “Downstream Oil Industry by enacting on February 10, 1998 a new oil
Deregulation Act of 1996.” deregulation law, R.A. No. 8479. This time,
Congress excluded the offensive provisions
R.A. No. 8180, however, met strong found in the invalidated law. Nonetheless,
opposition, and rightly so, as this Court petitioner Garcia again sought to declare the
concluded in its November 5, 1997 decision new oil deregulation law unconstitutional on
in Tatad vs. Secretary of Department of the ground that it violated Article XII, Section
Energy.[2][2] We struck down the law as invalid 19 of the Constitution.[4][4] He specifically
because the three key provisions intended objected to Section 19 of R.A. No. 8479 which,
to promote free competition were shown to in essence, prescribed the period for removal
achieve the opposite result; contrary to its of price control on gasoline and other finished
intent, R.A. No. 8180’s provisions on tariff petroleum products and set the time for the
differential, inventory requirements, and full deregulation of the local downstream oil
predatory pricing inhibited fair competition, industry. The assailed provision reads:
encouraged monopolistic power, and
interfered with the free interaction of market SEC. 19. Start of Full Deregulation. –
forces. We declared: Full deregulation of the Industry
shall start five (5) months
following the effectivity of this
R.A. No. 8180 needs provisions to Act: Provided, however, That when
vouchsafe free and fair competition. the public interest so requires,
The need for these vouchsafing the President may accelerate the
provisions cannot be overstated. start of full deregulation upon the
Before deregulation, PETRON, SHELL recommendation of the DOE and
and CALTEX had no real competitors the Department of Finance (DOF)
but did not have a free run of when the prices of crude oil and
the market because government petroleum products in the world
controls both the pricing and non- market are declining and the value of
pricing aspects of the oil industry. the peso in relation to the US dollar
After deregulation, PETRON, SHELL is stable, taking into account relevant
and CALTEX remain unthreatened by trends and prospects: Provided,
real competition yet are no longer further, That the foregoing provision
subject to control by government notwithstanding, the five (5)-month
with respect to their pricing and non- Transition Phase shall continue
pricing decisions. The aftermath to apply to LPG, regular gasoline
of R.A. No. 8180 is a deregulated and kerosene as socially-sensitive
market where competition can be petroleum products and said
corrupted and where market forces
G.R. Nos. 124360 and 127867, November 5, 1997, 281 SCRA 311.
[2] Ibid, pp. 361-362.
[3]
petroleum products shall be covered 3 to engage in price-fixing and overpricing.
by the automatic pricing mechanism He averred that Section 19 of R.A. No. 8479
during the said period. is “glaringly pro-oligopoly, anti-competition,
and anti-people,” and thus asked the Court to
Upon the implementation of full declare the provision unconstitutional.
deregulation as provided herein,
the Transition Phase is deemed On December 17, 1999, in Garcia vs. Corona
terminated and the following laws (1999 Garcia case),[6][6] we denied petitioner
are repealed: Garcia’s plea for nullity. We declined to rule
on the constitutionality of Section 19 of R.A.
(a) Republic Act No. 6173, as No. 8479 as we found the question replete
amended; with policy considerations; in the words of
Justice Ynares-Santiago, the ponente of the
(b) Section 5 of Executive Order No. 1999 Garcia case:
172, as amended;
It bears reiterating at the outset that
(c) Letter of Instruction No. 1431,
the deregulation of the oil industry
dated October 15, 1984;
is a policy determination of the
(d) Letter of Instruction No. 1441, highest order. It is unquestionably
dated November 20, 1984, as a priority program of Government.
amended; The Department of Energy Act of
1992 expressly mandates that the
(e) Letter of Instruction No. 1460, development and updating of the
dated May 9, 1985; existing Philippine energy program
“shall include a policy direction
(f) Presidential Decree No. 1889;
towards deregulation of the power
and
and energy industry.”
(g) Presidential Decree No. 1956, as
amended by Executive Order No. Be that as it may, we are not
137: concerned with whether or not
there should be deregulation. This
Provided, however, That in case full is outside our jurisdiction. The
deregulation is started by the President in judgment on the issue is a settled
the exercise of the authority provided in this matter and only Congress can
Section, the foregoing laws shall continue to reverse it.
be in force and effect with respect to LPG,
regular gasoline and kerosene for the rest of xxx xxx xxx
the five (5)-month period.
Reduced to its basic arguments, it
Petitioner Garcia contended that can be seen that the challenge in this
implementing full deregulation and removing petition is not against the legality of
price control at a time when the market is still deregulation. Petitioner does not
dominated and controlled by an oligopoly[5] expressly challenge deregulation.
[5]
would be contrary to public interest, as it The issue, quite simply, is the
would only provide an opportunity for the Big timeliness or the wisdom of the
date when full deregulation should
be effective.
Garcia vs. Corona. G.R No. 132451, December 17, 1999, 321
[4]

SCRA 218. Supra note 4; herein petitioner Garcia is the same petitioner in
[6]
Referring to the oil companies Shell, Caltex, and Petron, otherwise
[5]
G.R. No. 132451, and therein respondent Executive Secretary
known as the Big 3. Renato Corona is now a member of this Court.
In this regard, what constitutes continued existence of the Big 3 oligopoly
reasonable time is not for judicial and its overpricing of finished petroleum
determination. Reasonable time products;
involves the appraisal of a great
variety of relevant conditions, 2. The unabated overpricing of finished
political, social and economic. They petroleum products by the Big 3 oligopoly
are not within the appropriate range is gravely and undeniably detrimental to
of evidence in a court of justice. It the public interest;
would be an extravagant extension
of judicial authority to assert 3. No longer may the bare and blatant
judicial notice as the basis for the constitutionality of the lifting of price
determination. [Emphasis supplied.] control be glossed over through the
expediency of legislative wisdom or
Undaunted, petitioner Garcia is again before judgment call in the face of the Big 3
us in the present petition for certiorari oligopoly’s characteristic, definitive, and
seeking a categorical declaration from this continued overpricing;
Court of the unconstitutionality of Section 19
of R.A. No. 8479. 4. To avoid declaring the lifting of price
control on finished petroleum products
THE PETITION as unconstitutional is to consign to the
dead letter dustbin the solemn and
Petitioner Garcia does not deny that the explicit constitutional command for the
present petition for certiorari raises the same regulation of monopolies/oligopolies.[9][9]
issue of the constitutionality of Section 19 of
R.A. No. 8479, which was already the subject THE COURT’S RULING
of the 1999 Garcia case. He disagrees,
however, with the allegation that the prior We resolve to dismiss the petition.
rulings of the Court in the two oil deregulation
cases[7][7] amount to res judicata that would In asking the Court to declare Section 19 of R.A.
effectively bar the resolution of the present No. 8479 as unconstitutional for contravening
petition. He reasons that res judicata will not Section 19, Article XII of the Constitution,
apply, as the earlier cases did not completely petitioner Garcia invokes the exercise by this
resolve the controversy and were not decided Court of its power of judicial review, which
on the merits. Moreover, he maintains power is expressly recognized under Section
that the present case involves a matter of 4(2), Article VIII of the Constitution.[10][10] The
overarching and overriding importance to power of judicial review is the power of the
the national economy and to the public and courts to test the validity of executive and
cannot be sacrificed for technicalities like res legislative acts for their conformity with the
judicata.[8][8] Constitution.[11][11] Through such power, the
judiciary enforces and upholds the supremacy
To further support the present petition, of the Constitution.[12][12] For a court to
petitioner Garcia invokes the following exercise this power, certain requirements
additional grounds to nullify Section 19 of must first be met, namely:
R.A. No. 8479:
1. Subsequent events after the lifting of [9]
Ibid, pp. 14-15.
price control in 1997 have confirmed the [10]
The exercise of the power of judicial review by the lower courts is
implicitly recognized in Section 5(1) (a) and (b), Article VIII of the
Constitution.
[7]
See Tatad vs. Secretary of DOE, supra note 2, and Garcia vs. [11]
A. Nachura, Outline Reviewer in Political Law (2006 ed.), p. 13.
Corona, supra note 4. [12]
H. De Leon, Philippine Constitutional Law: Principles and Cases
[8]
Rollo, pp. 430-435. (2004 ed.), p. 473.
(1) an actual case or controversy calling for Thus, if an issue is clearly identified
the exercise of judicial power; by the text of the Constitution as
matters for discretionary action by
(2) the person challenging the act must have a particular branch of government
“standing” to challenge; he must have a or to the people themselves then
personal and substantial interest in the it is held to be a political question.
case such that he has sustained, or will In the classic formulation of Justice
sustain, direct injury as a result of its Brennan in Baker vs. Carr, “[p]
enforcement; rominent on the surface of any case
held to involve a political question
(3) the question of constitutionality must is found a textually demonstrable
be raised at the earliest possible constitutional commitment of
opportunity; and the issue to a coordinate political
department; or a lack of judicially
(4) the issue of constitutionality must be the discoverable and manageable
very lis mota of the case.[13][13] standards for resolving it; or the
impossibility of deciding without
Actual Case Controversy an initial policy determination
Susceptible of Judicial Determination of a kind clearly for non-judicial
discretion; or the impossibility of
The petition fails to satisfy the very first of a court’s undertaking independent
these requirements – the existence of an resolution without expressing lack of
actual case or controversy calling for the the respect due coordinate branches
exercise of judicial power. An actual case or of government; or an unusual need
controversy is one that involves a conflict of for unquestioning adherence to a
legal rights, an assertion of opposite legal political decision already made; or
claims susceptible of judicial resolution; the the potentiality of embarrassment
case must not be moot or academic or based from multifarious pronouncements
on extra-legal or other similar considerations by various departments on the one
not cognizable by a court of justice. Stated question.”[14][14] [Emphasis supplied.]
otherwise, it is not the mere existence of a
conflict or controversy that will authorize the Petitioner Garcia’s issues fit snugly into the
exercise by the courts of its power of review; political question mold, as he insists that by
more importantly, the issue involved must adopting a policy of full deregulation through
be susceptible of judicial determination. the removal of price controls at a time when
Excluded from these are questions of policy an oligopoly still exists, Section 19 of R.A. No.
or wisdom, otherwise referred to as political 8479 contravenes the Constitutional directive
questions: to regulate or prohibit monopolies[15][15] under
Article XII, Section 19 of the Constitution.
As Tañada vs. Cuenco puts it, political This Section states:
questions refer “to those questions
which, under the Constitution, are The State shall regulate or prohibit
to be decided by the people in their monopolies when the public interest
sovereign capacity, or in regard to so requires. No combinations
which full discretionary authority has in restraint of trade or unfair
been delegated to the legislative or competition shall be allowed.
executive branch of government.”
[14]
Integrated Bar of the Philippines vs. Zamora, G.R. No. 141284,
[13]
Francisco, Jr. vs. House of Representatives, G.R. No. 160261, August 15, 2000, 338 SCRA 81, citing Tañada vs. Cuenco, 103 Phil.
November 10, 2003, 415 SCRA 44, citing Angara vs. Electoral 1051 and Baker vs. Carr, 369 U.S. 186.
Commission, 63 Phil. 139 (1936). [15]
Rollo, pp. 29, 445.
Read correctly, this constitutional provision environment) cannot prevail for as long as the
does not declare an outright prohibition of market itself is dominated by an entrenched
monopolies. It simply allows the State to act oligopoly. In such a situation, he claims that
“when public interest so requires”; even then, prices are not determined by the free play
no outright prohibition is mandated, as the of supply and demand, but instead by the
State may choose to regulate rather than to entrenched and dominant oligopoly where
prohibit. Two elements must concur before overpricing and price-fixing are possible.
a monopoly may be regulated or prohibited: [17][17]
Thus, before full deregulation can be
implemented, he calls for an indefinite period
1. There in fact exists a monopoly or an of partial deregulation through imposition of
oligopoly, and price controls.[18][18]

2. Public interest requires its regulation or Petitioner Garcia’s thesis readily reveals the
prohibition. political,[19][19] hence, non-justiciable, nature
of his petition; the choice of undertaking full
Whether a monopoly exists is a question of or partial deregulation is not for this Court
fact. On the other hand, the questions of (1) to make. By enacting the assailed provision
what public interest requires and (2) what the – Section 19 – of R.A. No. 8479, Congress
State reaction shall be essentially require the already determined that the problems
exercise of discretion on the part of the State. confronting the local downstream oil industry
are better addressed by removing all forms
Stripped to its core, what petitioner of prior controls and adopting a deregulated
Garcia raises as an issue is the propriety of system. This intent is expressed in Section 2
immediately and fully deregulating the oil of the law:
industry. Such determination essentially
dwells on the soundness or wisdom of the SEC. 2. Declaration of Policy. – It shall
timing and manner of the deregulation be the policy of the State to liberalize
Congress wants to implement through R.A. and deregulate the downstream oil
No. 8497. Quite clearly, the issue is not for industry in order to ensure a truly
us to resolve; we cannot rule on when and competitive market under a regime of
to what extent deregulation should take fair prices, adequate and continuous
place without passing upon the wisdom of supply of environmentally-clean and
the policy of deregulation that Congress has high-quality petroleum products.
decided upon. To use the words of Baker vs. To this end, the State shall promote
Carr,[16][16] the ruling that petitioner Garcia and encourage the entry of new
asks requires “an initial policy determination participants in the downstream oil
of a kind clearly for non-judicial discretion”; industry, and introduce adequate
the branch of government that was given by measures to ensure the attainment
the people the full discretionary authority of these goals.
to formulate the policy is the legislative
department. In Tatad, we declared that the fundamental
principle espoused by Section 19, Article
Directly supporting our conclusion that Garcia XII of the Constitution is competition.[20]
raises a political question is his proposal to [20]
Congress, by enacting R.A. No. 8479,
adopt instead a system of partial deregulation determined that this objective is better
– a system he presents as more consistent
with the Constitutional “dictate.” He avers [17]
[18]
Rollo, pp. 439-442, 453.
Ibid, pp. 29, 440.
that free market forces (in a fully deregulated [19]
That is, “pertaining to public policy,” as defined in The New
International Webster’s Dictionary and Thesaurus of the English
Language, International Edition (2002 ed.).
[16]
Cited in IBP vs. Zamora, supra note 14. [20]
Supra note 2.
realized by liberalizing the oil market, instead whether the acts of the executive and the
of continuing with a highly regulated system legislative departments are null because
enforced by means of restrictive prior they were undertaken with grave abuse of
controls. This legislative determination was discretion. IBP vs. Zamora teaches us that -
a lawful exercise of Congress’ prerogative and
one that this Court must respect and uphold. When political questions are
Regardless of the individual opinions of the involved, the Constitution limits the
Members of this Court, we cannot, acting as determination as to whether there
a body, question the wisdom of a co-equal has been grave abuse of discretion
department’s acts. The courts do not involve amounting to lack or excess of
themselves with or delve into the policy or jurisdiction on the part of the official
wisdom of a statute;[21][21] it sits, not to review whose action is being questioned.
or revise legislative action, but to enforce
the legislative will.[22][22] For the Court to xxx xxx xxx
resolve a clearly non-justiciable matter would
be to debase the principle of separation of [W]hile this Court has no power to
powers that has been tightly woven by the substitute its judgment for that of
Constitution into our republican system of Congress or of the President, it may
government. look into the question of whether
such exercise has been made in
This same line of reasoning was what we used grave abuse of discretion. A showing
when we dismissed the first Garcia case. The that plenary power is granted either
petitioner correctly noted that this is not a department of government, may not
matter of res judicata (as the respondents be an obstacle to judicial inquiry, for
invoked), as the application of the principle of the improvident exercise or abuse
res judicata presupposes that there is a final thereof may give rise to justiciable
judgment or decree on the merits rendered controversy. [23][23] [Emphasis
by a court of competent jurisdiction. To be supplied.]
exact, we are simply declaring that then, as
now, and for the same reasons, we find that Jurisprudence has defined grave abuse
there is no justiciable controversy that would of discretion to mean the capricious or
justify the grant of the petition. whimsical exercise of judgment that is so
patent and gross as to amount to an evasion
Grave Abuse of Discretion of positive duty or a virtual refusal to perform
a duty enjoined by law, or to act at all in
Recourse to the political question doctrine contemplation of law, as where the power is
necessarily raises the underlying doctrine exercised in an arbitrary and despotic manner
of separation of powers among the three by reason of passion or hostility.[24][24]
great branches of government that our
Constitution has entrenched. But at the Significantly, the pleadings before us fail to
same time that the Constitution mandates disclose any act of the legislature that may
this Court to respect acts performed by co- be characterized as patently capricious or
equal departments done within their sphere whimsical. A reading of the congressional
of competence and authority, it has also deliberations made on R.A. No. 8479 indicates
allowed us to cross the line of separation on a that the measure was thoroughly and carefully
very limited and specific point – to determine considered. Indeed, petitioner Garcia was
[21]
Fariñas vs. COMELEC, G.R. No. 147387, December 10, 2003, 417
SCRA 503.
[22]
Demetria vs. Alba, G.R. No. L-71977, February 27, 1987, 148 [23]
Supra note 14.
SCRA 208, citing T. M. Cooley, A Treatise on the Constitutional Land Bank of the Philippines vs. Court of Appeals, G.R. No.
[24]
Limitations, Vol. 1, 8th ed. 129368, 25 August 2003, 409 SCRA 455.
among the many who interpellated the law’s data are irrelevant, as they cover a period way
principal author, then Congressman Dante O. before R.A. No. 8479 was enacted.[25][25]
Tiñga, now a Member of this Court.
Petitioner Garcia contends that the identity in
We note, too, that petitioner Garcia has the pricing patterns of the Big 3 confirms the
not adequately proven at this point that an existence of an oligopoly and shows that they
oligopoly does in fact exist in the form of have colluded to engage in unlawful cartel-like
the Big 3, and that the Big 3 have actually behaviour. His reasoning fails to persuade us.
engaged in oligopolistic practices. He merely That the oil firms have the same prices and
cites (in his argument against the applicability change them at the same rate at the same
of res judicata) and relies on the facts and time are not sufficient evidence to conclude
findings stated in the two prior cases on oil that collusion exists. An independent study
deregulation. This calls to mind what former on local oil prices explains:
Chief Justice Panganiban said in his Separate
Opinion in the 1999 Garcia case: [W]hen products are highly
substitutable with each other (or
Petitioner merely resurrects and what economists call “homogeneous
relies heavily on the arguments, the products”), then firms will tend to
statistics and the proofs he submitted set similar prices, especially when
two years ago in the first oil there are many competing sellers.
deregulation case, Tatad vs. Secretary Otherwise, if one firm tried to set
of the Department of Energy. a price significantly higher than the
Needless to state, those reasons others, it would find itself losing
were taken into consideration in customers to the others.[26][26]
said case, and they indeed helped
show the unconstitutionality of Even assuming that the Big 3 have indeed
RA 8180. But exactly the same old colluded in fixing oil prices, this development
grounds cannot continue to support will not necessarily justify a declaration
petitioner’s present allegation that against the validity and constitutionality of
the major oil companies -- Petron, Section 19 of R.A. No. 8479. The remedy
Shell and Caltex -- persist to this against the perceived failure of the Oil
date in their oligopolistic practices, Deregulation Law to combat cartelization is
as a consequence of the current Oil not to declare it invalid, but to set in motion
Deregulation Law and in violation of [25]
R.A. No. 8479 was enacted on February 10, 1998.
the Constitution. In brief, the legal [26]
Report of the SGV-UA&P Independent Study on Oil Prices, May
cause and effect relationship has [27]
2008, p. 4.
SECTION 11. Anti-Trust Safeguards. – To ensure fair competition
not been amply shown. [Emphasis and prevent cartels and monopolies in the Industry, the following
acts are hereby prohibited:
supplied.] (a) Cartelization which means any agreement, combination or
concerted action by refiners, importers and/or dealers, or
their representatives, to fix prices, restrict outputs or divide
This observation is true in the present case markets, either by products or by areas, or allocate markets,
either by products or by areas, in restraint of trade or free
as it was true in the 1999 Garcia case; the competition, including any contractual stipulation which
petitioner has simply omitted the citation prescribes pricing levels and profit margins;
(b) Predatory pricing which means selling or offering to sell any
of facts, figures and statistics specifically oil product at a price below the seller’s or offeror’s average
variable cost for the purpose of destroying competition,
supporting his petition. To prove charges eliminating a competitor or discouraging a potential
of continued overpricing or price-fixing, he competitor from entering the market: Provided, however,
That pricing below average variable cost in order to match
refers to data showing price adjustments of the lower price of the competitor and not for the purpose
petroleum products for the period covering of destroying competition shall not be deemed predatory
pricing. For purposes of this prohibition, “variable cost” as
February 8, 1997 to August 1, 1997. Insofar distinguished from “fixed cost”, refers to costs such as utilities
or raw materials, which vary as the output increases or
as R.A. No. 8479 is concerned, however, these decreases and “average variable cost” refers to the sum of all
variable costs divided by the number of units of outputs.
its anti-trust safeguards under Sections 11,[27] show that the case cannot be legally resolved
[27]
12,[28][28] and 13.[29][29] unless the constitutional question raised is
determined.[30][30] This requirement is based
Lis Mota on the rule that every law has in its favor
the presumption of constitutionality; [31][31] to
Lis Mota – the fourth requirement to satisfy justify its nullification, there must be a clear
before this Court will undertake judicial and unequivocal breach of the Constitution,
review – means that the Court will not pass and not one that is doubtful, speculative, or
upon a question of unconstitutionality, argumentative.
although properly presented, if the case
can be disposed of on some other ground, Petitioner Garcia argues against full
such as the application of the statute or the deregulation implemented through the
general law. The petitioner must be able to lifting of price control, as it allows oligopoly,
overpricing and price-fixing. R.A. No. 8479,
(c) Any person, including but not limited to the chief operating however, does not condone these acts;
officer, chief executive officer or chief finance officer of the
partnership, corporation or any entity involved, who is indeed, Section 11 (a) of the law expressly
found guilty of any of the said prohibited acts shall suffer the prohibits and punishes cartelization, which
penalty of three (3) to seven (7) years imprisonment, and a
fine ranging from One million pesos (P 1,000,000.00) to Two is defined in the same section as “any
million pesos (P 2,000,000.00).
[28]
SECTION 12. Other Prohibited Acts. – To ensure compliance with agreement, combination or concerted action
the provisions of this Act, the refusal to comply with any of the by refiners, importers and/or dealers, or
following shall likewise be prohibited:
(a) submission of any reportorial requirements; their representatives, to fix prices, restrict
(b) use of clean and safe (environment and worker-benign)
technologies;
outputs or divide markets, either by
(c) any order or instruction of the DOE Secretary issued in the products or by areas, or allocate markets,
exercise of his enforcement powers under Section 15 of this
Act; and either by products or by areas, in restraint
(d) registration of any fuel additive with the DOE prior to its use as
an additive.
of trade or free competition, including any
Any person, including but not limited to the chief operating contractual stipulation which prescribes
officer or chief executive officer of the partnership,
corporation or any entity involved, who is found guilty of pricing levels and profit margins.” This
any of the said prohibited acts shall suffer the penalty of definition is broad enough to include the
imprisonment for two (2) years and fine ranging from Two
hundred fifty thousand pesos (P 250,000.00) to Five hundred alleged acts of overpricing or price-fixing by
thousand pesos (P 500,000.00).
[29]
SEC. 13. Remedies. – (a) Government Action – Whenever it is the Big 3. R.A. No. 8479 has provided, aside
determined by the Joint Task Force created under Section 14 from prosecution for cartelization, several
(d) of this Act, that there is a threatened, imminent or actual
violation of Section 11 of this Act, it shall direct the provincial other anti-trust mechanisms, including
or city prosecutors having jurisdiction to institute an action to
prevent or restrain such violation with the Regional Trial Court
the enlarged scope of the Department of
of the place where the defendant or any of the defendants reside Energy’s monitoring power and the creation
or has his place of business. Pending hearing of the complaint
and before final judgment, the court may at any time issue a of a Joint Task Force to immediately act on
temporary restraining order or an order of injunction as shall be
deemed just within the premises, under the same conditions and
complaints against unreasonable rise in the
principles as injunctive relief is granted under the Rules of Court. price of petroleum products.[32][32] Petitioner
Whenever it is determined by the Joint Task Force that the
Government or any of its instrumentalities or agencies, Garcia’s failure is that he failed to show that
including government-owned or -controlled corporations, shall he resorted to these measures before filing
suffer loss or damage in its business or property by reason of
violation of Section 11 of this Act, such instrumentality, agency the instant petition. His belief that these
or corporation may file an action to recover damages and the
costs of suit with the Regional Trial Court which has jurisdiction
as provided above. (b) Private Complaint. – Any person or entity
shall report any violation of Section 11 of this Act to the Joint
Task Force. The Joint Task Force shall investigate such reports in [30]
People vs. Vera, 65 Phil. 56 (1938).
aid of which the DOE Secretary may exercise the powers granted [31]
Romualdez vs. Sandiganbayan, G.R. No. 152259, July 29, 2004,
under Section 15 of this Act. The Joint Task Force shall prepare a 435 SCRA 371.
report embodying its findings and recommendations as a result [32]
SECTION 14. Monitoring. – xxx (d) Any report from any person of
of any such investigation, and the report shall be made public at an unreasonable rise in the prices of petroleum products shall be
the discretion of the Joint Task Force. In the event that the Joint immediately acted upon. For this purpose, the creation of DOE-
Task Force determines that there has been a violation of Section DOJ Task Force is here by mandated to determine within thirty
11 of this Act, the private person or entity shall be entitled to (30) days the merits of the report and initiate the necessary
sue for and obtain injunctive relief, as well as damages, in the actions warranted under the circumstance: Provided, That
Regional Trial Court having jurisdiction over any of the parties, nothing herein shall prevent the said task force from investigating
under the same conditions and principles as injunctive relief is and/or filing the necessary complaint with the proper court or
granted under the Rules of Court. agency motu proprio. xxx.
oversight mechanisms are unrealistic and ANTONIO T. CARPIO
insufficient does not permit disregard of Associate Justice
these remedies.[33][33]
MA. ALICIA AUSTRIA-MARTINEZ
CONCLUSION Associate Justice

To summarize, we declare that the issues CONCHITA CARPIO MORALES
petitioner Garcia presented to this Court are Associate Justice
non-justiciable matters that preclude the
Court from exercising its power of judicial RENATO C. CORONA
review. The immediate implementation of Associate Justice
full deregulation of the local downstream oil
industry is a policy determination by Congress
which this Court cannot overturn without CERTIFICATION
offending the Constitution and the principle
of separation of powers. That the law Pursuant to Section 13, Article VIII of the
failed in its objectives because its adoption Constitution, it is hereby certified that the
spawned the evils petitioner Garcia alludes conclusions in the above Decision were
to does not warrant its nullification. In the reached in consultation before the case was
words of Mr. Justice Leonardo A. Quisumbing assigned to the writer of the opinion of the
in the 1999 Garcia case, “[a] calculus of Court.
fear and pessimism xxx does not justify the
remedy petitioner seeks: that we overturn a REYNATO S. PUNO
law enacted by Congress and approved by the Chief Justice
Chief Executive.”[34][34]

WHEREFORE, we hereby DISMISS the
petition. No pronouncements as to costs.

SO ORDERED.

ARTURO D. BRION
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice
LEONARDO A. QUISUMBING
Associate Justice
CONSUELO YNARES-SANTIAGO
Associate Justice
[33]
Rollo, pp. 459-461.
[34]
Concurring Opinion of Justice Quisumbing in the 1999 Garcia
case, p. 267.
Case No. 5: the oil industry other than those dealing with
ordinary commodities. Oil companies were
Republic of the Philippines free to enter and exit the market without any
Supreme Court government interference. There were four
Manila [4] refining companies [Shell, Caltex, Bataan
Refining Company and Filoil Refining] and six
EN BANC [6] petroleum marketing companies [Esso,
Filoil, Caltex, Getty, Mobil and Shell], then
G.R. No. 124360
operating in the country.[2]
November 5, 1997
In 1971, the country was driven to its knees
FRANCISCO S. TATAD, Petitioner, by a crippling oil crisis. The government,
realizing that petroleum and its products
-versus- are vital to national security and that their
continued supply at reasonable prices is
THE SECRETARY OF THE DEPARTMENT OF essential to the general welfare, enacted the
ENERGY, ET. AL., Respondents. Oil Industry Commission Act.[3] It created
the Oil Industry Commission [OIC] to regulate
the business of importing, exporting, re-
G.R. No. 127867 exporting, shipping, transporting, processing,
refining, storing, distributing, marketing and
November 5, 1997
selling crude oil, gasoline, kerosene, gas and
EDCEL C. LAGMAN, ET. AL., other refined petroleum products. The OIC
Petitioners, was vested with the power to fix the market
prices of petroleum products, to regulate
the capacities of refineries, to license new
-versus- refineries and to regulate the operations and
trade practices of the industry.[4]
HON. RUBEN TORRES in his capacity as
Executive Secretary, ET. AL., In addition to the creation of the OIC, the
Respondents. government saw the imperious need for
a more active role of Filipinos in the oil
D E C I S I O N industry. Until the early seventies, the
downstream oil industry was controlled by
PUNO, J.: multinational companies. All the oil refineries
and marketing companies were owned by
The petitions at bar challenge the foreigners whose economic interests did
constitutionality of Republic Act No. not always coincide with the interest of the
8180 entitled “An Act Deregulating the Filipino. Crude oil was transported to the
Downstream Oil Industry and For Other country by foreign-controlled tankers. Crude
Purposes”.[1] R.A. No. 8180 ends twenty six processing was done locally by foreign-
(26) years of government regulation of the owned refineries and petroleum products
downstream oil industry. Few cases carry a were marketed through foreign-owned retail
surpassing importance on the life of every outlets. On November 9, 1973, President
Filipino as these petitions for the upswing Ferdinand E. Marcos boldly created the
and downswing of our economy materially Philippine National Oil Corporation [PNOC]
depend on the oscillation of oil. to break the control by foreigners of our oil
industry.[5] PNOC engaged in the business
First, the facts without the fat. Prior to 1971, of refining, marketing, shipping, transporting,
there was no government agency regulating and storing petroleum. It acquired ownership
of ESSO Philippines and Filoil to serve as its Energy requiring payment of
marketing arm. It bought the controlling persons or companies engaged
shares of Bataan Refining Corporation, the in the business of importing,
largest refinery in the country.[6] PNOC later manufacturing and/or marketing
put up its own marketing subsidiary PetroPhil. petroleum products, or
PNOC operated under the business name
PETRON Corporation. For the first time, there 4. any resulting peso costs
was a Filipino presence in the Philippine oil differentials in case the actual
market. peso costs paid by oil companies
in the importation of crude oil
In 1984, President Marcos through Section 8 and petroleum products is less
of Presidential Decree No. 1956, created the than the peso costs computed
Oil Price Stabilization Fund (OPSF) to cushion using the reference foreign
the effects of frequent changes in the price exchange rate as fixed by the
of oil caused by exchange rate adjustments Board of Energy.[7]
or increase in the world market prices of
crude oil and imported petroleum products. By 1985, only three (3) oil companies were
The fund is used (1) to reimburse the oil operating in the country Caltex, Shell and the
companies for cost increases in crude oil government-owned PNOC.
and imported petroleum products resulting
from exchange rate adjustment and/or In May 1987, President Corazon C. Aquino
increase in world market prices of crude oil, signed Executive Order No. 172 creating
and (2) to reimburse oil companies for cost the Energy Regulatory Board to regulate
underrecovery incurred as a result of the the business of importing, exporting, re-
reduction of domestic prices of petroleum exporting, shipping, transporting, processing,
products. Under the law, the OPSF may be refining, marketing and distributing energy
sourced from: resources “when warranted and only when
public necessity requires.” The Board had the
1. any increase in the tax collection following powers and functions:
from ad valorem tax or customs
duty imposed on petroleum 1. Fix and regulate the prices of
products subject to tax under petroleum products;
P.D. No. 1956 arising from
exchange rate adjustment, 2. Fix and regulate the rate
schedule or prices of piped gas
2. any increase in the tax collection to be charged by duly franchised
as a result of the lifting of tax gas companies which distribute
exemptions of government gas by means of underground
corporations, as may be pipe system;
determined by the Minister of
Finance in consultation with the 3. Fix and regulate the rates of
Board of Energy, pipeline concessionaries under
the provisions of R.A. No. 387, as
3. any additional amount to amended;
be imposed on petroleum
products to augment the 4. Regulate the capacities of new
resources of the fund through refineries or additional capacities
an appropriate order that of existing refineries and license
may be issued by the Board of refineries that may be organized

after the issuance of (E.O. No. On December 16, 1993, PNOC sold 40% of its
172) under such terms and equity in Petron Corporation to the Aramco
conditions as are consistent with Overseas Company.
the national interest; and
In March 1996, Congress took the audacious
5. Whenever the Board has step of deregulating the downstream oil
determined that there is a industry. It enacted R.A. No. 8180, entitled
shortage of any petroleum the “Downstream Oil Industry Deregulation
product, or when public Act of 1996.” Under the deregulated
interest so requires, it may take environment, “any person or entity may
such steps as it may consider import or purchase any quantity of crude oil
necessary, including the and petroleum products from a foreign or
temporary adjustment of the domestic source, lease or own and operate
levels of prices of petroleum refineries and other downstream oil facilities
products and the payment to and market such crude oil or use the same
the Oil Price Stabilization Fund for his own requirement,” subject only to
by persons or entities engaged in monitoring by the Department of Energy.[11]
the petroleum industry of such
amounts as may be determined The deregulation process has two
by the Board, which may enable phases: the transition phase and the full
the importer to recover its cost deregulation phase. During the transition
of importation.[8] phase, controls of the non-pricing aspects
of the oil industry were to be lifted. The
On December 9, 1992, Congress enacted R.A. following were to be accomplished: (1)
No. 7638 which created the Department of liberalization of oil importation, exportation,
Energy to prepare, integrate, coordinate, manufacturing, marketing and distribution,
supervise and control all plans, programs, (2) implementation of an automatic pricing
projects, and activities of the government in mechanism, (3) implementation of an
relation to energy exploration, development, automatic formula to set margins of dealers
utilization, distribution and conservation.[9] and rates of haulers, water transport
The thrust of the Philippine energy program operators and pipeline concessionaires,
under the law was toward privatization of and (4) restructuring of oil taxes. Upon full
government agencies related to energy, deregulation, controls on the price of oil and
deregulation of the power and energy the foreign exchange cover were to be lifted
industry and reduction of dependency on and the OPSF was to be abolished.
oil-fired plants.[10] The law also aimed to
encourage free and active participation and The first phase of deregulation commenced
investment by the private sector in all energy on August 12, 1996. On February 8, 1997, the
activities. Section 5 (e) of the law states President implemented the full deregulation
that “at the end of four [4] years from the of the Downstream Oil Industry through E.O.
effectivity of this Act, the Department shall, No. 372.
upon approval of the President, institute the
programs and timetable of deregulation of The petitions at bar assail the constitutionality
appropriate energy projects and activities of of various provisions of R.A. No. 8180 and
the energy industry.” E.O. No. 372.

Pursuant to the policies enunciated in R.A. In G.R. No. 124360, petitioner Francisco S.
No. 7638, the government approved the Tatad seeks the annulment of section 5 (b) of
privatization of Petron Corporation in 1993. R.A. No. 8180. Section 5 (b) provides:

(b) Any law to the contrary runs counter to the objective of the
notwithstanding and starting law “to foster a truly competitive
with the effectivity of this Act, market.”
tariff duty shall be imposed and
collected on imported crude oil Third, that the inclusion of the tariff
at the rate of three percent (3%) provision in section 5 (b) of R.A. No.
and imported refined petroleum 8180 violates Section 26 (1) Article
products at the rate of seven VI of the Constitution requiring
percent (7%), except fuel oil and every law to have only one subject
LPG, the rate for which shall be which shall be expressed in its
the same as that for imported title. Petitioner contends that the
crude oil: Provided, That imposition of tariff rates in section
beginning on January 1, 2004 the 5 (b) of R.A. No. 8180 is foreign to
tariff rate on imported crude oil the subject of the law which is the
and refined petroleum products deregulation of the downstream oil
shall be the same: Provided, industry.
further, That this provision may
be amended only by an Act of In G.R. No. 127867, petitioners Edcel C.
Congress. Lagman, Joker P. Arroyo, Enrique Garcia,
Wigberto Tañada, Flag Human Rights
The petition is anchored on three arguments: Foundation, Inc., Freedom from Debt
Coalition (FDC) and Sanlakas contest the
First, that the imposition of different constitutionality of Section 15 of R.A. No.
tariff rates on imported crude oil and 8180 and E.O. No. 392. Section 15 provides:
imported refined petroleum products
violates the equal protection clause. SEC. 15. Implementation of Full
Petitioner contends that the 3%- Deregulation. – Pursuant to Section 5
7% tariff differential unduly favors (e) of Republic Act No. 7638, the DOE
the three existing oil refineries and shall, upon approval of the President,
discriminates against prospective implement the full deregulation of
investors in the downstream oil the downstream oil industry not
industry who do not have their own later than March 1997. As far as
refineries and will have to source practicable, the DOE shall time the
refined petroleum products from full deregulation when the prices of
abroad. crude oil and petroleum products in
the world market are declining and
Second, that the imposition of when the exchange rate of the peso
different tariff rates does not in relation to the US dollar is stable.
deregulate the downstream oil Upon the implementation of the full
industry but instead controls the deregulation as provided herein,
oil industry, contrary to the avowed the transition phase is deemed
policy of the law. Petitioner avers terminated and the following laws
that the tariff differential between are deemed repealed:
imported crude oil and imported
refined petroleum products bars xxx xxx xxx
the entry of other players in the
oil industry because it effectively E.O. No. 392 states in full, viz.:
protects the interest of oil companies
with existing refineries. Thus, it

WHEREAS, Republic Act No. 7638, in relation to the US dollar has
otherwise known as the “Department been stable for the past twelve (12)
of Energy Act of 1992,” provides that, months, averaging at around P 26.20
at the end of four years from its to one US dollar;
effectivity last December 1992, “the
Department (of Energy) shall, upon WHEREAS, Executive Order No. 377
approval of the President, institute dated 31 October 1996 provides for
the programs and time table of an institutional framework for the
deregulation of appropriate energy administration of the deregulated
projects and activities of the energy industry by defining the functions
sector;” and responsibilities of various
government agencies;
WHEREAS, Section 15 of Republic
Act No. 8180, otherwise known WHEREAS, pursuant to Republic
as the “Downstream Oil Industry Act No. 8180, the deregulation
Deregulation Act of 1996,” provides of the industry will foster a truly
that “the DOE shall, upon approval competitive market which can better
of the President, implement full achieve the social policy objectives of
deregulation of the downstream oil fair prices and adequate, continuous
industry not later than March, 1997. supply of environmentally-clean and
As far as practicable, the DOE shall high quality petroleum products;
time the full deregulation when the
prices of crude oil and petroleum NOW, THEREFORE, I, FIDEL V.
products in the world market are RAMOS, President of the Republic of
declining and when the exchange the Philippines, by the powers vested
rate of the peso in relation to the US in me by law, do hereby declare the
dollar is stable;” full deregulation of the downstream
oil industry.
WHEREAS, pursuant to the
recommendation of the Department In assailing Section 15 of R.A. No. 8180 and
of Energy, there is an imperative E.O. No. 392, petitioners offer the following
need to implement the full submissions:
deregulation of the downstream oil
industry because of the following First, Section 15 of R.A. No. 8180 constitutes
recent developments: (i) depletion an undue delegation of legislative power to
of the buffer fund on or about 7 the President and the Secretary of Energy
February 1997 pursuant to the because it does not provide a determinate or
Energy Regulatory Board’s Order determinable standard to guide the Executive
dated 16 January 1997; (ii) the prices Branch in determining when to implement
of crude oil had been stable at $ 21-$ the full deregulation of the downstream
23 per barrel since October 1996 oil industry. Petitioners contend that the
while prices of petroleum products law does not define when it is practicable
in the world market had been for the Secretary of Energy to recommend
stable since mid-December of last to the President the full deregulation of
year. Moreover, crude oil prices are the downstream oil industry or when the
beginning to soften for the last few President may consider it practicable to
days while prices of some petroleum declare full deregulation. Also, the law
products had already declined; and does not provide any specific standard to
(iii) the exchange rate of the peso determine when the prices of crude oil in the

world market are considered to be declining the one title one subject requirement of
nor when the exchange rate of the peso to the Constitution; (2) whether or not the
the US dollar is considered stable. same section violates the equal protection
clause of the Constitution; (3) whether or
Second, petitioners aver that E.O. No. 392 not Section 15 violates the constitutional
implementing the full deregulation of the prohibition on undue delegation of power; (4)
downstream oil industry is arbitrary and whether or not E.O. No. 392 is arbitrary and
unreasonable because it was enacted due to unreasonable; and (5) whether or not R.A. No.
the alleged depletion of the OPSF fund – a 8180 violates the constitutional prohibition
condition not found in R.A. No. 8180. against monopolies, combinations in restraint
of trade and unfair competition.
Third, Section 15 of R.A. No. 8180 and E.O.
No. 392 allow the formation of a de facto We shall first tackle the procedural issues.
cartel among the three existing oil companies Respondents claim that the avalanche of
Petron, Caltex and Shell in violation of the arguments of the petitioners assail the
constitutional prohibition against monopolies, wisdom of R.A. No. 8180. They aver that
combinations in restraint of trade and unfair deregulation of the downstream oil industry
competition. is a policy decision made by Congress and it
cannot be reviewed, much less be reversed
Respondents, on the other hand, fervently by this Court. In constitutional parlance,
defend the constitutionality of R.A. No. 8180 respondents contend that the petitions failed
and E.O. No. 392. In addition, respondents to raise a justiciable controversy.
contend that the issues raised by the petitions
are not justiciable as they pertain to the Respondents’ joint stance is unnoteworthy.
wisdom of the law. Respondents further aver Judicial power includes not only the duty
that petitioners have no locus standi as they of the courts to settle actual controversies
did not sustain nor will they sustain direct involving rights which are legally demandable
injury as a result of the implementation of and enforceable, but also the duty to
R.A. No. 8180. determine whether or not there has been
grave abuse of discretion amounting to
The petitions were heard by the Court on lack or excess of jurisdiction on the part
September 30, 1997. On October 7, 1997, of any branch or instrumentality of the
the Court ordered the private respondents oil government.[12] The courts, as guardians of
companies “to maintain the status quo and to the Constitution, have the inherent authority
cease and desist from increasing the prices of to determine whether a statute enacted by
gasoline and other petroleum fuel products the legislature transcends the limit imposed
for a period of thirty (30) days…subject to by the fundamental law. Where a statute
further orders as conditions may warrant.” violates the Constitution, it is not only the
right but the duty of the judiciary to declare
We shall now resolve the petitions on such act as unconstitutional and void.[13]
the merit. The petitions raise procedural We held in the recent case of Tañada vs.
and substantive issues bearing on the Angara:[14]
constitutionality of R.A. No. 8180 and
E.O. No. 392. The procedural issues are: xxx xxx xxx
(1) whether or not the petitions raise a
justiciable controversy, and (2) whether or In seeking to nullify an act of the
not the petitioners have the standing to Philippine Senate on the ground that
assail the validity of the subject law and it contravenes the Constitution, the
executive order. The substantive issues are: petition no doubt raises a justiciable
(1) whether or not section 5 (b) violates controversy. Where an action of the
legislative branch is seriously alleged Objections to taxpayers’ suit for lack
to have infringed the Constitution, it of sufficient personality, standing or
becomes not only the right but in fact interest are, however, in the main
the duty of the judiciary to settle the procedural matters. Considering the
dispute. The question thus posed is importance to the public of the cases
judicial rather than political. The duty at bar, and in keeping with the Court’s
to adjudicate remains to assure that duty, under the 1987 Constitution, to
the supremacy of the Constitution determine whether or not the other
is upheld. Once a controversy as to branches of government have kept
the application or interpretation of themselves within the limits of the
a constitutional provision is raised Constitution and the laws and that
before this Court, it becomes a legal they have not abused the discretion
issue which the Court is bound by given to them, the Court has brushed
constitutional mandate to decide. aside technicalities of procedure
and has taken cognizance of these
Even a side glance at the petitions will reveal petitions.
that petitioners have raised constitutional
issues which deserve the resolution of There is not a dot of disagreement between
this Court in view of their seriousness and the petitioners and the respondents on the
their value as precedents. Our statement far reaching importance of the validity of R.A.
of facts and definition of issues clearly No. 8180 deregulating our downstream oil
show that petitioners are assailing R.A. industry. Thus, there is no good sense in being
No. 8180 because its provisions infringe hypertechnical on the standing of petitioners
the Constitution and not because the law for they pose issues which are significant to
lacks wisdom. The principle of separation our people and which deserve our forthright
of power mandates that challenges on the resolution.
constitutionality of a law should be resolved
in our courts of justice while doubts on the We shall now track down the substantive
wisdom of a law should be debated in the issues. In G.R. No. 124360 where petitioner
halls of Congress. Every now and then, a law is Senator Tatad, it is contended that Section
may be denounced in court both as bereft of 5 (b) of R.A. No. 8180 on tariff differential
wisdom and constitutionally infirmed. Such violates the provision[17] of the Constitution
denunciation will not deny this Court of its requiring every law to have only one subject
jurisdiction to resolve the constitutionality which should be expressed in its title. We do
of the said law while prudentially refusing to not concur with this contention. As a policy,
pass on its wisdom. this Court has adopted a liberal construction
of the one title one subject rule. We have
The effort of respondents to question the consistently ruled[18] that the title need not
locus standi of petitioners must also fall on mirror, fully index or catalogue all contents
barren ground. In language too lucid to be and minute details of a law. A law having a
misunderstood, this Court has brightlined its single general subject indicated in the title
liberal stance on a petitioner’s locus standi may contain any number of provisions, no
where the petitioner is able to craft an issue matter how diverse they may be, so long as
of transcendental significance to the people. they are not inconsistent with or foreign to
[15] In Kapatiran ng mga Naglilingkod sa the general subject, and may be considered
Pamahalaan ng Pilipinas, Inc. vs. Tan,[16] We in furtherance of such subject by providing
stressed: for the method and means of carrying out the
general subject.[19] We hold that Section 5
xxx xxx xxx (b) providing for tariff differential is germane

to the subject of R.A. No. 8180 which is the Court. As early as 1916 in Compania General
deregulation of the downstream oil industry. de Tabacos de Filipinas vs. The Board of Public
The section is supposed to sway prospective Utility Commissioners,[21] this Court through
investors to put up refineries in our country Mr. Justice Moreland, held that “the true
and make them rely less on imported distinction is between the delegation of power
petroleum.[20] We shall, however, return to make the law, which necessarily involves a
to the validity of this provision when We discretion as to what it shall be, and conferring
examine its blocking effect on new entrants authority or discretion as to its execution, to
to the oil market. be exercised under and in pursuance of the
law. The first cannot be done; to the latter
We shall now slide to the substantive issues in no valid objection can be made.” Over the
G.R. No. 127867. Petitioners assail Section 15 years, as the legal engineering of men’s
of R.A. No. 8180 which fixes the time frame relationship became more difficult, Congress
for the full deregulation of the downstream has to rely more on the practice of delegating
oil industry. We restate its pertinent portion the execution of laws to the executive and
for emphasis, viz.: other administrative agencies. Two tests
have been developed to determine whether
SEC. 15. Implementation of Full the delegation of the power to execute laws
Deregulation. – Pursuant to section does not involve the abdication of the power
5 (e) of Republic Act No. 7638, to make law itself. We delineated the metes
the DOE shall, upon approval of and bounds of these tests in Eastern Shipping
the President, implement the full Lines, Inc. vs. POEA,[22] thus:
deregulation of the downstream oil
industry not later than March 1997. There are two accepted tests to
As far as practicable, the DOE shall determine whether or not there is a
time the full deregulation when the valid delegation of legislative power,
prices of crude oil and petroleum viz: the completeness test and the
products in the world market are sufficient standard test. Under the
declining and when the exchange first test, the law must be complete
rate of the peso in relation to the US in all its terms and conditions when it
dollar is stable… leaves the legislative such that when
it reaches the delegate the only
Petitioners urge that the phrases “as far thing he will have to do is to enforce
as practicable,” “decline of crude oil prices it. Under the sufficient standard
in the world market” and “stability of the test, there must be adequate
peso exchange rate to the US dollar” are guidelines or limitations in the law
ambivalent, unclear and inconcrete in to map out the boundaries of the
meaning. They submit that they do not delegate’s authority and prevent
provide the “determinate or determinable the delegation from running riot.
standards” which can guide the President Both tests are intended to prevent
in his decision to fully deregulate the a total transference of legislative
downstream oil industry. In addition, they authority to the delegate, who is
contend that E.O. No. 392 which advanced not allowed to step into the shoes of
the date of full deregulation is void for it the legislature and exercise a power
illegally considered the depletion of the OPSF essentially legislative.
fund as a factor.
The validity of delegating legislative power
The power of Congress to delegate the is now a quiet area in our constitutional
execution of laws has long been settled by this landscape. As sagely observed, delegation of

legislative power has become an inevitability “stable” as meaning firmly established.[25]
in light of the increasing complexity of the task The fear of petitioners that these words will
of government. Thus, courts bend as far back result in the exercise of executive discretion
as possible to sustain the constitutionality of that will run riot is thus groundless. To be
laws which are assailed as unduly delegating sure, the Court has sustained the validity of
legislative powers. Citing Hirabayashi vs. similar, if not more general standards in other
United States[23] as authority, Mr. Justice cases.[26]
Isagani A. Cruz states “that even if the law
does not expressly pinpoint the standard, the It ought to follow that the argument that E.O.
courts will bend over backward to locate the No. 392 is null and void as it was based on
same elsewhere in order to spare the statute, indeterminate standards set by R.A. 8180
if it can, from constitutional infirmity.”[24] must likewise fail. If that were all to the attack
against the validity of E.O. No. 392, the issue
Given the groove of the Court’s rulings, the need not further detain our discourse. But
attempt of petitioners to strike down Section petitioners further posit the thesis that the
15 on the ground of undue delegation of Executive misapplied R.A. No. 8180 when it
legislative power cannot prosper. Section considered the depletion of the OPSF fund as
15 can hurdle both the completeness test a factor in fully deregulating the downstream
and the sufficient standard test. It will be oil industry in February 1997. A perusal of
noted that Congress expressly provided in Section 15 of R.A. No. 8180 will readily reveal
R.A. No. 8180 that full deregulation will start that it only enumerated two factors to be
at the end of March 1997, regardless of the considered by the Department of Energy and
occurrence of any event. Full deregulation the Office of the President, viz.: (1) the time
at the end of March 1997 is mandatory and when the prices of crude oil and petroleum
the Executive has no discretion to postpone products in the world market are declining,
it for any purported reason. Thus, the law is and (2) the time when the exchange rate
complete on the question of the final date of the peso in relation to the US dollar is
of full deregulation. The discretion given to stable. Section 15 did not mention the
the President is to advance the date of full depletion of the OPSF fund as a factor to
deregulation before the end of March 1997. be given weight by the Executive before
Section 15 lays down the standard to guide ordering full deregulation. On the contrary,
the judgment of the President; he is to time it the debates in Congress will show that some
as far as practicable when the prices of crude of our legislators wanted to impose as a pre-
oil and petroleum products in the world condition to deregulation a showing that the
market are declining and when the exchange OPSF fund must not be in deficit.[27] We
rate of the peso in relation to the US dollar is therefore hold that the Executive department
stable. failed to follow faithfully the standards set
by R.A. No. 8180 when it considered the
Petitioners contend that the words “as far as extraneous factor of depletion of the OPSF
practicable,” “declining” and “stable” should fund. The misappreciation of this extra factor
have been defined in R.A. No. 8180 as they cannot be justified on the ground that the
do not set determinate or determinable Executive department considered anyway the
standards. The stubborn submission deserves stability of the prices of crude oil in the world
scant consideration. The dictionary meanings market and the stability of the exchange rate
of these words are well settled and cannot of the peso to the dollar. By considering
confuse men of reasonable intelligence. another factor to hasten full deregulation, the
Webster defines “practicable” as meaning Executive department rewrote the standards
possible to practice or perform, “decline” as set forth in R.A. 8180. The Executive is bereft
meaning to take a downward direction, and of any right to alter either by subtraction or
addition the standards set in R.A. No. 8180 for
it has no power to make laws. To cede to the refiners and importers to maintain
Executive the power to make law is to invite a minimum inventory equivalent to
tyranny, indeed, to transgress the principle ten percent (10%) of their respective
of separation of powers. The exercise of annual sales volume or forty (40)
delegated power is given a strict scrutiny by days of supply, whichever is lower;”
courts for the delegate is a mere agent whose and
action cannot infringe the terms of agency. In
the cases at bar, the Executive co-mingled the (3) Section 9 (b) which states,
factor of depletion of the OPSF fund with the “To ensure fair competition and
factors of decline of the price of crude oil in prevent cartels and monopolies in
the world market and the stability of the peso the downstream oil industry, the
to the US dollar. On the basis of the text of following acts shall be prohibited:
E.O. No. 392, it is impossible to determine the
weight given by the Executive department to xxx xxx xxx
the depletion of the OPSF fund. It could well
be the principal consideration for the early (b) Predatory pricing which means
deregulation. It could have been accorded an selling or offering to sell any product
equal significance. Or its importance could at a price unreasonably below the
be nil. In light of this uncertainty, We rule industry average cost so as to attract
that the early deregulation under E.O. No. customers to the detriment of
392 constitutes a misapplication of R.A. No. competitors.
8180.
On the other hand, Section 19 of Article XII
We now come to grips with the contention of the Constitution allegedly violated by
that some provisions of R.A. No. 8180 the aforestated provisions of R.A. No. 8180
violate Section 19 of Article XII of the 1987 mandates: “The State shall regulate or
Constitution. These provisions are: prohibit monopolies when the public interest
so requires. No combinations in restraint of
(1) Section 5 (b) which states, “Any trade or unfair competition shall be allowed.”
law to the contrary notwithstanding
and starting with the effectivity of A monopoly is a privilege or peculiar advantage
this Act, tariff duty shall be imposed vested in one or more persons or companies,
and collected on imported crude consisting in the exclusive right or power
oil at the rate of three percent (3%) to carry on a particular business or trade,
and imported refined petroleum manufacture a particular article, or control
products at the rate of seven percent the sale or the whole supply of a particular
(7%) except fuel oil and LPG, the rate commodity. It is a form of market structure
for which shall be the same as that in which one or only a few firms dominate
for imported crude oil. Provided, the total sales of a product or service.[28] On
That beginning on January 1, 2004 the other hand, a combination in restraint
the tariff rate on imported crude oil of trade is an agreement or understanding
and refined petroleum products shall between two or more persons, in the form of
be the same: Provided, further, That a contract, trust, pool, holding company, or
this provision may be amended only other form of association, for the purpose of
by an Act of Congress.” unduly restricting competition, monopolizing
trade and commerce in a certain commodity,
(2) Section 6 which states, “To controlling its, production, distribution and
ensure the security and continuity price, or otherwise interfering with freedom
of petroleum crude and products of trade without statutory authority.[29]
supply, the DOE shall require the
Combination in restraint of trade refers to the the need to achieve the goals of our national
means while monopoly refers to the end.[30] economy as defined by Section 1, Article XII of
the Constitution which are: more equitable
Article 186 of the Revised Penal Code and distribution of opportunities, income and
Article 28 of the New Civil Code breathe life wealth; a sustained increase in the amount of
to this constitutional policy. Article 186 of the goods and services produced by the nation for
Revised Penal Code penalizes monopolization the benefit of the people; and an expanding
and creation of combinations in restraint of productivity as the key to raising the quality
trade,[31] while Article 28 of the New Civil of life for all, especially the underprivileged.
Code makes any person who shall engage in It also calls for the State to protect Filipino
unfair competition liable for damages.[32] enterprises against unfair competition and
trade practices.
Respondents aver that Sections 5 (b), 6 and
9 (b) implement the policies and objectives Section 19, Article XII of our Constitution is
of R.A. No. 8180. They explain that the 4% anti-trust in history and in spirit. It espouses
tariff differential is designed to encourage competition. The desirability of competition is
new entrants to invest in refineries. They the reason for the prohibition against restraint
stress that the inventory requirement is of trade, the reason for the interdiction
meant to guaranty continuous domestic of unfair competition, and the reason for
supply of petroleum and to discourage fly- regulation of unmitigated monopolies.
by-night operators. They also submit that Competition is thus the underlying principle
the prohibition against predatory pricing is of Section 19, Article XII of our Constitution
intended to protect prospective entrants. which cannot be violated by R.A. No. 8180.
Respondents manifested to the Court that We subscribe to the observation of Prof.
new players have entered the Philippines Gellhorn that the objective of anti-trust law
after deregulation and have now captured is “to assure a competitive economy, based
3%-5% of the oil market. upon the belief that through competition
producers will strive to satisfy consumer
The validity of the assailed provisions of R.A. wants at the lowest price with the sacrifice
No. 8180 has to be decided in light of the of the fewest resources. Competition among
letter and spirit of our Constitution, especially producers allows consumers to bid for goods
Section 19, Article XII. Beyond doubt, the and services, and thus matches their desires
Constitution committed us to the free with society’s opportunity costs.”[35] He
enterprise system but it is a system impressed adds with appropriateness that there is a
with its own distinctness. Thus, while the reliance upon “the operation of the ‘market’
Constitution embraced free enterprise system [free enterprise] to decide what shall
as an economic creed, it did not prohibit be produced, how resources shall be allocated
per se the operation of monopolies which in the production process, and to whom the
can, however, be regulated in the public various products will be distributed. The
interest.[33] Thus, too, our free enterprise market system relies on the consumer to
system is not based on a market of pure and decide what and how much shall be produced,
unadulterated competition where the State and on competition, among producers to
pursues a strict hands-off policy and follows determine who will manufacture it.”
the let-the-devil devour the hindmost rule.
Combinations in restraint of trade and unfair Again, we underline in scarlet that the
competitions are absolutely proscribed and fundamental principle espoused by
the proscription is directed both against the Section 19, Article XII of the Constitution
State as well as the private sector.[34] This is competition for it alone can release the
distinct free enterprise system is dictated by creative forces of the market. But the

competition that can unleash these creative refineries puts the cart before the horse. The
forces is competition that is fighting yet is first need is to attract new players and they
fair. Ideally, this kind of competition requires cannot be attracted by burdening them with
the presence of not one, not just a few but heavy disincentives. Without new players
several players. A market controlled by one belonging to the league of Petron, Shell and
player [monopoly] or dominated by a handful Caltex, competition in our downstream oil
of players [oligopoly] is hardly the market industry is an idle dream.
where honest-to-goodness competition will
prevail. Monopolistic or oligopolistic markets The provision on inventory widens the
deserve our careful scrutiny and laws which balance of advantage of Petron, Shell and
barricade the entry points of new players in Caltex against prospective new players.
the market should be viewed with suspicion. Petron, Shell and Caltex can easily comply
with the inventory requirement of R.A.
Prescinding from these baseline propositions, No. 8180 in view of their existing storage
we shall proceed to examine whether facilities. Prospective competitors again
the provisions of R.A. No. 8180 on tariff will find compliance with this requirement
differential, inventory reserves, and difficult as it will entail a prohibitive cost. The
predatory prices imposed substantial barriers construction cost of storage facilities and the
to the entry and exit of new players in our cost of inventory can thus scare prospective
downstream oil industry. If they do, they have players. Their net effect is to further occlude
to be struck down for they will necessarily the entry points of new players, dampen
inhibit the formation of a truly competitive competition and enhance the control of the
market. Contrariwise, if they are insignificant market by the three [3] existing oil companies.
impediments, they need not be stricken
down. Finally, We come to the provision on
predatory pricing which is defined as “selling
In the cases at bar, it cannot be denied that or offering to sell any product at a price
our downstream oil industry is operated and unreasonably below the industry average cost
controlled by an oligopoly, a foreign oligopoly so as to attract customers to the detriment
at that. Petron, Shell and Caltex stand as the of competitors.” Respondents contend that
only major league players in the oil market. this provision works against Petron, Shell and
All other players belong to the lilliputian Caltex and protects new entrants. The ban
league. As the dominant players, Petron, on predatory pricing cannot be analyzed in
Shell and Caltex boast of existing refineries isolation. Its validity is interlocked with the
of various capacities. The tariff differential barriers imposed by R.A. No. 8180 on the
of 4% therefore works to their immense entry of new players. The inquiry should
benefit. Yet, this is only one edge of the tariff be to determine whether predatory pricing
differential. The other edge cuts and cuts deep on the part of the dominant oil companies
in the heart of their competitors. It erects a is encouraged by the provisions in the law
high barrier to the entry of new players. New blocking the entry of new players. Text-writer
players that intend to equalize the market Hovenkamp,[36] gives the authoritative
power of Petron, Shell and Caltex by building answer and We quote:
refineries of their own will have to spend
billions of pesos. Those who will not build xxx xxx xxx
refineries but compete with them will suffer
the huge disadvantage of increasing their The rationale for predatory pricing
product cost by 4%. They will be competing is the sustaining of losses today that
on an uneven field. The argument that the will give a firm monopoly profits in
4% tariff differential is desirable because it the future. The monopoly profits will
will induce prospective players to invest in
never materialize, however, if the xxx xxx xxx
market is flooded with new entrants
as soon as the successful predator The general rule is that where part
attempts to raise its price. Predatory of a statute is void as repugnant to
pricing will be profitable only if the the Constitution, while another part
market contains significant barriers is valid, the valid portion, if separable
to new entry. from the invalid, may stand and
be enforced. The presence of a
As afore-discussed, the 4% tariff differential separability clause in a statute
and the inventory requirement are significant creates the presumption that the
barriers which discourage new players to enter legislature intended separability,
the market. Considering these significant rather than complete nullity of
barriers established by R.A. No. 8180 and the the statute. To justify this result,
lack of players with the comparable clout of the valid portion must be so far
Petron, Shell and Caltex, the temptation for independent of the invalid portion
a dominant player to engage in predatory that it is fair to presume that the
pricing and succeed is a chilling reality. legislature would have enacted it
Petitioners’ charge that this provision on by itself if it had supposed that it
predatory pricing is anti-competitive is not could not constitutionally enact
without reason. the other. Enough must remain to
make a complete, intelligible and
Respondents belittle these barriers with the valid statute, which carries out the
allegation that new players have entered the legislative intent.
market since deregulation. A scrutiny of the
list of the alleged new players will, however, The exception to the general rule is
reveal that not one belongs to the class and that when the parts of a statute are so
category of Petron, Shell and Caltex. Indeed, mutually dependent and connected,
there is no showing that any of these new as conditions, considerations,
players intends to install any refinery and inducements, or compensations for
effectively compete with these dominant each other, as to warrant a belief
oil companies. In any event, it cannot be that the legislature intended them
gainsaid that the new players could have as a whole, the nullity of one part
been more in number and more impressive will vitiate the rest. In making the
in might if the illegal entry barriers in R.A. No. parts of the statute dependent,
8180 were not erected. conditional, or connected with one
another, the legislature intended the
We come to the final point. We now resolve statute to be carried out as a whole
the total effect of the untimely deregulation, and would not have enacted it if one
the imposition of 4% tariff differential on part is void, in which case if some
imported crude oil and refined petroleum parts are unconstitutional, all the
products, the requirement of inventory other provisions thus dependent,
and the prohibition on predatory pricing conditional, or connected must fall
on the constitutionality of R.A. No. 8180. with them.
The question is whether these offending
provisions can be individually struck down R.A. No. 8180 contains a separability
without invalidating the entire R.A. No. 8180. clause. Section 23 provides that “if for any
The ruling case law is well stated by author reason, any section or provision of this Act
Agpalo,[37] viz.: is declared unconstitutional or invalid, such
parts not affected thereby shall remain in

full force and effect.” This separability clause of just three [3] big oil companies there will
notwithstanding, we hold that the offending be other major oil companies to provide
provisions of R.A. No. 8180 so permeate its more competitive prices for the market and
essence that the entire law has to be struck the consuming public.” Senator Heherson
down. The provisions on tariff differential, T. Alvarez, one of the principal proponents
inventory and predatory pricing are among of R.A. No. 8180, also filed S.B. No. 2290
the principal props of R.A. No. 8180. Congress increasing the penalty for violation of its
could not have deregulated the downstream Section 9. It is his opinion as expressed in the
oil industry without these provisions. explanatory note of the bill that the present
Unfortunately, contrary to their intent, these oil companies are engaged in cartelization
provisions on tariff differential, inventory and despite R.A. No. 8180, viz.:
predatory pricing inhibit fair competition,
encourage monopolistic power and interfere xxx xxx xxx
with the free interaction of market forces.
R.A. No. 8180 needs provisions to vouchsafe Since the downstream oil industry
free and fair competition. The need for these was fully deregulated in February
vouchsafing provisions cannot be overstated. 1997, there have been eight (8)
Before deregulation, Petron, Shell and Caltex fuel price adjustments made by the
had no real competitors but did not have a three oil majors, namely: Caltex
free run of the market because government Philippines, Inc.; Petron Corporation;
controls both the pricing and non-pricing and Pilipinas Shell Petroleum
aspects of the oil industry. After deregulation, Corporation. Very noticeable in the
Petron, Shell and Caltex remain unthreatened price adjustments made, however,
by real competition yet are no longer subject is the uniformity in the pump prices
to control by government with respect to of practically all petroleum products
their pricing and non-pricing decisions. The of the three oil companies. This,
aftermath of R.A. No. 8180 is a deregulated despite the fact, that their selling
market where competition can be corrupted rates should be determined by a
and where market forces can be manipulated combination of any of the following
by oligopolies. factors: the prevailing peso-dollar
exchange rate at the time payment
The fall-out effects of the defects of R.A. is made for crude purchases, sources
No. 8180 on our people have not escaped of crude, and inventory levels of
Congress. A lot of our leading legislators have both crude and refined petroleum
come out openly with bills seeking the repeal products. The abovestated factors
of these odious and offensive provisions should have resulted in different,
in R.A. No. 8180. In the Senate, Senator rather than identical prices.
Freddie Webb has filed S.B. No. 2133 which
is the result of the hearings conducted by the The fact that the three [3] oil
Senate Committee on Energy. The hearings companies’ petroleum products are
revealed that (1) there was a need to level uniformly priced suggests collusion,
the playing field for the new entrants in the amounting to cartelization, among
downstream oil industry, and (2) there was no Caltex Philippines, Inc., Petron
law punishing a person for selling petroleum Corporation and Pilipinas Shell
products at unreasonable prices. Petroleum Corporation to fix the
prices of petroleum products in
Senator Alberto G. Romulo also filed S.B. violation of paragraph (a), Section 9
No. 2209 abolishing the tariff differential of R.A. No. 8180.
beginning January 1, 1998. He declared that
the amendment “would mean that instead
To deter this pernicious practice refineries. This tariff differential
and to assure that present virtually created a monopoly of
and prospective players in the the downstream oil industry by
downstream oil industry conduct the existing three oil companies
their business with conscience and as shown by their uniform and
propriety, cartel-like activities ought capricious pricing of their products
to be severely penalized. since this law took effect, to the
great disadvantage of the consuming
Senator Francisco S. Tatad also filed S.B. No. public.
2307 providing for a uniform tariff rate on
imported crude oil and refined petroleum Thus, instead of achieving the
products. In the explanatory note of the desired effects of deregulation,
bill, he declared in no uncertain terms that that of free enterprise and a level
“the present set-up has raised serious public playing field in the downstream
concern over the way the three oil companies oil industry, R.A. 8180 has created
have uniformly adjusted the prices of oil in the an environment conducive to
country, an indication of a possible existence cartelization, unfavorable, increased,
of a cartel or a cartel-like situation within the unrealistic prices of petroleum
downstream oil industry. This situation is products in the country by the three
mostly attributed to the foregoing provision existing refineries.
on tariff differential, which has effectively
discouraged the entry of new players in the Representative Marcial C. Punzalan, Jr., filed
downstream oil industry.” H.B. No. 9981 to prevent collusion among
the present oil companies by strengthening
In the House of Representatives, the moves the oversight function of the government,
to rehabilitate R.A. No. 8180 are equally particularly its ability to subject to a review
feverish. Representative Leopoldo E. San any adjustment in the prices of gasoline and
Buenaventura has filed H.B. No. 9826 other petroleum products. In the explanatory
removing the tariff differential for imported note of the bill, Rep. Punzalan, Jr., said:
crude oil and imported refined petroleum
products. In the explanatory note of the bill, xxx xxx xxx
Rep. Buenaventura explained:
To avoid this, the proposed bill seeks
xxx xxx xxx to strengthen the oversight function
of government, particularly its ability
As we now experience, this difference to review the prices set for gasoline
in tariff rates between imported and other petroleum products.
crude oil and imported refined It grants the Energy Regulatory
petroleum products, unwittingly Board [ERB] the authority to review
provided a built-in-advantage for prices of oil and other petroleum
the three existing oil refineries products, as may be petitioned
in the country and eliminating by a person, group or any entity,
competition which is a must in a and to subsequently compel any
free enterprise economy. Moreover, entity in the industry to submit any
it created a disincentive for other and all documents relevant to the
players to engage even initially in imposition of new prices. In cases
the importation and distribution where the Board determines that
of refined petroleum products there exist collusion, economic
and ultimately in the putting up of conspiracy, unfair trade practice,
profiteering and/or overpricing,
it may take any step necessary destroying competition, eliminating
to protect the public, including a competitor or discouraging a
the readjustment of the prices of competitor from entering the
petroleum products. Further, the market.”
Board may also impose the fine
and penalty of imprisonment, as The appropriate actions which may be
prescribed in Section 9 of R.A. 8180, resorted to under the Rules of Court in
on any person or entity from the oil conjunction with the oil deregulation
industry who is found guilty of such law are adequate. But to stress their
prohibited acts. availability and dynamism, it is a
good move to incorporate all the
By doing all of the above, the remedies in the law itself. Thus, the
measure will effectively provide present bill formalizes the concept
Filipino consumers with a venue of government intervention and
where their grievances can be heard private suits to address the problem
and immediately acted upon by of antitrust violations. Specifically,
government. Thus, this bill stands the government may file an action
to benefit the Filipino consumer by to prevent or restrain any act of
making the price-setting process cartelization or predatory pricing, and
more transparent and making it if it has suffered any loss or damage
easier to prosecute those who by reason of the antitrust violation
perpetrate such prohibited acts as it may recover damages. Likewise, a
collusion, overpricing, economic private person or entity may sue to
conspiracy and unfair trade. prevent or restrain any such violation
which will result in damage to his
Representative Sergio A. F. Apostol filed H.B. business or property, and if he has
No. 10039 to remedy an omission in R.A. No. already suffered damage he shall
8180 where there is no agency in government recover treble damages. A class suit
that determines what is “reasonable” increase may also be allowed.
in the prices of oil products. Representative
Dante O. Tiñga, one of the principal sponsors To make the DOE Secretary more
of R.A. No. 8180, filed H.B. No. 10057 to effective in the enforcement of the
strengthen its anti-trust provisions. He law, he shall be given additional
elucidated in its explanatory note: powers to gather information and to
require reports.
xxx xxx xxx
Representative Erasmo B. Damasing filed H.B.
The definition of predatory pricing, No. 7885 and has a more unforgiving view
however, needs to be tightened of R.A. No. 8180. He wants it completely
up particularly with respect to the repealed. He explained:
definitive benchmark price and the
specific anti-competitive intent. The xxx xxx xxx
definition in the bill at hand which
was taken from the Areeda-Turner Contrary to the projections at the
test in the United States on predatory time the bill on the Downstream Oil
pricing resolves the questions. The Industry Deregulation was discussed
definition reads, “Predatory pricing and debated upon in the plenary
means selling or offering to sell any oil session prior to its approval into
product at a price below the average law, there aren’t any new players or
variable cost for the purpose of
investors in the oil industry. Thus, So, if only to help the many who
resulting in practically a cartel or are poor from further suffering as
monopoly in the oil industry by a result of unmitigated increase in
the three [3] big oil companies, oil products due to deregulation, it
Caltex, Shell and Petron. So much is a must that the Downstream Oil
so, that with the deregulation now Industry Deregulation Act of 1996, or
being partially implemented, the R.A. 8180 be repealed completely.
said oil companies have succeeded
in increasing the prices of most Various resolutions have also been filed in
of their petroleum products with the Senate calling for an immediate and
little or no interference at all from comprehensive review of R.A. No. 8180 to
the government. In the month of prevent the downpour of its ill effects on
August, there was an increase of the people. Thus, S. Res. No. 574 was filed
Fifty centavos (50 ¢) per liter by by Senator Gloria M. Macapagal entitled
subsidizing the same with the OPSF, Resolution “Directing the Committee on Energy
this is only temporary as in March to Inquire Into the Proper Implementation
1997, or a few months from now, of the Deregulation of the Downstream
there will be full deregulation [Phase Oil Industry and Oil Tax Restructuring As
II] whereby the increase in the prices Mandated Under R.A. Nos. 8180 and 8184,
of petroleum products will be fully in Order to Make the Necessary Corrections
absorbed by the consumers since in the Apparent Misinterpretation of the
OPSF will already be abolished by Intent and Provision of the Laws and Curb
then. Certainly, this would make the the Rising Tide of Disenchantment Among
lives of our people, especially the the Filipino Consumers And Bring About the
unemployed ones, doubly difficult Real Intentions and Benefits of the Said Law.”
and unbearable. Senator Blas F. Ople filed S. Res. No. 664
entitled resolution “Directing the Committee
The much-ballyhooed coming in on Energy to Conduct an Inquiry In Aid of
of new players in the oil industry is Legislation to Review the Government’s Oil
quite remote considering that these Deregulation Policy in Light of the Successive
prospective investors cannot fight Increases in Transportation, Electricity
the existing and well established and Power Rates, As Well As of Food and
oil companies in the country today, Other Prime Commodities and Recommend
namely, Caltex, Shell and Petron. Appropriate Amendments to Protect the
Even if these new players will come Consuming Public.” Senator Ople observed:
in, they will still have no chance
to compete with the said three [3] xxx xxx xxx
existing big oil companies considering
that there is an imposition of oil WHEREAS, since the passage of R.A.
tariff differential of 4% between No. 8180, the Energy Regulatory
importation of crude oil by the said Board [ERB] has imposed successive
oil refineries paying only 3% tariff increases in oil prices which has
rate for the said importation and 7% triggered increases in electricity and
tariff rate to be paid by businessmen power rates, transportation fares, as
who have no oil refineries in the well as in prices of food and other
Philippines but will import finished prime commodities to the detriment
petroleum/oil products which is of our people, particularly the poor;
being taxed with 7% tariff rates.

WHEREAS, the new players that were Determining in the Context of the Oversight
expected to compete with the oil Functions of Congress Whether the Conduct
cartel – Shell, Caltex and Petron-have of the Oil Companies, Whether Singly or
not come in; Collectively, Constitutes Cartelization Which
Is A Prohibited Act Under R.A. No. 8180, and
WHEREAS, it is imperative that a What Measures Should Be Taken to Help
review of the oil deregulation policy Ensure the Successful Implementation of
be made to consider appropriate the Law in Accordance With Its Letter and
amendments to the existing law such Spirit, Including Recommending Criminal
as an extension of the transition Prosecution of the Officers Concerned of the
phase before full deregulation in Oil Companies If Warranted By The Evidence,
order to give the competitive market And For Other Purposes.” Representatives
enough time to develop; Marcial C. Punzalan, Jr., Dante O. Tiñga and
Antonio E. Bengzon III filed H.R. No. 894
WHEREAS, the review can include directing the House Committee on Energy
the advisability of providing some to inquire into the proper implementation
incentives in order to attract the of the deregulation of the downstream oil
entry of new oil companies to effect industry. House Resolution No. 1013 was
a dynamic competitive market; also filed by Representatives Edcel C. Lagman,
Enrique T. Garcia, Jr. and Joker P. Arroyo
WHEREAS, it may also be necessary urging the President to immediately suspend
to defer the setting up of the the implementation of E.O. No. 392.
institutional framework for full
deregulation of the oil industry as In recent memory there is no law enacted
mandated under Executive Order by the legislature afflicted with so much
No. 377 issued by President Ramos constitutional deformities as R.A. No. 8180.
last October 31, 1996. Yet, R.A. No. 8180 deals with oil, a commodity
whose supply and price affect the ebb and
Senator Alberto G. Romulo filed S. Res. No. 769 flow of the lifeblood of the nation. Its shortage
entitled resolution “Directing the Committees of supply or a slight, upward spiral in its price
on Energy and Public Services in Aid of shakes our economic foundation. Studies
Legislation to Assess the Immediate Medium show that the areas most impacted by the
and Long Term Impact of Oil Deregulation movement of oil are food manufacture, land
on Oil Prices and the Economy.” Among the transport, trade, electricity and water.[38] At
reasons for the resolution is the finding that a time when our economy is in a dangerous
“the requirement of a 40-day stock inventory downspin, the perpetuation of R.A. No. 8180
effectively limits the entry of other oil firms threatens to multiply the number of our
in the market with the consequence that people with bent backs and begging bowls.
instead of going down oil prices will rise.” R.A. No. 8180 with its anti-competition
provisions cannot be allowed by this Court
Parallel resolutions have been filed in the to stand even while Congress is working to
House of Representatives. Representative remedy its defects.
Dante O. Tiñga filed H. Res. No. 1311
“Directing the Committee on Energy to The Court, however, takes note of the plea of
Conduct An Inquiry, In Aid of Legislation, Petron, Shell and Caltex to lift our restraining
Into the Pricing Policies and Decisions of the order to enable them to adjust upward the
Oil Companies Since the Implementation of price of petroleum and petroleum products
Full Deregulation Under the Oil Deregulation in view of the plummeting value of the
Act [R.A. No. 8180] for the Purpose of peso. Their plea, however, will now have

to be addressed to the Energy Regulatory IN VIEW WHEREOF, the petitions are granted.
Board as the effect of the declaration of R.A. No. 8180 is declared unconstitutional
unconstitutionality of R.A. No. 8180 is to and E.O. No. 372 void.
revive the former laws it repealed.[39]
The length of our return to the regime of SO ORDERED.
regulation depends on Congress which can
fast track the writing of a new law on oil Regalado, Davide, Jr., Romero, Bellosillo and
deregulation in accord with the Constitution. Vitug, JJ., concur.

With this Decision, some circles will chide Mendoza, J., concurs in the result.
the Court for interfering with an economic
decision of Congress. Such criticism is Narvasa, CJ., is on leave.
charmless for the Court is annulling R.A.
No. 8180 not because it disagrees with
deregulation as an economic policy but Endnotes

because as cobbled by Congress in its present
form, the law violates the Constitution. The [1] Downstream oil industry refers to the business of importing,
exporting, re-exporting, shipping, transporting, processing, refining,
right call, therefore, should be for Congress to storing, distributing, marketing and/or selling crude oil, gasoline,
diesel, liquefied petroleum gas, kerosene and other petroleum and
write a new oil deregulation law that conforms crude oil products.
with the Constitution and not for this Court [2] Paderanga and Paderanga, Jr., The Oil Industry in the Philippines,
to shirk its duty of striking down a law that Philippine Economic Journal, No. 65, Vol. 27, pp. 27-98 [1988].
offends the Constitution. Striking down R.A. [3] Section 3, R.A. No. 6173.
No. 8180 may cost losses in quantifiable [4] Section 7, R.A. No. 6173.
terms to the oil oligopolists. But the loss in [5] P.D. No. 334.
tolerating the tampering of our Constitution [6] Makasiar, G., Structural Response to the Energy Crisis: The
Philippine Case. Energy and Structural Change in the Asia Pacific
is not quantifiable in pesos and centavos. Region: Papers and Proceedings of the 13th Pacific Trade and
Development Conference. Published by the Philippine Institute
More worthy of protection than the supra- for Development Studies/Asian Development Bank and edited by
normal profits of private corporations is the Romeo M. Bautista and Seiji Nava, pp. 311-312 [1984].
sanctity of the fundamental principles of the [7] P. D. 1956 as amended by E.O. 137.
Constitution. Indeed when confronted by a [8] Section 3, E.O. No. 172.

[9] R.A. No. 7638.
law violating the Constitution, the Court has
[10] Section 5 (b), R.A. No. 7638.
no option but to strike it down dead. Lest
[11] Section 5, R.A. No. 8180.
it is missed, the Constitution is a covenant
[12] Section 1, Article VIII, 1987 Constitution.
that grants and guarantees both the political
[13] Bondoc vs. Pineda, 201 SCRA 792 [1991]; Osmeña vs. COMELEC,
and economic rights of the people. The 199 SCRA 750 [1991].
Constitution mandates this Court to be the [14] G.R. No. 118295, May 2, 1997.
guardian not only of the people’s political [15] E.g. Garcia vs. Executive Secretary, 211 SCRA 219 [1922];
rights but their economic rights as well. The Osmena vs. COMELEC, 199 SCRA [1991]; Basco vs. Pagcor, 197
SCRA 52 [1991]; Daza vs. Singson, 180 SCRA 496 [1989]; Araneta vs.
protection of the economic rights of the poor Dinglasan, 84 Phil. 368 [1949].
and the powerless is of greater importance [16] 163 SCRA 371 [1988].
to them for they are concerned more with [17] Section 26 (1) Article VI of the 1987 Constitution provides that
“every bill passed by the Congress shall embrace only one subject
the esoterics of living and less with the which shall be expressed in the title thereof.”
esoterics of liberty. Hence, for as long as the [18] Tobias vs. Abalos, 239 SCRA 106 [1994]; Philippine Judges
Association v. Prado, 227 SCRA 703 [1993]; Lidasan vs. COMELEC,
Constitution reigns supreme so long will this 21 SCRA 496 [1967].
Court be vigilant in upholding the economic [19] Tio vs. Videogram Regulatory Board, 151 SCRA 208 [1987].
rights of our people especially from the [20] Journal of the House of Representatives, December 13, 1995,
onslaught of the powerful. Our defense of p. 32.
the people’s economic rights may appear [21] 34 Phil. 136 citing Cincinnati, W. & Z. R.R. Co. vs. Clinton
Country Commrs. [1 Ohio St. 77].
heartless because it cannot be half-hearted.
[22] 166 SCRA 533, 543-544.

[23] 320 US 99. If the offense mentioned in this article affects any food substance,
motor fuel or lubricants, or other articles of prime necessity the
[24] Philippine Political Law, 1995 Ed., p. 99. penalty shall be that of prision mayor in its maximum and medium
[25] Webster, New third International Dictionary, 1993 Ed., pp. periods, it being sufficient for the imposition thereof that the initial
1780, 586 and 2218. steps have been taken toward carrying out the purposes of the
[26] See e.g., Balbuena vs. Secretary of Education, 110 Phil. 150 combination.
used the standard “simplicity and dignity.” People vs. Rosenthal,
68 Phil. 328 [“public interest”]; Calalang vs. Williams, 70 Phil. 726
[“public welfare”]; Rubi vs. Provincial Board of Mindoro, 39 Phil. 669 xxx xxx xxx
[“interest of law and order”].
[27] See for example TSN of the Session of the Senate on November
14, 1995, p. 19, view of Senator Gloria M. Arroyo.
[28] Black’s Law Dictionary, 6th Ed., p. 1007.
[29] Id., p. 266. Whenever any of the offenses described above is committed by
[30] 54 Am Jur 2d 669. a corporation or association, the president and each one of the
[31] Art. 186. Monopolies and combinations in restraint of trade. directors or managers of said corporation or association, who shall
The penalty of prision correccional in its minimum period or a fine have knowingly permitted or failed to prevent the commission
ranging from 200 to 6,000 pesos, or both, shall be imposed upon: of such offenses, shall be held liable as principals thereof.
1. Any person who shall enter into any contract or agreement or [32] Art. 28. Unfair competition in agricultural, commercial
shall take part in any conspiracy or combination in the form of a or industrial enterprises or in labor through the use of
trust or otherwise, in restraint of trade or commerce to prevent by force, intimidation, deceit, machination or any other unjust,
artificial means free competition in the market. oppressive or highhanded method shall give rise to a right
2. Any person who shall monopolize any merchandise or object of action by the person who thereby suffers damage.
of trade or commerce, or shall combine with any other person or [33] Bernas, The Intent of the 1986 Constitution Writers [1995],
persons to monopolize said merchandise or object in order to alter p. 877; Philippine Long Distance Telephone Co. vs. National
the price thereof by spreading false rumors or making use of any Telecommunications Commission, 190 SCRA 717 [1990]; Northern
other article to restrain free competition in the market; Cement Corporation vs. Intermediate Appellate Court, 158 SCRA 408
3. Any person who, being a manufacturer, producer, or processor [1988]; Philippine Ports Authority vs. Mendoza, 138 SCRA 496 [1985];
of any merchandise or object of commerce or an importer of any Anglo-Fil Trading Corporation vs. Lazaro, 124 SCRA 494 [1983].
merchandise or object of commerce from any foreign country, either [34] Record of the Constitutional Commission, Volume III, p. 258.
as principal or agent, wholesaler or retailer, shall combine, conspire [35] Gellhorn, Anti Trust Law and Economics in a Nutshell, 1986 Ed.
or agree in any manner with any person likewise engaged in the p. 45.
manufacture, production, processing, assembling or importation of [36] Economics and Federal Anti-Trust Law, Hornbook Series,
such merchandise or object of commerce or with any other persons Student Ed., 1985 Ed., p. 181.
not so similarly engaged for the purpose of making transactions [37] Statutory Construction, 1986 Ed., pp. 28-29.
prejudicial to lawful commerce, or of increasing the market price in [38] Ibon Facts and Figures, Vol. 18, No. 7, p. 5, April 15, 1995.
any part of the Philippines, or any such merchandise or object of [39] Cruz vs. Youngberg, 56 Phil. 234 [1931].
commerce manufactured, produced, or processed, assembled in or
imported into the Philippines, or of any article in the manufacture
of which such manufactured, produced, processed, or imported
merchandise or object of commerce is used.
EXECUTIVE ORDER NO. 377

PROVIDING THE INSTITUTIONAL FRAMEWORK FOR THE ADMINISTRATION OF THE DEREGULATED
DOWNSTREAM OIL INDUSTRY

WHEREAS, Republic Act No. 8180, otherwise WHEREAS, there is need to provide an
known as the “Downstream Oil Industry institutional framework for the administration
Deregulation Act of 1996”, provides for the of the industry in order to define and
deregulation of all activities of the downstream delineate the functions and responsibilities of
oil industry in the country to foster a these agencies;
competitive market and achieve the social
policy objectives of fair prices and adequate, NOW, THEREFORE, I, FIDEL V. RAMOS,
continuous supply of environmentally-clean President of the Republic of the Philippines,
and high-quality petroleum products; by the powers vested in me by law, do hereby
establish the delineation of agency functions
WHEREAS, the effective and efficient and responsibilities as the institutional
mechanism of this deregulated local framework for the administration of the
downstream oil industry involves the deregulated local downstream oil industry:
participation and coordination of various
agencies as required under the Rules and SECTION 1. Delineation of Agency Functions
Regulations of the Act; and Responsibilities. – The functions and
responsibilities of agencies are delineated as (2) Provide measures to promote
follows: and ensure fair trade practices;
and
1.1. Overall Administration. – The
Department of Energy (DOE) shall be (3) Encourage investments in the
the lead agency in the administration of downstream oil sector.
the deregulated local downstream oil
industry. It shall serve as the oversight (b) Department of Science and
body which will integrate and coordinate Technology (DOST) shall prescribe the
the implementation of policies and calibration and verification intervals
programs affecting the industry. It shall of all measuring instruments used in
be responsible for the overall monitoring petroleum products. Towards this,
of the downstream oil industry, including the DOST shall initiate the following:
the monitoring and publication of daily
international oil prices, to ensure the (1) Evaluate and accredit the
security and continuity of oil supply as laboratories of the municipalities
well as the compliance of petroleum performing the calibration and
businesses with quality, safety and verification of tank lorries, road
environmental standards and fair trade tankers, storage tanks, flow
regulations. meters, calibrating buckets, and
weighing scales;
1.2. Standards Setting. – The government
shall prescribe the appropriate quality, (2) Assist the municipalities in
safety and environmental standards calibrating these measuring
for petroleum products, downstream instruments; and
facilities and processes as well as set
guidelines governing fair trade practices (3) Calibrate the reference standards
in the local downstream oil industry of accredited laboratories, such
through the following agencies: as proving tanks, provers, master
meter and test weighs.
(a) Department of Trade and Industry
(DTI) shall establish and update, (c) Department of Environment and
in coordination with the DOE, the Natural Resources (DENR) shall
Philippine National Standard (PNS) prescribe the environmental
on quality and safety of petroleum standards for petroleum products
products, including that of materials, and related activities thereto. In this
equipment and facilities related regard, the DENR shall undertake the
to petroleum products such as following:
storage tanks, LPG refilling plants
and cylinders, valves and regulators; (1) Review, evaluate and issue
methods of requalification of environmental compliance
cylinders; and codes of practices for certificates to petroleum
gas stations. Along with this, the DTI businesses;
shall undertake the following:
(2) Issue permits to construct and
(1) Enforce the existing PNS in operate petroleum facilities
coordination with the DOE, LGUs engaged in the recycling, re-
and other concerned agencies refining and re-processing of oil/
and sectors; petroleum products; and that for
air and water pollution, control
installations and devices as may (1) Enforce the requirements for the
be required in certain aspects operation of pressure vessels
of the downstream oil business used in business and in the
pursuant to RA 6969 (An Act to issuance of certificate of safety
Control Toxic Substances and of electrical and wiring system
Hazardous and Nuclear Wastes); for petroleum facilities;
and PD 984 (Pollution Control
Law); and (2) Develop guidelines for handling
and storage procedures in
(3) Monitor emissions, effluents, petroleum businesses to ensure
and the compliance of petroleum the safety of workforce and the
businesses with environmental public and general; and
standards and regulations,
including the application of (3) Formulate and implement
sanctions for violations of rules programs and information
and regulations thereof. dissemination activities to
enforce workers’ and employers’
(d) Department of Health (DOH) shall awareness on the health risks
prescribe the allowable level of involved in storage, handling
toxicity to health as regards the and distribution of petroleum
emissions of particulates and harmful products, including safety
substances accruing from the measures in dealing with
manufacturing, use and combustion emergency situations.
of petroleum products. In line with
this, the DOH shall undertake the (f) Department of Transportation
following: and Communication (DOTC) shall
set the standards for safety and
(1) Issue the necessary health and roadworthiness/seaworthiness of
safety guidelines on toxicity petroleum carriers, such as trucks,
level; haulers, tankers and barges, including
their allowable gas emission levels.
(2) Provide health advisory It shall also set, in coordination
services, information and with the DOE, the quality standards
education related to the effects for fuels used in air transport. In
of petroleum and petroleum addition, the DOTC shall pursue the
products on humans; and following:

(3) Conduct continuing studies (1) Regulate the routes of service,
on these effects towards zones or areas of operation of
determining measures to tank trucks and other petroleum
address them. transport facilities; and

(e) Department of Labor and (2) Establish fare rates for land
Employment (DOLE) shall set and and sea transport, taking into
enforce the standards for the consideration the price in the
protection and safety of workers international market of oil.
during their employment in any
petroleum facility. In this regard, the 1.3. Enforcement. – The government shall
DOLE shall undertake the following: enforce quality and safety standards

for petroleum products, carriers and (d)
Department of Finance (DOF)
downstream oil facilities. As such, the shall be responsible for the proper
following agencies shall ensure the application of import tariff duties
compliance of petroleum businesses with on petroleum and related goods/
these standards, including their strict products. In this regard, it shall
adherence to fair trade regulations so as vigorously undertake the following:
to prevent cartelization and monopolies:
(1) Collect taxes, duties and other
(a) Department of Interior and Local charges due;
Government (DILG) shall, in
coordination with national agencies, (2) Enforce the pertinent provisions
ensure the compliance of petroleum of the Oil Industry Deregulation
businesses with prescribed quality, Act on the importation,
safety and environmental standards exportation, re-exportation
on fuel, downstream oil facilities and bunkering of petroleum
and labor to ensure the protection products within the purview of
of localities hosting petroleum the Tariff and Customs Code and
facilities. Towards this, the DILG shall related laws; and
undertake the following:
(3) Monitor and enforce quality
(1) Strictly enforce the provisions as well as the environmental
of PD 1185 (Fire Code of the standards on imported oil.
Philippines) on safety measures
regarding the use, storage and (e) Department of Justice (DOJ) shall,
handling of petroleum products in its capacity as member of the
and downstream oil facilities; DOE-DOJ Task Force, adjudicate
and cases of cartelization, overpricing
and predatory pricing of petroleum
(2) Issue corresponding permits for products.
storage, conveyance, installation
of tanks and containers, including (f) Department of National Defense
other petroleum facilities. (DND) shall curb the illegal entry and
smuggling of petroleum products
(b) Department of Public Works and and related facilities into the
Highways (DPWH) shall enforce the country. It shall also prevent and
provisions of the National Building control maritime pollution through
Code to ensure the adherence inspection of vessel design and
of all downstream oil industry equipment, oil transfer procedures
infrastructure to safety standards and operation, and communication
thereto. requirement.

(c) Philippine Economic Zone (g) Energy Regulatory Board (ERB)
Authority (PEZA) and the Subic Bay shall, upon the implementation
Metropolitan Authority (SBMA) shall of the full deregulation phase of
enforce laws to prevent smuggling the downstream oil industry, be
and dumping of petroleum products responsible for fixing and regulating
in Special Economic Zones, including the rate of schedule or prices of piped
the rules and regulations of the DOE gas to be charged by duly franchised
with regard to the lifting of shipments gas companies which distribute
to or from the Zone.
3 DOWNSTREAM
VOLUME 121
gas by means of underground pipe amount to be imposed on petroleum
system. products to augment the resources
of the Oil Price Stabilization Fund to
1.4. Policy Support. – The National Economic persons or companies engaged in the
and Development Authority (NEDA) shall business of importing, manufacturing
conduct studies on the social, economic or marketing petroleum products,
and financial impact of changes in prices including those directly importing
of petroleum products. These shall serve petroleum products for their own
as inputs to policy formulation for and use.
review of the downstream oil industry.
SEC. 2. Reportorial Requirements. – The
1.5. Transition Pricing. – During the transition concerned Departments and Agencies shall
phase of deregulation, the pricing submit at least a quarterly report to the
of petroleum products shall be the DOE on their activities in discharging their
responsibility of the Energy Regulatory respective functions and responsibilities
Board (ERB), in particular the following: relative to the deregulated local downstream
oil industry, including developments thereto
(a) Setting, reviewing and resetting which may require government action.
of the wholesale posted domestic
prices of petroleum products based SEC. 3. Repealing Clause. – All orders,
on the approved automatic pricing issuances, rules and regulations or parts
formula; thereof, inconsistent with this Order are
hereby repealed or modified accordingly.
(b) Maintaining the current margin of
dealers and the rates charged by SEC. 4. Effectivity. – This Order shall take
water transport operators, haulers, effect immediately.
fillers and pipeline concessionaires,
and prescribing the formula Done in the City of Manila, this 31st day of
automatically setting the rates of the October, in the Year of Our Lord, Nineteen
same; and Hundred and Ninety-Six.

(c) Issuing the appropriate Order
requiring payment of additional
MEMORANDUM OF UNDERSTANDING
KNOW ALL MEN BY THESE PRESENTS: The DEPARTMENT OF TRADE AND INDUSTRY,
a national government agency created by
This MEMORANDUM OF UNDERSTANDING virtue of Executive Order No. 133 with offices
(MOU) is entered into by and between: at the Department of Trade and Industry
Building, 361 Sen. Gil J. Puyat Avenue, Makati,
The DEPARTMENT OF ENERGY, a national Metro Manila, represented by its Acting
government agency created under Republic Secretary, THOMAS G. AQUINO, hereinafter
Act No. 7638, with principal office address at referred to as DTI;
Merritt Road, Fort Bonifacio, Taguig, Metro
Manila, represented by its Secretary, MARIO
V. TIAOQUI, herein referred to as DOE;

WITNESSES: That for close coordination in the compliance and
enforcement of cylinder quality standards;
WHEREAS, Section 2 of Republic Act No.
8479, otherwise known as the “Downstream NOW, THEREFORE, in view of the foregoing
Oil Industry Deregulation Act of 1998,” premises, the DOE and DTI hereby stipulate
mandates the DOE, through its Energy and agree as follows:
Industry Administration Bureau (EIAB), to
foster a truly competitive market which can 1. The DOE, through the EIAB, shall:
better achieve the social policy objectives of
fair prices and adequate, continuous supply a) Conduct regular monitoring of LPG
of environmentally clean and high quality cylinders in circulations;
petroleum products;
b) Direct LPG refillers/marketers/
WHEREAS, Section 1.2 of Executive Order dealers/ retail outlets found
No. 377 of “The Institutional Framework for possessing unrequalified defective
the Administration of the Deregulated Local and dilapidated LPG cylinders to
Downstream Oil Industry” provides for the submit for requalification said
DTI, in coordination with the DOE, to establish cylinders and require the same to
and update the Philippine National Standards present proof of compliance with
on quality and safety of petroleum products, requalification requirements;
including those of materials, equipment and
facilities related to petroleum products such c) Recommend to the concerned LGUs
as storage tanks, liquefied petroleum gas the suspension or revocation of the
(LPG) refilling plants and cylinders; and codes licenses of LPG refillers/marketers/
of practices for gas stations; dealer/retail outlets who fail to
comply with government’s directive
WHEREAS, the DTI, through its Bureau of on requalification and other safety
Product Standards (BPS), issued Philippine standards;
National Standards (PNS) 03, specifying
the requirements for the materials, design, d) Require LPG refillers/ marketers/
construction, testing and markings of steel dealer/ retail outlets to submit
cylinders; PNS 41, specifying the methods for periodically to EIAB the total number
the requalification of low pressure unfired of LPG cylinders requalified for the
cylinder approved for use in the storage, specific period covered;
handling and transportation of LPG applicable
for locally manufactured and imported second e) Conduct verification of complaints
hand LPG cylinders; and PNS 711, specifying regarding the quality of LPG cylinders;
the methods for repair of steel cylinders;
f) Recommend to BPS, imposition of
WHEREAS, DTI and DOE have mutually administrative sanction against LPG
observed the proliferation and use of refillers/marketers/dealers/retail
dilapidated and unserviceable LPG cylinders outlets that violate PNS 41 and its
in the market which pose continuous hazard amendments.
and threat to the health and safety of
consumers; 2. The DTI, through the BPS and DTI Regional
Provincial Offices, shall:
WHEREAS, to ensure the strict enforcement
of existing standards on LPG cylinder quality a) Enforce the implementation of PNS
and maintenance, the DTI and DOE deemed it 03, PNS 41 and PNS 711 and its
urgent and necessary to provide a mechanism
future amendments on all locally 4. Implementing guidelines, if necessary,
manufactured and imported LPG shall be prepared and issued jointly by
cylinders prior to their circulation DOE-EIAB and DTI-BPS to clarify provisions
and require LPG requalifiers to be in this Memorandum of Understanding
accredited under the BPS Laboratory and to specify the activities to carry out
Accreditation Scheme; its requirements.
b) Conduct periodic inspection of plant 5. This Agreement shall take effect

premises of cylinder manufacturers upon its execution by the Parties. Any
and requalifiers to ensure compliance modification or amendment of the terms
with PNS 03, PNS 41 and PNS 711; and conditions of this Agreement shall be
mutually agreed upon by the parties and
c) Closely coordinate with DOE in shall be made in writing duly signed by
the dissemination of information the parties.
relevant to the enforcement of PNS
03, PNS 41 and PNS 711 and its IN WITNESS WHEREOF, the parties hereby
future amendments; set their hands this 18th day of January, year
Two Thousand One at Fort Bonifacio, Taguig,
d) Closely coordinate with DOE Metro-Manila.
ensuring that only LPG cylinders
properly marked in accordance with DEPARTMENT OF ENERGY
PNS 03 and PNS 41, PS and ICC Mark BY:
are refilled and sold;
MARIO V. TIAOQUI
e) Require DTI-accredited LPG Secretary
requalifiers to properly label LPG
cylinders as to date of requalification, DEPARTMENT OF TRADE AND INDUSTRY BY:
name of requalifier, correct tare
weight markings, brand name, etc.
as required under PNS 41; THOMAS G. AQUINO
Acting Secretary
f) Impose administrative sanctions on
violators of PNS 41 and its future
amendments. SIGNED IN THE PRESENCE OF:
3. DOE and DTI shall jointly develop and ZENAIDA Y. MONSADA

implement an effective strategy for the OIC Director, DOE-EIAB
dissemination of information to the
public about LPG cylinder quality.
JESUS L. MOTOOMULL
Director, DTI-BPS

EIAB MEMORANDUM CIRCULAR NO. 97-04-003
TO: ALL OIL COMPANIES

ALL LPG INDEPENDENT MARKETERS AND DEALERS
ALL CONCERNED
SUBJECT : SUBMISSION OF LPG PRICE LIST
WHEREAS, Republic Act No. 8180, otherwise shall be required to submit a price list for LPG
known as the “Downstream Oil Industry every 20th day of the month to the Energy
Deregulation Act of 1996”, provides for the Industry Administration Bureau (EIAB) of the
deregulation of the downstream oil industry Department of Energy.
to foster a truly competitive market which can
better achieve the social policy objectives of Failure to comply with this directive shall
fair prices and adequate, continuous supply subject the violator to corresponding
of environmentally clean and high-quality administrative sanctions as may be imposed
petroleum products; by the Bureau.
WHEREAS, for the protection of the Enclosed herewith is the standard format for
consuming public, Rule IV, Section 12 (a) of your guidance.
the Implementing Rules and Regulations of
RA 8180 requires that prices of petroleum Your strict compliance is hereby enjoined.
products, including LPG be monitored by the
Department of Energy to determine whether Fort Bonifacio, Taguig, Metro Manila, April 2,
said prices are reasonable or not; and 1997.
WHEREAS, during the full deregulation,

prices of LPG shall be closely monitored by MARCIA F. GESMUNDO
the Energy Industry Administration Bureau Acting Director
(EIAB) of the Department of Energy.
APPROVED:
NOW, THEREFORE, effective 1 May 1997,
all the oil companies, LPG independent FRANCISCO L. VIRAY
marketers and dealers, and all concerned Secretary of Energy

DEPARTMENT OF ENERGY – DEPARTMENT OF JUSTICE (DOE-DOJ) TASK FORCE
RESOLUTION NO. 98-01
RULES AND REGULATIONS OF THE DOE-DOJ TASK FORCE
Pursuant to paragraph (d) of Section 14 of in order to match the lower price of

Republic Act No. 8479, “The Downstream the competitor and not for the purpose
Oil Industry Deregulation Act of 1998”, the of destroying competition shall not be
Department of Energy-Department of Justice deemed predatory pricing; and
Task Force hereby adopts the following rules
and regulations to govern its activities: (g) “Report” refers to any written report or
complaint concerning any unreasonable
SECTION 1. Definition of Terms. – Unless the rise in prices of petroleum products or
context otherwise provides, the following, as of a threatened, imminent or actual
well as the other terms used herein, shall have cartelization or predatory pricing.
the meanings attached to them by Republic
Act No. 8479 and the rules and regulations SEC. 2. Report, Where Filed. – A report shall
issued by the Department of Energy pursuant be filed with –
to said Act –
“The DOE-DOJ Task Force
(a) “Act” refers to Republic Act 8479; Department of Energy
Merritt Road, Fort Bonifacio
(b) “DOE” refers to the Department of
Taguig, Metro Manila”
Energy;

(c) “DOJ” refers to the Department of Justice; However, the Task Force may, motu proprio,
consider/investigate any alleged incident of
(d) “Task Force” refers to the DOE-DOJ Task cartelization or predatory pricing whenever
Force; public interest will be served thereby.
(e) “Cartelization” refers to any agreement,
combination or concerted action by SEC. 3. Form and Contents of Report. – A
refiners, importers and/or dealers, report shall not be entertained by the Task
or their representatives, to fix prices, Force if it is not subscribed and signed by its
restrict outputs or divide markets, either author. It shall contain a detailed statement
by product or by areas, or allocate of the reason or reasons for alleging an
markets, either by product or by areas, unreasonable rise in the price of a petroleum
in restraint of trade or free competition, product or of the elements of the cartelization
including any contractual stipulation or predatory pricing, and the identity of the
which prescribes pricing levels and profit firm or person or persons who appear to be
margins; responsible therefor.

(f) “Predatory Pricing” refers to selling or SEC. 4. Action on Report. – The report, if
offering to sell any oil product at a price found sufficient in form and content, shall
below the seller’s or offeror’s average be forwarded by the Task Force to the Office
cost for the purpose of destroying of the DOE Secretary within ten (10) days
competition, eliminating a competitor or from receipt thereof for appropriate action.
discouraging a potential competitor from Otherwise, the report shall be dismissed by
entering the market: Provided, however, the Task Force.
That pricing below average variable cost
SEC. 5. DOE Investigation of Report. – The Only one motion for reconsideration shall be
Office of the DOE Secretary may investigate allowed.
the report. The DOE Secretary may, after
investigation, either dismiss the report if it SEC. 9. Filing of Complaint. – In cases where
finds no merit therein or direct the Task Force substantial evidence exists for the filing of
to conduct a formal investigation thereof in a criminal complaint for cartelization or
the manner provided hereunder. predatory pricing, the Task Force shall direct
the provincial or city prosecutor having
SEC. 6. Task Force Investigation. – Upon the jurisdiction to file the appropriate criminal
recommendation of the DOE Secretary to complaint with the Regional Trial Court of
investigate a report, the Task Force shall issue the place where the defendant or any of the
a subpoena against the respondent. A copy of defendants reside or has his place of business.
the investigation report of the DOE Secretary
shall be attached to the subpoena. Within SEC. 10. Injunctive Action. – Pending hearing
ten (10) days from receipt of the subpoena, of the complaint for cartelization or predatory
the respondent may submit counter-affidavits pricing or in case there is an unreasonable rise
and other supporting documents and shall in the price of a petroleum product, the Task
be allowed to examine all the evidence Force may request the prosecutor concerned
considered in the findings of the Office of the to ask the proper court to issue a temporary
DOE Secretary. restraining order or an injunction under the
same conditions and principles as injunctive
If the respondent cannot be subpoenaed relief is granted under the Rules of Court.
or if subpoenaed, does not submit counter-
affidavits within the ten (10) day period, the SEC. 11. Referral to the Solicitor General or
Task Force shall resolve the matter on the Government Corporate Counsel. – If the Task
basis of the records and evidence on hand. Force finds that the disclosed cartelization
The Task Force may, however, set a hearing or predatory pricing, or the unreasonable
where it may propound clarificatory questions rise in the price of a petroleum product will
to the parties or their witnesses. result in loss or damage in the business of
a government agency or instrumentality,
SEC. 7. Resolution of Task Force. – The Task including government-owned or -controlled
Force shall prepare a written resolution corporations, the Task Force shall refer the
on the results of its investigation of the said matter to the Office of the Solicitor
report within thirty (30) days after the General or to the Office of the Government
commencement thereof. The Resolution Corporate Counsel for appropriate action.
shall state whether or not there has been an
unreasonable rise in the price of petroleum SEC. 12. Effectivity. – These Rules shall take
product or if substantial evidence exists for effect fifteen (15) days after its publication in
the filing of a criminal complaint against the a newspaper of general circulation.
respondent for cartelization or predatory
Done in the City of Manila this 8th day of April
pricing. The Secretaries of DOE and DOJ, and
1998.
all concerned parties, shall be furnished with
copies of the Resolution. The DOE Secretary For the Department of Energy:
may make said Resolution public.
BEN HUR C. SALCEDO
SEC. 8. Motion for Reconsideration. – Undersecretary
An aggrieved party may file a motion for
reconsideration within a non-extendible For the Department of Justice:
period of ten (10) days from the date of
RAMON J. LIWANAG
receipt of the Resolution, furnishing all
Undersecretary
concerned parties with copies thereof.
DEPARTMENT OF ENERGY-DEPARTMENT OF JUSTICE
(DOE-DOJ) TASK FORCE

RESOLUTION NO. 2008-01
AMENDING RESOLUTION NO. 98-01 OTHERWISE KNOWN AS THE “RULES AND REGULATIONS OF
THE DOE-DOJ TASK FORCE”

Pursuant to paragraph (d) of Section 14 of “If the Respondent cannot be

Republic Act No. 8479, the “Downstream subpoenaed or if subpoenaed, does
Oil Industry Deregulation Act of 1998”, the not submit counter-affidavits within
Department of Energy-Department of Justice ten (10) days period, the Task Force
Task Force resolves, as it is hereby resolved to shall resolve the matter on the basis
adopt the following amendments: of the records and evidence on hand.
The Task Force may, however, set
SECTION 1. Section 4 of Resolution No. 98-01 a hearing where it may propound
is hereby amended to read as follows: clarificatory questions to the parties
or their witnesses.
“SEC. 4. Action on the Report. – The
report if found sufficient in form “The following parameters (the
and content, shall be forwarded by ‘Parameters’) shall guide the Task
the Task Force to the panel of State Force in determining whether or not
Prosecutors duly designated by the there has been an “unreasonable
Secretary of Justice. Otherwise, the rise” in the price or prices of
report shall be dismissed by the Task petroleum products:
Force.”
“1. MOVEMENTS IN WORLD OIL
SEC. 2. Section 5 of Resolution No. 98-01 is PRICES. – When an increase in price
hereby deleted. is inconsistent with the increase or
increases in the price of:
SEC. 3. Section 6 of the Resolution is
renumbered to Section 5 and is hereby “(a) Crude Oil as registered in the
amended to read as follows: Singapore market within a
particular period as determined
“SEC. 5. Task Force Investigation. by the DOE as regards refiners of
– In the process of conducting a crude oil; or
preliminary investigation of the
report, the Task Force, through “(b) Petroleum Products as registered
the State Prosecutor, shall issue a in the Singapore market within a
subpoena against the respondent. particular period as determined
Within ten (10) days from receipt by the DOE as regards importers
of subpoena, the respondent may of petroleum products;
submit counter affidavits and other
supporting documents and shall be “2. FOREIGN EXCHANGE
allowed to examine all the evidence FLUCTUATIONS. – When an increase
considered in the findings of the Task in price is inconsistent with foreign
Force. currency adjustments resulting

from fluctuations or changes in the cartelization or predatory pricing.
Philippine Peso-US Dollar rates; The Secretaries of DOE and DOJ,
and all concerned parties, shall
“3. VIOLATION OF REPORTORIAL be furnished with copies of the
REQUIREMENTS. – When an oil Resolution. The DOE Secretary may
company fails to report an increase make said Resolution public.”
in price pursuant to the pertinent
department circular or rules/ SEC. 5. Section 9 of the Resolution is
regulations issued by the DOE renumbered into Section 8 and is hereby
Secretary pursuant to the Act; and amended to read as follows:

“4. TIMING AND FREQUENCY. – “SEC. 8. Filing of Complaint. – If the
When an increase in price occurs evidence warrants/probable cause
during a period of and inconsistent exists for the filing of a complaint
with a prevailing industry advisory for cartelization, predatory pricing
issued in accordance with Rule V or unreasonable rise in the price of
Section 19-A of the Implementing petroleum product as determined
Rules and Regulations of R.A. 8479. by the State Prosecutor, the Task
Force shall approve the resolution
“In determining whether or not an and, thereafter refer the same to the
increase in price is ‘unreasonable’, Provincial or City Prosecutor having
the Task Force shall give due jurisdiction of the case for the filing
consideration to the interaction of of the appropriate criminal complaint
all local and international factors with the Regional Trial Court of the
affecting the price of petroleum place where the defendant or any
products. The Task Force may of the defendants reside or has his
consider such other factors not place of business.”
included in the parameters set forth
in this Section as may be relevant SEC. 6. Effectivity. – These Rules shall take
under the circumstances.” effect fifteen (15) days after publication in a
newspaper of general circulation.
SEC. 4. Section 7 of the Resolution is
renumbered into Section 6 and hereby Done in the City of Manila this 14th day of
amended to read as follows: July 2008.

“SEC. 6. Resolution of Task Force.
– The Task Force shall prepare a For the Department of Energy:
written Resolution on the results
of investigation of the report ROY V. KYAMKO
within thirty (30) days after the Undersecretary
commencement thereof. The
Resolution shall state whether or not For the Department of Justice:
there has been an unreasonable rise
in the price of a petroleum product JOSE VICENTE B. SALAZAR
or if evidence warrants/probable Undersecretary
cause exists for the filing of a criminal
complaint against the respondent for


AMENDING DEPARTMENT CIRCULAR NO. 95-10-008, DIRECTING ALL OPERATORS OF OIL RIGS
OR PLATFORMS, POWER PLANTS, OIL TANKERS AND, BARGES CARRYING, PRODUCING AND/
OR UTILIZING CRUDE OIL-BASED PRODUCTS TO REPORT ALL OIL SPILLS OR ENVIRONMENTAL
INCIDENTS TO THE DEPARTMENT OF ENERGY
SECTION 1. The title is hereby amended to Any third party may file a formal complaint
read as follows: of any such incident of oil spill with the
DOE-EPMD. The DOE-EPMD shall require
DIRECTING ALL OWNERS, AGENTS, LESSEES, that such complaint shall be verified under
OPERATORS OR REPRESENTATIVES OF oath and accompanied by evidences and
PETROLEUM REFINERIES, TERMINALS AND documents, if any, showing such incident of
DEPOTS, OIL RIGS OR PLATFORMS, POWER oil spill prior to its conduct of investigation of
PLANTS, OIL TANKERS AND BARGES HAULING, the incident disposal of oil and/or oil-based
CARRYING, PRODUCING AND/OR UTILIZING products or hydrocarbon contaminated
CRUDE OIL-BASED PRODUCTS TO REPORT ALL wastewaters and similar occurrences through
OIL SPILL INCIDENTS TO THE DEPARTMENT OF the most practicable and fastest means of
ENERGY communication possible.
SEC. 2. Section 1 is hereby amended to read SEC. 3. Section 4 is hereby amended to read
as follows: as follows:
The owner, agent, lessee, operator or The DOE-EPMD with other concerned DOE
representative of any tanker, barge, ship or units will conduct a thorough, technical and
facility used in relation to the petroleum and/ impartial investigation of the direct and
or energy industries, petroleum refineries, indirect causes of the incident. The EPMD
terminals and depots, oil rigs or platforms shall submit a report of its investigation and
and power plants, oil tankers and barges recommendations to the DOE Secretary and
hauling, carrying, producing and/or utilizing the concerned party within fifteen (15) days
crude oil and/or other oil-based products after the conclusion of said investigation. The
shall submit a verbal report within eight (8) EPMD shall conduct a compliance monitoring
hours, and a written report within forty eight thirty (30) days after the receipt by the
(48) hours, to the DOE Secretary through the concerned party of its report to ascertain that
Environmental Protection and Monitoring its recommendations contained in its report
Division (EPMD) during office hours (Telefax have been complied with by the concerned
No. 844-72-14) otherwise, to the DOE party.
Security Guard (Telephone No. 844-10-21 to
31 loc 278/210) so far as practicable, on any SEC. 4. Section 5 is hereby amended to read
incident, whether accidental or intentional, of as follows:
spill, leak, discharge, disposal of oil and/or oil-
based products or hydrocarbon contaminated Failure of the concerned party to submit the
wastewaters and. similar occurrences through required verbal report to the DOE within
the most practicable and fastest means of eight (8) hours after the incident of spill, leak,
communication possible. discharge, disposal of oil and/or oil based
products or hydrocarbon contaminated

wastewaters or any other violation of this service contract, permit, license, authority or
Department Circular shall subject said party other privileges previously granted by the
to an administrative fine of P 20,000.00 DOE or such other concerned government
to be paid to DOE. If no written report is agencies to such concerned party.
submitted within forty eight (48) hours after
the occurrence of said incident the party shall SEC. 6. A new Section 7 is hereby provided, to
be liable to pay an administrative fine of P read as follows:
50,000.00 to the DOE.
This circular shall take effect fifteen (15) days
SEC. 5. Section 6 is amended to read as after its publication in two (2) newspapers of
follows: general circulation.

In case of the failure of the concerned party to FRANCISCO L. VIRAY
file the required verbal or written report, or to Secretary
comply with the recommendations submitted
by EPMD, or to pay the administrative fine, the Fort Bonifacio, Taguig
DOE shall have the right to coordinate with Metro Manila
other concerned government agencies for February 23, 1998
the possible suspension or cancellation of any
RULES AND REGULATIONS IMPLEMENTING REPUBLIC ACT 8479,

“Downstream Oil Industry Deregulation Act of 1998”
Pursuant to Chapter VII, Section 23 of “Implementing Rules and Regulations (IRR)

Republic Act 8479, “Downstream Oil of the Downstream Oil Industry Deregulation
Industry Deregulation Act of 1998,” the Act of 1998.”
Department of Energy, in coordination with
the Energy Regulatory Board, Department SECTION 2. Coverage
of Environment and Natural Resources,
Department of Foreign Affairs, Department These rules shall apply to all persons or
of Labor and Employment, Department of entities engaged in any, a combination of, or
Health, Department of Finance, Department all activities or business of the downstream
of Trade and Industry, National Economic and oil industry, such as importing, exporting, re-
Development Authority and Technology and exporting, shipping, transporting, processing,
Livelihood Resource Center, hereby issues, refining, storing, distributing, marketing,
adopts and promulgates the following rules and/or selling, crude oil, gasoline’s, diesel,
and regulations to implement the Act. fuel oils, aviation fuels, liquefied petroleum
gas (LPG), kerosene, and other petroleum
RULE I products as herein defined, as well as persons
GENERAL PROVISIONS or companies directly importing refined
petroleum products for their own use or
SECTION 1. Title requirement. This shall likewise include the
activities or business of blending, recycling,
These rules shall be known and cited as the and/or re-processing of petroleum products.

SECTION 3. Definition of Terms k. Dealer refers to any person, whether
natural or juridical, engaged in the
The terms used in this IRR shall have the marketing and direct selling of petroleum
following respective meanings: products to motorists, end users, and
other consumers;
a. Act refers to Republic Act 8479;
l. DENR refers to the Department of
b. Average Variable Cost refers to the sum of Environment and Natural Resources;
all variable costs divided by the number
of units of outputs; m. DFA refers to the Department of Foreign
Affairs;
c. Basel Convention refers to the
international accord which governs the n. DOE refers to the Department of Energy;
trade or movement of hazardous and
toxic waste across borders; o. DOF refers to the Department of Finance;
d. Board refers to the Energy Regulatory p. DOH refers to the Department of Health;
Board;
q. DOJ refers to the Department of Justice;
e. BOI refers to the Board of Investments;
r. DOLE refers to the Department of Labor
f. BPS refers to the Bureau of Product and Employment;
Standards of the DTI;
s. DTI refers to the Department of Trade
g. Bulk Supplier refers to a person or and Industry;
entity engaged in the sale of petroleum
products in bulk; t. Downstream Oil Industry or Industry refers
to the business of importing, exporting,
h. Bureau refers to the Energy Industry re-exporting, shipping, transporting,
Administration Bureau of the DOE; processing, refining, storing, distributing,
marketing, and/or selling, crude oil,
i. Cartelization refers to any agreement, gasoline, diesel, liquefied petroleum gas
combination or concerted action by (LPG), kerosene, and other petroleum
refiners, importers and/or dealers, products;
or their representatives, to fix prices,
restrict outputs or divide markets, either u. EMB refers to the Environmental
by products or by areas, or allocate Management Bureau of the DENR;
markets, either by products or by areas,
in restraint of trade or free competition, v. Hauler refers to any person, whether
including any contractual stipulation natural or juridical, engaged in the
which prescribes pricing levels and profit transport, distribution, hauling, and
margins; carriage of petroleum products, whether
in bulk or packed form, from the oil
j. Crude Oil refers to the oil in its natural companies and independent marketers
state before the same has been refined to the petroleum dealers and other
or otherwise treated, but excluding consumers;
water, bottoms, sediments and foreign
substances; w. Unless the context otherwise indicates,
Importer refers to any person,

whether natural or juridical, engaged activity of the downstream oil industry;
in the importation of crude oil and/
or petroleum products, whether for hh. Petroleum refers to the naturally
processing, marketing or own use; occurring mixture of compounds of
hydrogen and carbon with a small
x. IRR refers to these rules and regulations proportion of impurities and shall include
implementing the Act; any mineral oil, petroleum gas, hydrogen
gas, bitumen, asphalt, mineral wax, and
y. Liquefied Petroleum Gas or LPG means all other similar or naturally-associated
commercial propane gas or commercial substances; with the exception of coal,
butane gas or a mixture of the two peat, bituminous shale, and/or other
gases, with properties conforming to the stratified mineral fuel deposits;
specifications set by the BPS;
ii. Petroleum Products refers to products
z. LPG cylinder refers to any portable formed in the course of refining crude
pressure-vessel or container for LPG, petroleum through distillation, cracking,
conforming to the specifications set by solvent refining and chemical treatment
the BPS; coming out as primary stocks from the
refinery such as, but not limited to: LPG,
aa. LPG Distributor refers to any person, naphtha, gasolines, solvent, kerosenes,
whether natural or juridical, engaged aviation fuels, diesel oils, fuel oils, waxes
in exporting, refilling, transporting, and petrolatums, asphalt, bitumens, coke
marketing, and/or selling of LPG to end and refinery sludges, or such refinery
users and other consumers; petroleum fractions which have not
undergone any process or treatment as
bb. LPG Retail Outlet refers to any person, to produce separate chemically-defined
whether natural or juridical, engaged in compounds in a pure or commercially
direct selling of LPG to consumers and pure state and to which various
whose supply comes from dealers; substances may have been added to
render them suitable for particular uses:
cc. Marketer refers to any person, whether Provided, That the resultant product
natural or juridical, engaged in the sale of contains not less than fifty percent (50%)
petroleum products, whether in bulk or by weight of such petroleum products;
retail;
jj. PNS refers to the Philippine National
dd. NEDA refers to the National Economic Standards;
and Development Authority;
kk. Predatory Pricing refers to selling or
ee. New Industry Participants refers to new offering to sell any oil product at a
participants in a particular subsector price below the seller’s or offeror’s
of the downstream oil industry with average variable cost for the purpose of
investments and initial business destroying competition, eliminating a
operations commencing after January 1, competitor or discouraging a potential
1994; competitor from entering the market:
ff. OPSF refers to the Oil Price Stabilization Provided, however, That pricing below
Fund established under Presidential average variable cost in order to match
Decree No. 1956, as amended; lower price of the competitor and not for
the purpose of destroying competition
gg. Person refers to any person, whether shall not be deemed predatory pricing.
natural or juridical, who is engaged in any
ll. Qualified LPG Serviceman refers to an SECTION 5. Notice Prior to Engagement in
individual who has been trained, qualified any Activity or Business in the Downstream
and certified by the Philippine Liquefied Oil Industry
Petroleum Gas Association (PLPGA) or
to an individual who has successfully Any person who intends to engage in the
completed an approved training course business of importing, exporting, re-exporting,
for LPG servicemen in a training school refining, processing, manufacturing,
duly recognized and accredited by the blending, recycling, and/or reprocessing,
Philippine government; shipping, transporting, transshipping, storing,
distributing, and marketing and/or selling of
mm.Refilling Plant refers to any installation crude oil, gasoline, diesel, LPG, kerosene, and
that has LPG bulk storage and filling/ other petroleum products, and in any similar
refilling facilities for bottling LPG; activities, shall file a notice with the Bureau
prior to initial engagement in the proposed
nn. Refiller refers to an LPG marketer who buys activity or prior to construction of the
LPG in bulk from bulk suppliers, refills petroleum products facilities, as the case may
LPG into cylinders under his own brand be. All notices shall be in writing, addressed
name or that of other LPG marketers, and to the Bureau, and shall contain the following
sells the same to his dealers, whether in information, as may be applicable:
bulk or retail to his customers;
a. Business name, address, telephone/fax
oo. Refiner refers to any person that locally number;
refines through distillation, conversion
and treatment of crude oil and b. Project or business plan indicating the
other naturally occurring petroleum scope of operation/activity;
hydrocarbons; and pp. Variable Cost
c. List of facilities and proof of the availability
refers to costs such as utilities or raw
of such facilities to support the proposed
materials, which vary as the output
business;
increases or decreases.
d. Business permits such as Mayor’s permit,
RULE II Securities and Exchange Commission
LIBERALIZATION OF DOWNSTREAM OIL (SEC)/DTI registration;
INDUSTRY AND TARIFF TREATMENT
e. Building permit;
SECTION 4. Liberalization of Downstream Oil
f. Locational/ zoning clearance; and
Industry
g. Other local government permits/
Any person may import or purchase any clearances.
quantity of crude oil and petroleum products
from foreign or domestic source, lease Any person already legally engaged in any
or own and operate refineries and other activity in the downstream oil industry upon
downstream oil facilities and market such the effectivity of this IRR is deemed to have
crude oil and petroleum products either in a complied with this notice requirement.
generic name or his or its own trade name, or
use the same for his or its own requirement: SECTION 6. Notice Prior to Every Importation
Provided, That, such person shall comply with
the notice, reportorial, quality, health, safety For effective monitoring, and to ensure
and environmental requirements as set forth conformance to the Basel Convention, any
in this IRR. person who shall import crude oil and/or

petroleum products from foreign countries, (2) Permits on the suitability of
freeports and economic zones, whether for facilities for the proposed operation
trade or for his own use or requirement, shall (Certificate of conformance of
file a notice with the Bureau prior to actual facilities to national or accepted
loading of every importation, indicating international standards on health,
details and/or accompanying documents safety and environment);
related to the importation, as follows:
(3) Product Liability Insurance Certificate
a. type and quantity of cargo; or Product Certificate of Quality; and
b. the estimated date of loading and arrival; (4) Environmental Compliance

Certificate issued by EMB, whenever
c. supplier of cargo;
applicable.
d. FOB price, freight and insurance cost;
For LPG dealers and retail outlets, an
e. vessel particulars; authenticated copy of the Fire Safety
Inspection Certificate will suffice.
f. port of loading and discharge;
b. Importations
g. guaranteed specification of the product;
and
To ensure proper representation of the
h. proforma invoice importation and to ascertain the quality of
imported crude oil, petroleum products and
In the case of importations of slop/used/ petroleum-based products, the importer
waste oils, sludges and similar petroleum shall submit to the Bureau the following
products/by-products, such notice shall be information/documents:
accompanied by a clearance from the EMB/
DENR pursuant to RA 6969, otherwise known (1) Not later than one (1) working day prior
as “Toxic Substances, Hazardous and Nuclear to loading of every importation: details
Wastes Control Act of 1990,” in accordance of importation as enumerated in Section
with the Basel Convention. 6 of this Rule.
SECTION 7. Reportorial Requirements (2) Not later than twenty (20) working days
after unloadingof every importation:
Any person who is engaged or intends to
engage in any activity or business in the i) Bill of lading;
downstream oil industry shall submit the ii) Commercial Invoice;
following reportorial requirements to the iii) Final Import Entry Declaration; and
Bureau: iv) Certificate of Quality issued by the
supplier for the actual shipment
a. Prior to Operation in Proposed Business including the Delivery Receipt or
or Activity Receiving Report.
Any person intending to engage in any c. Exportations

business/activity in the downstream oil
industry shall submit authenticated copies of Any person or entity who shall engage in
the following documents and permits to the exportation of crude oil and petroleum
Bureau prior to operation: products shall submit the following to the
(1) Fire Safety Inspection Certificate of Bureau, not later than ten (10) working days
the facilities; after the departure of shipment:
(1) Details of Exportation; Any person who shall use, charter or utilize
a foreign-owned petroleum product tanker/
i) Name and address of exporter vessel from an international source for
and consignee; domestic use in the Philippines, subject
to existing and pertinent cabotage and
ii) Type and quantity of cargo; maritime laws as approved by the Maritime
Industry Authority (MARINA), shall report
iii) Loading and discharge ports and the following to the Bureau not later than
dates; and ten (10) working days after the actual date
of commissioning/utilization of the tanker/
iv) Cost and vessel particulars. vessel: name and capacity of vessel, number
of compartments, cargo segregation, draft
(2) Certificate of Quality; and year built.
(3) Export Manifest and Release f. Monitoring Reports

Certificate; and
All refiners, importers, and marketers shall
(4) Bill of Lading. submit to the Bureau monthly reports of
their actual and projected importations,
d. Bunkering From Freeports and Special exportations, local purchases, actual and
Economic Zones projected sales (local, international and
exports), and/or consumption, and inventory
Any person or entity who shall engage in on a per crude and/or product basis, in the
bunkering of international vessels in Philippine format to be prescribed for this purpose.
waters, bunkering of aircraft for domestic Submissions are due on the fifteenth (15th)
service and liftings from Custom Bonded day of the month.
Warehouses located outside the source
freeports/special economic zones, but which For those engaged in the petroleum products
shall be eventually used for international business as bulk supplier, they shall submit
bunkering shall report the following to the the following data to the Bureau on or before
Bureau, not later than ten (10) working days January 15 of each year:
after bunkering:
(1) List of the names and addresses of their
(1) Details of bunkering such as name dealers/buyers;
and registry of vessel, type, quantity
and price of product, place of (2) Annual volume of petroleum products
bunkering, destination of vessel, supplied to each dealer/buyer; and
transporter (product carrying vessel),
loading and bunkering date; (3) Lists of names and business addresses of
authorized petroleum product haulers.
(2) Proforma Invoice;
Failure to comply with the notice requirement
(3) Bunkering permit from Bureau of shall constitute violation of Sec. 5 in relation
Customs (BOC) for specific vessels; to Section 12 of the Act.
and
SECTION 8. Tariff
(4) Certificate of Quality.
Pursuant to Section 6(a) of the Act, a single
e. Chartering of Foreign Vessel and uniform tariff duty shall be imposed
and collected both on imported crude oil
and imported refined petroleum products loan agreements, rationalized depot and
at the rate of three percent (3%): Provided, manufacturing operations, hospitality
however, That the President of the Philippines agreements, joint tanker and pipeline
may, in the exercise of his powers, reduce utilization, and joint actions on oil spill
such tariff rate when on his judgment such control and fire prevention. Participants to
reduction is warranted, pursuant to Republic this joint industry activity, either as a group
Act No. 1937, as amended, otherwise known or individual, shall inform the DOE, through
as the “Tariff and Customs Code”: Provided, the Bureau of occurrence and details of such
further, That beginning on January 1, 2004 or activities.
upon implementation of the Uniform Tariff
Program under the World Trade Organization SECTION 10. Monitoring and Arbitration by
and ASEAN Free Trade Area commitments, the DOE
the tariff rate shall be automatically adjusted
to the appropriate level notwithstanding the a. Monitoring
provisions under the aforementioned Section.
To help ensure the observance of fair and
NPC Exemption equitable practices and to ensure the
enforcement of existing contracts, the DOE
Pursuant to Section 6(b) of the Act, for as shall monitor the relationship between the oil
long as the National Power Corporation companies (refiners and importers) and their
(NPC) enjoys exemptions from taxes and dealers, haulers and LPG distributors.
duties on petroleum products used for power
generation, the exemption shall apply to For purposes of such monitoring, the oil
purchases through the local refineries and to companies shall provide the DOE, through the
the importation of fuel oil and diesel. Bureau, with copies of all existing contracts
between them and their dealers, haulers, and
RULE III LPG distributors.
FAIR TRADE PRACTICES AND PROMOTION
OF FREE COMPETITION b. Arbitration and Conciliation
SECTION 9. Promotion of Fair Trade Practices 1. Disputes subject to arbitration
The DTI and DOE shall take all measures to The DOE shall conciliate and
promote fair trade and prevent cartelization, arbitrate any dispute that may arise
monopolies, combinations in restraint of with respect to the contractual
trade and any unfair competition in the relationship, existing therein,
Industry as defined in Article 186 of the involving the dealer’s mark-up,
Revised Penal Code, and Articles 168 and 169 the freight rate in transporting
of Republic Act No. 8293, otherwise known as petroleum products and the margins
the “Intellectual Property Rights Law.” of LPG distributors,
Joint Industry Activities 2. Arbitrator
To serve the public interest, achieve The DOE Secretary shall be the
efficiency and cost reduction, ensure arbitrator for any dispute that may
continuos supply of petroleum products, and arise under Section 7 of the Act.
enhance environmental protection, the DOE Provided, that the DOE Secretary
shall continue to encourage joint industry may designate or appoint an official
activities, which may include borrow-andin the DOE to act as arbitrator on

his behalf, which official shall not g. The Arbitrator shall have the
be lower than a Director. Provided power to administer the oaths to
further, that any award resulting all witnesses in the hearing. This
from such arbitration shall be signed oath shall be required of every
by the Secretary. witness before his testimony is
heard.
3. Guidelines and Procedures
h. The Arbitrator may subpoena
a. Upon the filing of the complaint, any person to attend the hearing
the arbitrator shall forthwith as a witness or to produce
notify the adverse party/parties documents whenever he may
in writing of the issues raised deem necessary.
in the said complaint and shall
require him/them within ten i. In the absence of any agreement,
(10) days from receipt thereof the normal order of arbitration is
to submit position paper with as follows:
respect to arbitrable issues and
the possible evidences that the 1. Opening statements of the parties.
parties may present to support
his/their respective position. The Arbitrator may, at the commencement
of the hearing, ask both parties for brief
b. The arbitrator shall set a time statements of the issues in controversy
and place for the hearing of the and/or agreed statements of facts. He
dispute submitted to him and shall have wide latitude of discretion in
must cause notice thereof to be determining the order of presentation.
given to each of the parties.
2. Stipulation of Facts
c. The hearing may proceed in the
absence of any party who, after The arbitrator, when warranted, attempt
due notice, fails to be present to draw the parties to stipulate facts,
at such hearing or fails to file a which are no longer disputable, leaving
motion for the postponement or the presentation and examination of
continuance thereof. evidence only to such facts that are still
in dispute.
d. The arbitrator shall not make
an award based solely on the 3. Presentation of Evidence
default of a party but shall
require the other party to submit The parties may offer such evidence
such evidence as he may require as they desire, and shall produce such
for making an award. additional evidence as the arbitrator shall
require or deem necessary to a better
e. Each of the party to the dispute understanding and determination of the
may be represented by counsel. dispute.
f. The Arbitrator shall arrange 4. Formal Offer of Evidence

for the taking of stenographic
record of the proceedings. The formal offer of evidence may be
dispensed with unless otherwise agreed
upon by the parties.

5. Appreciation of Evidence They may also submit their respective
contentions to the Arbitrator in writing;
The Arbitrator shall be the sole judge which shall include a statement of
of the relevancy and materiality of the facts, together with all documentary
evidence offered or produced and shall proof. Parties may also submit a written
not be bound to conform to the Rules argument. Each party shall provide all
of Court pertaining to evidences. He other parties to the dispute with a copy of
shall receive as exhibits in evidence any all statements and documents submitted
document, which the parties may wish to to the arbitrators.
submit, and the exhibits shall be properly
identified and marked at the time of Each party shall have an opportunity
submission. to reply in writing to any other party’s
statements and proofs; but if such party
6. Submission of Memoranda fails to do so within seven (7) days after
receipt of such statements and proofs,
The Arbitrator may require the parties to he shall be deemed to have waived
submit their respective memoranda. A his right to reply. Upon the delivery to
definite time limit for the filling shall be the arbitrators of all statements and
fix by the arbitrator at the close of the documents, together with any reply
hearing. statements, the arbitrators shall declare
the proceedings in lieu of hearing closed.
7. Time for rendering award.
10. Reconsideration
The written award of the Arbitrator shall
be rendered within thirty (30) days after Any motion for reconsideration of any
the closing the hearings, or if the oral award by the arbitrator shall filed within
hearing shall have been waived, within fifteen (15) days from receipt of the
thirty (30) days after the Arbitrator award by the adverse party.
shall have declared such proceedings as
closed. 11. Judicial Review
In the event that the parties to an Any appeal that may be taken from
arbitration have, during the course of an award and the proceeding thereon
such arbitration, settled their dispute, shall be instituted by certiorari and the
they may request of the Arbitrator that proceeding thereof shall be governed by
such settlement be embodied in an the rules of court as these are applicable.
award which shall be signed by him.
SECTION 11. Program to Encourage the Entry
8. Form of Award of new Participants in the Industry
The award must be made in writing and Pursuant to Section 8 of the Act, the DOE,
signed by the DOE Secretary the DFA and the DTI shall jointly formulate
and establish a program that will promote
9. Proceeding in lieu of hearing the entry of new participants in the Industry.
This program shall commence after three (3)
The parties may, by written agreement, months from the effectivity of the Act.
submit their dispute to arbitration by a
mode other than oral hearing. The parties a. International Information Campaign
may submit an agreed statement of facts.

Among others, the program shall include b. Additional deduction for labor expenses;
a strategic international information
campaign to be implemented through c. Minimum tax and duty of three percent
selected embassies and consular offices (3%) and value-added tax (VAT) on
of the Philippines. imported capital equipment;
b. “Philippine Downstream Oil Industry d. Tax credit on domestic capital equipment;

Investment Guide”
e. Exemption from contractor’s tax;
The DOE shall provide an investment guide
to new Industry participants and prospective f. Unrestricted use of consigned equipment;
participants, which shall contain, among
others, the following: g. Exemption from the real property tax on
production equipment or machineries;
1. An introduction to the Philippine
Downstream Oil Industry and the h. Exemption from taxes and duties on
government’s unwavering commitment imported spare parts; and
to deregulation;
i. Such other applicable incentives under
2. The entry requirements; Article 39 of Executive Order No.226.
3. Information on the benefits and SECTION 13. Availment of Incentives

incentives for new industry participants
which shall specify: The incentives cited under Section 12 hereof
may be availed of by persons with new
(i) all the incentives and benefits they investments for a period of five (5) years from
can enjoy, and (ii) the procedural and registration with the BOI: Provided, however,
substantive requirements needed for That in the storage, marketing (including
entitlement; and the establishment of gasoline stations) and
distribution of petroleum products, only the
4. Such other information the DOE may investments of new industry participants
deem necessary to promote the entry of shall be entitled to incentives provided in the
new participants. Omnibus Investment Code of 1987.
SECTION 12. Incentives for New Investments For this purpose, the industry shall be
included in the Annual Investment Priorities
The same incentives granted to BOI- Plan (IPP): Provided, That nothing herein
registered enterprises engaged in a preferred contained shall preclude qualified persons
area of Investments, pursuant to Executive or entities as provided under the Code from
Order No. 226 (Omnibus Investment Code applying for or continue enjoying incentives
of 1987), shall be extended, as applicable, to and benefits under the said Code.
persons with new investments as determined
by the DOE and registered with the BOI in SECTION 14. Promotion of Retail Competition
refining, storage, marketing and distribution
of petroleum products. Such incentives shall To achieve the social policy objective of
include the following: fair prices, and facilitate the attainment
of a truly competitive petroleum product
a. Income tax holiday; market in the retail level, the DOE shall
promote and encourage by way of

information dissemination, networking and financial assistance; and the remaining three
management/skills training, the active and percent (3%) shall be utilized in accordance
direct participation of the private sector and with the provision of Section 26 of the Act.
cooperatives in the retailing of petroleum Provided, that the loans to be awarded herein
products through joint venture/supply shall be from short-to-medium-term with low
agreements with new industry participants interest rates.
for the establishment and operation of
gasoline stations; Provided, That, the training RULE IV
herein shall include LPG retailing. ANTI-TRUST SAFEGUARDS,
OTHER PROHIBITED
a. Management and Skills Training
ACTS AND REMEDIES
The DOE shall, in cooperation with the
Technology and Livelihood Resource SECTION 15. Anti-Trust Safeguards
Center (TLRC) and Technical Education
and Skills Development Authority (TESDA), To ensure fair competition and prevent cartels
coordinate with new industry participants and monopolies in the Industry, the following
and existing petroleum dealer’s associations acts are hereby prohibited:
in the formulation of a two-fold program
on management and skills training for the a. Cartelization, which means any
management, establishment and operation agreement, combination or concerted
of gasoline stations and LPG retail outlets. action by refiners, importers and/or
dealers, or their representatives, to
b. Government Assistance fix prices, restrict outputs or divide
markets, either by areas, in restraint of
Persons who successfully completed the two- trade or free competition, including any
fold program shall be entitled to government contractual stipulation which prescribes
assistance being extended by government pricing levels and profit margins;
lending agencies, in the form of medium-to
long-term loans with low interest rates and to b. Predatory Pricing which means selling or
the training and loan fund. offering to sell any oil product at a price
below the seller’s or offeror’s average
c. Training and Loan Fund variable cost for the purpose of destroying
competition, eliminating a competitor or
This shall serve as capital for the establishment discouraging a potential competitor form
and operation of gasoline stations and shall entering the market: Provided however,
be administered by the DOE under a separate that pricing below average variable cost
account. An initial amount of Three hundred in order to match the lower price of
million pesos (P300, 000,000.00) shall be the competitor and not for the purpose
provided by the Philippine Amusement and of destroying competition shall not be
Gaming Corporation (PAGCOR). deemed predatory pricing.
Of this amount, two percent (2%) plus any For purposes of this prohibition, “variable
additional funding shall be allocated for the cost” as distinguished from “fixed cost” refers
two-fold program; one percent (1%) plus to costs such as utilities or raw materials,
any additional funding shall be set aside which vary as the output increases or
for administrative, maintenance, and other decreases and “average variable cost” refers
operating expenses; ninety-four percent to the sum of all variables cost divided by the
(94%) shall be used exclusively for lending and number of units and outputs.

Any person, including but not limited to proprio, investigate and/or file the
the chief operating officer, chief executive necessary complaint with the proper
officer or chief finance officer partnership, court or agency;
corporation or any entity involved, who is
found guilty of any of the said prohibited acts, b. Investigate and act upon complaints or
shall suffer the penalty of three (3) to seven reports of commission of the prohibited
(7) years imprisonment, and a fine ranging acts under Section 11 of the Act, and
from One million pesos (P1, 000,000.00) to after determination of such violation
two million pesos (P2,000,000.00). endorse the same to the provincial or
city prosecutor having jurisdiction for
SECTION 16. Other Prohibited Acts institution of the appropriate action;
To ensure compliance with the provisions of c. Prepare and submit a report to the
the Act, the refusal to comply with any of the Secretary of Energy and Secretary of
following shall likewise be prohibited: Justice embodying its findings and
recommendations as a result of its
(a) Submission of any reportorial investigation of the alleged violation of
requirements; Section 11 of the Act;
(b) Use of clean and safe (environment and d. Investigate and act upon a complaint
worker-benign) technologies; by any instrumentality or agency of the
Government, including government-
(c) Any order or instruction of the DOE owned or –controlled corporations, that
Secretary issued in the exercise of his loss or damage has been suffered or
enforcement powers under Section 15 of incurred by such instrumentality, agency
the Act; and or government corporation by reason of
violation of Section 11 of the Act; and
(d) Registration of any fuel additive with the
DOE prior to its use as an Additive. e. Perform such other functions as may
jointly be assigned by the Secretary of
Any person, including but not limited to the Energy and the Secretary of Justice.
chief operating officer, chief executive officer
of the partnership, corporation or any entity RULE V
involved, who is found guilty of any of the POWERS AND FUNCTIONS
said prohibited acts shall suffer the penalty OF THE DOE AND DOE SECRETARY
of imprisonment for two (2) years and fine
ranging from Two hundred fifty thousand SECTION 18. Monitoring
pesos (250,000.00) to Five hundred thousand
pesos (5000,000.00). The DOE shall monitor the following
pursuant to Section 14 of the Act. Any
SECTION 17. Remedies misrepresentation, mislabeling, concealment
or fraud, shall be subject to penalties under
The DOE-DOJ Task Force, created under existing applicable laws.
Section 14 (d) of the Act, shall take the
following remedial measures: a. Prices
a. Investigate and act upon complaints The DOE shall monitor and publish
or reports from any person of an international oil prices as well as follow
unreasonable rise in the prices of the movement of domestic oil prices.
petroleum products and may, motu
1. Price Display Boards the BPS, together with the DENR, the
DOE, the DOST, representatives of the
For the convenience of the public, fuel and automotive industries and the
all retailers of petroleum products consumers, shall set pursuant to Section
shall display the prices of each 14 of the Act. Misrepresentation of the
type of petroleum product sold in quantity of petroleum products such as
gasoline stations in prominently underdelivery, shortselling, underfilling
installed price display boards with of LPG, dispensed at the outlets, as well
backgrounds preferably conforming as inaccurate tare weight markings on
to the color coding scheme for the the LPG cylinders, shall be subject to
product, such as: green for Unleaded penalties under existing applicable laws.
Premium Gasoline, red for Premium
Low Lead Gasoline, orange for 1. Color Coding/Use of Marker Dyes
Regular Gasoline, yellow for Diesel
Fuel, and white for Kerosene. In the Products sold on retail shall
case of LPG (which has no product conform to the color-coding scheme
color), the price display board may prescribed under Section 18 (b)
be light blue in color. The numeric hereof. The required marker dyes
entries in these boards shall be at for certain petroleum products shall
least six (6) inches in height. likewise be enforced to all refiners
and marketers directly importing
The price display boards shall be properly these products.
installed and labeled not later than June 30,
1998. Failure to comply with this requirement 2. Sampling and Testing of Product
shall be penalized pursuant to Section 24 of
the Act. To ascertain and ensure conformance
to national standards of quality,
2. Unreasonable Rise in Prices the Bureau may conduct spot and
periodic sampling and testing of
Any report from any person of an petroleum products at various
unreasonable rise in the prices points of the business. Likewise,
of petroleum products shall be quality control certificates shall
immediately acted upon by the DOE- be made available for monitoring
DOJ Task Force in accordance with purposes. All fees and charges to
Section 17 of this IRR. The said Task be encountered during the testing
Force shall determine within thirty of petroleum product samples shall
(30) days the merits of the report and be borne by the refiners/importers/
shall initiate the necessary actions bulk marketers except in cases of
warranted under the circumstances. product complaints from the public
against such entities, whereby the
b. Product Quality and Quantity corresponding testing fee for the
product shall be borne by the Bureau.
The Bureau shall monitor the quality
of petroleum products, including 3. Calibration
adulteration and other forms of product
misrepresentation or mislabeling, Periodic calibration of dispensing
and stop the operation of businesses pumps, tank trucks, storage tanks,
involved in the sale of petroleum weighing scales and calibration
products which do not comply with the buckets shall be done in accordance
national standards of quality, which with existing government standards,
the records of which shall be (ii) Storing (transshipment)
made available upon the Bureau’s
inspection and validation. Likewise, (a) Exact location of the storage
the required weighing scale shall be site;
installed and rendered usable at all (b) Plot plan (location of various
times. facilities for the storage);
(c) Maximum design and
c. Refining, Manufacturing and Marketing actual capacities of crude
Processes and product storage oil
movements’ facilities
The Bureau shall monitor the local (docking, berthing, and
refining and manufacturing processes loading).
and the process of marketing local and
imported petroleum products to ensure (iii) Distribution/Operation of
that clean and safe (environment and Petroleum Carriers (Pipeline,
worker-benign) technologies are applied. Tankers, Barges, Tanktrucks)
1. Conformance to Standards and (a) For tankers and barges:

Facilities details and particulars of the
vessel
The refiners and marketers shall (b) For pipelines: location and
operate using processes and facilities description; product service;
conforming to national standards and capacity/pumping rate
and/or internationally accepted (c) For tank trucks: number of
standards for the oil industry. The units and corresponding
following information/documents capacities; and Calibration
shall be submitted upon actual start Certificate
of operation, and to be updated
annually: (iv) Gasoline Stations
(i) Refining, Processing, including (a) List of dispensing pumps and

Recycling and Blending underground tasks with the
corresponding capacities
(a) Exact location of the and products stored;and
refinery/plant; (b) Lay-out plan and latest
(b) Plot plan (location of various photograph of the outlet
equipment and facilities for
the refinery/plant); (v) LPG Refilling Plant
(c) Process configuration and
description; (a) List of approved-type filling
(d) Material balance and equipment
product yield; (b) Plant data on storage and
(e) Maximum design and other fixed facilities
actual capacities for crude (c) Technical data on plant
and product storage, capacity
oil movements facilities (d) List Qualified LPG
(docking, berthing, and servicemen and duly
loading), as well as process licensed personnel; and
units capacities. (e) Lay-out plan and latest
photograph of the plant
(vi) Bunkering From Freeports and transport, storage, installation
Special Economic Zones - and use of equipment and
facilities used in the downstream
Copy of the delivery receipt oil industry shall be governed
signed by both the transporter by the pertinent provisions
and end-user vessels’ official/ of the different international
master/chief mate, and safety codes now observed and
representatives of the BOC and adopted in the industry.
Philippine Ports Authority
(iii) All installations for the filling,
2. Inspection and Audit of Facilities use and storage of petroleum
products including gasoline and
The Bureau shall conduct periodic LPG as well its containers and
inspection and audit at various points their necessary appurtenances
of the business, such as but not shall conform to local zoning
limited to refineries, manufacturing ordinances and regulations.
and storage plants, handling,
marketing, and distribution facilities, (iv) Any person undertaking the
as well as terminals, tankers, barges, initial installation of an LPG
pipeline, and tank trucks, or in system shall be responsible for
coordination with the appropriate providing his customer with
government agencies. Such facilities adequate instructions for the
shall conform to the government proper and safe handling, use
standards, or in its absence, and maintenance of the system
internationally accepted standards installed. All installations of LPG
for the downstream oil industry. systems shall be done only by
Qualified Servicemen.
3. Safety
(v) All LPG brand owners shall keep
To ensure safety of end-users and the their own cylinders in safe, clean
buying public in general, all persons and serviceable condition and
and engaged in the downstream shall maintain them in a manner
oil industry shall comply with the consistent with the provisions of
following: the safety codes adopted in the
industry.
(i) All persons and entities engaged
in the downstream oil industry, (vi) All persons or entities engaged
including selling of gasolines and in the sale and distribution of
any petroleum and petroleum- petroleum products including
based products, shall use only LPG shall provide free inspection
facilities, and equipment that and technical assistance to their
comply with the specification, customers, retail outlets and
design, fabrication, inspection, dealers, as the case may be,
marking and requalification to ensure conformity to safety
provision of the safety codes set standards in accordance with
and observed in the industry. the provisions of this IRR and
shall respond to all emergency
(ii) All other matters affecting the calls affecting safety at any time.
safe and proper handling,

(vii) To ensure safety of consumers, the authorized filling and refilling
all LPG marketers are enjoined to plants.
procure only brand new cylinders
from duly licensed cylinder (xiii) All unsafe or dilapidated empty
manufacturers with their brand cylinders shall be set aside for
name clearly embossed on the requalification, repair, cleaning,
cylinder body and shall conform painting prior to having such
with the provisions of the cylinders refilled.
Philippine National Standards
(“Specification for Steel Cylinders (xiv) All re-assembles or the so-called
for LPG”). All cylinders shall be “chop-chop” cylinders shall not
re-qualified ten (10) years from be used by those engaged in the
the date of manufacture and LPG business.
every five (5) years thereafter.
(xv) All LPG refillers shall test-weigh
(viii) All LPG marketers shall have and leak test every cylinder
appropriate provisions for the before each one leaves the
safe handling of all cylinders in refilling plant premises.
circulation.
4. Data on Facilities
(ix) Imported cylinders that are
without the prescribed safety Any person who shall engage in
and engineering standard any activity or business in the
markings must be requalified downstream oil industry shall provide
prior to being put in circulation, the Bureau with annual updates of
and every five (5) years information on the facilities used
thereafter. in the operation, including the
capacities and working/operating
(x) Vehicles used in transporting LPG conditions of such facilities.
cylinders shall have substantially Pertinent permits for any or all new/
flat floors and equipped with additional/renovated/refurbished
suitable racks for holding the facilities and its respective operation
cylinders which shall be securely shall be submitted to the Bureau
fastened in a position that prior to commissioning.
shall minimize the possibility
of movement and tipping over, Decommissioning or non-operation
which might cause danger to life of facilities, and the reasons for
and property. such, shall be reported to the Bureau
within five (5) working days from
(xi) All brand owners who sell LPG stoppage of operation.
in bulk or retail shall carry a
product liability insurance to SECTION 19. National Emergency
answer for whatever damage or
liability that may result from the By virtue of Section 14 (e) of the Act, in times
unsafe condition of LPG tanks, of national emergency, when the public
installation and equipment. interest so requires, the DOE may, during
the emergency and under reasonable terms
(xii) All cylinders offered for sale to prescribed by it, temporarily take over or
the public shall be filled only at direct the operation of any person or entity

engaged in the industry. In cases of imminent However, the DOE and DOF are authorized
supply disruptions, the DOE shall adopt to recommend to the President of the
contingency measures pursuant to Section Philippines the acceleration of the start of full
12 (c)(2) of RA 7638. of the Department of deregulation when the prices of crude oil and
Energy Act of 1992. petroleum products in the world market are
declining and the value of the peso in relation
RULE VI to the US dollar is stable, taking into account
TRANSITION PHASE relevant trends and prospects.
SECTION 20. Phases of Deregulation Notwithstanding the foregoing provision, the

five (5) -month Transition Phase shall continue
Pursuant to Section 16 of the Act, the to apply to LPG, regular gasoline and kerosene
deregulation shall be done in two (2) phases: as socially sensitive petroleum products and
Phase I (Transition Phase) and Phase II (Full said petroleum products shall be covered by
Deregulation Phase). the automatic pricing mechanism during the
said period. Upon the implementation of full
SECTION 21. Buffer Fund deregulation, the transition phase shall be
deemed terminated.
An amount not exceeding Two billion nine
hundred million pesos (P2,900,000,000.00) RULE VIII
from the Reserve Control Account or RCA FINAL PROVISIONS
may be used by the President as a buffer fund
to cover increases in the prices of petroleum SECTION 24. OPSF Balance
products, except for premium gasoline,
during the Transition Phase over the prices All outstanding claims against the OPSF
prevailing as of February 12, 1998. The RCA as of the effectivity of the Act, subject to
refers to a lump sum collation of reserve the existing auditing rules and regulations
impositions deducted from the appropriations of the Commission on Audit (COA), shall
approved by Congress for the operation of be considered as accounts payable of the
the government and the implementation of National Government. The reimbursement
projects and programs; certificates issued by the DOE covering the
said outstanding claims shall be honored and
SECTION 22. Automatic Oil Pricing accepted by the Bureau of Customs and the
Mechanism Bureau of Internal Revenue as payment to the
extent of ten percent (10) per payment of the
Pursuant to Section 18 of the Act, the tariff duties and specific taxes due from the
Board shall establish an automatic pricing creditor-claimant against the OPSF until such
mechanism to enable the domestic price claims are settled in full. All reimbursement
of petroleum products to approximate certificates are not transferable.
and promptly reflect the price of oil in the
international market. SECTION 25. Initial Public Offering
RULE VII Any person engaged in the oil refinery

FULL DEREGULATION business shall make a public offering through
the stock exchange of at least ten percent
SECTION 23. Start of Full Deregulation (10%) of its common stock within a period
of three (3) years from the effectivity of the
As provided under Sec. 19 of the Act, full Act, or the commencement of its refinery
deregulation of the Industry shall start five operations. Provided, That no single person
(5) months following the effectivity of the Act. or entity shall be allowed to own more than
five percent (5%) of the stock offered by any SECTION 28. Repealing Clause
other crude oil refining company pursuant to
Section 22 of the Act. Provided, finally, that Any rule or regulation inconsistent with the
any such company which made the requisite provisions of this IRR is hereby repealed or
public offering before the affectivity of the modified accordingly.
Act shall be exempted from the requirement.
SECTION 29. Separability Clause
SECTION 26. Penal Sanction
If, for any reason or reasons, any part of this
Any person who violates any of the provisions IRR be declared unconstitutional or invalid,
of the Act shall suffer the penalty of three (3) no other parts or provisions hereof shall be
months to one (1) year imprisonment and a affected thereby.
fine ranging from Fifty thousand pesos (P50,
000.00) to Three hundred thousand pesos SECTION 30. Effectivity
(P300,000.00).
This IRR and any amendments thereto shall
SECTION 27. Public Information Campaign take effect upon complete publication in
at least two (2) newspapers of general
The DOE, in coordination with the Board circulation.
and the Philippine Information Agency,
shall undertake an information campaign FRANCISCO L. VIRAY
to educate the public on the deregulation Secretary
program of the Industry. Fort Bonifacio, Taguig City, Metro Manila,
March 11,1998.
ERRATAIN
DOE DEPARTMENT CIRCULAR NO. 98-03-004
1. Section 10, Paragraph b (3) ix (5) of Rule To:

III (Appreciation of Evidence) “x x x. A definite time limit for the
From: filing of such memoranda shall be
fixed by the arbitrator at the close of
“x x x. He shall have his award on the the hearing.”
evidence submitted. x x x.”
3. Section 18, Paragraph b of Rule V
To: (Refining, Manufacturing and Marketing
“x x x. He shall have his award on the Processes)
evidence submitted. x x x.” From:
2. Section 10, Paragraph b (3) ix (6) of Rule “b. Refining, Manufacturing and
III (Submission of Memoranda) Marketing Processes.”
From: To:
“x x x. A definite time limit for the “c. Refining, Manufacturing and
filing of such memoranda shall Marketing Processes.”
be fixed by the arbitrator at the
close of the hearing.”

AMENDING SECTION 14 OF DEPARTMENT CIRCULAR NO. 98-03-004 ENTITLED “RULES AND
REGULATIONS IMPLEMENTING REPUBLIC ACT 8479, DOWNSTREAM OIL INDUSTRY DEREGULATION
ACT OF 1998”

Pursuant to Chapter VII, Section 23 of of R.A. 8479 to serve as capital for

Republic Act No. 8479 “Downstream Oil the establishment and operation of
Industry Deregulation Act of 1998,” Section gasoline stations.
14 of Department Circular No. 98-03-004 is
hereby amended to read as follows: “New industry participants refer to
new participants in a particular sub-
“SECTION 14. Promotion of Retail sector of the downstream oil industry
Competition with investments made and initial
business operations commenced
“To achieve the social policy after 1 January 1994 as provided
objective of fair prices and facilitate under Section 4 (k) of R.A. 8479.
the attainment of a truly competitive
petroleum product market in the “The private sector and cooperatives
retail level, the DOE shall promote may enter into joint venture/supply
and encourage by way of information agreements with new industry
dissemination, networking and participants for the establishment,
management/skills training, the management and operation of
active and direct participation of the gasoline stations.
private sector and cooperatives in
the retailing of petroleum products “In no case shall the investment of a
through joint venture/supply new industry participant in the joint
agreements with new industry venture agreement be lower that
participants for the establishment 90% of the total investment in the
and operation of gasoline stations: joint venture.
Provided, That the training herein
shall include LPG retailing. “(b) Training Program for New
Industry Participants
“(a) Recipients of Preferential
Treatment “The Department of Energy (DOE)
shall, in cooperation with the
“New industry participants shall be Technology and Livelihood Resource
given preference in the formulation Center (TLRC) and Technical
and implementation of a two-fold Education and Skills Development
program on management and skills Authority (TESDA) and other training
training for the establishment, agencies recognized by the DOE, with
operation, management and expertise in conducting training for
maintenance of gasoline stations. would-be gasoline station dealers,
They shall likewise be given coordinate with new industry
preferential treatment in the grant participants and existing petroleum
of gasoline station training and dealer associations in the formulation
loan fund provided in Section 10 and implementation of a two-fold

program on management and skills “Employees of the DOE and
training for the establishment, its attached agencies namely,
operation, management and the National Electrification
maintenance of gasoline stations. Administration, Philippine National
The DOE shall approve the training Oil Company and its subsidiaries and
program, obtained through the National Power Corporation are
competitive bidding, for which it disqualified to apply for the gasoline
shall have proprietary rights to the station loan during their employment
training curriculum design. in the said offices or entities and
up to a period of one (1) year after
“The two-fold program on the time of their resignation or
management and skills training separation from the service of such
shall also cover the retail of all offices or entities. In addition,
petroleum products including LPG relatives up to the fourth civil degree
retailing and shall be conducted as either by consanguinity or affinity of
often as necessary at the discretion members of the Executive Committee
of the DOE. The DOE shall collect (EXCOM) of the DOE, Chief Executive
minimal fees to cover materials and Officers and members of the Board
other administrative expenses in the of Directors/Administrators of such
conduct of the training. attached agencies shall not be
qualified to apply for the gasoline
“(c) Grant of Gasoline Station Loan station loan while said officials are in
the service of such offices/ entities
“The following shall be qualified to up to a period of one (1) year after
apply for a loan to serve as capital for their resignation or separation from
the establishment and operation of the service of said offices or entities.
gasoline stations:
“The DOE shall establish a separate
“(1) Natural persons who successfully account with a Government Financial
complete the two-fold program Institution as the depository bank
on management and skills under a Memorandum of Agreement
training for the establishment, (MOA) to be executed for the
operation, management and administration and management of
maintenance of gasoline the loan fund to be provided by the
stations; or, Philippine Amusement and Gaming
Corporation (PAGCOR).
“(2) Corporations, partnership,
cooperatives, associations, “Any qualified person or entity who
non-government organizations, applies for the gasoline station
joint ventures, consortia, loan shall be entitled to an amount
single proprietorships and equivalent to fifty percent (50%)
similar parties whose owners/ of the total project cost but not
representatives/s successfully exceeding Five Million Pesos (P
complete the two-fold program 5,000,000.00) with an interest rate of
on management and skills six percent (6%) per annum payable
training for the establishment, in a period of no more than seven (7)
operation, management and years. There shall be no fees/penalty
maintenance of gasoline for fast-track payments. The loan
stations. proceeds shall be used in activities
enumerated in Annex “A.”
“The terms and conditions of the loan “(d) Mechanics for the Loan
including interest payments shall Disbursement
be provided in a Loan Agreement
to be entered into among the DOE, “The disbursement of loan will follow
the Government Financial Institution the process described in Annex “B.”
(GFI) and the applicant.
“(e) Annexes
“All applications for a gasoline
station loan shall be submitted to “Annexes are integral part of this
the DOE with the following papers or Circular.
documents:
“(f) Standards of Quality
“(i) Certificate of Completion of the
two-fold training program; “The construction and operation
of the gasoline station shall be
“(ii) Application Form stating the in accordance with international
name of the applicant, address, standards of quality. Only products
telephone number cellular meeting the Philippine National
phone number, FAX number, Standard (PNS) shall be dispensed at
e-mail address, amount the stations.
applied for and other pertinent
information; “(g) Reportorial Requirements and
Visitation Rights
“(iii) DTI/SEC Registration and Articles
of Incorporation, if applicable; “The grantee of the loan shall submit
to the DOE a monthly status report
“(iv) Feasibility study for the gasoline on the construction and operation
station to be put up, including of the gasoline station starting from
the location of the proposed the notice of approval of the loan.
gasoline station or proposed Contents of the report is described in
suppliers and other similar Annex “C.” The DOE has the right to
information; counter-check the report submitted
by inspecting the said station.
“(v) Manpower complement.
“(h) Sanctions, Cancellation and
“The DOE shall act upon said Administrative Fines
application within fifteen (15)
working days from receipt thereof. “The corresponding sanctions
It is understood that any application described in Annex “D” hereof shall
not acted upon within the said period be imposed upon violation of any
shall be deemed automatically provision of this Circular.
endorsed for processing by the GFI.
“(i) Repealing Clause
“The grantee shall not assign or
transfer the operation of the gasoline “Any Department Order or Circular
station without the written consent inconsistent with the provisions of
of the DOE within the period of the this Circular is hereby repealed or
Loan Agreement. modified accordingly.

“(j) Separability Clause “This Department Circular No.
2002-05-001 shall take effect upon
“If, for any reason or reasons, any its complete publication in at least
part of this Circular is declared two (2) newspapers of general
unconstitutional or invalid, no other circulation.”
parts or provisions hereof shall be
affected thereby. VINCENT S. PEREZ, JR.
Secretary
“(k) Effectivity May 6, 2002

ANNEX A
ELIGIBLE PROJECT EXPENDITURES

(1) Payment for the purchase of equipment (4) Payment of construction and concreting
to be used for the operation of a of pump island/s
gasoline station (i.e., dispensing pumps,
underground tanks, lifter, compressor, (5) Payment for the initial purchase of
etc.) petroleum products but not to exceed P
1M
(2) Payment for the purchase of equipment
related to safety and environment (6) Payment for the purchase of brand new
protection such as fire extinguisher, LPG cylinders (not to exceed 40 cylinders)
water tank
(3) Payment of actual installation costs of

equipment
ANNEX B
MECHANICS FOR LOAN DISBURSEMENT

Disbursement by the GFI of the approved (b) Second Release – balance of the
loan shall be made upon endorsement by the amount approved for civil works
DOE, based on the following: upon 100% completion of the same

CIVIL WORKS EQUIPMENT

(1) Progressive disbursement – Loan releases Release for the payment of the equipment to
will be in two (2) tranches based on the be installed shall be made upon submission
development of the civil works. to the DOE of the purchase order.

(a) First Release – 20% of the approved FUEL REQUIREMENTS
loan for civil works upon 20%
completion of the same Release for the payment of the equipment to
be installed shall be made upon submission
to the DOE of the fuel supply purchase order.

ANNEX C
MONITORING REPORTS

(1) Pre-Construction Report – report for the (3) Monthly Report – from start of
period covering approval of loan up to commercial operation onwards to be
start of construction submitted fifteen (15) days after the end
of the preceding month
Contents: Status of negotiations with civil
works contractor, equipment provider, Contents: volume of sales, records
fuel supplier of petroleum products deliveries (by
product, by supplier)
(2) Progress Report – to be submitted in
accordance with the mechanics of loan
disbursement (Annex B)

ANNEX D
SANCTIONS

(1) Non-compliance with the reportorial (2) Non-conformity with quality standards
requirements for fuel, facilities and practices.
(a) first offense – reprimand Penalty pursuant to DOE regulations.

(b) two (2) weeks after notice – (3) Late/Non-payment of monthly
amortization.
a. cancellation of loan agreement
for pre-construction period Penalty provided under the Loan
Agreement.
b. withhold release of succeeding
loan tranche (4) Transfer of operation of the gasoline
station without consent of the DOE.
c. penalty provided under the Loan
Agreement Penalty – cancellation of the Loan
Agreement

DEPARTMENT CIRCULAR NO. DC 2003-06-007
FURTHER AMENDING SECTION 14 OF DEPARTMENT CIRCULAR NO. 98-03-004 ENTITLED “RULES

AND REGULATIONS IMPLEMENTING REPUBLIC ACT 8479, DOWNSTREAM OIL INDUSTRY
DEREGULATION ACT OF 1998,” AS AMENDED
SECTION 1. Coverage Pursuant to Section 10 of R. A.

8479, the total amount (Program
Pursuant to Chapter VII, Section 23 of Fund) earmarked for the Program
Republic Act No. 8479, otherwise known as is Ninety-Four Percent (94%) of
the “Downstream Oil Industry Deregulation the Three Hundred Million Pesos,
Act of 1998,” Section 14 (paragraph) c equivalent to Two Hundred Eighty-
of Department Circular No. 98-03-004, as Two Million Pesos (P282M). This
amended by Department Circular No. 2002- Program Fund shall be made available
05-001, is hereby further amended to read as by the Philippine Amusement and
follows: Gaming Corporation (PAGCOR)
through the DOE and administered
“SECTION 14. Promotion of Retail by the Development Bank of the
Competition xxx Philippines (DBP). The DBP and the
DBP-Trust Services (DBP-TS) shall
c. Grant of Gasoline Station Loan administer the Program Fund under
a Memorandum of Agreement
(1) The Gasoline Station Lending and (MOA) dated January 23, 2003. This
Financial Assistance Program Program Fund shall be placed in two
(2) special accounts with DBP-TS,
The Gasoline Station Lending which is tasked to perform fund
and Financial Assistance Program management functions and loan
(hereinafter referred to as the administration services to monitor
Program) is designed to provide fund disbursement and collection.
credit assistance to New Industry The DBP-TS shall maintain two (2)
Participants (Borrowers) whose books of accounts for the Program
owners successfully complete the Fund and a subsidiary ledger
two-fold program on management account of all borrowers.
and skills training in the retailing
of Petroleum Products for All repayments, including
the establishment, operation, amortization payments of principal
improvement, management and and interest earnings, shall accrue
maintenance of gasoline stations to the “Second Generation Fund” in
within the current deregulated accordance with the MOA.
environment. The financial
assistance covers the retailing of all The Program Fund shall assume the
Petroleum Products sold in gasoline credit risk of Borrowers.
stations, including LPG.
(3) Eligible Borrowers
(2) Program Fund
The following Borrowers shall be
qualified to avail of the Program:

(i) Natural persons who The following Loan Purposes shall
successfully completed the two- be eligible for funding under the
fold program on management Program:
and skills training for the
establishment, operation, (i) Purchase and installation of
management and maintenance equipment to be used for the
of gasoline stations; or operation of a gasoline station
including, but not limited to,
(ii) Corporations, partnerships, dispensing pumps,underground
cooperatives, associations, tanks, filters, compressors;
non-government organizations,
jointventures, consortia,single (ii) Purchase and installation of
proprietorships and similar equipment related to safety
parties whose owners/ and environmental protection
representatives successfully including, but not limited to, fire
completed the two-fold program extinguishers, water tanks;
on management and skills
training for the establishment, (iii) Construction and concreting of
operation, management pump islands;
and maintenance of gasoline
stations. (iv) Purchase of initial inventory
of Petroleum Products from
Employees of the DOE and its suppliers of good standing not
attached agencies namely, the National exceeding One Million Pesos (P1
Electrification Administration, Philippine million);
National Oil Company and its subsidiaries,
National Power Corporation, Private Sector (v) Purchase of brand new LPG
Assets and Liabilities Management (PSALM) cylinders not to exceed forty
and National Transmission Corporation (40) cylinders;
(TRANSCO) are disqualified from applying
for the gasoline station loan during their (vi) Purchase and installation of
employment in the said offices or entities other similar equipment as
and up to a period of one (1) year after may be approved by OIAB.
the time of their resignation or separation
from the services of such offices or entities. (5) Equity Participation
In addition, relatives up to the fourth civil
degree either by consanguinity or affinity A minimum of fifty percent (50%)
of members of the Executive Committee of the total Project cost, including
(ExCom) of the DOE, Chief Executive Officers existing land and improvements
and the members of the Board of Directors/ made by the Borrower, shall serve
Administrators of such attached agencies as equity of said Borrower.
shall not be qualified to apply for the
gasoline station loan while said officials are (6) Loanable Amount/Terms of the
in the service of such offices/entities up to a Loan
period of one (1) year after their resignation
or separation from the service of said offices All eligible projects (Projects) can
or entities. avail of the one hundred percent
(100%) loanable amount provided
(4) Eligible Loan Purposes that such amount shall not exceed

fifty percent (50%) of the total 2. Chattel mortgage on Project
Project cost or Five Million Pesos assets;
(P5,000,000.00), whichever is lower. 3. Assignment of insurance
The maximum term of the loan shall coverage;
be seven (7) years and payments 4. Assignment of leasehold
of principal shall be made monthly; contract; and/or
Provided, that the first installment 5. Joint and several signatures
shall be due within six (6) months (JSS) of stockholders and/
from the date of initial release of the or key officers
loan proceeds.
(iv) Assignment of leasehold
(7) Interest Rate contract; and
Interest on the loan shall be fixed (v) Joint and several signatures (JSS)
at six percent (6%) per annum and of stockholders/key officers.
shall be payable monthly in arrears
starting six (6) months after the (10) Loan Disbursement
release of loan.
Loan proceeds shall be disbursed
(8) Penalties upon one hundred percent
(100%) completion of the equity
Late payments shall be subject to requirement. For civil works, loan
a penalty of twenty-four percent releases for the construction and
(24%) per annum based on past due concreting of pump islands (including
amortizations, computed from due canopy), shall be made in two (2)
date of such amortization until fully tranches based on the development
paid. of the civil works.
(9) Collateral Requirements An initial fifty percent (50%) of

the total approved loan shall be
Loans may be secured by any or released provided that one hundred
a combination of the following percent (100%) of the equity has
collaterals: been complied with. The balance
of the approved amount shall be
made upon full completion of the
(i) Real estate mortgage for up to civil works.
sixty percent (60%) of appraised
value; (11) Loan Application and Acceptance
(ii) Chattel mortgage for up to (i) Persons interested to participate

seventy-five percent (75%) of in the Program shall submit the
appraised value; following documents to the Oil
Industry Administration Bureau
(iii) Assets acquired out of loan (OIAB) of the DOE:
proceeds and other applicable
securities specific to the 1. Duly accomplished
Projects, such as but not limited Application Form (Annex 1);
to the following:
2. Check payable to the DOE
1. Real estate mortgage; in the amount of Five
Thousand Five Hundred (iii) Within fifteen (15) working days
Pesos (P 5,500.00) as from receipt of the application,
application fee; the OIAB shall submit the
results of its evaluation and its
3. Check payable to DBP in the recommendation to the DOE
amount of Twenty Thousand Review Committee (RC).
Pesos (P20,000.00) as
processing fee (to be (iv) The DOE RC shall deliberate
returned to Borrower if on the OIAB findings and
his application fails initial recommendation within five
evaluation); (5) working days from receipt
of such OIAB recommendation.
4. DOE Certificate of Applications that merit
Completion of the two-fold funding assistance shall be
training program; immediately endorsed by the
DOE RC to the DBP, together
5. DTI or SEC Registration and with the processing fee, for
Articles of Incorporation, as credit investigation, appraisal
applicable; of offered collaterals and final
evaluation.
6. Feasibility Study of the
Project including the Applications not found qualified
location and layout of the to avail of the Program Fund
proposed gasoline station, shall be returned to the OIAB
proposed supplier/s, which shall immediately inform
manpower complement and the applicant of the DOE Review
other similar information; Committee’s decision.
and
(12) Loan Approval/Denial
7. Environmental Compliance
Certificate (ECC) issued (i) The DBP, through its
by the DENR for stations lending units in the Branch
ready to operate, or Banking Sector (BBS) and
ECC application letter the Development Banking
duly received by the Sector (DBS) Head Office, shall
Environmental Monitoring undertake the investigation
Bureau of the DENR and evaluation of the loan
for stations still to be applications and forward to the
established. OIAB their recommendation for
approval within twenty-five (25)
(ii) The DOE, through its OIAB working days from receipt of
shall undertake a preliminary such application.
evaluation of the application
which shall include, but not 1. A recommendation for
be limited to, the checking of approval shall be supported
eligibility criteria, identification by a credit application
and inspection of the proposed which shall be returned
site and other relevant matters. to DBP upon the DOE’s
approval.

2. In the event of a denial, 3. Verify compliance with all
the DBP shall return all pre-release conditions. If
documents to the DOE all conditions are complied
Review Committee with a with, the DBP shall forward
written explanation citing the necessary documents
the reason(s) for the to DBP-TS, which is the
denial together with the duly designated Loan
evaluation reports. Administrator, with the
written instruction for the
(ii) The OIAB shall act on the release of the loan, copy
DBP’s favorable findings and furnished the OIAB.
recommendations by issuing a
Notice of Approval to approved (ii) The DBP shall serve as the
credit applications to the DBP clearing office for transactions
together with the complete under this Program. Loan
requirements, copy furnished approvals, releases and related
the Loan Administrator (DBP- transactions from the branches
TS) within five (5) working shall be forwarded to DBP-TS
days from receipt of said for release and/or recording and
recommendation. In case of booking.
disapproval, the OIAB shall
directly inform the applicants. (iii) The DBP-TS shall, upon receipt
of the written instructions from
(13) Loan Documentation and Release the DBP, prepare the necessary
check release to qualified
(i) The DBP, through its BBS and/ Borrowers. For branch releases,
or Program Management I/ the DBP-TS shall transfer funds
Program Management II (PMI/ to the branch concerned which
PMII) shall, upon receipt of the shall, in turn, prepare the check
Notice of Approval from the release and issue the check
OIAB, undertake the following: in favor of the Borrower. The
branch shall advise DBP-TS of
1. Require the approved the actual date of release to
Borrower to submit Borrower.
documentary requirements
including post-dated checks. (14) Account Management
2. Prepare and cause the For account management, the

execution of required DBP-TS shall have the following
loan documents such as the responsibilities:
loan agreement, promissory
note, mortgage contract and (i) Book loan releases and
other security documents. maintain subsidiary and
The loan agreement shall be general ledgers;
executed by representatives
of the Borrower and the (ii) Send the appropriate billing
DOE, and duly witnessed statements and collection letters
by representatives from the to Borrowers;
DBP.

(iii) Remit monthly to the Bureau of application without the express
Treasury, through the DOE, all written consent of the DOE during
earnings/income, net of fees, the term of the Loan Agreement.
accruing to the General and
Second Generation Fund; (18) Standards of Quality
(iv) Render regular reports The construction, operation,

including, but not limited to, improvement and maintenance
financial statements, schedule of the gasoline station subject
of investments and other of the loan applications shall be
related reports; and in accordance with existing and
future standards promulgated for
(v) Perform such other functions the industry or with international
as may be necessary to comply standards of quality. Only products
with the foregoing. meeting the Philippine National
Standard (PNS) shall be dispensed
(15) Collection of Loan Payments at the stations. Moreover, these
stations shall be operated and
The DBP shall be responsible for maintained in conformance with all
sending the appropriate collection rules and regulations of the DOE.
letters and/or reminders to the
Borrowers. On the amortization (19) Sanctions
due dates, the DBP shall deposit the
applicable postdated check issued Sanctions shall be imposed on the
by the Borrower for application as following offenses:
loan payment and on the same day
remit the collection to the Loan (i) Non-conformity with applicable
Administrator. All loan payments standards for fuel, facilities and
shall be credited by the DBP-TS to practices – Penalties imposed
the Second Generation Fund. pursuant to DOE regulations
(16) Reportorial Requirements (ii) Late/Non-payment of monthly

amortization – Penalty provided
All Borrowers shall submit Quarterly under the Loan Agreement
Reports to the OIAB commencing
from the start of commercial (iii) Transfer of operation of the
operation and fifteen (15) days gasoline station without consent
after the end of each succeeding of the DOE – Penalty shall
quarter to include volume of sales include termination of Loan
and records of Petroleum Products Agreement and other relevant
deliveries (by product, by supplier) penalties
and other information requested by
DOE. Section 2. Repealing Clause
(17) Non-Transferability Clause Any Department Orders, Circulars or

Issuances inconsistent with this Circular are
The Borrower shall neither assign hereby repealed or modified accordingly.
nor transfer the operation of the
gasoline station subject of the loan Section 3. Separability Clause

If, for any reason or reasons, any part of this in at least two (2) newspapers of general
Circular is declared by a court of competent circulation.
jurisdiction as unconstitutional or invalid, the
other parts or provisions not so declared shall Issued in Fort Bonifacio, Taguig, Metro Manila,
not be affected thereby. this 30 day of May 2003.
Section 4. Effectivity
VINCENT S. PÉREZ, JR.
This Department Circular No. DC 2003-06- Secretary
007 shall take effect upon its publication
“Annex 1”
DOE GASOLINE STATION LENDING AND FINANCIAL ASSISTANCE PROGRAM
APPLICATION FORM
NAME:_______________________________________________ DATE___________________
ADDRESS:___________________________________________________________________
Requirements Submitted:
• Bio-data of Applicant/Major Stockholders/Officers

• Certificate of Completion of the two-fold training program
• Certificate of Registration of Business/Articles of Partnership or Incorporation/By- Laws
• Feasibility Study (including proposed location of gasoline station, proposed suppliers)
• Board Resolution authorized the borrowing & designating Authorized Signatories for the
loan
• Certified List of Stockholders and Officers
• Contact person & telephone No./address/authority to inspect
• Income Tax Return (last 3 years)
• Customer Information Report
• ECC or Letter of ‘Application to DENR for ECC issuance
On Lot/Building:
• 2 copies of lot plan, certified by a Geodetic Engineer

• Location/Vicinity Map
• 2 photo copies ofTCT/OCT authenticated by the Registry of Deeds
• Latest Real Estate Tax Declaration & Tax Receipt
• Bill of Materials, Building plans and Specifications
• Building permit (to be submitted before construction)
On Machinery and Equipment :
• Affidavit of ownership & Non-incumberance of machineries & equipment with complete

machine specifications
• Supplier’s quotation of machinery & equipment With complete technical specifications for
machinery to be acquired
• Contract to sell for machinery and equipment to be acquired
• Copy of Certificate of Registration with LTO for transportation equipment

DEPARTMENT CIRCULAR NO 98-06-009
SUPPLEMENTING RULES AND REGULATIONS AND REGULATIONS IMPLEMENTING REPUBLIC ACT

8479, “DOWNSTREAM OIL INDUSTRY DEREGULATION ACT OF 1998,” PARTICULARLY SECTION 15
THEREOF
Whereas, the Department of Energy (DOE) following powers:

issued on 11 March 1998, Department
Circular No. 98-03-004, entitled “Rules and a. Submission of Documents Concerning
Regulations Implementing Republic Act 8479, Organization
Downstream Oil Industry Deregulation Act of
1998,” which took effect on i3 March 1998; 1. Other than prior notice and
reportorial requirements prescribed
WHEREAS, there is a need to enunciate more under Department Circular No. 98-
fully the powers and functions of the DOE 03-004, dated March 11, 1998, the
Secretary provided in Section 15 of the Act Secretary from time to time, may
to apprise all persons and entities involved order or require any person or entity
in the downstream oil industry activities or in the Industry to submit information,
businesses for a more effective enforcement papers and documents concerning
of the Act; the organization, business, conduct,
practices and management of such
WHEREAS, a separate set of criminal- person or entity.
sanctions has been provided under Section
12 of the Act whereby any person, including, 2. The abovementioned information,
but not limited to the chief operating officer papers and documents shall be
or chief executive officer of a partnership, submitted to the Secretary not later
corporation or any entity involved, found than fifteen (15) calendar days from
guilty of refusing to comply with any order receipt of such Order, unless another
or instruction of the DOE Secretary issued in period is otherwise provide in said
the exercise of his enforcement powers under Order.
Section 15 of the Act shall suffer the penalty
of imprisonment for two (2) years and fine b. Submission of Annual or Special Reports
ranging from Two hundred fifty thousand
pesos (250,000.00) to Five hundred thousand 1. Filing of annual or special report
pesos (500,000.00);
The Secretary may require, by
NOW, THEREFORE, a new section is hereby general or special orders, persons
incorporated in Department Circular No. 98- and entities engaged in a particular
03-004, particularly Section 19-A thereof to activity of the Industry to file, under
implement Section 15 of the Act, to read as oath, an annual or special report, or
follows: both in such form as the Secretary
may prescribe as to the organization,
“SECTION 19-A. ADDITIONAL POWERS OF business, conduct, practices,
THE DOE SECRETARY management and relation to other
corporations, partnerships and
In connection with the enforcement of R.A. individuals of the respective persons
8479” the DOE Secretary shall have the or entities filing such a report.
2. Requirement to answer specific recommend to the proper government
questions agency the suspension of the business
permit of an offender. Whenever a final
The Secretary may likewise require, order has been entered against any
by general or special orders, said person found to have violated any of the
persons or entities to answer specific provisions of the Act, the Secretary shall
questions in writing, furnishing to recommend to the proper government
the Secretary such information, agency the termination of said business
papers, documents, contracts or permit of said offender.
agreements, deeds, resolutions or
other writings of whatever nature or f. Establishment of Programs for Continuous
kind, as he may require. Supply of Energy
3. Filing of answer/report under oath Consistent with Section 15 (f) of the Act
in relation to Section 5( c ) and Section
Such reports and/or answer shall be 12 (c) (2) of Republic Act 7638, otherwise
filed with the Secretary under oath known as the “Department of Energy Act
and within such reasonable time as of 1992,” the Secretary may establish and
the Secretary may prescribe. administer programs and plans for the
transportation, marketing, distribution,
c. Investigation upon the Discretion of the utilization, conservation, stockpiling
President or Congress and storage of crude oil and petroleum
products to ensure a continuous,
Upon their discretion, the President adequate and economic supply of energy.
of the Philippines or either House of
Congress may direct the Secretary to g. Public Disclosure and Submission of
investigate and submit to it a report on Report to Congress
any fact or information relating to any
alleged violation of the Act by any person 1. Public Disclosure
or corporation.
The Secretary may make public from
d. Recommendation for the Readjustment time to time all or such portions of
of Business any information obtained by him
in the exercise of his powers under
Upon the application of the Secretary the Act as are in the public interest:
of Justice, the DOE Secretary may Provided, That the Secretary shall
investigate and make recommendations not make public any trade secret
for the readjustment of the business or any commercial or financial
of any person or entity alleged to be information which is obtained
violating the Act in order that such from any person or entity which is
person or entity may thereafter maintain privileged or confidential, except
his or its organization, management and that the Secretary may disclose
conduct of business in accordance with such information to any officer
law. or employee of appropriate law
enforcement agencies upon the prior
e. Suspension of Business Permit certification by an officer of such
law agencies that such information
At any time during an investigation of any will be maintained in confidence
violation of the Act, the Secretary may and will be used only for official law
enforcement purposes.
2. Submission of Reports to Congress
i. Delegation of Powers:
The Secretary shall make annual
and special reports to Congress Pursuant to Section 7(8) of Chapter 2,
pertaining to the enforcement of Book IV of the Administrative Code of
the Act and to submit appropriate 1987 (Executive Order No. 292), the
recommendations for additional Secretary may delegate any or all of his
legislation. authority provided herein, to officers and
employees under his direction.
3. Publication of Reports and Decisions
j. Penal Sanctions
The Secretary shall cause the
publication of his reports and Any person, including but not limited
decisions in such form and manner to the chief operating officer or chief
as may be best adapted for public executive officer of a partnership,
information and use, consistent with corporation or any entity involved, who
existing rules and regulations. is found guilty of refusing to comply
with any order or instruction of the
h. Implementation/Execution of Final DOE Secretary issued in the exercise of
Orders his enforcement powers under Section
15 of the Act shall suffer the penalty of
Whenever a final order has been imprisonment for two (2) years and fine
entered against any defendant in any ranging from two hundred fifty thousand
suit brought by the government to pesos (250,000.00) to five hundred
prevent and restrain any violation of thousand pesos (500,000.00).
the anti-trust provisions of the Act, the
Secretary, upon his initiative, or upon k. Effectivity
the recommendation of the Secretary
of Justice, shall make an investigation of This Department Circular shall take
the manner in which such final order has effect immediately upon its complete
been or is being carried out. publication in at least two (2) newspapers
of general circulation.
The Secretary shall transmit to the
Secretary of Justice a report embodying
his findings and recommendations as FRANCISCO L. VIRAY
a result of any such investigation, and Secretary
the report may be made public at the Fort Bonifacio, Taguig, Metro Manila, June 19,
discretion of the DOE Secretary. 1998

MEMORANDUM CIRCULAR NO. 2001-05-002

TO : ALL OIL COMPANIES
SUBJECT : PRIOR NOTICE ON PRICE ADJUSTMENTS

DATE : 25 May 2001

Pursuant to Republic Act No. 8479, the May we reiterate that the House Committee
Department of Energy is mandated to on Energy has earlier recommended
monitor domestic petroleum prices and implementation of this procedure.
assess its reasonableness in light of the
prevailing market conditions. In order for the Your company’s full cooperation and
DOE to perform this function effectively, it is compliance is hereby enjoined.
imperative that we are apprised of current
and related developments in the industry.
JOSE ISIDRO N. CAMACHO
It is, therefore, requested that all oil companies Secretary
engaged in business in the Philippines extend
due courtesy to the Department by notifying
us of the details of oil price adjustments,
whether upward or downward, at least one
(1) day prior to its effectivity.

GUIDELINES IMPLEMENTING THE REQUIREMENT OF A PRIOR NOTICE ON PRICE

ADJUSTMENTS PURSUANT TO MEMORANDUM CIRCULAR NO. 2001-05-002
Pursuant to Sections 14 (a) and 15 (a), (b.ii) Requirement of Prior Notice on Price
and (g) of Chapter IV of Republic Act No. 8479 Adjustments of Industry Players” and shall be
or the Downstream Oil Industry Act of 1998 hereafter referred to as the “Guidelines”.
and in order for the Department of Energy
(DOE) to monitor movements of domestic oil SEC. 2. Scope and Coverage. –
prices, the DOE hereby adopts the following
guidelines to implement and clarify the said These Guidelines shall apply to any person or
Memorandum Circular. entity engaged in business activities covered
under Section 5, Chapter 2 of R.A. No. 8479 (Oil
ARTICLE I Companies) selling the following petroleum
GENERAL PROVISIONS products: gasoline, diesel, kerosene, jet fuel,
bunker oil and liquefied petroleum gas (LPG).
SECTION 1. Title. –
ARTICLE II
These guidelines shall be known as PRIOR NOTICE ON PRICE ADJUSTMENTS
“Implementing Guidelines for the
SECTION 1. Notification Requirements. – Secretary indicating therein the required
details on the day that the price adjustment
(a) For price increase: Oil companies shall takes effect. A formal notice shall be in any of
notify the DOE within one (1) day, but the following forms and duly acknowledged
not less than six (6) hours, prior to received at least by the OIMB:
implementing any intended price increase
and prior to any public announcement of (a) a letter;
said movement. (b) a facsimile copy; or
(c) electronic mail;
(b) For price reduction: Oil companies shall
notify the DOE prior to implementing any If the price adjustment is intended to take
intended price reduction and prior to any effect on a non-working day, the formal notice
public announcement of said movement. shall be submitted not later than on the first
working day following the adjustment.
ARTICLE III
FORM AND CONTENTS OF NOTICE ARTICLE IV
FINAL PROVISIONS
SECTION 1. Initial Notice. –
SECTION 1. Penalties. –
A notice sent via SMS message shall be
deemed in compliance with this Circular Any failure to comply with the provisions
when the following conditions are met: of these Guidelines shall be governed by
the terms of Section 12 (a) of R.A. 8479, in
(a) the message is sent to and received relation to Section 15 of the said Act and shall
by the Undersecretary who exercises be punishable in accordance therewith.
supervision over the Oil Industry
Management Bureau (OIMB), the OIMB SEC. 2. Public Announcement of Price
Director and the Division Chief of the Oil Adjustments. –
Industry Competition and Monitoring
Division (OICMD) and duly acknowledged Compliance with the provisions of this
by any of them; Circular shall be without prejudice to the
Oil Companies’ initiative of initiating their
(b) the message is sent within the timeframe own public announcement of intended price
specified in Article II hereof; and adjustments.
(c) subsequent submission of a formal notice SEC. 3. Effectivity. –

required in Section 2 below.
These Guidelines shall take effect fifteen
SMS message should include the list of (15) days after its complete publication in a
products subject to the price adjustment, the newspaper of general circulation.
corresponding price adjustment, the cause
of adjustment and why such magnitude and Issued in Fort Bonifacio, Taguig, Metro Manila
timing are reasonable. this 11th day of August 2005.

SEC. 2. Formal Notice. – (sgd)
RAPHAEL P.M. LOTILLA
A formal notice of any price adjustment Secretary
shall be submitted to the officials referred
to in Article III, Section 1 (a), and to the DOE

PROVIDING FOR THE RULES AND REGULATIONS GOVERNING THE BUSINESS OF RETAILING LIQUID
PETROLEUM PRODUCTS

WHEREAS, R.A. 8479, otherwise known as licenses issued by government authorities

the “Downstream Oil Industry Deregulation including the Department of Environment
Act of 1998”, applies to all persons or and Natural Resources, Bureau of Fire
entities engaged in any and all activities of Protection, Bureau of Internal Revenue and
the domestic downstream oil industry and Local Government Units;
mandates the DOE to promote the entry of
new industry participants; WHEREAS, all matters affecting the safe
and proper handling, transport, storage,
WHEREAS, R.A. 8479 also mandates the installation and use of equipment and
DOE to promote fair trade practices, monitor facilities in the downstream oil industry shall
marketing processes and quality of petroleum be governed by the pertinent provisions of
products and stop the operation of businesses the different national and international safety
involved in the sale of petroleum products codes observed and adopted by the industry;
not complying with the national standards of
quality; WHEREAS, the continued operation of unsafe
and sub-standard Retail Outlets may (i)
WHEREAS, Batas PambansaBlg. 33, as expose the consuming public to fire, security,
amended by Presidential Decree No. 1865, health and environmental risks; (ii) deny the
and the Implementing Rules and Regulations public the proper quality and quantity of the
therefor, define and penalize certain Liquid Petroleum Products they purchase; (iii)
prohibited acts that are considered inimical deprive legitimate Retail Outlets of additional
to the public interest and national security, sales volume; (iv) deprive the government
including illegal trading in petroleum and/or of revenue derived from licensing fees,
petroleum products, hoarding of petroleum local business taxes and pump calibration
products, adulteration and underdelivery, charges, among others; and (v) encourage
among others; the marketing of Liquid Petroleum Products
sourced from illegal activities such as
WHEREAS, there now exist petroleum Retail smuggling, pilferage, theft and the like;
Outlets or gasoline stations engaged in the
Retailing of Liquid Petroleum Products which WHEREAS, certain provisions of Department
do not comply with safe and appropriate Circular No. 98-03-004, otherwise known
technologies for the petroleum products as the Rules and Regulations Implementing
retail business; R.A. 8479, and the Rules and Regulations in
the Implementation of Batas PambansaBlg.
WHEREAS, there is also an increasing 33, as amended by Presidential Decree No.
proliferation of unsafe practices in Liquid 1865, need to be further clarified, updated,
Petroleum Product Retailing particularly with amended and/or repealed, particularly in
the use of inappropriate containers (e.g., the conduct of the Liquid Petroleum Product
“bote-bote”), storage tanks and tank vehicles; Retailing business;

WHEREAS, the Retailing of Liquid Petroleum NOW, THEREFORE, in consideration of the
Products is subject to pertinent permits and foregoing premises, the following rules are
hereby promulgated to govern the Retailing diesel and combustible liquid products
of Liquid Petroleum Products. formed in the course of refining crude
petroleum through distillation, cracking,
RULE I solvent refining and chemical treatment
GENERAL PROVISIONS coming out as primary stocks from the
refinery and sold through Retail Outlets;
SECTION 1. Title. – provided, that Liquid Petroleum Products
shall refer to class I flammable liquids
This Department Circular shall be known with a flash point below thirty seven and
and cited as “The Rules and Regulations eight tenths (37.8oC) degrees Celsius,
Governing the Business of Retailing Liquid and class II flammable liquids with a
Petroleum Products” or “Retail Rules.” flash point at or above thirty seven and
eight tenths (37.8oC) degrees Celsius,
SEC. 2. Coverage. – and below sixty (60oC) degrees Celsius.
Combustible Liquid Petroleum Products
These Retail Rules shall apply to all Persons have flash points at or above sixty (60oC)
engaged or intending to engage in the business degrees Celsius;
of Retailing Liquid Petroleum Products.
(f) LGU – shall refer to Local Government
SEC. 3. Definition of Terms. – Units;

Except as provided below, the terms used in (g) OIMB – shall refer to the Oil Industry
these Retail Rules shall have the same meaning Management Bureau of the DOE;
as the terms used in Department Circular
No. 98-03-004, as amended (Implementing (h) Portable Tank – shall refer to any closed
Rules and Regulations of the Downstream Oil vessel for holding liquids but not intended
Industry Deregulation Act of 1998): for fixed installation;

(a) API – shall refer to the American (i) Retail Outlet – shall refer to a gasoline
Petroleum Institute; station, outlet, facility or business
establishment which sells or dispenses
(b) BFP – shall refer to the Bureau of Fire Liquid Petroleum Products directly to
Protection; individual end user/s or to the public;

(c) Bote-bote – shall refer to the manner (j) Retailing – shall refer to the act of selling
of Retailing Liquid Petroleum Products and/or dispensing Liquid Petroleum
in soda bottles, plastic containers, jugs Products directly to individual end users
and other similar portable containers not or to the public;
intended or suited for storing, handling
and dispensing Liquid Petroleum (k) Tank Truck – shall refer to any single
Products; self-propelled motor vehicle with or
without a trailer, equipped with a cargo
(d) DOST-ITDI – shall refer to the Department tank mounted thereon or built as an
of Science and Technology –Industrial integral part thereof, and used for the
Technology Development Institute; transportation of Liquid Petroleum
Products.
(e) Liquid Petroleum Products – shall refer to
Petroleum Products that are flammable
liquids such as gasoline, kerosene and

RULE II (v) Dispensing pumps are properly
MINIMUM STANDARDS AND calibrated and sealed in accordance
REQUIREMENTS with Section 12 of these Retail Rules.

SEC. 4. Retailing. – (c) The owner and/or operator of the Retail
Outlet must possess valid permits,
Any Person engaged or intending to engage licenses and certifications for the
in the Retailing of Liquid Petroleum Products retailing, storage, handling, transfer
shall comply with the following minimum and/or dispensing of Liquid Petroleum
standards: Products from the LGU concerned, the
BFP, the DENR, DOE and other relevant
(a) The Retailing of Liquid Petroleum government authorities.
Products shall be conducted in duly
approved premises with an initial (d) The construction and operation of
minimum lot area of 100 square meters the Retail Outlet must comply with all
and where vehicles being serviced shall applicable laws, rules, regulations and
at all times be inside the duly approved LGU ordinances.
business premises.
(e) The operation of service bays shall be
(b) The Retailing of Liquid Petroleum subject to and fully comply with the
Products shall only be carried out through criteria and/or guidelines set by the
fixed and permanent dispensing pumps DENR-EMB for such facilities and/or
duly approved by the DOE and further operations. Generated waste oil or
subject to the following: petroleum from Retail Outlets shall be
properly collected, stored and disposed
(i) The dispensing pump clearly of in accordance with the requirement of
indicates on its face the type of Liquid DENR DAO 92-29, as amended.
Petroleum Product being dispensed
and its brand name, if any; (f) The Prior Notice requirement provided
for in Section 6 of these Retail Rules shall
(ii) The dispensing pump accurately be fully complied with.
displays both the volume of Liquid
Petroleum Product dispensed (in SEC. 5. Fuel Storage, Handling, Transfer and/
liters) and the corresponding amount or Dispensing. –
(in Pesos) up to the 1/100th part;
The storage, handling, transfer and/or
(iii) The dispensing pump for gasoline dispensing of Liquid Petroleum Products shall
displays the Octane Rating of be subject to the following:
the product as required under
Department Circular No. 2001-09- (a) Liquid Petroleum Products shall be
003; transferred only from underground tanks
by means of fixed pumps designed and
(iv) All dispensing pumps and storage equipped to allow the control of the
tanks of Liquid Petroleum Products flow and prevent leakage or accidental
are distinct and labeled to ensure discharge;
that there shall be no product
contamination or inadvertent (b) Liquid Petroleum Products shall not be
mixing or misfueling of the different dispensed from above -ground tanks,
Petroleum Products; and portable tanks, tank vehicles, drums,

barrels or similar containers, e.g., bote- (i) Barangay Clearance (Barangay
bote, into the fuel tanks of motor vehicles concerned)
or containers;
(ii) Department of Trade and Industry/
(c) The product suction lines of storage tanks Securities and Exchange Commission
shall be elevated at least four (4) inches Registration
from the bottom of the tank to avoid
water draw-off with the product; (iii) Zoning/Location Clearance (LGU
concerned)
(d) The discharge of Liquid Petroleum
Products into or upon any street, (iv) Environmental Compliance
highway, drainage canal or ditch, storm Certificate (DENR)
drain or flood control channel, lake or
tidal waterway, or upon the ground shall (v) Building Permit (LGU concerned)
be strictly prohibited.
(vi) Discharge Permit, if applicable
SEC. 6. Prior Notice. – (Laguna Lake Development
Authority)
No Person may engage in the business of
Retailing Liquid Petroleum Products without (b) Before commencement of Operation
previously notifying the OIMB in writing
of its intention to engage in such activity, (i) Fire Safety Inspection Certificate
Such notification shall contain the following (BFP)
information:
(ii) Reference Standards/Codes and
(a) Business name, address, telephone/fax compliant statement for Facility
number of the business office; Design & Operation

(b) Location and complete address of Retail (iii) Mayor’s Permit (LGU concerned)
Outlet/s;
(iv) List of dispensing pumps, storage
(c) Project or business plan indicating the tanks and Tank Trucks, with
scope of operation/activity; corresponding capacities

(d) List of facilities and proof of availability (v) Lay-out plan and latest photograph
of such facilities to support the proposed of the Retail Outlet
business; and
The documents enumerated in this Section
(e) Such other requirements as may be 7 must be accompanied by original copies
imposed by the OIMB from time to time. thereof for authentication purposes.

SEC. 7. Documentary Requirements. – SEC. 8. Consumer Safety and Informational
Signs. –
In addition to the prior notice requirement of
Section 6 of these Retail Rules, the following The following signs shall be prominently
documents shall also be submitted to the displayed by the owner and/or operator of
OIMB: the Retail Outlet in strategic and appropriate
locations within the premises of the said
(a) Before commencement of construction outlet for the awareness and information
of the buying public and service station
personnel: National Internal Revenue Code. Duplicate
copies of official receipts shall be made
(a) Price Display Board with updated prices available for verification by OIMB inspectors.
for each Liquid Petroleum Product sold
in the Retail Outlet, pursuant to Rule V, SEC. 11. Hoarding. –
Section 18 a (1) of Department Circular
No. 98-03-004; For purposes of these Retail Rules, the
following shall constitute prima facie evidence
(b) Signs which require the switching-off of of HOARDING:
cellular phones while filling pursuant to
Department Circular No. 2002-05-002; (a) The refusal of Retail Outlets to sell Liquid
Petroleum Products shortly before a
(c) No Smoking signs; price increase or in times of tight supply,
and in both instances if the buyer or
(d) Switch off engine while filling signs; and consumer has the ability to pay in cash
for the product; or
(e) Other safety signs as may be required by
the DOE, other government agencies and (b) The undue accumulation of Retail
relevant LGUs. Outlets of Liquid Petroleum Products in
times of tight supply or shortly before
SEC. 9. Certificate of Compliance. – a price increase. Undue accumulation
shall mean the keeping or stocking of
The DOE, through the OIMB, shall issue a quantities of Liquid Petroleum Products
Certificate of Compliance upon the complete beyond the normal inventory levels
submission of and full compliance by the maintained by Retail Outlets for thirty
Retail Outlet owner and/or operator with (30) days immediately preceding the
the requirements provided in the foregoing period of tight supply or price increase.
Sections of this Rule. No Retail Outlet shall
operate until a Certificate of Compliance is so RULE III
secured from the DOE. PUMP CALIBRATION, TESTING, SEALING
AND PRODUCT SAMPLING
The owner and/or operator shall be deemed
to be engaged in the ILLEGAL TRADING of SEC. 12. Calibration and Sealing of Dispensing
Liquid Petroleum Products if he/she operates Pumps. –
without the Certificate of Compliance and/or
All dispensing pumps used in Retail Outlets
violates any of the foregoing Sections, except
must be properly calibrated once every sixty
for Section 8 hereof.
(60) days and sealed by a duly authorized

calibrating entity immediately after
SEC. 10. Issuance of Receipts. –
calibration. A dispensing pump that is not

calibrated and sealed or goes off-calibration
All transactions involving the Retail of Liquid
shall be clearly marked with an “out of order”
Petroleum Products must be evidenced by an
sign and shall not be used until the said pump
official receipt bearing the registered name
is recalibrated and resealed.
and address of the seller and detailing the
quantity, price and type of Liquid Petroleum
Product sold, the date of the transaction For the purpose of these Retail Rules, the
and such other information required under authorized calibrating entities are the
Republic Act No. 8424, otherwise known Municipal or City Treasurer of an LGU or, in
as “An Act Amending the National Internal their absence or incapacity, duly authorized
Revenue Code” and Section 237 of the representatives of the DOST-ITDI or, in their
absence or incapacity, duly authorize d The capacity of all Tank Trucks used to
representatives of any other government transport measured amounts of Liquid
agency authorized therefor or, in their absence Petroleum Products in bulk must be certified,
or incapacity, duly authorized representatives calibrated and sealed by the DOST-ITDI.
of the oil company.
Tank Trucks transporting Liquid Petroleum
In locations where the Municipal or Products shall have all valves, hatches and
City Treasurer are capable of calibrating other openings sealed shut by the Marketer
dispensing pumps, the calibration by other before leaving the source depot. Such seal
authorized entities shall be provisional may be removed, tampered with or broken
only and subject to final calibration by the by the buyer or his representative, or by the
Treasurer. The authority performing the supplier, and only at their places of business
calibration shall install a seal after calibration or location designated by the buyer.
to guard against the unauthorized adjustment
of the dispensing pump meter which seal A broken or tampered valve or hatch seal, or
may not be broken or removed until the next the absence of one on a loaded compartment,
calibration by an authorized entity. shall give rise to the presumption that the
Tank Truck is UNDERDELIVERING or that the
All calibrations shall be duly documented product contained is adulterated and the
and signed by the mechanic performing the shipment may be refused by the buyer.
calibration and countersigned by the Retail
Outlet owner and/or operator or the shift SEC. 14. Calibration and Testing of Dispensing
supervisor of the Retail Outlet. A copy of Pumps Using A Properly Sealed Calibrating
these calibration documents shall be kept on Bucket. –
file at the Retail Outlet.
Owners and/or operators of Retail Outlet/s
After calibration, a sticker provided by the oil shall maintain in their Retail Outlets a
company having a dimension of at least one- DOST-ITDI calibrated and sealed calibrating
half (1/2) inch by two (2) inches and bearing bucket available for use pursuant to Section
the date of the calibration and the signature 12 hereof. The Retail Outlet’s calibrating
of the mechanic who calibrated the pump bucket/s must be recalibrated and resealed
shall be posted on the face of the pump once every twelve (12) months.
calibrated.
All dispensing pump meters of Retail Outlets
For independently owned Retail Outlets or shall be tested daily not later than 9:00 A.M.
Retail Outlets with its own Liquid Petroleum for accuracy in delivering Liquid Petroleum
Product brand name, the owner and/ Products using said calibrating bucket.
or operator of the Retail Outlet shall be
responsible for complying with this Section Any dispensing pump not delivering the
12. correct quantity shall be marked by the owner
and/or operator with an “out-of-order” sign
Failure of the Retail Outlet owner and/or and padlocked and shall not be used until
operator to have his/her dispensing pumps said pump is recalibrated and resealed by the
calibrated and sealed shall constitute ILLEGAL proper authority.
TRADING.
The calibrating bucket and a written record
SEC. 13. Calibration, Registration and Sealing or logbook of the daily testing thereof shall
of Petroleum Product Transport Containers. – be maintained at all times in the Retail Outlet
premises, and presented to OIMB inspectors
and to the public upon demand thereof.
Failure to provide the written record or The calibrating bucket shall be filled to the
logbook and the properly sealed calibrating ten (10)-liter mark three (3) times at low,
bucket shall give rise to the presumption that medium and fast flow rates and the average
the dispensing pump is UNDERDELIVERING. quantity as measured by the pump meter
shall constitute the quantity to be compared
SEC. 15. Sample Taking and Testing of with the actual quantity of ten (10) liters.
Dispensing Pumps. – Dispensing pumps delivering less than the
tolerable minimum quantity shall be deemed
Duly authorized inspectors from the OIMB to be UNDERDELIVERING. The absence of an
shall undertake random and unannounced 11 out-of- order” sign or padlock locking the
inspections in the presence of the owner dispensing pump shall be deemed an actual
and/or operator of the Retail Outlet or his use of the pump for the conduct of Retailing.
designated shift supervisor to test for, among A dispensing pump found with a broken or no
others, the sample taking and calibration of seal shall constitute a prima facie evidence of
dispensing pumps. Owners and/or operators UNDERDELIVERING.
of the Retail outlets, or their shift supervisors
in their absence, shall allow said inspectors RULE IV
to inspect their Retail Outlets and cooperate PETROLEUM PRODUCT STANDARDS
with them fully.
SEC. 17. Product Quality. –
Retail Outlets shall provide duly authorized
OIMB inspectors samples of Liquid Petroleum Only Liquid Petroleum Products complying
Products which they are offering for sale, in with the Philippine National Standards (PNS),
volumes required by current DOE issuances including the prescribed color coding scheme
and circulars on sample taking and as for the same shall be dispensed at Retail
reflected in the Special Assignment covering Outlets.
the said inspection, for product testing on-
site or quality tests at the DOE laboratory. The possession of Liquid Petroleum Products
which do not meet the prescribed PNS
Retail Outlets shall retain a duplicate set of shall constitute prima facie evidence of
the samples obtained by the OIMB inspectors ADULTERATION and the sale, distribution,
during their inspection and product quality transportation, exchange or barter of
verification as provided in Memorandum adulterated products shall constitute ILLEGAL
Circular No. 2001-02-001. Refusal to allow TRADING.
entry of the authorized OIMB inspectors
to the Retail Outlet and/or to conduct the SEC. 18. Testing and Retention of Samples of
inspection and sampling shall constitute Petroleum Products by Dealer/Operator. –
prima facie evidence of ILLEGAL TRADING.
In order to protect against the delivery of
SEC. 16. Underdelivery in Dispensing Pumps. adulterated products, Retail Outlets may do
– either of the following:

The quantity of Liquid Petroleum Products (a) The owner and/or operator shall take one
delivered by dispensing pumps at Retail (1) liter samples of each Liquid Petroleum
Outlets as measured by the dispensing Product delivered to his Retail Outlets.
pump meter shall not be less than the actual The samples shall be placed in an OIMB-
quantity by more than fifty (50) milliliters specified container and sealed in the
for every ten (10) liters as measured by a presence of the Tank Truck driver who
calibrating bucket certified and sealed by the shall verify the taking of the sample by
DOST- ITDI.
signing on the invoice. The sample shall facilities and their respective operation
be kept by the owner and/or operator for five (5) days prior to commissioning.
at least one (1) month or until the third
delivery thereafter, whichever is shorter. (c) Report to the OIMB any decommissioning,
removal from service or abandonment
(b) By using a hydrometer, the owner and/ of storage tank/s or of the entire Retail
or operator shall take the American Outlet not later than five (5) days prior to
Petroleum Institute (API) gravity or the proposed activity.
density and obtain the corrected API
gravity at 60 degrees Fahrenheit or (d) Submit to the OIMB, not later than ninety
specific gravity at 15 degrees Celsius (90) days from the effectivity of these
and compare this against the API gravity Retail Rules, a list of all its Retail Outlets,
at 60 degrees Fahrenheit or density at their corresponding locations, names
15 degrees Celsius as indicated in the of dealers and operators, number and
product invoice. For this purpose, oil type of storage tanks (e.g., UGT, AGT)
companies shall indicate the API gravity and respective capacities, number of
at 60 degrees Fahrenheit or density dispensing pumps, types of products sold
at 15 degrees Celsius of all deliveries and a layout of their Retail Outlets. This
of Liquid Petroleum Products in the list shall be updated on an annual basis by
corresponding invoice. A Retail Outlet the submission of a report not later than
owner/operator may refuse to accept the thirtieth (30th) day of January each
the shipment if the API gravity difference year. The updating report shall contain,
exceeds by 0.6 degrees API or the density among others, change in dealership;
difference exceeds by 0.0024. Both the expansions, additions or closures of
oil company’s and Retail Outlet owner’s previously reported outlets; and such
and/or operator’s specific gravity or other information that the OIMB may
density readings should be recorded in a require from time to time.
logbook specifically kept for this purpose.
SEC. 20. Penalties and Sanctions by LGUs. –
Retail Outlet owners and/or operators may
require their respective oil company suppliers The DOE recognizes and respects the right
to perform verification quality tests on of the appropriate LGU to refuse issuing the
products received. necessary business permits, revoke business
permits and/or impose fines and/or penalties
RULE V in the event of a violation of ordinances
MISCELLANEOUS PROVISIONS enacted by them consistent with these Retail
Rules. Likewise, the DOE may recommend
SEC. 19. Reportorial requirements. – to the concerned LGU the suspension,
revocation or termination of the business
In addition to the obligations of the owners permits of Persons found to be in violation
and/or operators of Retail Outlets provided of this Department Circular as provided in
under these Retail Rules, all owners and/or Section 15 (e) of R.A. 8479.
operators of Retail Outlets shall:
RULE VI
(a) File a notice to the OIMB of their official ADMINISTRATIVE FINES AND SANCTIONS
start of business at least five (5) days
prior to the start of actual operations. SEC. 21. Fines/Sanctions Against Prohibited
Acts. –
(b) Submit applicable permits for any new,
additional, renovated or refurbished
Any Person engaged in the business of and/or the imposition of any fine against any
Retailing Liquid Petroleum Products who Person who violates or does not comply with
commits any of the prohibited acts defined this Department Circular shall be without
or provided in this Department Circular prejudice to the filing of any criminal action
such as ILLEGAL TRADING, ADULTERATION, against such person pursuant to Batas
UNDERDELIVERY and HOARDING shall be PambansaBlg. 33, as amended.
imposed, for the first offense, a fine of Ten
Thousand Pesos (P10,000.00) for every RULE VII
prohibited act. A fine of Ten Thousand FINAL PROVISIONS
Pesos (P10,000.00) shall be imposed against
such Person in the event the latter is found SEC. 24. Transition Period. –
to have committed the same prohibited act
a second time. In the event such Person is All existing Retail Outlets that have fully
found to have committed the same offense a complied with the prior notice requirements
third time, the DOE shall recommend to the of the DOE pursuant to Department Circular
proper government agency the suspension No. 98-03-004 shall be given six (6) months
or revocation of the business permit of the from effectivity of these Retail Rules to fully
offender. comply with the provisions hereof: Provided,
That new Retail Outlets under construction
Any Person who does not comply with the shall immediately comply with the same.
consumer safety and informational signs
required under Section 8 of these Retail SEC. 25. Repealing Clause. –
Rules shall be issued a warning for the first
offense. In the event such Person is found The following DOE issuances and circulars
to have committed the same violation a are hereby repealed or amended accordingly
second time, the DOE may recommend to the upon the effectivity of these Retail Rules:
proper government agency the suspension
or revocation of the business permit of the (a) Department Circular No. 98-03-004,
offender. Rules and Regulations Implementing
Republic Act No. 8479, “Downstream Oil
SEC. 22. Initiation of Administrative Industry Deregulation Act of 1998”
Proceedings. –
(i) Section 5 – Notice Prior to
Any Person may initiate administrative Engagement in any Activity or
proceedings against Persons committing any Business in the Downstream Oil
of the prohibited acts defined or provided Industry.
in this Department Circular in accordance
with Department Circular No. 2002-07-004 (ii) Section 7 – Reportorial Requirements
(“Rules of Practice and Procedure Before
the Department of Energy”): Provided, Section 7 (a) – Prior to Operation in
That the DOE may motupropio proceed the Proposed Business or Activity
administratively against any Person who
violates or does not comply with this (iii) Section 16 – Other Prohibited Acts 16
Department Circular pursuant to the said (a) – Submission of Any Reportorial
Department Circular No. 2002-07-004. Requirements

SEC. 23. Initiation of Criminal Acts. – (iv) Section 18.a.1 – Price Display Boards

The initiation of an administrative action Section 18.b.2 – Sampling and Testing
of Product
Section 18.b.3 – Calibration Operator of Petroleum Product Retail
Outlet
Section 18.c.2 – Inspection & Audit
of Facilities (iv) Rule IV – Underdelivery&Underfilling
Section 18.c.3 – Safety
Section 1a. – Underdelivery in
Section 18.c.1.iv – Conformance Dispensing Pumps
to Standards & Facilities, Gasoline
Stations Section 1b. – Daily Testing of
Dispensing Pumps by Dealer
(b) Rules & Regulations Implementing BP 33
as amended by PD 1865 Section 1c. – Calibration of
Dispensing Pumps by Oil Companies
(i) Rule I Section 2 – Definition of Terms
Section 1d. – Testing of dispensing
(ii) Rule 11 – Illegal Trading Pumps by Bureau personnel and/or
by other Law Enforcement Agents
Section 1 – BEU Licensing
(v) Rule V – Hoarding
Section 2 – Issuance of Receipts
Section 5 – Unloading of Petroleum SEC. 26. Separability Clause. –
Products
Should any provision herein be declared
Section 6 – Calibration & Sealing of invalid or unconstitutional by a court of
Dispensing Pumps competent jurisdiction, the same shall not
affect the validity of the other provisions not
Section 7 – Calibration, Registration so declared.
& Sealing of Petroleum Product
Transport Containers SEC. 27. Effectivity. –

(iii) Rule III – Petroleum Product This Department Circular shall take effect
Adulteration fifteen (15) days from the date of its complete
publication in two (2) newspapers of general
Section 2 – Sampling & Testing of circulation.
Finished Petroleum Products by Oil
Companies Fort Bonifacio, Taguig, Metro Manila
Section 3 – Testing or Retention of November 14, 2003.
Sample of Petroleum Products by the
Dealer/Operator
VINCENT S. PEREZ JR.
Section 4 – Sample taking by the Secretary
Bureau

Section 5 – Removal of Water phase
in Underground Tank by Dealer/

TO: ALL PETROLEUM PRODUCT SUPPLIERS OF FILLING/SERVICE STATIONS
SUBJECT: PROPER RETENTION OF PETROLEUM SAMPLES IN RETAIL OUTLETS
In furtherance to Rule V, Section 18 (b) of • Provision for tamper-proof seal and

Department Circular No. 98-03-004 (Rules ensure that the DOE inspector/
and Regulations Implementing Republic Act representative affix a distinguishable
8479), all petroleum suppliers are hereby mark on the said seal.
required to coordinate with their client
service stations for the provision in their • The sealed samples must be stored in a
place of business SAMPLE BOTTLES for use safe and preferably cool place away from
in retaining duplicate petroleum samples direct sunlight to preserve its properties.
taken in the course of inspection made by
representatives of the Department of Energy • Disposition of the said duplicate samples
(DOE). are to be undertaken only upon receipt
of the official Test Results on the samples
Retention of duplicate samples by the service taken by the DOE or after six months
stations is accordingly institutionalized in the from the taking of the said sample.
inspection procedures of the DOE. Access to
the retained duplicate samples is allowed to • Said Sample Bottles are of the following
settle with finality contested DOE-National specifications:
Petroleum Testing Laboratory test results on
DOE-held samples. Description Specifications
Color Amber
Suppliers are further instructed to give Volume 0.5 liter (min.)
guidance to their respective dealers in Cover Air-tight
ensuring the integrity of the samples retained Orifice opening (dia.) 1.0” (min.)
through the following procedures:
Suppliers are advised to ensure compliance
• Appropriate labeling of the sample taken; by their clients by April 1, 2001.
product name and date taken.

BEN-HUR C. SALCEDO
OIC – Secretary

OCTANE POSTING AT THE PUMP
FOR : ALL COMPANIES : ALL GASOLINE DEALERS AND RETAIL OUTLETS : ALL CONCERNED
WHEREAS, Republic Act No. 8479, otherwise through a “sticker” with the specifications
known as the ‘Downtsream Oil Industry below.
Deregulation Act of 1998”, provides for the
deregulation of the downsrteam oil industry
to foster a truly competitive market which can 1) Layout. The label is 3 inches wide and
better achieve the social policy objectives of. 2 1/2 inches long. Spacing of the label
Fair prices, adequate and continuous supply is ¼ inch between the top border and
of environmentally-clean and high quality the first line of text, 1/8 inch between
petroleum products ; the first and second line of text, ¼ inch
between the octane rating and the line of
WHEREAS, as a result of the lead phase- text above it. All text and numerals are
out program and pursuant to Republic Act centered within the interior. borders;
8749 or the “Philippine Clean Air Act” which
prohibits the sale and use of leaded gasoline 2) Type size and setting. The Helvetica series
nor later than eighteen (18) months from is used for all letters at font 16, bold and
its enactment, various brands and grades all capital, while the octane number in
of unleaded gasoline (ULG) have been Franklin gothic at fond 96 condensed
introduced in the market at different prices with ¼ inch space between the numbers.
creating confusion among consumers;
3) Colors. The basic color (background)
WHEREAS, the octane rating or number of on all labels is 012C Pantone yellow. All
gasoline is commonly used for differentiation prints and borders are black;
of various grades in most countries;
4) Contents. The contents are shown in
WHEREAS, the Philippine National Standard the illustration (annex A). The PNS RON
for Unleaded Gasoline requires a minimum for each gasoline grade must be shown.
octane rating for each gasoline grade; No marks or information other than that
called for by this rule may appear on the
WHEREAS, the reflection of the octane ratings label; and
at the pump level will readily apprise the
consumers on the quality of gasoline they are 5) Special label protection. All labels must
buying, thereby relating it to the price they be resistant to gasoline, oil, grease
are paying; solvent, detergents, water, etc. and must
be capable of withstanding extreme
NOW, THEREFORE, upon effectivity of this weather conditions so that the entries
Circular, all dealers/operators of gasoline in the sticker are clearly readable at
stations shall be required to display the all times. The label should be replaced
octane rating, in terms of Research Octane immediately in the event it is substantially
Number (RON) as part of the gasoline label defaced, soiled, torn-off, or otherwise
at the pumps sold in their establishment destroyed.

This Department Circular shall take effect may be imposed by the Department.
fifteen (15) days after its complete publication
in a newspaper of general circulation. Full Fort Bonifacio, Taguig, Metro Manila, 10
compliance to this Circular shall not be later September, 2001.
than January 1, 2002. Failure to comply with
this directive shall subject the violator to VICENTE S. PEREZ
corresponding administrative sanctions as Secretary of Energy

REQUIRING DEALERS AND/OR OPERATORS OF GASOLINE STATIONS TO POST A WARNING SIGN
AGAINST THE USE AND/OR OPERATION OF CELLULAR PHONES WHILE GASSING‑UP IN GASOLINE
STATIONS
WHEREAS, the Department of Energy (DOE) WHEREAS, the said threat is acknowledged
and the Department of Transportation by many, particularly by cellular phone
and Communication (DOTC) recognize the manufacturers themselves as manifested by
possibility that battery-operated equipment the warnings carried by their products, by
represent a potential ignition source and oil companies here and abroad as reflected
should not be permitted on sites where there in their information materials, and by local
is a concentration of flammable vapors; government units as reflected by issuance of
city ordinances;
WHEREAS, despite the lack of documented
evidences, both agencies recognize the WHEREAS, areas with a potentially explosive
possibility that the use and operation of atmosphere are often but not always clearly
cellular phones by consumers while filling marked;
up in gasoline stations pose a threat to the
safety of the motorists, gasoline station WHEREAS, in the interest of consumer
personnel and to the establishments through safety, there is a need for both agencies to
the possibility of igniting gas fumes by even a take necessary steps to avoid occurrence of
small electric spark produced by the key pad accidents resulting from the use of cellular
or ringer; phones in gasoline stations;

NOW, THEREFORE, in view of the above suitable equivalent as determined by a
premises, the following are hereby ordered: DOE inspection team shall be subject to
the following penalties:
1. Upon effectivity of this Circular, all
dealers/operators of gasoline stations a. First Offense – warning
shall be required to post ample and b. Second Offense – P 2,000.00 fine
prominent warning signs in each pump c. Third Offense – P 5,000.00 fine
island within the station, against the
use of cellular phones while filling up in This Department Circular shall take effect
gasoline stations or at any time within fifteen (15) days after its complete publication
the forecourt. Attached as Annex A in two (2) newspapers of general circulation.
is the warning design for use in such Full compliance with this Circular shall not be
station. Oil companies and dealers shall later than July 30, 2002.
not be precluded from posting their
own warning signs; provided that prior Fort Bonifacio, Taguig, Metro Manila, May 30,
approval from the DOE is required. 2002.

2. Dealer and/or operators of gasoline VINCENT S. PEREZ, JR.
stations who fail to post the recommended Secretary
warning signs required herein or a
DEPARTMENT CIRCULAR NO. DC2007-05-0005
IMPLEMENTING THE PHILIPPINE NATIONAL STANDARD SPECIFICATION FOR BUNKER FUEL OILS
(PNS/DOE QS 006:2005)
WHEREAS, Republic Act (R.A.) No. 7638 of R.A. 8479, provides that the Oil Industry
“An Act Creating the Department of Energy Management Bureau (OIMB) shall monitor
(DOE)”, tasks the DOE to formulate rules and thru spot and periodic sampling and testing
regulations as may be necessary to guide the of petroleum products including adulteration
operations of both government and private and other forms of product misrepresentation
entities involved in energy resource supply or mislabelling to ensure conformance to the
and distribution; Philippine National Standards of quality.
WHEREAS, R. A. No. 8479 otherwise known WHEREAS, Section 26 of R.A. No. 8749
as the ‘Downstream Oil Industry Deregulation otherwise known as the “Philippine Clean Air
Act of 1998”, provides for the deregulation Act of 1999”, provides that the DOE together
of the downstream oil industry to foster a with the Department of Environment
truly competitive market which can better and Natural Resources (DENR), Bureau of
achieve the social policy objectives of fair Product Standards (BPS) and Department of
prices, adequate and continuous supply Science and Technology (DOST) and other
of environmentally-clean and high quality stakeholders shall set specifications for all
petroleum products; types of fuel and fuel-related products and
improve fuel composition;
WHEREAS, Rule V, Section 18, b and b (2) of
the Implementing Rules and Regulations (IRR)

WHEREAS, it is the intent of R. A. 8749 that 3. The oil company/ies, shall conduct
the specifications of fuels shall be reviewed quality control tests and undertake
and revised for further improvement in regular monitoring of all activities being
harmony with the continuing development of undertaken at their refineries, bulk
fuel quality standards worldwide; plants, terminals, depots, tank trucks,
power plants, barges, commercial and
WHEREAS, PNS/DOE QS 006:2005 was noncommercial ships nationwide to
promulgated on April 18, 2006 to supersede ensure that the quality of all BFO sold
PNS 21:1997 as the latest revision/update of meets the latest BFO specifications
quality standard specification for Bunker Fuel provided in PNS/DOE QS 006:2005;
Oils (BFO);
4. Effectively, PNS/DOE QS 006:2005
NOW, THEREFORE, the following guidelines
provides the minimum standard
are hereby adopted to effectively implement
requirements for BFO and shall be
the Philippine National Standard specification
the reference standard for all BFO
for BFO:
commercially available in the country;
1. Starting June 1, 2007, only BFO 5. Failure to comply with the provisions of
conforming to PNS/DOE QS 006:2005 this Department Circular shall subject the
shall be manufactured, imported, sold, violator to the corresponding sanctions
offered for sale, dispensed, or introduced imposed by the appropriate laws, DOE
into commerce in the Philippines; rules and regulations and the Philippine
Clean Air Act.
2. All oil company manufacturers/importers
of BFO shall submit to the OIMB within
This Department Circular shall take effect
ten (10) days after the end of each quarter
upon publication in any newspaper of general
a report of the production/importation
circulation.
and sales of each type of BFO with the
corresponding quality specification.
Fort Bonifacio, Taguig City, Metro Manila, 11
Companies importing BFO for their own
May 2007.
use shall submit a similar report covering
their importations and consumption;
(sgd.) RAPHAEL P. M. LOTILLA
Secretary

SUMMARY OF DEPARTMENT OF ENERGY/PHILIPPINE NATIONAL STANDARDS
(DOE/PNS)
Fuel Quality Standards Development
Title Highlights/Notes
PNS/DOE 001:2009 – Unleaded motor gasoline This standard is a revision of PNS/DOE QS

001:2005 and was made to update and
provide clear guidance on fuel classification for
conventional gasoline distinct from the Ethanol-
Blended Gasoline (E-Gasoline) or E10 Standard.
PNS/DOE QS 001:2005 – Unleaded motor gasoline • This standard replaced PNS 1131:2002
(DOE:001:2002), highlights among other

quality improvements, the reduction of
Completed/Promulgated: December 5, 2005 maximum sulfur content from 0.1% for
premium and 0.2% for regular grade to
0.005% mass for all grades in conformance
with sulfur limit of EURO II standard.
PNS 1131:2002/DOE 001:2002 • This standard is a revision of PNS 1131:2001

and was made in line with the need to address
- Unleaded motor gasoline the improved gasoline fuel specification
requirements of the CAA for 2003.
o Aromatic – 35% max. by vol.
Completed/Promulgated: May 21, 2003
o Benzene – 2% max. by vol.
PNS 1131:2001 – Unleaded motor gasoline • This standard is a revision of PNS 1131:2000
and was made in line with the need to
address other concerns brought about by the
prohibitions on the use of leaded gasoline as
Completed/Promulgated: Jan. 2003 provided under the CAA of 1999.
• This standard provided the multi grade ULG:
o Premium Plus = 95 RON
o Premium = 93 RON
o Regular Plus = 87 RON
o Regular = 81 RON
PNS 1131:2000 (1st DOE/TCPPA std.) • This standard supersedes and cancels the
standard issued in 1998 in compliance with
-Unleaded premium motor gasoline the Clean Air Act of 1999 which provides the
prohibitions on the use of leaded gasoline
Completed/Promulgated: July 2000 starting 23 December 2000.

PNS/DOE QS 002:2007 – Coconut Methyl Ester (B100) • This standard supersedes the first CME (PNS
2020:2003/DOE 002:2003, B100) biodiesel
specification promulgated in support of the
Coco-biodiesel Program of the DOE in 2003.
Completed/Promulgated: Aug. 24, 2007
• As an improvement to the previous standard,
current specifications are harmonized
with the specifications of EN 14214, ASTM
D6751 as well as recent biodiesel quality
specifications assessments conducted by
Japan Automotive Manufacturers Association
(JAMA) and current Philippine studies and
actual experience on coco-biodiesel use.
PNS 2020:2003/DOE 002:2003 • Jumpstarting the coco-diesel program,

this was made to ensure the quality and
- Coconut Methyl Ester (B100) effectiveness of coconut methyl ester for
blending with diesel.
Completed/Promulgated: May 21, 2003
PNS/DOE QS 003:2003 – Two-stroke lubricating oil • This standard is in line with the technological
improvements in the formulation of two-
stroke lubricating oil vis-à-vis stringent
emission requirements for two-stroke
Completed/Promulgated: May 6, 2004 motorcycles which is primarily aimed at
benefiting its environmental friendliness
supporting the intent of the Clean Air Act for
a cleaner environment.
• This standard also considers CME as a
possible feedstock.
PNS/DOE QS 004:2009 • This standard is revision of PNS/DOE QS

004:2007, and was made to comply with the
requirements of the Biofuels Act of 2006 for a
2% volume biodiesel blend into all diesel oils
Fatty Acid Methyl Ester (FAME) – Blended Diesel Oils (B2) solid in the country by February 2009.
Completed/Promulgated: Feb 3, 2009
PNS/DOE QS 004:2007 • This standard is harmonized with the regional

trends in quality improvements of conventional
Fatty Acid Methyl Ester (FAME) – Blended Diesel diesel as well as the incorporation of biodiesel
Oils (B1) into the fuel blend as required by the “Biofuels
Act of 2006” which mandate the blending of
1% volume biodesiel into all diesel oil solid in
the country, to wit:
Completed Promulgated : Apr 24, 2007 -0.7-1.2% FAME blend to conventional diesel
PNS/DOE QS 004:2003 - Diesel Oils • This standard is a revision of PNS 20:2000 in

compliance with the reduction of sulfur for
Automotive Diesel Oil (ADO) from 0.2% max.
to 0.05% max., by weight by January 2004
Completed/Promulgated: May 6, 2004 provided under the CAA.
• This is also the last CAA-mandated
specification.

PNS/DOE QS 005:2005 – Liquefied • This standard is a revision of PNS 22:1990 and
Petroleum Gases (LPG) was made to highlight the use of LPG as motor
fuel in support of the Philippine Government’s
effort to promote the utilization of alternative
and clean fuel technology.
Completed/Promulgated: April 13, 2005 • Also improves the properties of LPG not only
as motor fuel but also its other uses.
PNS/DOE QS 006:2005 –Fuel Oils (Bunker) • This standard is an update/review of PNS

21:1997 with no major revision made except
on the test methods. Said standard retained
the three grades based on Sulfur content: BFO
Completed/Promulgated: April 18, 2006 1, BFO 2, and BFO 3.
PNS/DOE QS 007:2005 –Anhydrous Bioethanol Fuel • This is a quality standard for fuel grade ethanol
both pure (Bioethanol with 99.3% purity), and
denatured grade (Fuel Bioethanol with 96.9%
purity with 2% ULG denaturant) for blending
Completed/Promulgated: April 18, 2006 with gasoline for use as automotive spark
ignition engine fuel.
PNS/DOE QS 008:2009 – E-Gasoline Fuel (multi-grade) • This is a revision of PNS/DOE QS 008:2006 and
has now two (2) grades in terms of research
octane number (RON) to provide more choices
to the public, particularly in the mandatory
Completed/Promulgated Feb. 03, 2009 substitution by ethanol of 5% of the annual
gasoline sales starting February 2009.
PNS/DOE QS 008:2006 – E- Gasoline Fuel • This standard specifies the chemical and
physical requirements for bioethanol-blended
gasoline (E-Gasoline) with emphasis on the
following properties:
Completed/ Promulgated:Oct. 24, 2006 - 9.5%-10% vol. ethanol
- 3.5% oxygen content, max.
• Requires marking/labeling on dispensing
pumps for e-gasoline:
- This e-gasoline contains 10%
Bioethanol; and
- Generally recommended for fuel
injection engines
PNS/DOE QS 09:2007 – Kerosene • This standard is an update/review of PNS

32:1991 with improvements made only in
Completed/ Promulgated: Aug. 24, 2007 the property of color and updating of test
methods.
OISMD FILE: summary of PNS for FQ

ADTL/RSI/ega: 01.07.1

DEPARTMENT ORDER NO. 2003-10-014

CREATING A DOE GASOLINE STATION LOAN REVIEW COMMITTEE AND DEFINING THE FUNCTIONS
THEREOF AND THOSE OF THE DOE BUREAUS/UNITS INVOLVED
WHEREAS, Department Circular No. 2003- Pursuant to Section 23 of Republic Act (R.A.)
06-007 (Further Amending Section 14 of 8479, otherwise known as the Downstream
Department Circular No. 98-03-004 entitled Oil Industry Deregulation Act of 1998, and
“Rules and Regulations Implementing Section 11 of DOE Circular 2003-06-007, a
Republic Act 8479, Downstream Oil Industry DOE Review Committee (DOE-RC) is hereby
Deregulation Act of 1998,” as amended) and created to serve as the clearing house for all
the Memorandum of Agreement entered applications of the Program.
into on January 23, 2003 by and among
the Department of Energy (DOE), the SEC. 2. Composition of the DOE Review
Development Bank of the Philippines (DBP) Committee. –
and the Development Bank of the Philippines
– Trust Services (DBP-TS), operationalized The DOE Review Committee shall be
the Gasoline Station Lending and Financial composed of the following:
Assistance Program (herein referred to as the
Program); Chairman –
Undersecretary
WHEREAS, the Program, established under Vice-Chairman –
Section 10 of Republic Act 8479 and designed Director, Oil Industry
to provide credit assistance to New Industry Management Bureau (OIMB)
Participants, as such term has been defined
in said law, shall be implemented and Members: -
administered by the DBP and the DBP-TS, Director, Administrative Services
respectively; Director, Financial Services
Director, Legal Services
WHEREAS, the DOE, on the other hand,
shall provide the necessary policy, technical Chief, Retail Market Monitoring and Special
and administrative support to facilitate the Concerns Division
effective and efficient implementation of the
Program; SEC. 3. Functions. –

WHEREAS, the DOE as part of its support The DOE Review Committee shall have the
to the Program recognizes the need to following functions:
create a committee that would serve as the
clearinghouse for all applications received (a) Review the findings and recommendations
under the Program; submitted by the OIMB pertaining to
loan applications filed with it under the
NOW, THEREFORE, in view of the foregoing Gasoline Station Training and Loan Fund
premises, the following is hereby issued. (Loan Fund) provided by the Philippine
Gaming and Amusement Corporation
SECTION 1. Creation of DOE Review (PAGCOR) pursuant to Section 10 of
Committee. – Republic Act No. 8479;


(b) Endorse to the DBP such applications (vii) Coordinate the signing of the Loan
which merit funding assistance; Agreement with the borrower;

(c) Instruct DBP on relevant matters relating (viii)Monitor progress of approved
to the Loan Fund; applications; and

(d) Represent the DOE in the executions of (ix) Perform such other functions that
loan documents with the borrower/s; may be assigned to it by the DOE
and Review Committee.

(e) Perform such other functions as may be (b) Administrative Services
necessary to successfully implement the
Program. (i) Follow up monthly releases of Ten
Million Pesos (Php 10 million) by
SEC. 4. Responsibilities of Bureaus/Units. – PAGCOR to the DOE;

The following Bureaus/Units are hereby given (ii) Receive and collect the contribution
the following responsibilities to assist the from PAGCOR to the Loan Fund
DOE Review Committee in the performance and deposit the amount available
of its duties: for loan (94% of the fund collected
pursuant to Section 10 of R.A. 8479)
(a) Oil Industry Management Bureau to the DBP;

(i) Receive and check the eligibility (iii) Receive the proceeds of interest
criteria and identification of income from DBP-TS and deposit the
applicants and their respective loan same with the Bureau of Treasury;
applications;
(iv) Provide updated status reports on
(ii) Conduct initial evaluation of loan the Loan Fund; and
applications which includes, among
others, the technical inspection of (v) Perform such other functions that
the proposed site; may be assigned to it by the DOE
Review Committee.
(iii) Submit the results of the initial
evaluation and its recommendation (c) Financial Services
to the DOE Review Committee for
review; (i) Ensure the implementation of the
accounting system in full compliance
(iv) Inform the applicant of the actions with existing government accounting
taken by the DOE Review Committee and auditing laws, rules and
on the application; regulations;

(v) Inform the applicant of the final (ii) Ensure the availability of Loan
action on the application; Funds pursuant to the terms of the
February 21, 2002 Memorandum of
(vi) For approved loan applications, send Agreement between the DOE and
Notice of Approval to the DBP-TS to PAGCOR;
initiate fund release, copy furnished
the DOE Administrative and Financial (iii) Ensure completeness of
Services; documentation of the disbursements
of the Loan Funds; (iv) Perform such other functions that
may be assigned to it by the DOE
(iv) Conduct regular audits of the Review Committee.
borrower’s disbursements of the
fund to ensure that the loan is SEC. 5. Meetings. –
properly utilized in accordance with
Department Circular No. 2003-06- The DOE Review Committee shall meet once
007; every two (2) months or as the need may
arise to ensure the effective implementation
(v) Provide updated status reports on of the Gasoline Station Lending and Financial
audits conducted; and Assistance Program and this Order.

(vi) Perform such other functions that SEC. 6. Secretariat Support. –
may be assigned to it by the DOE
Review Committee. Secretariat support for the DOE Review
Committee shall be provided by the OIMB.
(d) Legal Services
SEC. 7. Effectivity. –
(i) Review and evaluate contracts, to be
entered into between the DOE and This Department Order shall take effect
the borrower/s; immediately.

(ii) Review and endorse contracts to the Fort Bonifacio, Taguig City, Matro Manila
OIMB for finalization prior to signing October 14, 2003
by the DOE of the same;
VINCENT S. PEREZ, JR.
(iii) Issue legal opinion on matters Secretary
referred to it in connection with the
Loan Fund; and

PROVIDING FOR THE RULES AND REGULATIONS GOVERNING THE BUSINESS OF SUPPLYING,
HAULING, STORAGE, HANDLING, MARKETING AND DISTRIBUTION OF LIQUEFIED PETROLEUM
GAS (LPG) FOR AUTOMOTIVE USE

WHEREAS, the Department of Energy (DOE) WHEREAS, the DOE shall regulate private
in pursuance of its powers and functions sector activities relative to energy projects in
under Section 5 of Republic Act (RA) No. order to attain the goals embodied in Section
7638 otherwise known as the “Department 2 of RA 7638: Provided, that the Department
of Energy Act of 1992”, establishes and shall endeavor to provide for an environment
administers programs for the exploration, conducive to free and active private sector
transportation, marketing, distribution, participation and investment in all energy
utilization, conservation, stockpiling, and activities;
storage of energy resources of all forms,
whether conventional or non-conventional; WHEREAS, RA 8479, otherwise known as
the “Downstream Oil Industry Deregulation

Act of 1998”, shall apply to all persons or WHEREAS, there is an urgent need to
entities engaged in any and all activities of the eliminate, illegal and unsafe operation of
domestic downstream oil industry including such business and to impose penalties on
the LPG business for automotive use, and violations to health, safety and product
mandates the DOE to promote the entry of quantity/quality standards in the industry in
new industry participants; order to better protect the consuming public;

WHEREAS, Section 14 (b) of RA 8479 NOW, THEREFORE, in consideration of the
empowers the DOE to monitor the refining and foregoing premises, the following rules are
manufacturing of local petroleum products hereby promulgated to govern the Business
to ensure that clean and safe (environment of LPG for Automotive Use.
and worker-benign) technologies are applied.
The same shall also apply to the process of Rule I
marketing local and imported petroleum
products; GENERAL PROVISIONS

WHEREAS, Batas Pambansa Blg. 33, as SECTION 1. TITLE
amended by Presidential Decree No. 1865,
and the Implementing Rules and Regulations This Department Circular shall be known
therefor, define and penalize certain and cited as “The Rules and Regulations
prohibited acts that are considered inimical Governing the Business of Supplying,
to the public interest and national security, Hauling, Storage, Handling, Marketing and
including illegal trading in petroleum and/or Distribution of LPG for Automotive Use” or
petroleum products, hoarding of petroleum “Auto-LPG Rules”.
products, adulteration and underdelivery,
among others; SECTION 2. COVERAGE

WHEREAS, the LPG Business for Automotive These Auto-LPG Rules shall apply to any
Use is subject to pertinent certifications, Person engaged or intending to engage in
permits and licenses issued by government the business of supplying, hauling, storage,
authorities such as, but not limited to, the handling, marketing and distribution of
Department of Trade and Industry, the liquefied petroleum gas (LPG) for automotive
Department of Environment and Natural use.
Resources, the Bureau of Fire Protection,
Bureau of Internal Revenue and Local SECTION 3. DEFINITION OF TERMS
Government Units;
For the purpose of this Auto-LPG Rules, the
WHEREAS, the downstream oil industry has following definitions shall apply:
adopted pertinent provisions of different
national and international safety codes that a. “Auto-LPG Dispensing Station” shall
cover the safe and proper handling, transport, refer to an outlet, facility, or business
storage, installation and use of equipment establishment which retails Liquefied
and facilities that are used in the industry; Petroleum Gas (LPG) for automotive fuel
directly to individual end users or to the
WHEREAS, these pertinent provisions in the motoring public; The same may be stand
different national and international safety alone or located within or operated with
codes have been integrated and included in a LPPs Retail Outlet;
a National Standards on Health, Safety, and
Quality for the petroleum products business; b. “Auto LPG Industry Participants” shall
refer to persons or entities engaged in the
business of supplying, hauling, storage, m. “LGU” shall refer to the local government
handling, marketing and distribution unit;
of liquefied petroleum gas (LPG) for
automotive use. n. “OIMB” shall refer to the Oil Industry
Management Bureau of the Department
c. “BFP” shall refer to the Bureau of Fire of Energy;
Protection created under Republic Act
No. 6975 as amended; o. “PNP” shall refer to the Philippine
National Police, created under Republic
d. “Bulk Supplier” shall refer to any person Act No. 6975;
or entity who engages in the sale of LPG
thru tankers, barges, tank trucks, trailers p. “PNS” or Philippine National Standards”
and lorries; shall refer to the standards promulgated
by the DTI-Bureau of Product Standards
e. “Container” or “Auto-LPG Container” relating to product specifications,
shall refer to any portable pressure test methods, terminologies, and
vessel with all its permanent support(s) standardization procedures, guidelines
and attachment(s) installed, used for the or practices;
storage of LPG for automotive use;
q. “Retailing” shall refer to the act of
f. “DENR” shall refer to the Department selling, distributing, dispensing, storing,
of Environment and Natural Resources, handling, transferring or dispensing
created under Executive Order No. 192; LPG for automotive use directly to the
individual end users or to the motoring
g. “DILG” shall refer to the Department of public.
Interior and Local Government, created
under Republic Act No. 6975; Rule II
MINIMUM STANDARDS AND REQUIREMENTS
h. “DOE” shall refer to the Department of
Energy, created under Republic Act No. SECTION 4. SUPPLYING/HAULING IN BULK
7638, as amended;
Any person who is operating or intending to
i. “DOST” shall refer to the Department of operate a LPG bulk supply and/or hauling
Science and Technology, created under business for automotive use shall comply
Executive Order No. 128; with the latest edition of the following:

j. “DTI” shall refer to the Department a. National Fire Protection Association
of Trade and Industry, created under (NFPA), Pamphlet 58 – Liquefied
Executive Order No. 292; Petroleum Gas Code; and

k. “Hauler” shall refer to persons or entities b. Philippine LPG Association (PLPGA) Safety
engaged in the transport, distribution Code
and carriage of LPG in bulk from the
bulk supplier to the Auto-LPG Dispensing Section 5. RETAILING
Station;
Any person who is operating or intending to
l. “LPP” shall refer to Liquid Petroleum operate an Auto-LPG Dispensing Station shall
Products such as gasoline, diesel, and comply with the following requirements of
kerosene; this Auto-LPG Rules:

a. Auto-LPG Dispensing Stations shall Participant with the requirements provided in
conform to PNS/DOE FS 3:2006 and any Section 9 hereof: Provided, that the issuance
amendments thereto. of the said SCC does not exempt such person
or entity from securing DOE’s Certificate of
Pursuant to PNS/DOE FS 3:2006, the Compliance (COC) for liquid fuels and any
retailing of LPG for automotive use other permit or certificate of quality, health,
shall be conducted in a dedicated Auto- safety, security, or environmental clearance
LPG business premises with an initial from the concerned governmental agencies or
minimum lot area of 250 square meters instrumentalities: Provided further, that the
for stand-alone stations with single Auto- Auto-LPG Industry Participant shall submit to
LPG Dispenser and above ground storage the DOE-OIMB an authenticated copy of the
or 150 square meters for stand-alone business/mayor’s permit within thirty (30)
stations with single Auto-LPG Dispenser days from the issuance of the SCC, otherwise
and underground storage; such that the latter shall be deemed revoked.
vehicles being serviced shall at all times
be inside the said business premises. No Auto-LPG Industry Participant shall
operate until a SCC is secured from the DOE-
b. Auto-LPG Dispensing Stations shall only OIMB. The Auto-LPG Industry Participant
refill LPG containers for automotive use shall be deemed engaged in the ILLEGAL
which conform to the specifications of TRADING of LPG for automotive use if he/she
PNS 04:2006 “Road Vehicles – Automotive operates without the SCC.
LPG Components – Containers” and
installed in the vehicle complying with Section 7. CERTIFICATE OF NON-COVERAGE
PNS 05:1983 “Code of Practice for the
use of Liquefied Petroleum Gas (LPG) Auto-LPG garage-based operation shall not
System in Internal Combustion Engines”. be covered by this Auto-LPG Rules only upon
issuance of a Certificate of Non-Coverage
c. Auto-LPG Dispensing Stations shall not be (CNC) by the DOE-OIMB. For purposes of this
allowed to refill cylinders for household Auto-LPG Rules, a garage-based operation
use. shall refer to the operation of a motor vehicle
fleet with at least thirty (30) vehicle units;
d. Operation of “self-serve” Auto-LPG parked and serviced in a confined area or
Dispensing Station shall not be allowed. garage.

e. Auto-LPG Dispensing Stations shall A Certificate of Non-Coverage shall be issued
conform to the minimum standards and provided that the owner/operator shall
requirements prescribed hereunder, ensure that:
and such other pertinent rules and
regulations, and shall operate only with a a. They file with the DOE-OIMB a duly
valid SCC as described in Section 6 hereof. acknowledged formal letter of request
for a certificate of non-coverage under
SECTION 6. STANDARDS COMPLIANCE these Rules.
CERTIFICATE
b. They present pertinent LTO/LTFRB
The DOE, through the Oil Industry documents confirming their fleet with at
Management Bureau (OIMB), shall issue least thirty (30) taxi units in operation.
a Standards Compliance Certificate (SCC)
upon the complete submission of and c. They do not render retailing services as
full compliance by the Auto-LPG Industry defined and as provided for in Section 5
hereof.
d. Their dispenser/s does not have “money f. Failure to submit, show or present
wheels” or “price indicators”. For proof, papers or documents evidencing
purposes of this Auto-LPG Rules, a compliance with any requirement,
“money wheel” is the price-indicating existing laws, rules and regulations
device of the LPG dispenser that indicates governing the Auto LPG Industry or any
the amount corresponding to the volume other related law.
of product dispensed from the nozzle.
SECTION 9. DOCUMENTARY REQUIREMENTS
e. Their facility shall not be open for retail
to the motoring public, hence, shall only No person or entity shall engage in the
be accessible to its own fleet vehicles business of LPG for Automotive Use without
through a controlled entry point. first notifying the DOE-OIMB in writing his/
her intention to engage in such activity
Bulk suppliers shall ensure that their garage- and without first complying with the DOE
based Auto-LPG clients/buyers have secured requirements, including submission of
the necessary Certificate of Non-Coverage documentary requirements. Such notification
(CNC) from the DOE prior to engaging into and documentary requirements shall be
contractual obligations, such as but not distinct and separate from the submissions
limited to supply agreements, with their relating to the other LPG and/or Liquid
clients or buyers. Petroleum Products activity and shall contain
the following, as applicable:
The CNC does not preclude compliance with
PNS/DOE FS 3:2006 “Auto-LPG Dispensing a. Prior to Engagement in Auto-LPG
Stations” and with the requirements of other Business:
government agencies.
i. Business name, address, telephone/
SECTION 8. NON-ISSUANCE, NON- fax number of the business office;
RENEWAL OR REVOCATION OF STANDARDS
COMPLIANCE CERTIFICATE ii. Proposed location and complete
address of Auto-LPG Dispensing
The following shall constitute grounds for Station;
non-issuance, non–renewal or revocation of
SCC: iii. Project or business plan indicating
the scope of operation/activity; and
a. Failure to comply with Sections 9, 10, and
11 hereof; iv. List of facilities and proof of
availability of such facilities to
b. Failure to present an authenticated support the proposed business.
Business/Mayor’s permit as prescribed in
Section 6 hereof; b. Prior to Commencement of Construction:
c. Unjustified refusal to allow entry of i. Department of Trade and Industry/

authorized DOE-OIMB inspectors during Securities and Exchange Commission
inspections; registration;
d. Failure to pay fines imposed by the DOE- ii. Environmental Compliance

OIMB; Certificate or applicable certificate/
permits/licenses issued by the DENR-
e. Violation of these rules; and EMB or LLDA;

iii. Zoning/Locational Clearance; e. Location and identification of
dispensing unit/s including hose
iv. Building Permit; and reach zone.
v. Barangay Clearance for the proposed d. Other requirements or information as

location. may be required by the DOE-OIMB,
such as, but not limited to, change of
c. Prior to Operation: dealership or business name, expansion
of LPG activity and temporary or
i. File a notice to the OIMB of their permanent closure.
official start of business at least five
(5) days prior to the start of actual Unless explicitly specified, certifications,
operations; permits and licenses for LPPs cannot be
considered in compliance to the above
ii. Current Fire Safety Inspection requirements for Auto LPG Dispensing
Certificate (BFP); Stations.
iii. PNS Compliance Statement for The documents enumerated in this Section
Facility Design and Operation; must be accompanied by original documents
for authentication purposes.
iv. List of Auto-LPG station personnel
and proof of training and SECTION 10. REPORTORIAL REQUIREMENTS
qualification;
All businesses engaged in the trade of
v. List of dispensers, storage tanks, LPG, such as but not limited to, Auto-LPG
and bullet trucks/lorries with its Dispensing Stations shall be required to
corresponding Certificate of Approval submit the following reports:
or any other similar documents as
provided by the equipment supplier/ a. For Bulk Suppliers and/or Haulers
manufacturer; and
i. List of Auto-LPG buyers/clients such
vi. Engineering layout plan and latest as, but not limited to, taxi companies,
photograph of the Auto-LPG garage-based, fleet operators by
Dispensing Station. Such lay-out company/entity and location;
plan duly signed by a company
designated project engineer shall ii. Quarterly report of sales to buyers/
indicate the following information, clients as specified in Item (a.i)
among others: above;
a. Number of tanks and type of iii. List/number of LPG tankers, barges,

installation; tank trucks, trailers and lorries
including its load capacities; and
b. Location and distances between
building structures and facilities iv. List of certified personnel.
and equipment;
b. For Auto-LPG Dispensing Station:
c. Ingress and Egress;
i. Quarterly Sales and Purchase
d. Perimeter wall/property Volume;
boundaries; and
ii. Applicable permits for any new, iii. Ensure that only certified station
additional, renovated or refurbished personnel are allowed to dispense
facilities and/or changes in their Auto-LPG with strict observance of
respective operation within five the following:
(5) days prior to commissioning or
decommissioning, as the case may 1) Familiar with and knowledgeable
be; and of the emergency shutdown
procedures observed by the
iii. List of qualified station personnel/ auto-LPG dispensing station;
attendant as provided for in Section
9(c) of this Rules. 2) Compliance to pertinent
provisions of Section on
SECTION 11. CODE OF PRACTICE Consumer Safety and
Informational Signs;
In order to ensure the safe operation in the
auto LPG business, the following operational 3) Only fixed and vehicle-mounted
guidelines and procedures shall be strictly LPG containers are permitted
observed at all times: for filling at LPG Stations. LPG
cylinders for household use
a. For Bulk Suppliers and/or Haulers: shall not be allowed for refill in a
Auto-LPG Dispensing Station;
Compliance to pertinent provisions of
Section 3 (LPG Bulk Storage Facilities) and 4) Display of the PS/Global Check
Section 4 (Vehicular Transport of LPG) of mark or the equivalent import
the PLPGA Safety Code of 2000. commodity clearance (ICC)
mark on LPG container and
b. For Auto-LPG Dispensing Station Owner/ container name plate which
Operator: indicates, among others, its
manufacturing/re-qualification/
i. Ensure that the emergency shut retest date, as the case may be;
off valves for the dispensing unit
and for the LPG storage tanks as 5) The Auto-LPG container,
provided under PNS/DOE FS 3:2006 including its attachments, is
are complied with and are fully adequately protected from
operational. damage by impact from objects
being handled or carried by the
ii. Ensure that its personnel shall vehicle; and
have undergone, as a minimum
requirement, training and 6) The remote fill valve is
qualification conducted by the located outside the container/
Philippine LPG Association (PLPGA) baggage compartment and an
for the proper handling and retailing appropriate external filler cap is
of Auto-LPG. Such proof of training provided.
shall be submitted to the DOE-
OIMB prior to its initial operation iv. A dedicated 9.1 kg. BC rated BPS
and subsequent renewal of SCC. certified fire extinguisher shall readily
The same shall be made available be accessible within the dispensing
upon demand by the DOE during area.
inspection.

v. No part of the vehicle being filled SECTION 12. CONSUMER SAFETY AND
shall be in a public place. For this INFORMATIONAL SIGNS
purpose, a “public place” shall
refer to sidewalks, streets, or public The following signs shall be prominently
parking. displayed by the owner and/or operator of
the Auto-LPG Dispensing Station in strategic
vi. The following shall not be within the and appropriate locations within the premises
hose reach zone of the dispenser: of the said outlet for the awareness and
information of the buying public and station
1) Public place; personnel:
2) Protected place e.g., place a. Appropriately filled-up price display

of worship, school, hospital, board indicating the updated price
theater or any building or open of the LPG product dispensed at
area in which persons are the Auto-LPG Dispensing Station:
accustomed to assemble in large Provided that the numeric entries
numbers; shall be light blue in color and at
least six (6) inches in height;
3) An entry into a building;
b. Switching off of cellular phones and
4) A pit or opening into a close other electronic devices while filling;
drain; and
c. No smoking;
5) Basement or an aboveground
tank for flammable liquid. d. Switching off of engines while filling;
and
vii. The LPG tank truck entry and exit
driveways should be located in such e. Other safety signs as may be required
a manner that ensures that the tank by the DOE, other government
truck has ready access to the site so agencies and concerned LGUs.
as to reduce the time it may need to
be exposed to traffic while entering Failure to provide and display any of the
or leaving the site. above-mentioned requirements shall subject
the owner or operator of the station to the
viii. The LPG tank truck unloading position fine or sanction provided in Section 22 of
shall be such that the LPG tank truck these Rules.
is positioned wholly within the site
during unloading. SECTION 13. ISSUANCE OF RECEIPTS

ix. The unloading of an LPG tank truck All transactions involving the LPG Business
shall only proceed when the exit is for Automotive Use must be evidenced by an
not obstructed and it is positioned in official receipt bearing the registered name
such a manner that it can leave the and address of the seller and indicating the
site without recourse to reversing. quantity and price of the LPG product sold,
the date of the transaction and such other
x. Vehicles shall be prevented from information required by existing laws and
driving over the filling hose if the LPG rules on national internal revenue (or those
tank truck parking area is away from implemented by the Bureau of Internal
the fill point. Revenue). Duplicate copies of official receipts
shall be made available for verification by
DOE-OIMB inspectors/personnel. The bulk supplier shall provide a Certificate
of Quality (COQ) for such LPG products to
Rule III the Auto-LPG Dispensing Station and shall be
LPG DISPENSER CALIBRATION AND SEALING made available at all times for inspection.
SECTION 14. IN-SERVICE CALIBRATION AND SECTION 16. PRODUCT SAMPLING AND
SEALING OF LPG DISPENSERS TESTING OF AUTO-LPG DISPENSING PUMPS
All LPG dispensers shall be calibrated Duly authorized inspectors from the
quarterly or as often as possible or as DOE-OIMB shall undertake random and
deemed necessary by the calibrating entity. unannounced inspections in the presence of
A dispenser that is not calibrated and sealed the owner and/or operator of the Auto-LPG
or goes off-calibration shall be clearly marked Dispensing Station or his duly authorized
with an “out of order” sign and shall not be representative to conduct, among others,
used until the said dispenser is calibrated and sample taking and testing of Auto-LPG
resealed by the authorized calibrating entity. dispensing pumps. The owner and/or
operator of the Auto-LPG Station, or his/her
For the purpose of these Auto LPG Rules, the duly authorized representative, shall allow
authorized calibrating entity is the Municipal said inspectors to inspect the Station and
or City Treasurer or, in its absence or cooperate with them fully.
incapacity, the DOST-ITDI, or, in its absence or
unavailability, any other government agency The owner and/or operator or his/her duly
authorized therefore or, in its absence, the authorized representative shall allow the
representative of the Auto-LPG Dispensing duly authorized DOE-OIMB inspectors to
Station’s bulk supplier duly authorized by the take samples of Auto-LPG which they are
concerned LGU. offering for sale, in volumes as required by
DOE Issuances and Circulars on sample taking
The owner/operator shall maintain an and as reflected in the Special Assignment
updated record of calibration and shall be covering the said inspection, for on-site
made available upon demand by the DOE- product testing or quality tests at the DOE
OIMB inspectors. laboratory.
Failure to provide the updated record of The Auto-LPG Dispensing Station shall retain
calibrations or properly sealed dispensing a duplicate set of the samples obtained by
pumps shall give rise to the presumption that the OIMB inspectors during the inspection
the Auto LPG dispenser is UNDERDELIVERING. and product quality verification.
Rule IV Rule V
PETROLEUM PRODUCT STANDARDS PROHIBITED ACTS
SECTION 15. PRODUCT QUALITY SECTION 17. ILLEGAL TRADING
Only LPG products for automotive use and The Owner or operator shall be deemed
complying with the Philippine National engaged in ILLEGAL TRADING under any of
Standards PNS/DOE QS 005:2005, specifically the following circumstances:
Type 2B Propane Butane (C3-C4 Mixture) for
Motor Fuels, shall be dispensed at the Auto- a. Engaging in business without
LPG Dispensing Stations. Standards Compliance Certificate;

b. Non-issuance of receipts; a. The refusal of Auto-LPG Dispensing
Stations to sell LPG products for
c. Dispensing of LPG into household automotive use shortly before a
cylinders; price increase or in times of tight
supply, and in both instances if the
d. Selling of Adulterated LPG for buyer or consumer has the ability to
automotive use; and pay in cash for the product; or
e. For bulk-suppliers, selling Auto-LPG b. The undue accumulation of Auto-LPG

to LPG Stations without SCC and to Dispensing Stations of LPG products
garage-based operators without DOE for automotive use in times of tight
Certificate of Non-Coverage. supply or shortly before a price
increase. For purposes of this Auto
SECTION 18. REFUSAL TO ALLOW LPG Rules, “undue accumulation”
INSPECTION shall mean the keeping or stocking
of quantities of LPG products for
The refusal to allow access or entry of automotive use beyond the inventory
authorized DOE-OIMB inspectors to the Auto- levels as required to be maintained
LPG Dispensing Station and/or to conduct by the Auto-LPG Dispensing Stations,
the actual inspection and product sampling for a period of thirty (30) days
is prohibited and shall constitute prima facie immediately preceding the period of
evidence of ILLEGAL TRADING and shall be tight supply or price increase.
subject to the penalty provided in Section 22
hereof. SECTION 21. ADULTERATION
SECTION 19. UNDERDELIVERING The possession of LPG products for automotive

use, which do not meet the prescribed
The quantity of LPG products for automotive PNS, shall constitute prima facie evidence
use delivered by the LPG dispensers at the of ADULTERATION, and the distribution or
Auto-LPG Dispensing Stations shall be within transportation of the said LPG product for
the maximum permissible error (MPE) of +/- purposes of sale, exchange or barter of
1%. adulterated products shall constitute ILLEGAL
TRADING.
Dispensers delivering more than the MPEs
shall be deemed to be UNDERDELIVERING. Rule VI
The absence of an “out-of-order” sign or ADMINISTRATIVE FINES AND SANCTIONS
padlock, locking the dispenser shall be
deemed an actual use for the conduct of SECTION 22. FINES/SANCTIONS AGAINST
retailing. A dispenser found with a broken or PROHIBITED ACTS
no seal shall be immediately padlocked by the
DOE-OIMB and shall be subject to applicable Any Person engaged in the LPG Business
penalties under Section 22 hereof. for Automotive Use who commits any of
the prohibited acts defined or provided
SECTION 20. HOARDING in this Department Circular such as
ILLEGAL TRADING, ADULTERATION,
For purposes of these Auto LPG Rules, UNDERDELIVERY, HOARDING, refusal
the following shall constitute prima facie of inspection and violation of the other
evidence of HOARDING: provisions of this Department Circular shall
be imposed for the first offense, a fine

of Ten Thousand Pesos (P10,000.00) for with this Rule shall be without prejudice to
every prohibited act. An additional fine of the filing of any criminal action against such
Ten Thousand Pesos (P10,000.00) shall be person pursuant to Batas PambansaBlg. 33,
imposed against such Person in the event the as amended and R.A. 8479.
latter is found to have committed the same
prohibited act a second time. Commission of Rule VII
the same offense a third time, by the same FINAL PROVISIONS
person shall mean cancellation or revocation
of its SCC by the DOE. SECTION 26. TRANSITION PERIOD

Any person found operating without a SCC, All Persons engaged in the LPG business for
the DOE shall cause the immediate cessation automotive use that have fully complied
or suspension of the operation of the station with the prior notice requirements of the
and impose a fine of Sixty Thousand Pesos DOE pursuant to Department Circular No.
(P60,000.00) against the owner or operator. 98-03-004 shall be given three (3) months
No SCC shall be granted or issued unless said from effectivity of this Auto LPG Rules to fully
fines are paid and after full compliance with comply with the provisions hereof: Provided,
the requirements of Section 6 hereof. that all persons intending to engage in
Auto-LPG Business for Automotive use shall
SECTION 23. REFUSAL OR FAILURE TO PAY immediately comply with this Rules.
FINE
SECTION 27. REPEALING CLAUSE
The DOE-OIMB shall cause the immediate
cessation or suspension of the operation or All other DOE Issuances and Circulars not
cancellation of the SCC of the owner/operator consistent with this Auto LPG Rules are
who refuses or fails to pay any administrative hereby repealed or amended accordingly
fine without prejudice to the filing of an upon the effectivity of this Rules.
appropriate criminal action if warranted.
SECTION 28. SEPARABILITY CLAUSE
SECTION 24. INITIATION OF ADMINISTRATIVE
PROCEEDINGS Should any provision herein be declared
invalid or unconstitutional by a court of
Any Person may initiate administrative competent jurisdiction, the same shall not
proceedings against Persons committing any affect the validity of the other provisions not
of the prohibited acts defined or provided in so declared.
these Rules in accordance with Department
Circular No. 2002-07-004 (“Rules of Practice SECTION 29. EFFECTIVITY
and Procedure Before the Department of
Energy”): Provided, that, the DOE may motu This Department Circular shall take effect
propio proceed administratively against any fifteen (15) days from the date of its complete
Person who violates or does not comply with publication in two (2) newspapers of general
this Auto-LPG Rules pursuant to the said circulation.
Department Circular No. 2002-07-004.
Fort Bonifacio, Taguig City, February 13, 2007.
SECTION 25. INITIATION OF CRIMINAL ACTS
The initiation of an administrative action RAPHAEL P.M. LOTILLA

and/or the imposition of any fine against Secretary
any Person who violates or does not comply

CHARTS:

Chapter 3
REQUIRING OIL COMPANIES AND BULK SUPPLIERS TO MAINTAIN A SUFFICIENT MINIMUM

INVENTORY OF PETROLEUM, FOR PURPOSES OF ENSURING CONTINUITY, ADEQUACY AND
STABILITY OF CRUDE AND FUEL SUPPLY
WHEREAS, the Philippines has, pursuant to Philippines, by virtue of powers vested in me

a program of diversifying fuel sources for by law, do hereby order:
power generation, reduced its dependence
on fossil fuels for power requirements; SECTION 1. All oil companies and bulk
suppliers operating in the country, shall
WHEREAS, the above development maintain a minimum inventory of petroleum
notwithstanding, the country is still stock in the amount sufficient to ensure a
largely dependent on imported oil for the continuous, adequate and stable supply of
transportation sector; petroleum products should domestic and
international events, such as, but not limited
WHEREAS, recent and prevailing domestic and to terrorist attacks, armed conflicts in the
International events, such as the escalating Middle East and in other regions whence the
tensions and conflicts obtaining in Middle Philippines draws or secures its petroleum
Eastern countries, have highlighted the need supply, threaten or restrict the supply of
for the country to adopt and implement petroleum to the Philippines.
prudent initiatives to ensure continuous,
adequate and stable supply of petroleum SEC. 2. To comply with the requirements
products in response to imminent and actual under Section 1 of this Order, the Secretary of
threats to our petroleum supply; Energy is hereby directed to:

WHEREAS, under the Downstream Oil • determine the existence of the
Industry Deregulation Act of 1998 (RA 8479), circumstances envisaged in Section 1
in relation to the Department of Energy Act that would trigger the application of the
of 1992 (RA 7638), the Secretary of Energy minimum inventory requirements; the
is authorized to exercise such powers types and mix of petroleum products
concomitant with the policy of ensuring to be stocked by the oil companies and
continuous, adequate and-stable supply bulk suppliers, the appropriate levels
of energy, in respect of the conservation, of minimum petroleum inventory of
stockpiling and storage of energy resources. oil companies and bulk suppliers; and
the commencement and duration of
NOW, THEREFORE, I, GLORIA MACAPAGAL- compliance by the oil companies and
ARROYO, President of the Republic of the bulk suppliers therewith;
VOLUME 3 DOWNSTREAM
207
• promulgate appropriate issuances, SEC. 4. All orders, issuances, rules and
directives and orders to implement this regulations, or parts thereof, which are
Order; and inconsistent with this Order, are hereby
repealed or modified accordingly.
• perform any and all acts necessary and
appropriate to carry out the purposes of SEC. 5. This Executive Order shall take
this Order. effect immediately upon its publication in
a newspaper of general circulation in the
SEC. 3. Pursuant to Section 15 (b) of Republic Philippines.
Act of 8479, all oil companies and bulk
suppliers shall provided the Department of Done in the City of Manila, this 14th day of
Energy with a weekly report, under oath, October in the year of our Lord, Two Thousand
of compliance with the minimum Inventory and Two.
requirement and such other matters required
for the duration specified by the Secretary of
Energy, in accordance with Section 2 hereof.

GUIDELINES IMPLEMENTING THE MINIMUM INVENTORY REQUIREMENTS OF OIL COMPANIES

AND BULK SUPPLIERS AS PROVIDED UNDER EXECUTIVE ORDER NO. 134
Pursuant to Executive Order No. 134 issued ARTICLE I

by the President of the Republic of the GENERAL PROVISIONS
Philippines on 14 October 2002, Republic
Act No. 7638, otherwise known as “An Act SECTION 1. Title. – These guidelines shall
Creating the Department of Energy” and be known as the “Implementing Guidelines
Republic Act No. 8479, otherwise known as for the Minimum Inventory Requirements
the “Downstream Oil Industry Deregulation of Petroleum of Oil Companies and Bulk
Act of 1998”, the Department of Energy Suppliers” and shall be hereafter referred to
hereby adopts the following guidelines as the “Guidelines”.
to implement the minimum inventory
requirement of all Oil Companies and Bulk SEC. 2. Scope and Coverage. – These
Suppliers operating in the country, to ensure Guidelines shall apply to all Oil Companies and
a continuous, adequate and stable supply of Bulk Suppliers engaged in any activity of the
Petroleum Crude Oil and Products in cases Downstream Oil Industry in the Philippines.
where domestic and international events
threaten or restrict the supply of Petroleum SEC. 3. Definition of Terms. – For purposes
Crude Oil and Products to the Philippines of these Guidelines the following terms shall
such as, but not limited to, terrorist attacks, have the following meanings:
armed conflict in the Middle East and in other
regions from which the Philippines draws or (a) Bureau refers to the Energy Industry
transits its supply of Petroleum Crude Oil and Administration Bureau of the Department
Products, and other similar events. of Energy or its successor;


(b) Bulk plant/terminal/depot refers to an (k) Minimum Inventory Level refers to the
intermediate distribution facility where minimum level of supply of Petroleum
delivery of Petroleum Products to and Crude Oil and Products to be stored by
from the facility is undertaken by tank Oil Companies and Bulk Suppliers in
trucks, tankers/barges, pipes and other their respective bulk plants, terminals or
modes of transport in large quantities; depots and stocks in-transit within the
country,
(c) Bulk Sales/Supply refers to cargoes which
are transported through tank trucks, (l) Oil Company refers to any Person who
tankers/barges, pipes and other modes refines/manufactures/processes and/or
of transport in large quantities; imports/exports and stores, distributes
and sells Petroleum Products;
(d) Bulk Supplier refers to any Person engaged
in the sale of Petroleum Products in bulk (m) Person refers to any person, whether
sourced through direct importation; natural or judicial, who is engaged in
any or a combination of activities in the
(e) BPS means the Bureau of Product Downstream Oil Industry;
Standards of the Department of Trade
and Industry; (n) Petroleum refers to the naturally
occurring mixture of compounds of
(f) Crude Oil refers to oil in its natural hydrogen and carbon with a small
state before the same has been refined proportion of impurities and shall include
or otherwise treated, and excludes any mineral oil, petroleum gas, hydrogen
water, bottoms, sediments and foreign gas, bitumen, asphalt, mineral wax and
substances; all other similar or naturally associated
substances, with the exception of coal,
(g) Days Supply refers to the equivalent peat, bituminous shale and/or other
number of days of in-country stocks of stratified mineral fuel deposits;
Petroleum Crude Oil and Products based
on the average daily sales or liftings for (o) Petroleum Products refers to products
the past six (6) months; formed in the course of refining crude
petroleum through distillation, cracking,
(h) DOE refers to the Department of Energy solvent refining and chemical treatment
of the Republic of the Philippines; coming out as primary stocks from
the refinery such as, but not limited
(i) Downstream Oil Industry refers to to: LPG, naphtha, gasolines, solvents,
the business of importing, exporting, kerosene, aviation fuels, diesel oils, fuel
reexporting, shipping, transporting, oils, waxes and petroleums, asphalts,
processing, refining, storing, distributing, bitumens, coke and refinery sludges,
marketing and/or selling of Crude Oil, or such refinery petroleum fractions
gasoline, diesel, Liquefied Petroleum Gas which have not undergone any process
(LPG), kerosene and other Petroleum or treatment as to produce separate
Products; chemically-defined compounds in a pure
or commercially pure state and to which
(j) Liquefied Petroleum Gas or LPG refers to various substances may have been added
commercial propane gas or commercial to render them suitable for particular
butane gas or a mixture of the said two uses: Provided, that the resultant product
gases, with properties conforming to the contains not less than fifty percent (50.0
specifications set by the BPS; %) by weight of such Petroleum Products;

(p) Refiner refers to any Person who locally stocked may vary for each Oil Company and
refines Petroleum through distillation, Bulk Supplier: Provided, that priority shall be
conversion and treatment thereof. given to the stockpiling of diesel and gasoline
which are used, in the transport sector, LPG
ARTICLE II for household consumption and fuel oil for
MINIMUM INVENTORY REQUIREMENTS power generation.

SEC. 4. Application of Minimum Inventory SEC. 7. Commencement of Minimum
Requirements. – In cases where domestic Inventory Level Requirement and Duration
and international events may threaten or of Compliance. – The Minimum Inventory
restrict the supply of Petroleum Crude Oil Level requirement shall commence upon a
and Products to the Philippines such as, but determination by the Secretary of Energy of
not limited to terrorist attacks, armed conflict the existence of circumstances enumerated
in the Middle East and in other regions from in Section 4 of these Guidelines that would
which the Philippines draws or transits its require its imposition. The requirement of
Petroleum Crude Oil and Products supply, Minimum Inventory Level shall continue until
and other similar events, the Secretary of such tune that the Secretary of Energy makes
Energy shall require Oil Companies and Bulk a determination that the circumstance/s
Suppliers to maintain a minimum inventory of warranting the application thereof no
Petroleum Crude Oil and Products, to ensure longer exists. The Oil Companies and Bulk
the continuous, adequate and stable supply Suppliers shall be notified in writing of the
of Petroleum Crude Oil and Products in the commencement and termination of the
country. Minimum Inventory Level requirement.

SECT. 5. Minimum Inventory Level. – All Oil ARTICLE III
Companies, except Refiners operating in the MONITORING
country, and Bulk Suppliers shall maintain a
minimum inventory equivalent to fifteen (15) SEC. 8. Reportorial Requirements. – To ensure
Days Supply of Petroleum Products, excluding full compliance with E.O. 134 and these
LPG, which shall have to be maintained at Guidelines, and for DOE’s effective monitoring
seven (7) Days Supply. of the country’s inventory level of supply of
Petroleum Crude Oil and Products, all Oil
Refiners on the other hand, shall maintain a Companies and Bulk Suppliers, shall submit
minimum inventory equivalent to thirty (30) to the Bureau weekly reports, prepared
Days Supply consisting of Petroleum Crude under oath, of their inventory on a per
Oil and refined Petroleum Products. crude and per product basis including their
actual and projected importations and local
The required minimum inventories shall purchases and such other matters required
include Petroleum Crude Oil and product for compliance with these Guidelines for
stock, on shore and en route to stockpoints the duration to be specified by the Secretary
within the country, but shall exclude of Energy pursuant to Section 6 of these
importations still in-transit to the country Guidelines.
during the period specified in Section 7 of
these Guidelines. The Bureau shall conduct, and the Oil
Companies and Bulk Suppliers shall cooperate
SEC. 6. Product Type/Mix to be Stocked. – with, periodic inventory checks on the storage
For purposes of Section 4 of these Guidelines, facilities, bulk plants, terminals or depots to
the type and mix of Petroleum Products to be reconcile actual submissions.


ARTICLE IV SEC. 10. Effectivity. – These Guidelines shall
FINAL PROVISIONS take effect upon complete publication in a
newspaper of general circulation.
SEC. 9. Penalties. – Failure to comply with the
provisions of these Guidelines shall constitute Issued in Fort Bonifacio, Taguig this 20th day
a violation of Section 12 of Republic Act No. of January 2003.
8479, in relation to Section 15 of Republic Act
No. 8479, and Section 5 (c) of Republic Act No.
7638, and shall be punishable in accordance VINCENT S. PÉREZ
therewith. Secretary
Republic of the Philippines

DEPARTMENT OF ENERGY

C E R T I F I C A T I O N
TO WHOM IT MAY CONCERN: “SEC. 3. Filing. – (1) Every agency

shall file with the University of the
THIS IS TO CERTIFY that, as shown by our Philippines Law Center three (3)
records, Department Circular No. DC 2003-01- certified copies of every rule adopted
001, entitled: “GUIDELINES IMPLEMENTING by it.
THE MINIMUM INVENTORY REQUIREMENTS
OF OIL COMPANIES AND BULK SUPPLIERS Rules in force on the date of
AS PROVIDED UNDER EXECUTIVE ORDER effectivity of this Code which are not
NO. 134,” issued on January 20, 2003 was filed within three (3) months from
published in the 22 January 2003, Wednesday the date shall not thereafter be the
issue of Today. basis of any sanction against any
party or persons.”
Section 10 of said Department Circular
provides that it shall take effect upon three (3) certified copies of the Department
complete publication in a newspaper of Circular issued on 20 January 2003 had been
general circulation. Pursuant to this provision, filed with the University of the Philippines
Department Circular No.DC 2003-01-001, Law Center on 29 January 2003.
therefore, took effect on 22 January 2003.
Done this 30th day of January, 2003, at the
THIS IS TO CERTIFY FURTHER that, in Department of Energy, Merritt Road, Fort
compliance with Section 3, Chapter 2, Book Bonifacio, Taguig, Metro Manila.
VII of the Administrative Code of 1987 (E.O.
292), which provides: MANUEL L. OCAMPO
OIC, Office of the Director
Information Technology and Management Services


PROVIDING FOR THE RELAXATION OF THE MINIMUM INVENTORY REQUIREMENTS OF ALL OIL
COMPANIES AND BULK SUPPLIERS OPERATING IN THE COUNTRY

WHEREAS, under the Downstream Oil Industry of Energy to make a determination as to

Deregulation Act of 1998 (RA 8479), in relation the commencement and duration, of the
to the Department of Energy Act of 1992 (RA compliance of the Minimum Inventory Level
7638), the Secretary of Energy is authorized Requirement;
to exercise such powers concomitant with
the policy of ensuring continuous, adequate WHEREAS,with the outbreak of the US-Iraq
and stable supply of energy, in respect of war, current crude prices in the world market
the conservation, stockpiling and storage of started to soften and the country has recorded
energy resources; a high level of inventory of in-country stocks
of petroleum;
WHEREAS, Executive Order No. 134 requires
the Oil Companies and Bulk Suppliers to NOW THEREFORE, the following rules are
maintain a sufficient minimum inventory hereby promulgated, relaxing the minimum
of petroleum, for purposes of ensuring a inventory level requirement to all Oil
continuous, adequate and stable supply of Companies and Bulk Suppliers operating in
Petroleum Crude Oil and Products, in cases the country.
where domestic and international events
threaten or restrict the supply of Petroleum SECTION 1.Minimum Inventory Level. –
Crude Oil and Products to the Philippines
such as, but not limited to, terrorist attacks, All Oil Companies, except Refiners and Bulk
armed conflict in the Middle East and in other Suppliers operating in the country, shall
regions from which the Philippines draws or maintain a minimum inventory equivalent to
transits its supply of Petroleum Crude Oil and seven (7) Days Supply of Petroleum Products,
Products, and other similar events; excluding LPG, which shall also be maintained
at seven (7) Days Supply.
WHEREAS, Section 5 of Department Circular
No. 2003-01-001, requires all Oil Companies, Refiners, on the other hand, shall maintain a
except Refiners operating in the country, minimum inventory equivalent to fifteen (15)
and Bulk Suppliers to maintain a minimum Days Supply consisting of Petroleum Crude
inventory equivalent to fifteen (15) Days Oil and refined Petroleum Products.
Supply of Petroleum Products, excluding LPG,
which shall be maintained at seven (7) Days The required minimum inventories shall
Supply. include Petroleum Crude Oil and Products
stock, on shore and en route to stockpoints
WHEREAS, the same Section provides that within the country, but shall exclude
Refiners shall maintain a minimum inventory importations still in-transit to the country
equivalent to thirty (30) Days Supply during the period specified in Section 7 of
consisting of Petroleum Crude Oil and refined Department Circular 2003-01-001.
Petroleum Products;
SEC. 2.Product Type/Mix to be Stocked. –
WHEREAS, Section 7 of the same Circular
provides for the Secretary of the Department
The type and mix of products to be stocked These Guidelines shall take effect upon
shall still be in accordance to Section 6 of complete publication in a newspaper of
Department Circular 2003-01-001. general circulation.

All other provisions of the same Circular, Issued in Fort Bonifacio, Taguig this 21st day
particularly Sections 7, 8 and 9 shall still be in of March 2003.
effect upon effectivity of this Circular.

SEC. 3.Effectivity. –
VINCENT S. PÉREZ
Secretary

Chapter 4
AN ACT TO DIRECT THE USE OF BIOFUELS, ESTABLISHING FOR THIS PURPOSE THE BIOFUEL
PROGRAM, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES
SECTION 1. Short Title. – This Act shall be (a) AFTA – shall refer to the ASEAN Free Trade
known as the “Biofuels Act of 2006.” Agreement initiated by the Association of
Southeast Asian Nations;
SEC. 2. Declaration of Policy. – It is hereby
declared the policy of the State to reduce (b) Alternative Fuel Vehicles/Engines –
dependence on imported fuels with due shall refer to vehicles/engines that
regard to the protection of public health, use alternative fuels such as biodiesel,
the environment, and natural ecosystems bioethanol, natural gas, electricity,
consistent with the country’s sustainable hydrogen and automotive LPG, instead of
economic growth that would expand gasoline and diesel;
opportunities for livelihood by mandating the
use of biofuels as a measure to: (c) Bioethanol – shall refer to ethanol
(C2H5OH) produced from feedstock and
(a) develop and utilize indigenous renewable other biomass;
and sustainably-sourced clean energy
sources to reduce dependence on (d) Biodiesel – shall refer to Fatty Acid
imported oil; Methyl Ester (FAME) or mono-alkyl esters
derived from vegetable oils or animal fats
(b) mitigate toxic and greenhouse gas (GHG) and other biomass-derived oils that shall
emissions; be technically proven and approved by
the DOE for use in diesel engines, with
(c) increase rural employment and income; quality specifications in accordance with
and the Philippine National Standards (PNS);

(d) ensure the availability of alternative (e) Bioethanol Fuel – shall refer to hydrous or
and renewable clean energy without anhydrous bioethanol suitably denatured
any detriment to the natural ecosystem, for use as motor fuel, with quality
biodiversity and food reserves of the specifications in accordance with the
country. PNS;
SEC. 3. Definition of Terms. – As used in this (f) Biofuel – shall refer to bioethanol and
Act, the following terms shall be taken to biodiesel and other fuels made from
mean as follows: biomass and primarily used for motive,
thermal and power generation, with created under Executive Order No. 125-
quality specifications in accordance with A, as amended;
the PNS;
(p) DTI – shall refer to the Department
(g) Biomass – shall refer to any organic of Trade and Industry created under
matter, particularly cellulosic or ligno- Executive Order No. 133;
cellulosic matter, which is available on a
renewable or recurring basis, including (q) Feedstock – shall refer to organic sources
trees, crops and associated residues, such as molasses, sugarcane, cassava,
plant fiber, poultry litter and other coconut, jatropha, sweet sorghum or
animal wastes, industrial wastes, and the other biomass used in the production of
biodegradable component of solid waste; biofuels;

(h) DA– shall refer to the Department of (r) Gasoline – shall refer to volatile mixture
Agriculture created under Executive of liquid hydrocarbon, generally
Order No. 116, as amended; containing small amounts of additives,
suitable for use as a fuel in spark-ignition
(i) Diesel – shall refer to refined internal combustion engines with quality
petroleum distillate, which may contain specifications in accordance with the
small amounts of hydrocarbon or PNS;
nonhydrocarbon additives to improve
ignition quality or other characteristics, (s) Motor fuel – shall refer to all volatile and
suitable for compression ignition engine inflammable liquids and gas produced,
and other suitable types of engines with blended or compounded for the purpose
quality specifications in accordance with of, or which are suitable or practicable
the PNS; for, operating motor vehicles;

(j) DENR – shall refer to the Department (t) MTBE – shall refer to Methyl Tertiary
of Environment and Natural Resources Butyl Ether;
created under Executive Order No. 192,
as amended; (u) NBB or Board – shall refer to the National
Biofuel Board created under Section 8 of
(k) DOE – shall refer to the Department of this Act;
Energy created under Republic Act No.
7638, as amended; (v) Oil Company – shall refer to any entity
that distributes and sells petroleum fuel
(l) DOLE – shall refer to the Department of products;
Labor and Employment created under
Executive Order No. 126, as amended; (w) Oxygenate – shall refer to substances,
which, when added to gasoline, increase
(m) DOF – shall refer to the Department of the amount of oxygen in that gasoline
Finance created under Administrative blend;
Order Nos. 127 and 127-A;
(x) PNS – shall refer to the Philippine National
(n) DOST – shall refer to the Department of Standards; consistent with Section 26 of
Science and Technology created under R.A. No. 8749, otherwise known as the
Republic Act No. 2067; “Philippine Clean Air Act of 1999”;

(o) DOTC – shall refer to the Department (y) Renewable Energy Sources – shall refer
of Transportation and Communications to energy sources that do not have an
upper limit on the total quantity to be 5.3. Within three months from the effectivity
used. Such resources are renewable on of this Act, a minimum of one percent
a regular basis; and (1%) biodiesel by volume shall be
blended into all diesel engine fuels sold in
(z) WTO – shall refer to the World Trade the country: Provided, That the biodiesel
Organization. blend conforms to PNS for biodiesel.

SEC. 4. Phasing Out of the Use of Harmful Within two years from the effectivity of
Gasoline Additives and/or Oxygenates. – this Act, the NBB created under this Act is
Within six months from the effectivity of this empowered to determine the feasibility
Act, the DOE, according to duly accepted and thereafter recommend to DOE to
international standards, shall gradually phase mandate a minimum of two percent (2%)
out the use of harmful gasoline additives such blend of biodiesel by volume which may be
as, but not limited to, MTBE. increased taking into account considerations
including but not limited to domestic supply
SEC. 5. Mandatory Use of Biofuels. – Pursuant and availability of locally-sourced biodiesel
to the above policy, it is hereby mandated component.
that all liquid fuels for motors and engines
sold in the Philippines shall contain locally- SEC. 6. Incentive Scheme. – To encourage
sourced biofuels components as follows: investments in the production, distribution
and use of locally-produced biofuels at and
5.1. Within two years from the effectivity above the minimum mandated blends, and
of this Act, at least five percent (5%) without prejudice to enjoying applicable
bioethanol shall comprise the annual incentives and benefits under existing laws,
total volume of gasoline fuel actually rules and regulations, the following additional
sold and distributed by each and every incentives are hereby provided under this Act.
oil company in the country, subject to the
requirement that all bioethanol blended (a) Specific tax
gasoline shall contain a minimum of five
percent (5%) bioethanol fuel by volume: The specific tax on local or imported
Provided, That the ethanol blend biofuels component, per liter of volume
conforms to PNS. shall be zero (0). The gasoline and diesel
fuel component shall remain subject to
5.2. Within four years from the effectivity of the prevailing specific tax rates.
this Act, the NBB created under this Act is
empowered to determine the feasibility (b) Value Added Tax
and thereafter recommend to DOE to
mandate a minimum of ten percent (10%) The sale of raw material used in the
blend of bioethanol by volume into all production of biofuels such as, but not
gasoline fuel distributed and sold by each limited to, coconut, jatropha, sugarcane,
and every oil company in the country. cassava, corn, and sweet sorghum shall
be exempt from the value added tax.
In the event of supply shortage of locally-
produced bioethanol during the four-year (c) Water Effluents
period, oil companies shall be allowed to
import bioethanol but only to the extent All water effluents, such as but not limited
of the shortage as may be determined by to distillery slops from the production
the NBB. of biofuels used as liquid fertilizer and
for other agricultural purposes are

considered “reuse”, and are therefore, and diesel which comply with the PNS;
exempt from wastewater charges under
the system provided under Section 13 (d) Establish guidelines for the transport,
of R.A, No. 9275, also known as the storage and handling of biofuels;
Philippine Clean Water Act: Provided,
however, That such application shall be (e) Impose fines and penalties against
in accordance with the guidelines issued persons or entities found to have
pursuant to R.A. No. 9275, subject to the committed any of the prohibited acts
monitoring and evaluation by DENR and under Section 12 (b) to (e) of this Act:
approved by DA.
(f) Stop the sale of biofuels and biofuel-
(d) Financial Assistance blended gasoline and diesel that are not
in conformity with the specifications
Government financial institutions, provided for under Section 5 of this Act,
such as the Development Bank of the the PNS and corresponding issuances of
Philippines, Land Bank of the Philippines, the Department; and
Quedancor and other government
institutions providing financial services (g) Conduct an information campaign to
shall, in accordance with and to the promote the use of biofuels.
extent allowed by the enabling provisions
of their respective charters or applicable SEC. 8. Creation of the National Biofuel
laws, accord high priority to extend Board (NBB). – The National Biofuel Board is
financing to Filipino citizens or entities, hereby created. It shall be composed of the
at least sixty percent (60%) of the capital Secretary of the DOE as Chairman and the
stock of which belongs to citizens of the Secretaries of the DTI, DOST, DA, DOF, DOLE,
Philippines that shall engage in activities and the Administrators of the PCA, and the
involving production, storage, handling SRA, as members.
and transport of biofuel and biofuel
feedstock, including the blending of The DOE Secretary, in his capacity as
biofuels with petroleum, as certified by Chairperson, shall, within one month from
the DOE. the effectivity of this Act, convene the NBB.

SEC. 7. Powers and Functions of the DOE. The Board shall be assisted by a Technical
– In addition to its existing powers and Secretariat attached to the Office of the
functions, the DOE is hereby mandated to Secretary of the DOE. It shall be headed by
take appropriate and necessary actions to a Director to be appointed by the Board. The
implement the provisions of this Act. In number of staff of the Technical Secretariat
pursuance thereof, it shall within three and the corresponding positions shall
months from the effectivity of this Act: be determined by the Board, subject to
approval by the Department of Budget and
(a) Formulate the implementing rules and Management (DBM) and existing civil service
regulations under Section 15 of this Act; rules and regulations.
(b) Prepare the Philippine Biofuel Program SEC. 9. Powers and Functions of the NBB. –
consistent with the Philippine Energy The NBB shall have the following powers and
Plan and taking into consideration the functions:
DOE’s existing biofuels program;
(a) Monitor the implementation of, and
(c) Establish technical fuel quality standards evaluate for further expansion, the
for biofuels and biofuel-blended gasoline National Biofuel Program (NBP) prepared
by the DOE pursuant to Section 7 (b) of (f) Recommend specific actions to be
this Act; executed by the DOE and other
appropriate government agencies
(b) Monitor the supply and utilization concerning the implementation of the
of biofuels and biofuel-blends and NBP, including its economic, technical,
recommend appropriate measures in environment and social impact.
cases of shortage of feedstock supply for
approval of the Secretary of DOE. For SEC. 10. Security of Domestic Sugar Supply. –
this purpose: Any provision of this Act to the contrary
notwithstanding, the SRA, pursuant to its
(1) The NBB is empowered to require all mandate, shall, at all times, ensure that
entities engaged in the production, the supply of sugar is sufficient to meet the
blending and distribution of biofuels domestic demand and that the price of sugar
to submit reports of their actual and is stable.
projected sales and inventory of
biofuels, in a format to be prescribed To this end, the SRA shall recommend and
for this purpose; and the proper agencies shall undertake the
importation of sugar whenever necessary
(2) The NBB shall determine availability and shall make appropriate adjustments to
of locally-sourced biofuels and the minimum access volume parameters for
recommend to DOE the appropriate sugar in the Tariff and Customs Code.
level or percentage of locally-
sourced biofuels to the total annual SEC. 11. Role of Government Agencies. – To
volume of gasoline and diesel sold ensure the effective implementation of the
and distributed in the country. NBP, concerned agencies shall perform the
following functions:
(c) Review and recommend to DOE the
adjustment in the minimum mandated (a) The DOF shall monitor the production
biofuel blends subject to the availability and importation of biofuels through the
of locally-sourced biofuel: Provided,That Bureau of Internal Revenue (BIR) and the
the minimum blend may be decreased Bureau of Customs (BOC);
only within the first four years from the
effectivity of this Act. Thereafter, the (b) The DOST and the DA shall coordinate
minimum blends of five percent (5%) in identifying and developing viable
and two percent (2%) for bioethanol feedstock for the production of biofuels;
and biodiesel, respectively, shall not be
decreased; (c) The DOST, through the Philippine Council
for Industry and Energy Research and
(d) Recommend to DOE a program that will Development (PCIERD), shall develop and
ensure the availability of alternative implement a research and development
fuel technology for vehicles, engines program supporting a sustainable
and parts in consonance with the improvement in biofuel production
mandated minimum biofuel-blends, and and utilization technology. It shall also
to maximize the utilization of biofuels, publish and promote related technologies
including other biofuels; developed locally and abroad;

(e) Recommend to DOE the use of biofuel- (d) The DA through its relevant agencies
blends in air transport taking into account shall:
safety and technical viability; and

(1) Within three months from the distribution, sale and use of biofuels and
effectivity of this Act, develop a biofuel-blends.
national program for the production
of crops for use as feedstock supply. SEC. 12. Prohibited Acts. – The following acts
For this purpose, the Administrators shall be prohibited:
of the SRA and the PCA, and other DA-
attached agencies shall, within their (a) Diversion of biofuels, whether locally
authority, develop and implement produced or imported, to purposes other
policies supporting the Philippine than those envisioned in this Act;
Biofuel Program and submit the
same to the Secretary of the DA for (b) Sale of biofuel-blended gasoline or diesel
consideration; that fails to comply with the minimum
biofuel-blend by volume in violation of
(2) Ensure increased productivity the requirement under Section 5 of this
and sustainable supply of biofuel Act;
feedstocks. It shall institute a
program that would guarantee that (c) Distribution, sale and use of automotive
a sufficient and reliable supply of fuel containing harmful additives such
feedstocks is allocated for biofuel as, but not limited to, MTBE at such
production; and concentration exceeding the limits to be
determined by the NBB;
(3) Publish information on available and
suitable areas for cultivation and (d) Noncompliance with the established
production of such crops. guidelines of the PNS and DOE adopted
for the implementation of this Act; and
(e) The DOLE shall:
(e) False labeling of gasoline, diesel, biofuels
(1) Promote gainful livelihood and biofuel blended gasoline and diesel.
opportunities and facilitate
productive employment through SEC. 13. Penal Provisions. – Any person, who
effective employment services and willfully aids or abets in the commission of a
regulation; crime prohibited herein or who causes the
commission of any such act by another shall
(2) Ensure the access of workers to be liable in the same manner as the principal.
productive resources and social
protection coverage; and In the case of association, partnership or
corporations, the penalty shall be imposed on
(3) Recommend plans, policies and the partner, president, chief operating officer,
programs that will enhance the social chief executive officer, directors or officers,
impact of the NBP. responsible for the violation.

(f) The Tariff Commission, in coordination The commission of an act enumerated
with the appropriate government in Section 12, upon conviction thereof,
agencies, shall create and classify a shall suffer the penalty of one year to five
tariff line for biofuels and biofuel-blends years imprisonment and a fine ranging
in consideration of WTO and AFTA from a minimum of One Million Pesos
agreements; and (P1,000,000.00) to Five Million Pesos
(P5,000,000.00).
(g) The local government units (LGUs)
shall assist the DOE in monitoring the
In addition, the DOE shall confiscate any members. An additional four members from
amount of such products that fail to comply each House, to be designated by the Senate
with the requirements of Sections 4 and 5 of President and the Speaker of the House of
this Act, and implementing issuances of the Representatives, respectively. The minority
DOE. The DOE shall determine the appropriate shall be entitled to pro-rata representation
process and the manner of disposal and but shall have at least one representative in
utilization of the confiscated products. The the Biofuels Oversight Committee.
DOE is also empowered to stop and suspend
the operation of businesses for refusal to SEC. 17. Benefits of Biofuel Workers. – This
comply with any order or instruction of the Act shall not in any way result in the forfeiture
DOE Secretary in the exercise of his functions or diminution of the existing benefits enjoyed
under this Act. by the sugar workers as prescribed under
R.A. No. 6982, or the Sugar Amelioration Act
Further, the DOE is empowered to impose of 1991, in case sugarcane shall be used as
administrative fines and penalties for any feedstock.
violation of the provisions of this Act,
implementing rules and regulations and other The NBB shall establish a mechanism similar
issuances relative to this Act. to that provided under the Sugar Amelioration
Act of 1991 for the benefit of other biofuel
SEC. 14. Appropriations. – Such sums as may workers.
be necessary for the initial implementation
of this Act shall be taken from the current SEC. 18. Special Clause. – This Act shall
appropriations of the DOE. Thereafter, the not be interpreted as prejudicial to clean
fund necessary to carry out the provisions development mechanism (CDM) projects that
of this Act shall be included in the annual cause carbon dioxide (CO2) and greenhouse
General Appropriations Act. gases (GHG) emission reductions by means of
biofuels use.
SEC. 15. Implementing Rules and Regulations
(IRR). – The DOE, in consultation with the SEC. 19. Repealing Clause. – The provisions
NBB, the stakeholders and other agencies of Section 148 (d) of R.A. No. 8424, otherwise
concerned, shall within three months from known as the Tax Reform Act of 1997, and all
the effectivity of this Act, promulgate the other laws, presidential decrees or issuances,
IRR of this Act: Provided, That prior to its executive orders, presidential proclamations,
effectivity, the draft of the IRR shall be posted rules and regulations or parts thereof
at the DOE website for at least one month, and inconsistent with the provisions of this Act,
shall be published in at least two newspapers are hereby repealed, modified or amended
of general circulation. accordingly.
SEC. 16. Congressional Oversight SEC. 20. Separability Clause. – If any provision
Committee. – Upon the effectivity of this of this Act is declared unconstitutional,
Act, a Congressional Committee, hereinafter the same shall not affect the validity and
referred to as the Biofuels Oversight effectivity of the other provisions hereof.
Committee, is hereby constituted. The
Biofuels Oversight Committee shall be SEC. 21. Effectivity. – This Act shall take effect
composed of fourteen (14) members, with fifteen (15) days after its publication in at
the Chairmen of the Committees on Energy of least two newspapers of general circulation.
both Houses of Congress as co-chairmen. The
Chairmen of the Committees on Agriculture Approved, January 12, 2007
and Trade and Industry shall be ex officio

INTERIM GUIDELINES FOR THE ACCREDITATION OF OIL INDUSTRY PARTICIPANTS IN THE FUEL
BIOETHANOL PROGRAM
WHEREAS, under Section 2(a) of Republic aim to promote and/or mandate the use of
Act No. 7638, otherwise known as the bioethanol in the transport sector which
“Department of Energy Act of 1992” (the includes a package of incentives intended to
“Act”), it is declared the policy of the State encourage the local production of bioethanol
to develop the country’s indigenous energy within the next few years;
resources taking into consideration the
active participation of the private sector WHEREAS, there is a need for the DOE to
in the various areas of energy resource provide and set out an interim accreditation
development; process for the effective monitoring and
implementation of the Program while at
WHEREAS, under Section 5(b) of the Act, the this phase where sources are limited to
Department of Energy (“DOE”) is mandated importation of bioethanol and related
to develop and update the existing Philippine products, in anticipation also and in
energy program which shall provide for an preparation for a smooth transition to a
integrated and comprehensive exploration, nationwide, legislated bioethanol or biofuels
development, utilization, distribution, and program;
conservation of energy resources, with
preferential bias for environment-friendly NOW, THEREFORE, in consideration of these
indigenous, and low-cost sources of energy; premises, these Interim Guidelines for the
accreditation of participants in the Program
WHEREAS, bioethanol is an energy resource are hereby promulgated in accordance with
that is environment-friendly, renewable and the provisions of this Department Circular.
has significant prospects to be produced
locally such that, if blended with petroleum Section 1. Scope
products, would support the Government’s
five-point energy independence package This Department Circular shall apply to and
as well as the DOE’s thrusts towards the provide the accreditation only of Oil Industry
development of indigenous and renewable Participants, as defined below, engaged
energy resources and increased use of in or intending to engage in any one of the
alternative fuels for the transport sector; following set of activities:
WHEREAS, in 2005, the DOE has adopted the 1.1 Full Scale Bioethanol Activity. Importation
Fuel Bioethanol Program (the “Program”) to of Anhydrous Bioethanol, denaturing to
promote the use of bioethanol as a blending local sale of Fuel Bioethanol, blending
component to gasoline under certain terms Fuel Bioethanol to gasoline, and retail
and conditions particularly in view of the sale of E-gasoline;
fact that the Program is on a voluntary basis
and currently there is no local source or 1.2 Bioethanol Importation to Retail Sale.
production of bioethanol; Importation of Anhydrous Bioethanol,
denaturing and blending of Fuel
WHEREAS, there are pending legislations Bioethanol to gasoline, and retail sale of
expected to be passed soon by Congress that E-gasoline;
1.3 Full Scale Fuel Bioethanol Activity. 2.6 Fuel Bioethanol - refers to the suitably
Importation and local sale of Fuel denatured bioethanol, for use as blending
Bioethanol, blending of Fuel Bioethanol component to gasoline to produce
to gasoline, and retail sale of E-gasoline; E-gasoline.
1.4 Fuel Bioethanol lmportation/Local 2.7 Notice of Importation - refers to the

Purchase to Retail Sale. Importation written notice filed by an Oil Industry
and/or local purchase of Fuel Bioethanol, Participant in accordance with Section
blending of Fuel Bioethanol to gasoline, 4.2(a) hereof.
and retail sale of E-gasoline; and
2.8 Oil Company/ies - refers to such person/s
1.5 E-Gasoline Purchase and Retail Sale. Local or entity/ies recognized/acknowledged
purchase and retail sale of E-gasoline. by the OIMB as a player in the Philippine
Downstream Oil Industry, whose activities
Section 2. Definition of Terms include retailing of petroleum products in
gasoline station.
2.1 Accreditation - refers to the process of
certification of an Oil Industry-Participant 2.9 Oil Industry Management Bureau or
for determination that the latter complied OIMB - refers to the unit within the
with the prescribed qualification criteria Department of Energy that is in charge of
for the conduct of activities set forth in monitoring the activities of players in the
Section 1 of these Interim Guidelines and Philippine Downstream Oil lndustry.
the documentary requirements of the
DOE under its Fuel Bioethanol Program. 2.10 Oil Industry Participant - refers to an oil
Company duly authorized and accredited
2.2 Bioethanol - refers to ethanol (C2H5OH) by the Department, in accordance with
produced from biomass resources. the requirement and process provided
herein, to engage in the activities
2.3 E-gasoline - refers to unleaded gasoline provided in Section 1 hereof.
blended with Fuel Bioethanol.
2.11 Request for Accreditation – refers to the
2.4 Certificate of Accreditation - refers to the written application filed by Oil Company
certification issued by the Department, intending to engage in the activities
through the OIMB, in favor of the Oil governed by these Interim Guidelines, in
Industry-applicant pursuant to these accordance with Section 4.1 hereof, that
Interim Guidelines as confirmation of commences the Accreditation process.
the latter’s qualification to participate in
the Fuel Bioethanol Program and engage Section 3. Criteria for Accreditation of an Oil
in the activities set forth in Section 1 of Industry Participant
these Interim Guidelines.
The Oil Industry Management Bureau (OlMB)
2.5 Certificate of Quality or COQ - refers to the shall adhere to the following guidelines for the
certification issued by the supplier, either Accreditation of Oil Industry Participants and
local or foreign, or by an independent or the issuance of the appropriate Certificate of
third- party surveyor on the quality of the Accreditation as an oil Industry Participant
goods transported and consigned in favor applicable and specific to the nature of the
of the Oil Industry-Participant for use in activities that each participant shall engage
the Fuel Bioethanol Program and undertake.

3.1 Oil Companies of good standing. Only tanks duly approved by the Bureau
Oil Companies of good standing shall of Internal Revenue (BIR) and/or
be allowed to apply and participate the Bureau of Customs (BOC), as the
in the Fuel Bioethanol Program under case may be, subject to issuances or
these Interim Guidelines. Accordingly, regulations of said agencies.
an applicant must demonstrate its full
compliance with the pertinent rules and (c) List, including addresses, of its retail
regulations of the Department, including outlets marketing E-gasoline, and the
such notice and reportorial requirements. corresponding work, maintenance
and/or retrofitting program to be
3.2 Active marketing or retail business. The undertaken to ensure compatibility
Oil Company-applicant must be actively of the retail outlet equipment/facility
engaged in the business of retailing to handle and dispense E-gasoline
gasoline. products.
3.3 Technical and logistics capability. The Within ten (10) days from the effectivity of
Oil Company-applicant must submit this Circular, the OIMB shall publish at the
proof of its technical and physical or DOE website the timeline and process flow
logistical capability to handle bioethanol of the Request for Accreditation. Receipt by
products appropriate and commensurate the OIMB of the Request for Accreditation,
to the scope of activity applied for with the complete documentary attachments
DOE accreditation, e.g. provision of and information, shall commence the
dedicated storage tanks and/or especially Accreditation. The process shall terminate
modified/retrofitted retail outlets where upon the issuance of the Certificate of
bioethanol-blended products shall Accreditation in favor of the Oil Company
be marketed, in accordance with the Applicant.
procedure and requirements set forth in
Section 4 hereof. 4.2 Post-Accreditation obligations. All Oil
Industry Participants shall submit the
Section 4. Documentary Requirements following reports to the OIMB:
4.1 Accreditation prior to any activity. The (a) Notice of Importation - This shall
Oil Company-applicant shall file with be filed at least one (1) day prior
the OIMB a Request for Accreditation to loading of every shipment of
relative to its intent to participate in Bioethanol imported by the Oil
the Fuel Bioethanol Program under Industry Participant and strictly
these Interim Guidelines. The Request intended for use in the Program,
for Accreditation shall state the set of with the following details:
activities, as indicated in Section 1 herein,
that the applicant intends to undertake. i. Type and quantity of cargo;
In addition, the Request for Accreditation ii. Certificate of Quality (COQ) for
shall provide the following information: the product, to include among
others the properties per PNS
(a) Timetable of product launching or for anhydrous bioethanol;
introduction of product into the denaturant used and dosage,
market; provided by the product supplier,
original or notarized copy;
(b) Location, tank ID number and iii. Vessel particulars, loadport and
capacity (MB) of dedicated storage discharge, ETL/ETA;

iv. Supplier of cargo, FOB price, iii. Schedule IV D - Sales Reports/
freight and insurance costs; and Removal Reports
v. Proforma invoice.
On a per customer basis, the
The OIMB shall correspondingly issue an names and addresses of customers/
Acknowledgement of Notice of Bioethanol consignees, the volume of
Importation for every qualified application Bioethanol and/or Fuel Bioethanol
filed before the Bureau by an Oil Industry sold/transferred and the volume
Participant. of E-Gasoline sold/transferred.
The report shall also include (for
For purposes of qualifying and to avail of verification against the Product
applicable tax and duty privileges consequent Movement Reports) the details on
to its participation to the Program, the Oil the actual movement from and
Industry Participant must be ready to present to other depots/storage facilities
its valid Certificate of Accreditation as an Oil owned and operated by the Oil
Industry Participant issued by the Department Industry Participant and/or sale
together with the Acknowledgement of or transfer to other Oil Industry
Notice of Bioethanol Importation to the Participant of products covered
BOC and/or BIR, subject to issuances and by this Circular occurring in the
regulations of said agencies. immediately preceding month.
(b) Monthly Reports - These shall include iv. Schedule V - Inventory Summary
information on products covered by Reports
this Circular, as warranted and due
on the fifteenth (15th) day of the On a per company basis, the inventory
succeeding month, subject to other stocks including in-transit volume
information as the DOE-OIMB may of Bioethanol, Fuel Bioethanol and
require: E-gasoline.
i. Schedule II – Imports (c) Further, the Oil Industry Participant

shall submit a copy of the BIR approval
Names and address of foreign for every product movement to and
suppliers, dates, volume and from the BIR-approved dedicated
price of actual importation of storage tanks within two (2) days
Bioethanol, Fuel Bioethanol, after receipt of approval from the
and gasoline, as applicable (for BIR.
verification against the Notices
of Importation). Section 5. Other Provisions
ii. Schedule IV C – Local Purchases 5.1 Product Quality. The Oil Industry
Report/Receiving Reports Participant shall sell only products, i.e. fuel
bioethanol and E-gasoline, conforming to
On a per supplier basis, the names the Philippine National Standards. For
and addresses of the suppliers of purposes of ensuring quality, products
products covered by this Circular, and imported and/or sourced locally have
the volume of Fuel Bioethanol and to be accompanied by a COQ from the
E-gasoline received (for verification supplier, which shall be verified through
against the Product Movement spot testing on certain properties.
Reports).

5.1.1 For the anhydrous bioethanol, the Industry Participant to which the same
properties to be determined shall was issued.
be: ethanol content, water content
and density 5.5 Compliance with other government
requirements. Oil Industry Participants
5.1.2 For unleaded gasoline to be used shall at all times be in compliance
as a denaturant, the density with pertinent government rules and
property shall be determined and regulations including among others the
the Certificate of Quality for the BIR/BOC, as a requisite for availment
product shall be submitted. of and continuous access to incentives
under the Fuel Bioethanol Program.
5.1.3 For fuel bioethanol directly
imported and/or produced 5.6 Compliance to standards and practices.
locally by entities other than Oil Industry Participant shall at all
the Oil Industry Participant, the times adhere to the Philippine National
properties to be determined are: Standards, or in its absence to industry-
ethanol content, denaturant type accepted standards and practices in the
and content, water content, and storage and handling of bioethanol, fuel
density. bioethanol and E-gasoline products. The
Oil Industry Participant shall develop
Sampling at the BIR-approved shore tanks and maintain its own internal Code of
shall be conducted by the representatives Practice or Manual consistent with its
from the DOE, BIR, and BOC, along with the DOE-accredited nature of activity under
importer/Oil Industry Participant. The testing the Fuel Bioethanol Program.
at the importer’s laboratory and/or DOE/BIR
laboratories shall be witnessed by the same Section 6. Term of Certificate and Transition
parties. Testing may also be conducted by an Clause
independent third party laboratory, in which
case all the properties in the PNS shall have 6.1 Term. The Certificate of Accreditation
to be tested, and at the cost of the importer. issued pursuant to these Interim
Guidelines shall have a term of one (1)
5.2 Marketing. Subsequent re-sale or year from the date of issuance, unless
trading of domestically purchased Fuel earlier revoked or terminated by the
Bioethanol by an Oil Industry Participant DOE. Oil Industry Participants may
to another entity including accredited Oil renew or obtain a new Certificate of
Industry Participant(s) is not allowed, Accreditation by complying with the
criteria and process set forth in Sections
5.3 Pump Labels. All E-gasoline dispensing 3 and 4 hereof.
pumps must be labeled indicating
bioethanol blend, as follows: “This 6.2 Transition Clause. All certifications related
gasoline contains 10% Bioethanol.” to the Program issued by the DOE prior to
and “Generally recommended for fuel- the effectivity of this Circular shall be valid
injection engines.” only for a period of thirty (30) days after
the effectivity of this Circular. Thereafter,
5.4 Assignabitity. The Certificate of only those Oil Industry Participants duly
Accreditation issued pursuant to these accredited or that have commenced the
Interim Guidelines shall not be assigned, Accreditation process pursuant to these
transferred or otherwise conveyed to or Interim Guidelines shall be allowed to
used by such person other than the Oil engage in such activities and avail of the
incentives and benefits of the Program.
Section 7. Penalty Provisions unconstitutional or invalid, such parts not
affected shall remain in full force and effect.
Failure to fully comply with all the above
requirements as provided under Sections Section 9. Effectivity and Term
4 and 5 herein shall constitute a violation
of the criteria for Accreditation provided This Circular shall take effect immediately
in Section 3 and shall be a ground for the after its publication in a newspaper of general
automatic revocation of the Certification of Circulation and shall remain in effect until
Accreditation issued. revoked or modified by the Secretary of
Energy, or upon issuance of the final and
Any person/entity who engages in any of comprehensive guidelines for accreditation
the activities under Section 1 of this Interim of all participants in the Fuel Bioethanol
Guidelines without the appropriate Certificate Program.
of Accreditation as an Oil Industry Participant
under the Fuel Bioethanol Program of the Energy Center, Fort Bonifacio, Taguig City,
Department shall suffer the appropriate Metro Manila, 30 August, 2006.
penalty as indicated under existing laws, rules
and regulations.
(sgd.)
Section 8. Separability Clause RAPHAEL P. M. LOTILLA
Secretary
lf for any reason, any section or provision
of this Interim Guidelines is declared


IMPLEMENTING THE PHILIPPINE NATIONAL STANDARD SPECIFICATION FOR ANHYDROUS
BIOETHANOL FUEL (PNS/DOE QS 007:2005)

WHEREAS, Republic Act (R.A.) No. 7638, for Oil Industry Participants for the effective
otherwise known as “An Act Creating the monitoring and implementation of the Fuel
Department of Energy (DOE)”, tasks the DOE Bioethanol Program, ensuring also therein
to formulate rules and regulations as may be quality conformance of both imported and
necessary to guide the operations of both locally manufactured bioethanol to the
government and private entities involved in Philippine National Standard (PNS);
energy resource supply and distribution;
WHEREAS, R.A. No. 8749, otherwise known
WHEREAS, R.A. 7638 further mandates the as the “Philippine Clean Air Act of 1999”,
DOE to develop and update the existing provides that the DOE together with the
Philippine Energy Program, which shall Department of Environment and Natural
provide for an integrated and comprehensive Resources (DENR), the Bureau of Product
exploration, development, utilization, and Standards (BPS), and the Department of
conservation of energy resources, with Science and Technology (DOST) and other
preferential bias for environment-friendly, stakeholders shall set specifications for
indigenous, and low-cost sources of energy; all types of fuel and biofuel products and
improve fuel composition;
WHEREAS, bioethanol is an energy resource
that is environment-friendly, renewable WHEREAS, pursuant to the Fuel Bioethanol
and can be produced locally such that if Program of the government, partnership was
blended with petroleum products, would established with the ethanol manufacturers
support the Government’s five-point energy and other stakeholders for the development
independence program as well as the of product quality standard specification for
DOE’s thrust towards the development of Anhydrous Bioethanol, designated as PNS/
indigenous and renewable energy resources, DOE QS 007/2005 for blending with gasoline
and increasing the use of alternative fuels for for use as automotive spark ignition engine
the transport sector; fuel;

WHEREAS, in 2005, the DOE adopted the WHEREAS, PNS/DOE QS 007/2005 was
Fuel Bioethanol Program to promote the use promulgated by the BPS on April 18, 2006,
of bioethanol as a blending component to which in effect requires the issuance of a
gasoline under certain terms and conditions corresponding circular to implement the
particularly in view of the fact that the same;
program implementation is not yet mandatory
and as there is no currently no locally-sourced WHEREAS, there are pending legislation
or produced bioethanol; expected to be passed soon by Congress
that aim to promote and/or mandate the use
WHEREAS, the DOE has issued Department of bioethanol in the transport sector with
Circular No. 2006-08-0011 entitled “Interim quality specification conforming to the PNS;
Guidelines for the Accreditation of Oil Industry
Participants in the Fuel Bioethanol Program”, NOW, THEREFORE, the following guidelines
providing for the accreditation guidelines are hereby adopted to effectively implement

the PNS specifications for anhydrous bioethanol-blended gasoline or E-gasoline
bioethanol fuel: in gasoline stations shall be required to
label all E-Gasoline pumps with “This
(1) Upon the effectivity of this Department gasoline contains 10% Bioethanol”
Circular, only bioethanol conforming to and “Generally recommended for
PNS/DOE QS 007/2005 shall qualify for fuel injection engines” following the
the Fuel Bioethanol Program: Provided, prescribed specifications in Annex A;
however, That the PNS color specification
of dark violet for fuel bioethanol shall (5) Failure to comply with the provisions of
be made mandatory starting January 1, this Department Circular shall subject the
2007; violator to the corresponding sanctions
imposed under appropriate laws,
(2) All Oil Industry Participants engaged including DOE rules and regulations.
in the importation of bioethanol
and/or denaturing of the same shall (6) If, for any reason, any provision of
be required to submit to the DOE a this Department Circular is declared
Certificate of Quality of the imported or unconstitutional or invalid, the other
locally produced bioethanol, showing parts or provisions thereof which are not
conformance to all the properties listed affected thereby shall continue to be in
in PNS/DOE QS 007/2005. Further, all full force and effect.
Oil Industry Participants shall ensure that
their imported and/or locally-purchased This Department Circular shall take effect
bioethanol contains the desired and immediately following its publication in any
appropriate corrosion inhibitor additive newspaper of general circulation and shall
for bioethanol. remain in effect unless otherwise revoked or
amended.
(3) The DOE shall verify compliance of the
products to PNS/DOE QS 007/2005 Fort Bonifacio, Taguig City, Metro Manila, 9
through regular testing or spot testing. November 2006.

(4) Starting January 1, 2007, all Oil Industry RAPHAEL P.M. LOTILLA
Participants engaging in retailing Secretary



RULES AND REGULATIONS IMPLEMENTING REPUBLIC ACT NO. 9367
PURSUANT TO SECTION 15 OF REPUBLIC ACT NO. 9367, OTHERWISE KNOWN AS THE

BIOFUELS ACT OF 2006, THE DEPARTMENT OF ENERGY, IN CONSULTATION WITH NATIONAL
BIOFUELS BOARD, APPROPRIATE GOVERNMENT AGENCIES, AND OTHER STAKEHOLDERS,
HEREBY ISSUES, ADOPTS AND PROMULGATES THE FOLLOWING IMPLEMENTING RULES AND
REGULATIONS.

Rule 1 imported oil;

General Provisions
b) mitigate toxic and greenhouse gas (GHG)

emissions;
Section 1. Title, Purpose, and Scope.
c) increase rural employment and income;
1.1 This Department Circular shall be and
known as the Implementing Rules and
Regulations (IRR) of Republic Act No. d) ensure the availability of alternative
9367, otherwise known as the Biofuels and renewable clean energy without
Act of 2006 and referred to as the “Act” any detriment to the natural ecosystem,
in this IRR. biodiversity and food reserves of the
country.
1.2 It shall cover the production, blending,
storage, handling, transportation, Section 3. Definition of Terms.
distribution, use, and sale of biofuels,
biofuel-blends, and biofuel feedstock in 3.1 As used in the Biofuels Act of 2006 and
the Philippines. this Implementing Rules and Regulations
(IRR), the following terms shall be defined
1.3 Further, it clarifies specific provisions of as follows:
the Act and the roles and functions of the
different government agencies and their a) Act – shall refer to the Biofuels Act of
relationship with the National Biofuels 2006;
Board.
b) AFTA – shall refer to the ASEAN
Section 2. Declaration of Policy. Free Trade Agreement initiated by
the Association of Southeast Asian
It is hereby declared the policy of the State to Nations;
reduce dependence on imported fuels with
due regard to the protection of public health, c) Alternative Fuel Vehicles/Engines
the environment, and natural ecosystems – shall refer to vehicles/engines
consistent with the country’s sustainable that use alternative fuels such as
economic growth that would expand biodiesel, bioethanol, natural gas,
opportunities for livelihood by mandating the electricity, hydrogen, and automotive
use of biofuels as a measure to: LPG, instead of gasoline and diesel;

a) develop and utilize indigenous renewable d) Bioethanol – shall refer to ethanol
and sustainably-sourced clean energy (C2H5OH) produced from feedstock
sources to reduce dependence on and other biomass;

e) Biodiesel – shall refer to Fatty Acid hydrocarbon or nonhydrocarbon
Methyl Ester (FAME) or mono-alkyl additives to improve ignition quality
esters derived from vegetable oils or other characteristics, suitable for
or animal fats and other biomass- compression ignition engine and
derived oils that shall be technically other suitable types of engines with
proven and approved by the DOE quality specifications in compliance
for use in diesel engines with quality with the PNS;
specifications in accordance with the
Philippine National Standards (PNS); m) DOE – shall refer to the Department
of Energy created under Republic Act
f) Bioethanol Fuel – shall refer to No. 7638, as amended;
hydrous or anhydrous bioethanol
suitably denatured for use as motor n) DOF – shall refer to the Department
fuel, with quality specifications in of Finance created under
accordance with the PNS; Administrative Order Nos. 127 and
127-A;
g) Biofuel – shall refer to bioethanol
and biodiesel and other fuels made o) DOLE – shall refer to the Department
from biomass and primarily used of Labor and Employment created
for motive, thermal and power under Executive Order No. 126, as
generation with quality specifications amended;
in accordance with the PNS;
p) DOST – shall refer to the Department
h) Biofuel blends – shall refer to gasoline of Science and Technology created
or diesel that has been blended with under Republic Act No. 2067;
biofuels such as, but not limited to,
bioethanol and biodiesel; q) DOTC – shall refer to the
Department of Transportation and
i) Biomass – shall refer to any organic Communications created under
matter, particularly cellulosic or ligno- Executive Order No. 125-A, as
cellulosic matter, which is available amended;
on a renewable or recurring basis,
including trees, crops and associated r) DTI – shall refer to the Department
residues, plant fiber, poultry litter of Trade and Industry created under
and other animal wastes, industrial Executive Order No. 133;
wastes, and the biodegradable
component of solid waste; s) Feedstock – shall refer to organic
sources such as molasses, sugarcane,
j) DA – shall refer to the Department of cassava, coconut, jatropha, sweet
Agriculture created under Executive sorghum or other biomass used in
Order No. 116, as amended; the production of biofuels;

k) DENR – shall refer to the Department t) Gasoline – shall refer to volatile
of Environment and Natural mixture of hydrocarbon, generally
Resources created under Executive containing small amounts of
Order No. 192, as amended; additives, suitable for use as a fuel
in spark-ignition internal combustion
l) Diesel – shall refer to refined engine with quality specifications in
petroleum distillate, which compliance with the PNS;
may contain small amounts of
u) Locally-Sourced Biofuels – shall refer ee) Renewable Energy Sources – shall
to biofuels derived from feedstocks refer to energy sources that do not
grown/planted harvested and have an upper limit on the total
processed in the Philippines; quantity to be used. Such resources
are renewable on a regular basis,
v) Motor Fuel – shall refer to all volatile and whose renewal rate is relatively
and inflammable liquids and gas rapid to consider availability over an
produced, blended or compounded indefinite period of time;
for the purpose of, or which are
suitable or practicable for, operating ff) SRA – shall refer to Sugar Regulatory
motor vehicles; Administration created under
Executive Order No. 18, s. 1986;
w) MTBE – shall refer to Methyl Tertiary
Butyl Ether; gg) Sugarcane Industry – shall refer
to the industry that integrates the
x) National Biofuels Program/Philippine agricultural production systems of
Biofuels Program – shall refer to the growing sugarcane into the industrial
program which the DOE is mandated processing of the same into sugar,
to formulate under Section 7 of the ethanol and other products with
Act; the consequent production of by-
products including but not limited
y) NBB or Board – shall refer to the to bagasse, filter cake, and molasses.
National Biofuels Board, created The sugarcane industry also covers
under Section 8 of the Act; the processing and manufacture of
any of the by-products (bagasse,
z) Oil Company – shall refer to any filter cake, molasses and others)
entity that distributes and sells into other value-added products or
petroleum fuel products; commodities; and

aa) Oxygenate – shall refer to substances hh) WTO – shall refer to the World Trade
which, when added to gasoline, Organization.
increase the amount of oxygen in
that gasoline blend; 3.2 All other terms not covered in the Act or
in this IRR shall be defined by concerned
bb) PCA – shall refer to the Philippine government agencies in the exercise of
Coconut Authority created under their respective regulatory and/or policy
P.D. 232 as amended by Presidential formulating functions.
Decrees 961 and 1468;
Rule 2
cc) Petroleum Depot or Terminal – Operation of the Mandate
shall refer to the supply point of
petroleum products (or bulk storage Section 4. Phasing Out of the Use of Harmful
facilities) operated by oil companies; Gasoline Additives and/or Oxygenates

dd) PNS – shall refer to the Philippine 4.1 Pursuant to Section 4 of the Act, the
National Standards consistent with DOE shall gradually phase out the use
Section 26 of R.A. No. 8749 otherwise of harmful gasoline additives and/or
known as the “Philippine Clean Air oxygenates, such as, but not limited
Act of 1999”; to MTBE, according to duly accepted
international standards.
4.2 The DOE, in consultation with the the biodiesel blend conforms to the
concerned government agencies and PNS.
stakeholders, shall issue the appropriate
department circular for the purpose b) Within two (2) years from the
within six (6) months from the effectivity effectivity of the Act, the NBB
of the Act. is empowered to determine
the feasibility and thereafter
Section 5. Mandatory Use of Biofuels. recommend to DOE to mandate
a minimum of two percent (2%)
Pursuant to Section 5 of the Act, all liquid blend of biodiesel by volume which
fuels for motors and engines sold in the may be increased after taking into
Philippines shall contain locally-sourced account considerations including,
biofuels components as follows: but not limited to, domestic supply
and availability of locally-sourced
5.1 Bioethanol biodiesel component.

a) Within two (2) years from the 5.3 Other Biofuels
effectivity of the Act, at least five
percent (5%) bioethanol shall In the event that fuels derived from
comprise the annual total volume biomass other than bioethanol and
of gasoline fuel actually sold and biodiesel are developed pursuant to the
distributed by each and every oil Act as technically validated by the DOST,
company in the country, subject to the DOE shall issue, upon consultation
the requirement that all bioethanol with the entities concerned and upon
blended gasoline shall contain the recommendation of the NBB, the
a minimum five percent (5%) appropriate department circular to
bioethanol fuel by volume: Provided, promote the utilization of such fuels
That the bioethanol blend conforms and provide the appropriate initiatives
to the PNS. consistent with the provisions of the
Act: Provided, That the appropriate PNS
b) Within four (4) years from the for such fuel is established and complied
effectivity of the Act, the NBB with.
created under Section 8 of the
Act is empowered to determine 5.4 The DOE shall issue, in consultation with
the feasibility and thereafter the concerned government agencies
recommend to the DOE to mandate and entities, further guidelines relative
a minimum of ten percent (10%) to the above provisions which shall
blend of bioethanol by volume into include among others, the standards and
all gasoline fuel distributed and sold reportorial requirements to be complied
by each and every oil company in the with. The issuance of these further
country: Provided, That the same guidelines shall not be a condition
conforms to the PNS. precedent to the implementation of the
above provisions.
5.2 Biodiesel
Section 6. Importation in case of supply
a) Within three (3) months from the shortage of locally-produced bioethanol.
effectivity of the Act, a minimum of
one percent (1%) biodiesel by volume 6.1 Pursuant to Section 5.2 of the Act, in
shall be blended into all diesel fuels the event of a supply shortage of locally-
sold in the country: Provided,That produced bioethanol during the first
four-year period of implementation of cassava, corn, and sweet sorghum
the Act, as may be confirmed by the NBB, shall be exempt from the value
oil companies shall be allowed to import added tax.
bioethanol to the extent of the shortage
as may be determined by the NBB. The tax incentive provided under
Items (a) and (b) of this Section shall
6.2 Prior to the importation of bioethanol be subject to rules and regulations
due to a supply shortage, the importing promulgated by the DOF.
oil company may apply for the issuance
of a DOE Certification to the effect that c) Water Effluents. All water effluents,
the bioethanol to be imported shall be such as but not limited to distillery
used for the National Biofuels Program. slops from the production of biofuels
used as liquid fertilizer and for other
6.3 The DOE Certification may be used by agricultural purposes are considered
the oil company to avail itself of reduced “reuse” and are therefore, exempt
tariff on bioethanol pursuant to Executive from wastewater charges under
Order No. 449. the system provided under Section
13 of R.A. 9275, otherwise also
6.4 The issuance of the DOE Certification known as the Philippine Clean Water
shall be made in accordance with existing Act: Provided, however, That such
DOE guidelines. application shall be in accordance
with the guidelines issued pursuant
Section 7. Incentives under the Act. to R.A. 9275, subject to the
monitoring and evaluation by the
7.1 To encourage investments in the DENR and approved by the DA; and
production, distribution, and use of
locally-produced biofuels at and above d) Financial Assistance. Government
the minimum mandated blends, and financial institutions, such as
without prejudice to enjoying applicable the Development Bank of the
incentives and benefits under existing Philippines, Land Bank of the
laws, rules, regulations, the following Philippines, Quedancor, and other
additional incentives are hereby government institutions providing
provided: financial services shall, in accordance
with and to the extent allowed by
a) Specific Tax. The specific tax on local the enabling provisions of their
or imported biofuels component respective charters or applicable
of the blend per liter of volume laws, accord high priority to extend
shall be zero. For the purpose of financing to Filipino Citizens or
availing of a zero specific tax, local or Entities, at least sixty per cent (60%)
imported bioethanol shall be suitably of the capital stock of which belongs
denatured into bioethanol fuel in to citizens of the Philippines that
accordance with existing revenue shall engage in activities involving
regulations. The gasoline and diesel production, storage, handling, and
fuel component shall remain subject transport of biofuel and biofuel
to the prevailing specific tax rates. feedstock, including blending of
biofuels with petroleum, as certified
b) Value Added Tax. The sale of raw by the DOE.
material used in the production
of biofuels such as but not limited 7.2 The appropriate government agencies
to, coconut, jathropha, sugarcane, shall issue the necessary guidelines for
the availment of such incentives. Section 9. Meetings of the NBB.

Rule 3 Regular meetings of the NBB shall be held at
The National Biofuels Board least once every quarter on a date and in a
place fixed by the Board.
Section 8. Creation and Organizational
Structure of the National Biofuels Board. Section 10. Powers and Functions of the
NBB.
8.1 Pursuant to Section 8 of the Act, the
National Biofuels Board (NBB) is created Pursuant to Section 9 of the Act, the NBB shall
and shall be composed of the Secretary of have the following powers and functions:
the DOE as Chairman and the Secretaries
of the DTI, DOST, DA, DOF, DOLE, and the a) Monitor the implementation of, and
Administrators of the PCA and SRA, as evaluate for further expansion, the
members. National Biofuels Program prepared by
the DOE pursuant to Section 7 (b) of the
a) The Secretary of the DOE, as the Act;
Chairman, shall be assisted by a duly
designated Undersecretary who shall b) Monitor the supply and utilization
act as his alternate; and of biofuels and biofuel-blends and
recommend appropriate measures in
b) The member Secretaries and cases of shortage of feedstock supply for
Administrators may assign alternate approval by the Secretary of DOE. For
representatives who must be this purpose:
occupying at least the level of
Assistant Secretary: Provided, That i. The NBB is empowered to require all
only the Department Secretaries/ entities engaged in the production,
Administrators shall sign official blending and distribution of biofuels
documents and issuances of the to submit reports of their actual and
NBB. projected sales and inventory of
biofuels in a format to be prescribed
8.2 The NBB shall create a Technical for this purpose;
Secretariat which shall provide for the
administrative, policy, and technical ii. The NBB shall determine the
services of the Board. availability of locally-sourced
biofuels and recommend to the DOE
8.3 The NBB shall determine the appropriate the appropriate level or percentage
compensation/remuneration of the of locally sourced biofuels to the
members and the Technical Secretariat annual volume of gasoline and diesel
staff and personnel in accordance with sold and distributed in the country.
existing laws, rules and regulations, and
shall make appropriate requests and iii. To ensure an adequate supply
representations with the Office of the of bioethanol, the NBB shall
President and the DBM for the allocation recommend to the DOE the amount
and appropriation of funds necessary of bioethanol that may be imported
to effectively perform its duties and at any given time by DOE-certified oil
functions. companies in the event of shortage of
supply of locally-sourced bioethanol
during the first four years from the
effectivity of the Act.
c) Review and recommend to the DOE the a) Composition. The Technical Secretariat
adjustment in the minimum mandated shall be headed by a Director to be
biofuel blends subject to the availability appointed by the NBB. The number
of locally-sourced biofuels: Provided,That of staff of the Technical Secretariat
the minimum blend may be decreased and corresponding positions shall be
only within the first four (4) years from determined by the NBB subject to
the effectivity of the Act. Thereafter, the existing civil service rules and regulations
minimum blends of five percent (5%) and the approval of the Department of
and two percent (2%) for bioethanol Budget and Management (DBM).
and biodiesel, respectively, shall not be
decreased. b) Functions and responsibilities. The
Technical Secretariat shall have the
In determining the availability of locally- following functions and responsibilities:
produced biofuels, the NBB may take into
account factors such as, but not limited i. Provide administrative and general
to, shortage in the supply of biofuels and support service to the NBB in
feedstock and constraints or difficulties in collecting, securing, and processing
the distribution of biofuel blends. pertinent information/data from all
entities engaged in the production,
d) Recommend to the DOE a program that blending and distribution of biofuels
will ensure that availability of alternative and biofuel-blends, including, but
fuel technology for vehicles, engines not limited to, actual and projected
and parts in consonance with the sales and inventory and data on
mandated minimum biofuel-blends, and the availability of locally-sourced
to maximize the utilization of biofuels, biofuels;
including other biofuels;
ii. Provide all members of the NBB
e) Recommend to the DOE the use of appropriate information/data on
biofuel-blends in air transport taking into appropriate vehicle technologies,
account safety and technical viability; including air transportation, in
consonance with the mandated
f) Recommend specific actions to be minimum biofuel blends;
executed by the DOE and other
appropriate government agencies iii. Monitor and coordinate with
concerning the implementation of the all government entities in the
NBP, including its economic, technical, performance of their respective
environment and social impact; and functions and responsibilities in
the implementation of the National
g) Exercise such other powers and functions Biofuels Program;
as may be necessary or incidental to
attain the objectives of the Act. iv. Identify issues, concerns and/or
barriers on the implementation of the
Section 11.The Technical Secretariat. National Biofuels Program, including
the mandated minimum biofuel
Pursuant to Section 8 of the Act, the NBB shall blends, and propose measures/
be assisted by a Technical Secretariat attached solutions to address the same, in
to the Office of the Secretary of the DOE. coordination with all stakeholders of
the biofuel industry; and


v. Perform such other functions as may program of the DOST, and the vehicle
be directed by the NBB. development program of the DTI;

c) Creation of an Interim Technical b) Establish technical and fuel quality
Secretariat. Within one (1) month standards for biofuels and biofuel-
from the effectivity of this IRR, the NBB blended gasoline and diesel which
shall designate an interim technical comply with the PNS;
secretariat to be known as the NBB-
Project Management Office (NBB-PMO) c) Establish the guidelines for the transport,
to hold office for a period of one (1) year storage and handling of biofuels and
or until such time that the organization biofuel-blends;
of the Technical Secretariat is completed,
subject to existing rules and regulations d) Accredit producers and distributors
of the Department of Budget and of biofuels and developers/owners of
Management and the Civil Service biofuel production facilities following
Commission. Prior to the organization DOE’s accreditation guidelines;
of the NBB-PMO, the Energy Utilization
Management Bureau of the DOE shall e) Endorse qualified biofuel producers to the
serve as the Technical Secretariat of the Board of Investments for the availment of
NBB; and appropriate fiscal incentives;

The NBB-PMO staff and personnel shall be f) Conduct regular monitoring, announced
provided with appropriate compensation or unannounced inspections sampling
and remuneration in accordance with and laboratory testing of biofuels in all
existing rules and regulations of the biofuel production facilities and feedstock
Department of Budget and Management production areas, and biofuel-blended
and the Civil Service Commission. gasoline and diesel in all blending/
storage/distribution facilities and retail
Rule 4 stations;
Role of the Department of Energy
and Other Government Agencies g) Stop the sale of biofuels and biofuel-
blended gasoline and diesel that are not
Section 12. The Department of Energy. in conformity with the specifications
provided for under Section 5 of the Act,
Pursuant to Section 7 of the Act, the DOE is the PNS and corresponding issuances of
mandated to take appropriate and necessary the Department;
actions to implement the provisions of the
Act, in addition to its existing powers and h) Impose fines and penalties against
functions. In pursuance thereof, it shall, persons or entities found to have
within three (3) months from the effectivity committed any of the acts under Section
of the Act: 12 (b) to (e) of the Act;

a) Prepare the National Biofuels Program i) Conduct various research and
consistent with the Philippine Energy development activities and studies on
Plan and taking into consideration the biofuels, biofuel-blended gasoline and
DOE’s existing biofuels program and the diesel, and/or other biomass-derived
programs of other government agencies, fuels for use in motors and engines,
such as, but not limited to, the feedstock including air transport, and other vehicle
supply program of the DA, PCA and SRA technologies;
technology research and development
j) Provide laboratory support services Section 15. The Department of Agriculture.
to other government entities and the
private sector in the conduct of research The DA, through its relevant agencies,
and development activities on biofuels, shall have the following functions and
biofuel-blends, and other biomass- responsibilities:
derived fuels;
a) Coordinate with the DOST in identifying
k) Formulate guidelines for the importation and developing viable and quality
of biofuels, taking into consideration feedstock, including production
relevant existing rules and regulations and primary postharvest processing
issued by the DOE and other government technologies for biofuels;
agencies; and
b) Within three (3) months from the
l) Conduct, in coordination with biofuel effectivity of the Act, develop a national
stakeholders, information campaign to program for the production of crops for
promote the use of biofuels. use as feedstock supply. For this purpose,
the administrators of the SRA and the
Section 13. The Department of Finance. PCA, and other related DA agencies,
within their authority, shall develop and
The DOF shall monitor, in coordination with implement policies in support of the
other concerned government agencies, National Biofuels Program and submit
the production and importation of biofuels the same for consideration and approval
through the Bureau of Internal Revenue (BIR) by the Secretary of the DA;
and the Bureau of Customs (BOC).
c) Ensure increased productivity and
The DOF shall promulgate the rules and sustainable supply of biofuel feedstocks.
regulations necessary to implement its The DA shall institute a program that
mandate under the Act. would guarantee that a sufficient and
reliable supply of feedstocks is allocated
Section 14. The Department of Science and for biofuel production;
Technology.
d) Publish information on available and
The DOST shall: suitable areas for cultivation and
production of biofuel crops, available
a) Coordinate with the DA in identifying and accessible technologies, sources
and developing viable feedstock for the of planting materials, and financial
production of biofuels; assistance;

b) Develop and implement, through the e) In cooperation with SRA, PCA, other
Philippine Council for Industry and Energy attached agencies, and bureaus, shall
Research and Development (PCIERD), undertake the identification and
a research and development program publication of potential areas suitable
supporting a sustainable improvement for the expansion and production of raw
in biofuel production and utilization materials as feedstocks for biofuels;
technology. For this purpose, the DOST
shall establish a network of academic and f) Undertake biofuel feedstock research
research institutions; and and development which may include
identifying new feedstock, developing
c) Publish and promote related technologies high yielding varieties, and developing
developed locally and abroad. new processing technologies in
cooperation with public and private the strengthening of its organization,
research agencies, and international manpower and capabilities to fully
research institutes; and support the National Biofuels Program;

g) Promulgate such necessary rules and c) Formulate and implement the necessary
regulations necessary to implement its regulatory measures to ensure the
mandate under the Act. availability, sufficiency, quality, and
sustainability of the supply of coconut
Section 16. The Sugar Regulatory raw materials for the National Biofuels
Administration. Program;

Pursuant to its mandate under Executive d) Require the accreditation/registration
Order No. 18 and the Act, the SRA shall: of reputable and credible oil mills
who shall supply the coconut oil
a) at all times ensure that the supply of (CNO) requirements of coco biodiesel
sugar is sufficient to meet the domestic producers;
demand and that the price of sugar is
stable; and e) Formulate industry policies and
regulations which shall include the
b) together with the DA, PCA, and other retention of CNO volume to support the
DA-attached agencies, develop and required minimum of one percent (1%),
implement policies supporting the and later on two percent (2%), coconut
National Biofuels Program and submit methyl ester (CME) of the biodiesel
the same to the Secretary of the DA for blends which may be increased later
consideration. upon the recommendation of the NBB;

Section 17. The Philippine Coconut Authority. f) Explore and expand the domestic and
foreign markets of coconut biofuel
Pursuant to its mandate to formulate and products and by-products; and
adopt a general program of development for
the coconut and other palm oil industry in its g) Seek funds for its sustainable operation
all aspects, under PD 1468, Article II, Section and continuous support for the National
(3) (a), the PCA shall develop, implement Biodiesel component program.
policies and programs within the coconut
industry in support of the National Biofuels Section 18. The Department of Labor and
Program. Employment.

To this end, the PCA shall: The DOLE shall:

a) Review and assess the policies, projects a) Promote gainful livelihood opportunities
and activities of all other government and facilitate productive employment
agencies related to the National Biofuels through effective employment services
Program and integrate/adopt them and regulation;
into the National Coconut Industry
Development Program; b) Ensure the access of workers to productive
resources and social protection coverage;
b) Develop, formulate, and implement
a massive nationwide rehabilitation, c) Recommend policies, plans, and
planting, and replanting program using programs that will enhance the social
high-yielding coconut varieties including impact of the National Biofuels Program;
and biofuel and biofuel blends found to be
operating without the necessary permits
d) Promulgate such necessary rules and and licenses;
regulations necessary to implement its
mandate under the Act. c) Reporting to the DOE violations of the
Act being committed by any person
Section 19. The Department of Trade and involved in the distribution, sale, and use
Industry. of biofuels and biofuel blends; and

19.1 Pursuant to the State’s policy of protecting d) Revoking local permits previously issued
public health through, among others, to business entities found to have violated
the reduction of toxic and greenhouse pertinent rules and regulations of the
gas emissions, the DTI shall formulate DOE and other concerned government
and implement, in coordination with the agencies, upon the recommendation of
DOTC and the DENR, a national motor the DOE or other concerned agency, as
vehicle inspection and maintenance the case may be.
program as a measure to substantially
reduce emissions from motor vehicles Rule 5
pursuant to Art. 4, Section 21 (d) of R.A. Role of the Players in the Biofuels Industry.
8749, otherwise known as the Philippine
Clean Air Act of 1999. Section 22. Oil Companies.

19.2 Pursuant to its program under existing 22.1Blending of Biofuels. Blending of
laws, the DTI shall promote the biodiesel shall and bioethanol with diesel
development of an alternative fuel and gasoline fuels, respectively, shall be
technology for vehicles, engines and parts undertaken by the oil companies using
in consonance with the requirements of appropriate blending methodologies
the mandated minimum biofuel-blends. at their respective refineries, depots or
blending facilities prior to the sale of
Section 20. The Tariff Commission. biofuel-blends to consumers/end-users:
Provided, That blending methodologies
The Tariff Commission, in coordination with shall be in accordance with duly accepted
the appropriate government agencies, shall international standards as well as the
create and classify a tariff line for biofuels guidelines issued by the DOE for this
and biofuel-blends in consideration of WTO purpose: Provided, further, That oil
and AFTA agreements. companies shall ensure compliance of
the biofuel blends with the PNS.
Section 21. The Local Government Units.
22.2Supply and Distribution. To ensure
The Local Government Units shall assist the compliance of the minimum mandated
DOE in monitoring the distribution, sale and biofuel blends with the PNS, oil
use of biofuels and biofuel-blends by: companies shall observe the following
guidelines, in addition to what may be
a) Ensuring strict implementation of local prescribed by the DOE under subsequent
permitting requirements applicable to issuances:
businesses engaged in the distribution
and sale of biofuels and biofuel blend; a) Supply of biofuels shall be sourced only
from biofuel producers accredited
b) Ordering the closure of any business by the DOE. The procurement of
engaged in the distribution and sale of biofuels may be covered by biofuels
supply contracts or agreements; Section 23. Biofuel Producers.

b) Ensure proper logistics and 23.1 Accreditation of Biofuels Producers.
application of appropriate
technologies in blending, handling, a) Any individual or entity intending
transporting, and distributing to engage in the production of
biofuel–blends; and biofuels shall apply for accreditation
as a biofuel producer with the
c) Observe proper diligence in the DOE. The DOE, in consultation
supervision of company-operated, with the stakeholders, shall issue
dealer-owned, or dealer-operated the appropriate guidelines for this
retail service stations carrying purpose, which shall indicate the
their brand in order to ensure requirements for quality assurance,
that the quality and integrity of quality management system, and
PNS-compliant biofuels shall be analogous quality production
maintained. standards.

22.3 Supply Shortage. In the event of supply b) Pending the issuance of these
shortage of locally-produced bioethanol guidelines, only those biofuel
during the first four-year period from the producers who have existing
effectivity of the Act, oil companies may accreditation or have been issued
apply for the issuance of a certification a permanent Certificate of Fuel
to import bioethanol from the DOE in Additive Registration (CFAR) and
accordance with existing guidelines. who have pending applications
for accreditation pursuant to
22.4 Reportorial Requirements. For proper Memorandum Circular No. 55 shall
monitoring of the compliance by oil be allowed to produce and sell
companies with this IRR, each oil biofuels.
company shall submit to the DOE the
following reports: 23.2 All biofuels producers, in addition to
what may be required by the DOE under
a) Performance Compliance Report. subsequent guidelines shall:
Every oil company shall submit
on an annual basis a Performance a) Register their distributors with the
Compliance Report containing its DOE;
compliance plan with the minimum
mandated biofuel blends as well b) Ensure proper logistics and
as other information that may be application or appropriate
required by the DOE. Such report shall technologies in handling biofuels;
be duly certified and signed under
oath by an authorized responsible c) Submit to the DOE the following data
officer of the oil company who shall and information:
personally attest to the veracity and
accuracy of its contents. i. Monthly production, sales and
inventory of biofuels;
b) Periodic Reports. The oil companies
shall likewise submit periodic reports ii. Monthly report on projected
as may be required by the DOE. production, sales and inventory
of biofuels;

iii. Report on the application of Facilities for the production, handling,
technologies in the production, distribution and storage of biofuels and
handling, storage and biofuel blends shall likewise conform to
distribution of biofuels; and standards and guidelines set by the DOE.

iv. Such other data and information Section 26. Quality Assurance.
as may be required by the DOE
and/or the NBB. All biofuels producers shall assure compliance
with quality standards in accordance with the
d) Maintain a minimum inventory of following guidelines, in addition to what may
biofuels equivalent to its average be required by the DOE under subsequent
monthly sales to meet the minimum issuances:
mandate;
a) All biofuel deliveries must be
e) Conduct and/or support local accompanied by a Certificate of Quality
research and development to to be issued by the distributor/supplier
improve biofuels feedstock indicating the properties of the delivered
productivity; and biofuels, which must be in compliance
with the PNS;
f) Report to DOE the weekly price of
biofuels. b) Biofuels packaged in individual containers
shall be appropriately labeled and shall
Section 24.Importer End-Users. contain information such as DOE CFAR
number, batch manufacturing date,
End-users who are direct importers of diesel and expiry date in accordance with the
or gasoline shall also be subject to the guidelines that will be issued by the DOE;
required use of the mandated biofuel blend. and
To determine their compliance, such entities
shall submit the following reports, in addition c) Biofuel producers shall establish
to what may be required by the DOE under management systems covering quality
subsequent guidelines: assurance, environmental management
and occupational health and safety
a) Monthly report to the DOE of its standards in accordance with the
importation and consumption of accreditation guidelines to be issued by
gasoline/diesel; and the DOE.

b) Monthly report on the purchase and Rule 7
consumption of biofuels and biofuel Security of Domestic Sugar
blends. and Feedstock Supply

Rule 6 Section 27. Security of Domestic Sugar
Standards for Biofuel and Biofuel Blends Supply.

Section 25. Quality Standards. 27.1 The SRA shall develop and implement
policies within the sugarcane industry in
All biofuels and biofuel blends that qualify support of the National Biofuels Program.
under the Act shall be limited to those It shall form a consultative body within
compliant with the PNS. the sugarcane industry to undertake the
initiatives stated herein.

27.2 Towards this end, the SRA shall formulate programs and guidelines in order to ensure a
the necessary guidelines in ensuring the reliable supply of biofuel feedstocks.
supply of sugar is sufficient to meet the
domestic demand and that the price of Rule 8
sugar is stable. Development of Social Amelioration
and Welfare Program for Workers in the
a) The SRA shall ensure full utilization Production of Biofuels
of sugarcane and adequate supply of
sugar in the domestic market and for Section 29. Objectives of the Program.
other requirements. To this end, it
shall conduct a periodic assessment A Social Amelioration and Welfare Program
of the domestic sugar supply and (“Program”) similar to that of the Sugar
demand situation, and report the Amelioration Act of 1991 or R.A. 6982, shall
same to the NBB on a regular basis: be developed for the following objectives:
Provided, That in case of shortage of
locally produced bioethanol, the SRA a) Promote gainful livelihood opportunities;
in consultation with stakeholders,
shall initiate appropriate action b) Facilitate productive employment
to increase local production and through effective employment services
propose measures to the NBB to and regulation; and
address the supply shortage.
c) Ensure the access of workers to productive
b) The SRA shall develop appropriate resources and social protection coverage.
schemes to facilitate orderly
allocation of sugarcane for both sugar Section 30. Coverage.
and ethanol. For this purpose, it shall
report to the NBB the supply and The program shall cover all rank and file
demand situation of sugarcane and employees of biofuel plants, workers and
shall require regular submission of farmers engaged in the production of crops
prescribed reports from bioethanol used as feedstocks in biofuels.
producers.
Section 31. Components of the Program.
The SRA, pursuant to its existing
mandate, shall formulate issuances The program shall provide basic benefits and
consistent with its existing sugar assistance that will augment the income and
classification functions, to effect an improve the standard of living of workers
appropriate system of classification engaged in the production of biofuels. It
and allocation in terms of sugar and may consist of, among others, the following
sugar equivalent. components:

Section 28. Security of Domestic Biofuels a) training and education assistance;
Feedstock Supply. b) livelihood assistance;
c) social protection and welfare benefits;
Pursuant to Section 11, paragraph (d) (2) of the and
Act, the DA shall ensure increased productivity d) distribution of financial benefits.
and sustainable supply of biofuels feedstocks.
Towards this end, the DA in consultation Section 32. Establishment of Guidelines and
with PCA, SRA, and other entities concerned, Mechanisms.
shall develop and implement appropriate

Pursuant to Section 17 of the Act, the NBB shall e) False labeling of gasoline, diesel, biofuels,
formulate and issue, through the appropriate and biofuel-blended gasoline and diesel.
NBB member agency/ies, the guidelines
covering or governing the mechanisms, Section 34. Penal Provisions.
management and monitoring of the Program,
similar to that prescribed under R.A. 6982 or 34.1 In accordance with Section 13 of the Act,
the Sugar Amelioration Act of 1991. any person, who willfully aids or abets in
the commission of a crime prohibited in
However, the Act and this IRR shall not in any the Act, or who causes the commission
way result in the forfeiture or diminution of of any such act by another shall be liable
the existing benefits enjoyed by the sugar in the same manner as the principal;
workers as prescribed under the Sugar
Amelioration Act, in case sugarcane shall be 34.2 In the case of association, partnership
used as feedstock. or corporations, the penalty shall be
imposed on the partner, president, chief
Rule 9 operating officer, chief executive officer,
Prohibited Acts, Penal directors or officers, responsible for the
and Administrative Provisions violation; and

Section 33. Prohibited Acts. 34.3 The commission of an act enumerated
in Section 12 of the Act, upon conviction
Any person or entity found in violation of thereof, shall suffer the penalty of
any provision of the Act and this IRR shall be one year to five years imprisonment
subject to appropriate criminal, civil, and /or and a fine ranging from One Million
administrative sanctions as provided herein (P 1,000,000) to Five Million pesos (P
and other existing applicable laws, rules and 5,000,000).
regulations.
Section 35. Administrative Liability.
Under Section 12 of the Act, the following
shall be prohibited: 35.1 Without prejudice to incurring criminal
liability, any person who commits any
a) Diversion of biofuels, whether locally of the prohibited acts under Section 12
produced or imported, to purposes other (b) to (e) of the Act, this IRR and other
than those envisioned in the Act; issuances relative to the implementation
of the Act shall likewise be subject
b) Sale of biofuel-blended gasoline or diesel to administrative fines and penalties,
that fails to comply with the minimum in accordance with a schedule of
biofuel-blend by volume in violation of administrative fines and penalties to be
the requirement under Section 5 of the issued by the DOE.
Act;
For avoidance of doubt, administrative
c) Distribution, sale, and use of automotive actions initiated pursuant to this Section
fuel containing harmful additives such shall be separate and independent from any
as, but not limited to, MTBE at such criminal actions that may arise for violations
concentration exceeding the limits to be of Section 12 of the Act.
determined by the NBB;
35.2 In addition to imposing fines and
d) Non-compliance with the established penalties, the DOE shall be authorized to:
guidelines of the PNS and DOE adopted
for the implementation of the Act; and
a) Confiscate any amount of such members, with the Chairpersons of the
products that fail to comply with the Committees on Energy of both Houses of
requirements of Sections 4 and 5 of Congress as co-chairpersons.
the Act and implementing issuances
of the DOE; 37.2 The Chairpersons of the Committees on
Agriculture and on Trade and Industry in
b) Determine the appropriate process each chamber shall be ex-officio members
and the manner of disposal and of the Biofuels Oversight Committee.
utilization of the confiscated
products; and 37.3 The Senate President and the Speaker
of the House of Representatives shall
c) Stop and suspend the operation of each designate four members from their
businesses for refusal to comply respective chambers to sit in the Biofuels
with any order or instruction of the Oversight Committee. In designating
DOE Secretary in the exercise of his such four members, the minority in each
functions under the Act. chamber shall be entitled to pro-rata
representation provided that at the very
Section 36. Administrative Procedures. least, they shall have one representative
in the Biofuels Oversight Committee.
36.1 The DOE may initiate, motu propio, or
upon the filing of any complaint for the Section 38. Appropriations.
violation of any prohibited act under
Section 12 (b) to (e) of the Act, the IRR Funds necessary to finance the activities of
or related issuances, an administrative concerned government agencies as provided
proceeding against any such person or in the Act and in this IRR shall be included in
entity. In the exercise thereof, the DOE the annual General Appropriations Act.
may commence such hearing or inquiry
by an order to show cause, setting forth Section 39. Special Clause.
the grounds for such order.
The Act and the IRR shall not be interpreted as
36.2 The administrative proceeding shall be prejudicial to clean development mechanism
conducted before the DOE to determine (CDM) projects that cause carbon dioxide
the culpability of alleged offenders and (CO2) and greenhouse gases (GHG) emission
to determine the applicable penalties. reductions by means of biofuels use.
The administrative proceedings under
this IRR shall be governed by the existing Section 40. Village Level and/or Community-
rules of practice and procedure before Based Facilities.
the DOE.
The promotion and utilization of biofuels
Rule 10 for household and community equipment
Other Provisions for lighting, cooking, farming, post-harvest
processing, off-road operations, and other
Section 37. Congressional Oversight analogous uses shall be included as part of
Committee. the National Biofuels Program in accordance
with the government policy under the Act.
37.1 Pursuant to Section 16 of the Act, a
Congressional Oversight Committee, Section 41. Separability Clause. If
called the Biofuel Oversight Committee, any provision of this IRR is declared
is hereby constituted with fourteen (14) unconstitutional, the same shall not affect the

validity and effectivity of the other provisions Signed this 17th day of May 2007 at the DOE,
thereof. Energy Center, Merritt Road, Fort Bonifacio,
Taguig City, Metro Manila.
Section 42. Effectivity. This IRR shall take
effect fifteen (15) days after its publication in RAPHAEL P.M. LOTILLA
two newspapers of general circulation. Secretary of Energy

JOINT ADMINISTRATIVE ORDER NO. 2008-1, Series of 2008
GUIDELINES GOVERNING THE BIOFUEL FEEDSTOCKS PRODUCTION, AND BIOFUELS AND BIOFUEL
BLENDS PRODUCTION, DISTRIBUTION AND SALE UNDER REPUBLIC ACT NO. 9367
Pursuant to Sections 7, 8, 9, 10, 11 and 17 of referred to as the “Guidelines”.

Republic Act (R.A.) No. 9367, otherwise known
as “The Biofuels Act of 2006” (hereinafter SEC. 2. Objectives. –
referred to as the “Act”), and Rule 4 of its
Implementing Rules and Regulations (IRR), the Pursuant to Section 2 of the Act and its IRR,
Department of Agriculture (DA), Department the following are the objectives of these
of Agrarian Reform (DAR), Department of Guidelines:
Energy (DOE), Department of Environment
and Natural Resources (DENR), Department (a) To develop and utilize indigenous
of Finance (DOF), Department of Labor and renewable and sustainably-sourced clean
Employment (DOLE), Department of Science energy sources to reduce dependence on
and Technology (DOST), Department of imported oil;
Trade and Industry (DTI), Department of
Transportation and Communications (DOTC), (b) To mitigate toxic and greenhouse gas
National Biofuels Board (NBB), National (GHG) emissions;
Commission on Indigenous Peoples (NCIP),
Philippine Coconut Authority (PCA), and Sugar (c) To increase rural employment and
Regulatory Administration (SRA) hereby adopt income;
the following guidelines that shall govern
the biofuel feedstocks production, biofuels (d) To ensure the availability of alternative
and biofuel blends production, distribution and renewable clean energy without
and sale for the information, guidance and any detriment to the natural ecosystem,
compliance of all concerned. biodiversity, and food reserves of the
country;
CHAPTER I
GENERAL PROVISIONS (e) To ensure that lands devoted to food
crops shall not be utilized for biofuel
SECTION 1. Title. – feedstocks production, except in cases
provided herein;
This Joint Administrative Order shall be known
as “GUIDELINES GOVERNING THE BIOFUEL (f) To ensure the stability of the domestic
FEEDSTOCKS PRODUCTION, AND BIOFUELS supply of feedstock, biofuels, and biofuel
AND BIOFUEL BLENDS PRODUCTION, blends;
DISTRIBUTION AND SALE”, hereinafter
(g) To ensure the compliance of biofuels and SEC. 4. Definition of Terms –
biofuel blends producers, distributors
and sellers with the Philippine National For purposes of these Guidelines, the
Standards (PNS) on biofuels and biofuel following definitions shall apply:
blends;
(a) Act refers to Republic Act No. 9367,
(h) To ensure compliance with the mandated otherwise known as the “Biofuels Act of
biofuel blends under the Act; 2006”;
(i) To promote the development of the (b) Agricultural Lands as amended by Section
biofuel industry in the country and 3-B of R.A. No. 7881 (Amendments to the
encourage private sector participation Comprehensive Agrarian Reform Law)
and to institute mechanisms which will refer to lands devoted to or suitable
fast track investments in the biofuel for the cultivation of the soil, planting
industry; and of crops, growing of trees, including
the harvesting of such farm products,
(j) To promote biofuel workers’ welfare and and other farm activities and practices
protection. performed in conjunction with such
farming operations by persons whether
SEC. 3. Biofuel Production Site as One of natural or juridical, and not classified
the Priority Development Areas for Land by law as mineral land, forest or timber,
Conversion. – or national park nor reclassified as
residential, commercial, industrial or
In accordance with the purpose of the Act, other non-agricultural uses before June
Section 6 of DAR Administrative Order No. 01, 15, 1988;
Series of 2002, is hereby amended to include a
proposed biofuel production site as a Priority (c) Ancestral Domain refers to the areas
Development Area for Land Conversion and belonging to indigenous Cultural
shall therefore read as follows: Communities/Indigenous Peoples (ICCs/
IPs) comprising lands, inland waters,
xxx coastal areas, and natural resources
therein, held under a certain claim of
6.1.7 Agricultural Areas/Lands ownership, occupied or possessed by
proposed to be developed as biofuel ICCs/IPs, by themselves or through their
production site as certified by DA: ancestors, communally or individually
Provided, That each production since time immemorial;
facility site shall not be more than
twenty five (25) hectares: Provided, (d) Applicant refers to any person or entity
further, That a project that has a who proposes to engage in biofuel
production capacity in excess of one feedstock production, and biofuel
hundred thousand (100,000) liters production, distribution and sale;
per day or where more than twenty
five (25) hectares is required as a (e) Biodiesel refers to the fatty acid methyl
production facility site, the applicant ester (FAME) or mono-alkyl esters
can apply for exemption for the derived from vegetable oils or animal
additional hectarage as production fats and other biomass-derived oils that
facility site subject to the approval of shall be technically proven and approved
DAR. by the DOE for use in diesel-fed engines,
xxx with quality specifications in accordance
with the PNS;
(f) Bioethanol refers to ethanol (C2H5OH) (l) Biofuel Production Site refers to the area
produced from feedstock and other for biofuel production which includes,
biomass that shall be technically proven but not limited to the processing plant,
and approved by the DOE for use in waste management facilities. and other
gasoline-fed engines, including hydrous facilities directly related to biofuel
ethanol, with quality specifications in production;
accordance with the PNS, and for higher
blends beyond the 10% blend, the DOE (m) Certificate of Compliance refers to the
shall issue the appropriate PNS; Certificate issued by the NCIP attesting
that the Applicant has complied for
(g) Biofuel refers to bioethanol and biodiesel securing the affected ICCs/IPs’ free and
and other fuels made from biomass prior informed consent;
and primarily used for motive, thermal
and power generation with quality (n) Certification of Non-Overlap refers to
specifications in accordance with the PNS, the Certificate issued by the concerned
and added or blended to petroleum fuels Regional Director of NCIP, attesting to the
to enhance or alter chemical or physical fact that the area affected by a particular
properties and improve performance/ plan, program, project, or activity does
usage of the fuels; not overlap with any ancestral domain;
(h) Biofuel Blends refer to gasoline or diesel (o) Certification Precondition refers to
that has been blended with biofuels such the Certification issued by NCIP that
as, but not limited to, bioethanol and the Applicant has complied with the
biodiesel; requirements under Republic Act 8371
(RA 8371), otherwise known as the
(i) Biofuel Distributor refers to any person Indigenous Peoples Rights Act of 1997
or entity engaged in the distribution of and its IRR;
PNS-compliant biofuels of an accredited
Biofuel Producer in the domestic market: (p) CFAR refers to Certificate of Fuel Additive
Provided, That any person or entity Registration issued by the DOE;
engaged in distribution, supply and
sale of PNS-compliant biofuels shall be (q) Community-based Biofuel Producer refers
deemed as a Biofuel Distributor; to a people’s organization, cooperative or
group of people in a specific community
(j) Biofuel Feedstock Producer refers to who is engaged in the production of
any person or entity engaged in farming biofuel;
and production of biofuel feedstocks
and in the development, operation and (r) EUMB refers to the Energy Utilization
management of biofuel feedstock areas; Management Bureau of the Department
of Energy;
(k) Biofuel Producer refers to any person
or entity engaged in the production of (s) Feedstock refers to organic sources such
PNS-compliant biofuels for the domestic as molasses, sugarcane, cassava, coconut,
market Provided, That any person jatropha, sweet sorghum oil palm and
or entity engaged in the production, other biomass used in the production of
distribution, and sale of any PNS- biofuels;
compliant biofuels shall be deemed as a
Biofuel Producer; (t) Free and Prior Informed Consent (FPIC)
refers to the consensus of all members

of the ICCs/IPs which is determined (cc) Oil Company refers to any entity that
in accordance with their respective distributes and sells petroleum fuel
customary laws and practices that is free products;
from external manipulation, interference,
and coercion, and obtained after fully (dd) OIMB refers to the Oil Industry
disclosing the intent and scope of the Management Bureau of the Department
plan/program/project/activity; of Energy;
(u) Fuel refers to products used to produce (ee) PFC refers to the Philippine Forest
heat, power or illumination by means of Corporation of the Department of
combustion, burning or oxidation. This Environment and Natural Resources;
includes gasoline, diesel, and biofuel;
(ff) PNS refers to the Philippine National
(v) Illegal Conversion is the act of changing Standards consistent with Section 26 of
the current use of the land from R.A. No. 8749, otherwise known as the
agricultural to another agricultural “Philippine Clean Air Act of 1999”;
or non-agricultural use, the effect of
which is to exempt the land from CARP (gg) Private Agricultural Lands refer to
coverage without an order of conversion agricultural lands as defined herein and
from DAR, or changing the use of the owned by natural or juridical persons
land other than that allowed under the or by the government in its proprietary
order of conversion issued by the DAR; capacity;
(w) IRR refers to DOE Department Circular No. (hh) Raw Materials refer to bio-feedstocks
DC 2007-05-0006, otherwise known as may it be in its original state or otherwise,
the “Implementing Rules and Regulations such as, but not limited to, molasses,
of Republic Act No. 9367”; coconut oil, coconut, palm oil, oil palm,
jatropha oil, jatropha, sugarcane, cassava,
(x) Irrigable Lands refer to lands which sweet sorghum, and other biomass used
display marked characteristics justifying in the production of biofuels;
the operation of an irrigation system;
(ii) Reclassification of Agricultural Lands
(y) Irrigated Lands refer to lands serviced by refer to the act of specifying how
natural irrigation or irrigation facilities. agricultural land shall be utilized for
These include lands where water is not non-agricultural uses such as residential,
readily available as existing irrigation industrial and commercial, as embodied
facilities need rehabilitation or upgrading in the approved land use plan, subject
or where irrigation water is not available to the requirements and procedure for
year-round; land use reclassification. It also includes
the reversion of non-agricultural lands to
(z) Land Use Conversion refers to the act or agricultural use;
process of changing the current use of a
piece of agricultural land into some other (jj) Renewable Energy Sources refer to the
use as approved by the DAR; energy sources that do not have an
upper limit on the total quantity to be
(aa) LGU refers to the Local Government Unit; used. Such resources are renewable on
a regular basis;
(bb) NIA refers to the National Irrigation
Administration; (kk) Social Amelioration and Welfare Program
refers to the guidelines governing the
mechanisms and implementation of area of more than one thousand (1,000)
amelioration and welfare program for hectares and which involves land
the biofuel workers pursuant to Section preparation, an Environmental Impact
17 of the Act, which shall be issued by the Statement (EIS) is required prior to the
DOLE. issuance of ECC; and
CHAPTER II (c) For existing biofuel feedstock production

BIOFUEL FEEDSTOCK PRODUCERS areas regardless of the total land area, an
ECC is no longer required;
SECTION 1. Requirements for Biofuel
Feedstock Producers. – For the above purposes, DENR Administrative
Order No. 30, Series of 2003 and DENR
An Applicant who shall engage in the Memorandum Circular No. 2007-08,
production of biofuel feedstock shall secure whenever applicable is hereby adopted as an
the following, prior to the production thereof: integral part of these Guidelines (Annex “A”
and “B”, respectively).
(a) Environmental Compliance Certificate
(“ECC”) issued by the DENR, as applicable; SEC. 3. Certification Precondition. –
(b) Certification Precondition issued by the An Applicant shall secure a Certificate of Non-
NCIP, as applicable; and Overlap or Certificate of Compliance from the
NCIP, subject to the following guidelines:
(c) Certification issued by the DA, as
applicable; SEC. 3.1. If the Proposed Site Is Outside the
Ancestral Domain/Land. –
The requirements above shall not be required
for all existing feedstock areas, subject to If the proposed site for the project is outside
DA policy guidelines. Existing coconut and the ancestral domain/land of the ICCs/IPs, a
sugarcane areas shall be subject to the Certificate of Non-Overlap shall be secured
regulations by PCA and SRA, respectively, as by the Applicant, which shall be issued by
approved by the DA. the concerned NCIP Regional Director after a
field-based investigation.
SEC. 2. Environmental Compliance Certificate.
– SEC. 3.2. If the Proposed Site is Within or
An Applicant who shall engage in the Overlaps the Ancestral Domain/Land. –
production of biofuel feedstocks shall secure
an ECC from the DENR. The issuance thereof (a) An Applicant shall secure the Free and
shall be subject to the following guidelines: Prior Informed Written Consent if the
area to be covered by the project is
(a) For new biofuel feedstock production located within or overlaps the ancestral
project with a total contiguous land area domain/land ICCs/IPs.
of one hundred (100) hectares up to one
thousand (1,000) hectares and which (b) After securing the FPIC, an Applicant shall
involves land preparation, an Initial secure a Certificate of Compliance from
Environmental Examination (IEE) or IEE the NCIP Head Office.
Checklist is required prior to the issuance
of ECC; SEC. 3.3. Documentary Requirements. –
(b) For new biofuel feedstock production For purposes of securing the Certification
project with a total contiguous land Precondition under Sections 3.1 and 3.2
hereof, the following documents are required to support rice and other crop
to be submitted by the Applicant: production, and all irrigated lands
where water is not available for
(a) Endorsement from the DENR; rice and other crop production but
(b) Project Profile of the Applicant; and are within areas programmed for
(c) Operational Plan. irrigation facility rehabilitation by DA
and NIA;
For the above purpose, NCIP Administrative
Order No. 1, Series of 2006, is hereby adopted (2) All irrigable lands already covered by
as an integral part of these Guidelines (Annex irrigation projects with firm funding
“C”). commitments as certified by NIA at
the time of the application for land
SEC. 4. DA Certification. – use conversion;

An Applicant shall secure a DA certification (3) All privately irrigated alluvial plain
that the feedstock or the proposed biofuel lands utilized for rice and corn
feedstock area may be utilized for the production; and
production of biofuel feedstock.
(4) All agricultural lands that are
The DA Certification shall not be required if ecologically fragile, the utilization
the feedstock to be used (e. g., molasses), of which shall result in serious
does not involve land utilization. environmental degradation.
SEC. 4.1. Criteria for DA Certification. – The SEC. 4.2. Issuance of Certification. –
following are the criteria for the issuance of
DA certification: The Certification may be issued, except for
areas identified above, under the following
(a) Cereals that can be used both for food conditions:
and for biofuel production such as, but
not limited to, corn and wheat, shall not (a) Compliance with the SRA and PCA policy
be used for biofuel production; guidelines, as approved by DA, for the
utilization of sugarcane and coconut
(b) The land to be used shall be consistent areas, and DA policy guidelines for the
with the natural expansion of the utilization of all other existing feedstock
municipality or locality, as contained areas;
in the approved physical framework
and land use plan by the concerned (b) The areas are evaluated by DA to be
municipality or locality; underutilized and marginal; and
(c) The area that will be used is not the only (c) The proposed project is supportive to
remaining food production area of the agro-industrial development, and will
community; generate additional and alternative
livelihood opportunities for the affected
(d) All agricultural areas classified hereunder community.
shall not be utilized for biofuel feedstock
production: SEC. 4.3. Scope and Coverage. –
(1) All areas covered by government- As used in this Section, an Independent

funded irrigation facilities, either Biofuel Feedstock Producer shall refer to
national agency or LGU, designed a Biofuel Feedstock Producer who has no
marketing or supply agreement with a Biofuel (1) Sells biofuels to Oil Companies; and
Producer. (2) Sells directly to the end users (for
bio-diesel);
(a) Only an Independent Biofuel Feedstock
Producer with an effective area (b) Biofuel Distributor
exceeding twenty five (25) hectares,
either contiguous or fragmented, shall be Community-based Biofuel Producers and/
required to obtain a DA Certification. or individuals who produce biofuels for their
own direct uses are exempt from securing
(b) An Independent Biofuel Feedstock a Certificate of Accreditation: Provided,
Producer whose effective area is twenty however, That Community-based Biofuel
five (25) hectares or less is exempted Producers and/or individuals who sell their
from securing the DA Certification. products commercially are required to secure
a Certificate of Accreditation from the DOE.
(c) A Biofuel Feedstock Producer who has
a marketing or supply agreement with SEC. 2. Requirements for Registration of
a Biofuel Producer shall not be required Biofuel Producers With the DOE. –
to secure the DA Certification; Provided,
that the Biofuel Producer shall secure the The DOE shall issue a Certificate of
DA Certification as provided in Chapter Registration with Notice to Proceed with the
III, Section 2.4 of this Guidelines. construction of the facilities upon complete
and satisfactory submission of the following:
SEC. 4.4. Documentary Requirements. –
(a) Duly accomplished DOE application form;
The following documents and information are
required to be submitted by the Applicant: (b) Proof of payment of filing fees;
(a) Feasibility Study; (c) Registration with the Securities and

Exchange Commission (SEC), Philippine
(b) List of Biofuel Feedstock supplier(s); and Economic Zone Authority (PEZA),
Cooperative Development Authority
(c) One (1) copy each of geo-referenced (CDA) and/or the DTI, as applicable;
map, vicinity map, and lot plan showing
the feedstock production areas duly (d) Certification Precondition from NCIP for
certified by the LGU. ancestral domains/lands, as applicable.

CHAPTER III (e) Feasibility Study demonstrating the
BIOFUEL PRODUCER, DISTRIBUTOR, technical, economic and ecological
AND SELLER viability of biofuel production and
Construction/Work Plan;
SECTION 1. Certificate of Registration and
Accreditation. – (f) Developer’s Profile;
An Applicant shall secure a Certificate of (g) Letter of Intent to supply a volume of

Registration and Accreditation from the DOE biofuel;
prior to production, distribution, and sale of
biofuel. This shall apply to the following: (h) DA Certification as specified in Chapter II
of this Guidelines;
(a) Biofuel Producer that:

(i) SRA or PCA Registration, as applicable; SEC. 2.1.3. Documentary Requirements. –
(j) Special Forest Land-Use Agreement from For purposes of securing the Certification
DENR if the site is within untenured Precondition under Sections 2.1.1 and 2.1.2
forest lands, as per existing rules and hereof, the following documents are required
regulations; to be submitted by the Applicant:
(k) CARP Exemption based on HLURB (a) Endorsement from the DENR;
certification that the land was classified
prior to June 15, 1988 or DAR Land Use (b) Project Profile of the Applicant; and
Conversion, as applicable;
(c) Operational Plan.
(l) ECC from DENR; and
For the above purpose, NCIP Administrative
(m) LGU Clearance and Locational Clearance. Order No. 1, Series of 2006, is hereby adopted
as an integral part of this Guidelines (Annex
The Certificate of Registration with Notice “C”).
to Proceed shall automatically be revoked
upon failure to commence construction of SEC. 2.2. Issuance of ECC by DENR for Biofuel
the facilities within two (2) years from the Production. –
issuance thereof.
An Applicant who shall engage in the
SEC. 2.1. Certification Precondition. – production of biofuels shall secure an ECC
from the DENR-EMB Regional Office. The
An Applicant shall secure a Certificate of Non- issuance thereof shall be subject to the
Overlap or Certificate of Compliance from the following guidelines:
NCIP, subject to the following guidelines:
(a) For Biofuel Processing Plants with annual
SEC. 2.1.1. If the Proposed Site is Outside the production capacity of equal to or less
Ancestral Domain/Land. – than one hundred fifty (150) million liters
(< 150 million liters) per year, an Initial
If the proposed site for the project is outside Environmental Examination (IEE) or IEE
the ancestral domain/land of the ICCs/IPs, a Checklist is required prior to the issuance
Certificate of Non-Overlap shall be secured of ECC; and
by the Applicant, which shall be signed by
the concerned NCIP Regional Director after a (b) For Biofuel Processing Plants with annual
field-based investigation. production capacity of more than one
hundred fifty (>150) million liters per
SEC. 2.1.2. If the Proposed Site is Within or year, an Environmental Impact Statement
Overlaps the Ancestral Domain/Land. – (EIS) is required prior to the issuance of
ECC.
(a) An Applicant shall secure the Free and
Prior Informed Written Consent if the For the above purpose, DENR Administrative
area to be covered by the project is Order No. 30, Series of 2003 and DENR
located within or overlaps the ancestral Memorandum Circular No. 2007-08,
domain/land of the ICCs/IPs. whenever applicable is hereby adopted as an
integral part of these Guidelines (Annex “A”
(b) After securing the FPIC, an Applicant shall and “B”, respectively).
secure a Certificate of Compliance from
the NCIP Head Office.
SEC. 2.3. DAR Conversion of Agricultural (m) Lot plan; and
Lands to Biofuel Production Site. –
(n) Maps:
The following documents and information (1) Vicinity Map;
are required to be submitted by an Applicant (2) Directional Sketch Map; and
to DAR for purposes of converting land from (3) Topographic Map, as applicable.
agricultural to biofuel production site:
For the above purpose of converting the use
(a) Proof of payment of filing fees and of an agricultural land from agricultural to
inspection costs; biofuel production site, DAR Administrative
Order No. 1, Series of 2002, as amended, in
(b) Posting of performance bond; all aspect not inconsistent herewith, is hereby
adopted as an integral part of this Guidelines
(c) Sworn application for conversion; (Annex “D”).

(d) Proof of land ownership or proof of right SEC. 2.4. DA Certification. –
over the land (e. g., Transfer Certificate of
Title, tax declaration, lease agreement, All Biofuel Producers shall declare their
if applicant is Farmer Beneficiary under proposed source of feedstock for evaluation
the Comprehensive Agrarian Reform Law of DA if the proposed biofuel feedstock
(CARP), a certification from LBP/PARO); production area is compliant with the
prescribed criteria as specified in Chapter
(e) DA certification as provided in Chapter II, II, Section 4.1 of these Guidelines. The DA
Section 2.4 of these Guidelines; shall subsequently issue a certification to that
effect.
(f) Feasibility Study containing, among
others, the Applicant’s financial A Biofuel Producer who shall have new
and organizational capability, and biofuel feedstocks producer-supplier, or new
development plan; feedstock production areas, is required to
submit to the DA the list of its new feedstock
(g) Joint venture agreements and other producer-supplier or new feedstock
similar arrangements; production areas for evaluation based on
the criteria as specified in Chapter II, Section
(h) Photographs of the property; 4.1 of these Guidelines. Moreover, every
Biofuel Producer shall declare his/her biofuel
(i) Affidavit of Undertaking, as provided feedstocks producer-supplier and the location
under DAR Administrative Order No. 1, of the feedstock production area.
Series of 2002, as amended;
A Biofuels Producer or Biofuel Blend Producer
(j) MARO Certification as provided under who shall have agricultural lands as biofuels
DAR Administration Order No. 1, Series and biofuel blend production site is required
of 2002, as amended; to apply with the DA Technical Committee on
Land Use Matters (NTECLUM) for the purpose
(k) Notice of LUC Application as provided of securing the DA Certification of Eligibility
under DAR Administrative Order No. 1, for Reclassification of Agricultural Lands as
Series of 2002, as amended; a requirement of the DAR. The following
information and documents are required:
(l) HLURB Certification or Sangguniang
Panlalawigan Resolution, as the case may (a) Notarized Sworn Declaration of
be; Application for Land Use Reclassification;
(b) Proof of ownership of land e.g., photocopy Working Group (RLUTWG) Inspection
of OCT/TCT and/or other documents Team;
establishing ownership, duly certified by
the Register of Deeds not later than thirty (h) Certification from the NIA (for areas of 5
(30) days prior to filing. If at the time of hectares and above, to be signed by the
application the landholding is an untitled Regional Irrigation Manager);
agricultural land, the following shall be
required, in lieu of the OCT/TCT: (i) Certification from the SRA, as applicable;
(i) Certification of the DENR Community (j) Certification from the PCA, as applicable;
Environment and Natural Resources
Officer (CENRO) that the landholding (k) Certification from the Fiber Industry
has been classified as alienable and Development Authority, as applicable;
disposable;
(l) Certification from the Bureau of Fisheries
(ii) Certification of the DENR CENRO and Aquatic Resources, as applicable;
(for administrative confirmation
of imperfect title) or the Clerk of (m) Field Inspection Report by the DA-
Court of regular courts (for judicial RLUTWG.
confirmation of imperfect title)
that the titling process/proceeding SEC. 3. Certificate of Accreditation from DOE.
has commenced, and there are no –
adverse claimants;
The DOE shall issue a Certificate of
(iii) If the land title has any encumbrances Accreditation prior to commercial operations
or mortgages, a certification by upon the submission and compliance with
the lending institution/mortgagee the following:
that he has no objection to the
application, is required. (a) Rated production capacity in million liters
per year;
(c) Special Power of Attorney (if the
Petitioner is other than the owner of (b) Certificate of Fuel Additive Registration
the land) or Board Resolution (with from the DOE for biofuels, as applicable;
the signature of the members) if the
landowner is a Corporation; (c) Completion of DOE’s inspection of the
facilities and on-site sample taking of the
(d) Map of the Area/Parcellary Map biofuels produced;
prepared by a licensed geodetic engineer
indicating the Name of Owner, Title No., (d) Product compliance with the PNS;
and Lot Area;
(e) Distribution networks and authorized
(e) Location Map with sufficient reference distributors, if any; and
points for proper identification of lot/s
applied for; (f) Program of quality management system.
(f) Zoning Certification from HLURB; The Certificate of Accreditation shall be valid
for a period of five (5) years, unless earlier
(g) Photographs of the area (Size: 5R) with revoked or suspended as provided in this
captions duly certified by a member Guidelines.
of the DA-Regional Land Use Technical
SEC. 3.1. Renewal of Certificate of An accredited Biofuel Producer shall be
Accreditation. – required to submit the following reports and
documents to the DOE:
The Certificate of Accreditation may be
renewed every five (5) years, subject to (a)
Monthly accomplishment reports
compliance with the minimum requirements which shall include, among others, the
as provided by this Guidelines, pertinent following:
laws, rules and regulations, and other
DOE issuances. The following documents (1) Actual monthly biofuel production,
shall be submitted for the renewal of this sales and inventory report;
Accreditation:
(2) Projected monthly biofuel
(a) Proof of payment of renewal fee; production, sales and inventory
report;
(b) Compilation of DOE’s inspection of the
facilities and on-site sample-taking of the (3) Safety and accident reports, if
biofuels produced; applicable;
(c) Proof of compliance with PNS; (4) Reports on product analysis in

compliance with the PNS;
(d) BIR tax clearance for the immediately
preceding year; (5) Feedstock production reports and
technology enhancements, if any;
(e) Updated distribution networks and
authorized distributors; and (6) Biofuel Supply Contract with oil
company and other end uses or
(f) Updated local government licenses and Sworn Sales Report;
permits.
(7) Updated list of distributors; and
SEC. 3.2. Amendment of Certificate of
Accreditation. – (8) Updated feedstock supplier.
The Biofuel Producer shall send a Letter- (b) Annual local government licenses and
request to DOE for the amendment of the permits; and
Certificate of Accreditation, thirty (30) days
prior to the intended amendment, if any of (c) Any and all data, information and reports
the following is attendant: which may be required by the NBB, the
DOE, or any other government regulating
(a) Increase or decrease of production agencies. For this purpose, the DOE shall
capacity; formulate a standard and harmonized
(b) Change in the process flow, technology reporting system for the purpose of
or feedstock to be used for the biofuel consolidating and harmonizing all
production; and the reportorial requirements of the
regulating agencies concerned.
(c) Change in the ownership of the biofuel
production project. SEC. 5. Registration of a Distributor With the
DOE. –
SEC. 4. Reportorial Requirements and Other
Submissions for Biofuel Producers. – An Applicant shall register with the DOE
for the distribution of the biofuels. The
Certificate of Registration shall be issued by allow exportation in the event that there
the DOE upon submission and compliance is excess of supply of biofuels for domestic
with the following: consumption.
(a) Registration with the SEC and/or the DTI; The following documents and information
are required to be submitted by the Biofuel
(b) Business and Mayor’s permit; Producer:
(c) Certification by an accredited Biofuel (a) Product type and volume to be exported
Producer as its duly authorized distributor and cost of product shipment;
for a particular biofuel product;
(b) Country of destination;
(d) Proof of compliance with PNS; and
(c) Percentage of volume to be exported to
(e) Registration certificates, certifications plant’s current production capacity; and
and other clearances as may be required
by other government entities. (d) Payment of appropriate application of
processing fees per shipment; and
The Certificate of Registration shall be
renewed annually subject to compliance with (e) Export clearance from PCA, SRA, and
the minimum requirements as provided for other appropriate regulatory agency
by this Guidelines, pertinent laws, rules and for coconut-based, sugarcane/sugar/
regulations and other DOE issuances. molasses-based biofuels and other
biofuels, respectively.
Upon registration, the authorized Biofuel
Distributor shall submit to the DOE, through CHAPTER IV
the EUMB, monthly accomplishment reports OIL COMPANIES
that shall include among others, monthly
biofuel sales and inventory of biofuels. SECTION 1. Responsibilities of Oil Companies.
–
SEC. 6. Issuance of Receipts. –
All Oil Companies shall undertake the blending
All transactions involving the production, of biodiesel and bioethanol with diesel and
distribution and sale of biofuels must be gasoline, respectively, using appropriate
evidenced by an official receipt bearing the blending methodologies at their respective
name address of the Biofuel Producer, and refineries, depots or blending facilities within
Distributor and indicating the quantity and the period required in Section 5 of the Act
price of the biofuel product sold, the date of and Section 5 of the IRR, and shall ensure
the transactions and such other information that the biofuel blends comply with the PNS
required under existing laws and rules on set forth under the pertinent rules in addition
national internal revenue. Duplicate copies to quality/property requirements provided
of official receipts shall be made available for under pertinent laws or guidelines applicable
verification by DOE inspectors/personnel. to petroleum and/or petroleum products.
SEC. 7. Permit to Export Biofuels. – An oil company shall source its biofuels only
from Biofuel Producers accredited by the DOE
Prior to each exportation of the biofuels, the or from Biofuel Distributors registered with
Biofuel Producer and/or Biofuel Distributor the DOE. Unless otherwise authorized by the
shall submit to the DOE a written application DOE to import in case of shortage of supply of
to export: Provided, That the DOE shall only
locally-produced bioethanol as provided for biofuels; and
under Section 5.2 of the Act, an oil company’s
failure to source its biofuels from accredited (4) Imports. Names and addresses of
Biofuel Producers and/or registered Biofuel foreign suppliers, dates, volume
Distributors is a prohibited act under this and price of actual importation
Guidelines and shall be subjected to the of Bioethanol, as applicable (for
sanctions provided herein. verification against the Notices of
Importation).
In the event that an oil company’s retail
stations, carrying its name, company- SEC. 3. Issuance of Receipts. –
operated, dealer-owned, and/or dealer
owned, are found to be selling biofuel blends All transactions involving the sale of biofuel
that do not conform with the PNS, the oil blends must be evidenced by an official
company shall be equally responsible with receipt bearing the name and address of
such retail stations for the violation of this the Oil Company and indicating the quantity
Guidelines. and price of biofuel sold, the date of the
transactions and such other information
SEC. 2. Reportorial Requirements for Oil required under existing laws and rules on
Companies. – national internal revenue. Duplicate copies
of official receipts shall be made available for
Every oil company shall submit to the DOE the verification by DOE Inspectors/personnel.
following:
SEC. 4. Importation of Bioethanol by Oil
(a) Within the month of January every year, Companies. –
Performance Compliance Report of the
prior year containing its compliance In the event of supply shortage of locally-
plan with the minimum biofuel blends, produced Bioethanol during the four-year
as well as other information that may period provided under Section 5.2 of the Act,
be required by the DOE. Such report an Oil Company may apply for the issuance of
shall be duly certified and signed by an a certification to import bioethanol from the
authorized responsible officer of the oil DOE-OIMB, Provided, that the NBB certifies
company. the shortage of bioethanol in the country.
For this purpose, DOE Department Circular
(b) Periodic reports as may be required by No. DC 2006-08-0011 is hereby adopted as
the DOE, including the following: an integral part of this Guidelines and hereby
attached as Annex “E”.
(1) Local Purchases Report/Receiving
Reports. On a per supplier basis, the SEC. 5. Local Purchases of Denatured
names and addresses of the suppliers Bioethanol by Oil Companies. –
of biofuels;
Consistent with the reportorial requirements
(2) Sales Reports/Removal Reports. The of DOE, an Oil Company shall report and file
names and addresses of customers/ a Notice to the DOE-OIMB for every purchase
consignees, the volume of biofuels of locally-produced denature bioethanol for
sold/transferred and volume thereof; the proper monitoring of quality standards
and the volume of bioethanol actually sold
(3) Inventory Summary Reports. On a and distributed. Further, such purchases of
per company basis, the inventory denatured bioethanol shall be sourced from a
stocks including in-transit volume of DOE accredited Biofuel Producer.

CHAPTER V government agencies for at least one year
ONE-STOP SHOP upon the effectivity of this Guidelines or until
such time the NBB Technical Secretariat has
SECTION 1. Creation of One-Stop Shop. – developed or gained the necessary expertise
on the functions of the One-Stop Shop.
A One-Stop Shop under the supervision of the
NBB is hereby created. The One-Stop Shop CHAPTER VI
shall: SOCIAL AMELIORATION
AND WELFARE PROGRAM
(a) Accept, screen and undertake preliminary
evaluation of the applications for SECTION 1. Benefits of Biofuel Workers. –
feedstock production, biofuels and biofuel
blends production and distribution; Pursuant to Section 17 of the Act, R.A. No.
6892 or the Sugar Amelioration Act of 1991
(b) Assist in the processing of applications and its Implementing Rules and Regulations
and forward the same to the concerned are hereby made as integral parts of this
government agency(ies) in securing Guidelines and hereby attached as Annexes
the necessary certificates, licenses “F” and “G”.
and permits: Provided, that any
application which involves issuances and SEC. 2. Social Amelioration and Welfare
certifications from the DA, DAR, DENR, Program for Biofuel Workers. –
and NCIP shall be transmitted also to the
DA-DAR-DENR Convergence Initiative Pursuant to Sections 11 (e) and 17 of the Act,
Technical Secretariat for facilitation and and per authority granted by the NBB, the
monitoring. The DA, DAR, and DENR DOLE, shall be the implementing agency for
are currently undertaking convergence the development and management of the
efforts which primarily focus on Social Amelioration and Welfare Program of
development of idle lands for agricultural Biofuel Workers, and in consultation with
purposes; concerned government agencies and other
stakeholders, shall lead in the formulation of
(c) Coordinate and liaise with the concerned appropriate policies and guidelines governing
government agency on the status of the the mechanisms, management, and
said applications; and monitoring of the Social Amelioration and
Welfare Program (SAWP) for biofuel workers.
(d) Collect the applicable fees, including
facilitation fee. Considering the peculiarities of the
technological aspects, and institutional
SEC. 2. Rules and Regulations Governing the arrangements and systems in the biofuel
Operations of the One-Stop Shop. – feedstocks production, and biofuels
production, distribution and sale, separate
The NBB is hereby empowered to promulgate and specific SAWP guidelines shall be
the necessary rules and regulations governing formulated and issued for the workers in
the operations of the One-Stop Shop. each biofuel feedstock. All guidelines to be
formulated and issued by DOLE relative to
SEC. 3. Staffing. – the implementation of the SAWP for biofuel
workers are hereby made integral part(s) of
The One-Stop Shop shall be manned by this Guidelines.
duly designated staff of the concerned

CHAPTER VII (a) Diversion of biofuels, whether locally
FUNCTIONS OF OTHER GOVERNMENT produced or imported, for purposes
AGENCIES other than those stated in the Act, the
IRR, this Guidelines, the Certificate of
In addition to the functions of the concerned Accreditation, and any other legislation
government agencies as specified in the or administrative issuances that may be
Act, its IRR, and other existing and pertinent subsequently promulgated.
laws, the DOST, DA and its attached agencies,
DENR-PFC and the PNOC-AFC are hereby (b) Sale of biofuel and biofuel blends which
tasked to identify, develop and propagate the fail to conform with the PNS. A person
biofuel feedstocks to be used in the country. or entity that commits this prohibited act
shall be guilty of the act of Adulteration.
In the case of Jatropha and other biofuel The possession of biofuel blend which
feedstocks, the primary regulatory agency does not conform to the PNS shall prima
shall be the DA or its designated unit under facie constitute Adulteration.
the Department.
(c) Distribution, sale and/or use of
For the development and production of non- automotive fuel containing harmful
land based biofuel feedstocks or feedstocks additives such as, but not limited to,
not derived from agricultural and agro- MTBE at such concentration exceeding
forestry products and residues, the DOST or the limits to be determined by the NBB
its designated unit shall be the coordinating or the DOE;
agency.
(d) Refusal to sell biofuel and/or biofuel
The Agribusiness Lands Investment Center, blends shortly before a price increase or
under the management of the Philippine in times of tight supply thereof; where
Agricultural Development and Commercial the buyer or end-user has the ability
Corporation (PADCC) of the DA, shall be a to pay for the product; and/or undue
member of the DA Evaluation Team tasked accumulation of biofuel and/or biofuel
with the identification and validation of blends in times of tight supply or shortly
biofuel feedstock production areas. before a price increase. A person or
entity who commits this prohibited act
The NBB shall be the repository of data and shall be guilty of Hoarding.
information on the biofuels industry and the
concerned government agencies are hereby For the purpose of this Guidelines,
tasked to forward such data and information “undue accumulation” means to keep
to the NBB. or stock quantities of biofuel products
beyond inventory levels as determined
CHAPTER VIII by the DOE, for a period of thirty (30)
PROHIBITED ACTS AND SANCTIONS days immediately preceding the period
of tight supply or price increase.
SECTION 1. Prohibited Acts. –
(e) Production, distribution and/or sale of
A fine of Two Hundred Thousand Pesos biofuels without having been issued the
(P 200,000.00) for each violation shall be requisite Certificate of Accreditation/
imposed by the DOE upon any person or Registration;
entity that has been found to have committed
any of the following acts: (f) Distribution, sale and/or delivery of
gasoline, diesel, biofuels, and biofuel-

blended gasoline and diesel with false (b) Failure to provide copies of official
or incorrect labels or information, receipts when so required by the DOE
or without the appropriate labels or inspectors/personnel shall be penalized
information such as DOE CFAR batch with a fine of Fifty Thousand Pesos (P
manufacturing date, expiry date and such 50,000.00);
other label or information that the DOE
shall subsequently require; and (c) Failure to issue a Certificate of Quality
accompanying the delivered biofuels
(g) An Oil Company’s failure to source its and/or biofuel blends shall be penalized
biofuels from other than accredited with a fine of Fifty Thousand Pesos (P
Biofuel Producers or registered Biofuels 50,000.00). All biofuels and biofuel
Distributors. blends deliveries must be accompanied
by a Certificate of Quality to be issued by
The DOE shall likewise cause the cessation of the Biofuel Producer, Distributor or Seller
the operation of such business found to have indicating the properties of the delivered
committed a prohibited act upon compliance biofuels and biofuel blends, and to the
with the administrative procedures provided effect that the delivered products are in
under Section 36 of the Act’s IRR. The DOE compliance with the PNS; and
may subsequently issue an order to authorize
resumption of the operation of the business (d) Refusal to allow inspection by the DOE
of the violator upon proper showing, with or other concerned government agency
sufficient proof and to the satisfaction of the shall be penalized with a fine of Fifty
DOE, that necessary corrective measures have Thousand Pesos (P 50,000.00). The DOE
been applied and dully effected, and after or other concerned government agency
full payment of the said fines. An additional shall have the right to enter, within
fine of Ten Thousand Pesos (P 10,000.00) per reasonable hours of the day, a plant or any
day shall be imposed in case such person distribution or retail station to conduct
continues to operate after an Order or Notice actual inspection and product sampling.
of cessation of operation of business has Any person or entity that refuses to allow
been issued by the DOE. access or entry of authorized inspectors
from the DOE after proper presentation of
Provided, That a fine of Three Hundred reasonable identification papers shall be
Thousand Pesos (P 300,000.00) shall be subject to the sanctions herein provided
imposed against a person or entity who is and such refusal to allow access or entry
found to have committed the same prohibited shall furthermore constitute prima facie
act for the second time and shall be a ground evidence of the prohibited acts under
for revocation of the Accreditation granted to Section 1 (a, b, c, d, and e) above, against
such person. the entity refusing such access.

SEC. 2. Other Prohibited Acts. – (e) Violation of the criteria for utilization of
land as provided under Chapter II, Section
The following acts are likewise prohibited 4 of this Guidelines, after the Certificate
under these Guidelines: of Accreditation has been issued shall be
penalized with a fine of Fifty Thousand
(a) Exportation of biofuels and biofuel Pesos (P 50,000.00) and shall be the
blends without the permit to export from cause of revocation of the Certificate of
the DOE shall be penalized with a fine of Accreditation.
Fifty Thousand Pesos (P 50,000.00).
Provided, That a fine of One Hundred
Thousand Pesos (P 100,000.00) shall be
imposed against a person or entity that is SEC. 5. Issuance of Notice and Warning. –
found to have committed the same prohibited
act for the second time. The DOE shall The penalty provided in the preceding sections
further order the immediate cessation of shall be imposed only after compliance with
the operation of the business of such person the administrative procedures under Section
found to have committed any of the above 36 of the Act’s IRR.
mentioned prohibited acts, upon compliance
with the administrative procedures provided SEC. 6. Criminal Liability. –
under Section 36 of the Act’s IRR. The DOE
may subsequently issue an order to authorize The imposition of any administrative sanction
resumption of the operation of the business is without prejudice to any criminal action
of the violator upon proper showing, with that may be filed, if warranted, under Section
sufficient proof and to the satisfaction of the 13 of the Act, IRR, existing laws, rules and
DOE, that necessary corrective measures regulations.
have been applied and duly effected, and
after full payment of the said fines. An CHAPTER IX
additional fine of Ten Thousand Pesos (P FINAL PROVISIONS
10,000.00) per day shall be imposed in case
such person continues to operate after an SECTION 1. Transition Period. –
Order of cessation of operation of business
has been issued by the DOE. The validity of all accreditations and
provisional registrations issued by DOE
A fine of Two Hundred Thousand Pesos pursuant to Memorandum Circular No. 55
(P200,000.00) shall be imposed against a shall automatically expire six (6) months
person who is found to have committed the after the effectivity of this Guidelines.
same prohibited act for the third time and such Biofuel Producers accredited or registered
violation shall be a ground for the revocation provisionally under the said memorandum
of the Accreditation or Registration granted circular shall be required to submit the
to such person. following to the DOE, in addition to the
requirements under Chapter III, Section 3
SEC. 3. Confiscation of Biofuel Products. – of this Guidelines, for the issuance of a new
Certificate of Accreditation:
In addition to the sanctions provided above,
the products that fail to comply with the (a) Letter of Intent to supply a volume of
requirements under Sections 4 and 5 of the biofuel or biofuel blends; and
Act, shall be confiscated under Section 13
of the Act. The DOE shall determine the (b) Certification from the DA on feedstock
appropriate process and manner of disposal supply and land use as specified in
and utilization of the confiscated products. Chapter II of this Guidelines.

SEC. 4. Non-Compliance with Registration SEC. 2. Interpretation of these Guidelines. –
and Reportorial Requirements. –
In the event that a conflict arises in the
A penalty of Two Hundred Thousand Pesos interpretation of this Guidelines, it shall be
(P200,000.00) plus Ten Thousand Pesos liberally construed by the concerned agencies
(P10,000.00) a day shall be imposed upon in favor of the Biofuel Feedstock Producer,
any person who fails, without any justifiable Biofuel and Biofuel Blends Producer,
reason, to submit documents required to be Distributor and Seller.
submitted under the Guidelines.

SEC. 3. Amendments. – NASSER C. PANGANDAMAN
Secretary
Amendment/s to any part of this Guidelines Department of Agrarian Reform
and to the pertinent parts of the Department
orders, circulars, memoranda or other ARTHUR C. YAP
issuances which were made part as Annexes Secretary
of this Guidelines shall be done through a Department of Agriculture
consultation of the concerned agencies and
stakeholders and concurrence of the majority
JOSE L. ATIENZA, JR.
of the signatories herein.
Secretary

Department of Environment
SEC. 4. Separability Clause. –
and Natural Resources

If, for any reason, any section or provision of
this Guidelines is declared unconstitutional or MARGARITO B. TEVES
invalid, such parts not affected shall continue Secretary
to remain in full force and effect. Department of Finance

SEC. 5. Suppletory Provisions. – MARIANITO D. ROQUE
Secretary
The DOE, in consultation with the concerned Department of Labor and Employment
agencies and the biofuel sector, is hereby
authorized to promulgate rules, suppletory in
character, for the proper implementation of ESTRELLA F. ALABASTRO
this Guidelines. Secretary
Department of Science and Technology
SEC. 6. Repealing Clause. –
PETER B. FAVILA
Department orders, circulars and other Secretary
issuances of the concerned departments and Department of Trade and Industry
other government agencies not consistent
with this Guidelines are hereby deemed LEANDRO R. MENDOZA
repealed or amended accordingly. Secretary
SEC. 7. Effectivity. – Communications

This Guidelines shall take effect fifteen (15)
days after its publication in a newspaper of EUGENIO A. INSIGNE
general circulation. Chairman
National Commission on Indigenous Peoples
Issued in Taguig City, Metro Manila, this 8th
day of October, 2008. OSCAR G. GARIN
Administrator
Philippine Coconut Authority
ANGELO T. REYES
Secretary RAPHAEL L. COSCOLLUELA
Department of Energy and Administrator
Concurrent Chairman Sugar Regulatory Adminstration and
National Biofuels Board Vice-Chairman
National Biofuels Board

IMPLEMENTING THE PHILIPPINE NATIONAL STANDARD SPECIFICATION FOR BIODIESEL AND

BIOFUEL BLENDS PURSUANT TO REPUBLIC ACT NO. 9367, OTHERWISE KNOWN AS THE “BIOFUELS
ACT OF 2006”
WHEREAS, Republic Act (R.A.) No. 7638, PNS/DOE QS 2020:2003 – Coconut Methyl
“An Act Creating the Department of Energy Ester (B100) Specification
(DOE)”, tasks the DOE to formulate rules and
regulations as may be necessary to guide the PNS/DOE QS 007:2005 – Anhydrous
operations of both government and private Bioethanol Fuel Specification
entities involved in energy resource supply
and distribution; PNS/DOE QS 008:2006 – E-Gasoline Fuel
Specification
WHEREAS, Republic Act No. 8749, otherwise
known as the “Philippine Clean Air Act of PNS/DOE QS 004:2007 – FAME-blended
1999”, directs the DOE, together with the Diesel Oils Specification
Department of Environment and Natural
Resources (DENR), Bureau of Product WHEREAS, subsequently PNS/DOE QS
Standards (BPS), and Department of 002:2007 was promulgated to supersede
Science and Technology (DOST) and other PNS/DOE QS 2020:2003 as the latest revision
stakeholders, to set specifications for all types of quality standard specification for Coconut
of fuel and fuel-related products and improve Methyl Ester (CME);
fuel composition;
NOW, THEREFORE, the following guidelines
WHEREAS, Republic Act No. 9367, otherwise are hereby adopted to effectively implement
known as the “Biofuels Act of 2006”, mandates the Philippine National Standard for Coconut
the use of biofuels to reduce dependence Methyl Ester (B100):
on imported fuels with due regard to the
protection of public health, the environment (1) Starting on the effectivity of the
and natural ecosystems consistent with the Department Circular, only CME
country’s sustainable economic growth that conforming to PNS/DOE QS 002:2007
would expand opportunities for livelihood; shall be manufactured, sold, offered
for sale, dispensed, or introduced into
WHEREAS, Republic Act No. 9367 mandates commerce as Biodiesel in the Philippines;
a minimum blend of biodiesel to diesel by
volume respectively, provided, that the (2) Only Fatty Acid Methyl Ester (FAME)-
biofuel blend conforms to the Philippine blended diesel conforming to PNS/DOE
National Standard (PNS); QS 004:2007 shall qualify under the
National Biofuels Program;
WHEREAS, Department Circular No. DC
2007-05-0006, providing for the “Rules and (3) Accordingly, only FAME-blended diesel
Regulations Implementing Republic Act No. conforming to PNS/DOE QS 004:2007
9367”, and which took effect on June 8, 2007, shall be allowed to be blended into
instituted among others, the following PNS base diesel and sold at the retail outlets
for biofuels: (gasoline stations).


(4) In order to protect against adulterated otherwise known as the Downstream
or off-specification products, it shall be Oil Industry Deregulation Act of 1998.
the responsibility of the operator of the Said acknowledged product importation
Retail Outlet or oil company to require shall be subject to proper blending with
his product supplier to provide a quality the biodiesel component prior to use or
certification for every product delivery commercial sale.
made prior to blending with base diesel.
(7) Any person who shall commit any of
(5) To ensure the integrity of the products the prohibited acts enumerated in RA
for retail, the Retail Outlet operator shall 9367, this issuance and other issuances
adhere to good housekeeping protocol relative to the implementation of the Act
particularly with regard to handling, and in pursuance of the mandate of the
storage and dispensing of biofuel blends. DOE, shall be subject to criminal and/
Correspondingly, the Oil Companies or administrative action, in accordance
shall ensure that their retail outlets and with existing DOE rules and regulations
other customers are properly trained and or any subsequent rules and regulations
equipped to handle, store and dispense or guidelines that shall be issued by the
biofuel blends. DOE.

(6) Only qualified entities as determined This Department Circular shall take effect
by the DOE shall be allowed to import immediately following its publication in any
unblended or base diesel either for newspaper of general circulation and shall
own use or commercial purposes. In remain in effect unless otherwise revoked or
order to qualify, said entities shall, amended.
prior to any importation, submit to the
DOE a certification that they have the Fort Bonifacio, Taguig City, Metro Manila.
capability and capacity to blend imported June 10, 2008.
unblended or base diesel with the
required biofuel component. In addition,
such entities shall fully comply with the ANGELO T. REYES
Notice and Reportorial Requirements Secretary
provided under Republic Act No. 8479,

MANDATING A MINIMUM OF 2% BLEND OF BIODIESEL IN ALL DIESEL AND 5% BIOETHANOL IN

ANNUAL TOTAL VOLUME OF GASOLINE
WHEREAS, Section 5.1 of Republic Act No. WHEREAS, in a resolution dated January 19,
9367 or the “Biofuel Act of 2006” mandates 2009, the NBB recommended to the DOE
that, “Within two years from the effectivity of the implementation of the two percent (2%)
this Act, at least five percent (5%) bioethanol blend (B2) for diesel;
shall comprise the annual total volume of
gasoline fuel actually sold and distributed by NOW, THEREFORE, in consideration of the
each and every oil company in the country, foregoing, all entities that distribute and
subject to the requirement that all bioethanol sell petroleum fuel products are required to
blended gasoline shall contain a minimum of implement the following minimum biofuel
five percent (5%) bioethanol fuel by volume. blends by February 6, 2009, with specifications
Provided, that the ethanol blend conforms to pursuant to the Philippine National Standards
PNS.”; (PNS) for B2, and conventional gasoline and
E10 grades:
WHEREAS, Section 5.3, paragraph 2 of
Republic Act No. 9367 states, “Within two c. At least five percent (5%) bioethanol in
years from the effectivity of this Act, the the annual total volume of gasoline fuel
NBB created under this Act, is empowered actually sold and distributed by each and
to determine the feasibility and thereafter every oil company in the country;
recommend to DOE to mandate a minimum
of two percent (2%) blend of biodiesel by At least two percent (2%) blend of biodiesel
volume which may be increased taking into by volume.
account considerations including but not
limited to domestic supply and availability of This Circular shall take effect immediately.
locally-sourced biodiesel component.”
Signed this ______ day of February 2009 at
the DOE, Energy Center, Merritt Road, Fort
WHEREAS, on January 19, 2009, the National Bonifacio, Taguig City, Metro Manila.
Biofuels Board (NBB) established the viability
of implementing the minimum blend of two
percent (2%) for biodiesel sold and distributed (Sgd)
by every oil company; ANGELO T. REYES
Secretary

Chapter 5
MEMORANDUM CIRCULAR NO. 55

DIRECTING ALL DEPARTMENTS BUREAUS, OFFICES AND INSTRUMENTALITIES OF THE GOVERNMENT,
INCLUDING GOVERNMENT-OWNED AND CONTROLLED CORPORATIONS TO INCORPORATE THE USE
OF ONE PERCENT (1%) BY VOLUME COCONUT METHYL ESTER IN THEIR DIESEL REQUIREMENTS
WHEREAS, under Section 2 (a) of R.A. No. WHEREAS, the World-wide Fuel Charter
7638, known as the “Department of Energy states that based on the technical effects
Act of 1992”, it is declared the policy of the of fatty acid methyl esters (FAME), which
State to ensure a continuous, adequate and include CME, “... it is strongly advised the
economic supply of energy with the end in FAME content be restricted to less than or at
view of ultimately achieving self-reliance in five percent (5%).”
the country’s energy requirements through
the integrated and intensive exploration, WHEREAS, the use of CME in the petroleum
production, management and development industry will create a new and significant
of the country’s indigenous energy resources, application for coconut oil and reinvigorate
without sacrificing ecological concerns; the Philippine coconut industry through
the creation of a new domestic market and
WHEREAS, under Sections 2 and 4 (a) of R.A. increased productivity, thereby improving the
No. 8749, known as “The Philippine Clean Air lives of coconut farmers.
Act (PCAA) of 1999”, it is declared the policy
of the State to protect and advance the right NOW, THEREFORE, I, GLORIA MACAPAGAL-
of the people to a balanced and healthful ARROYO, President of the Republic of the
ecology in accord with the rhythm and Philippines, by virtue of the powers vested in
harmony of nature and recognize the citizens’ me by law, do hereby order:
right to breathe clean air;
SECTION 1. All departments, bureaus, offices
WHEREAS, the government is a major user of and instrumentalities of the Government,
motor vehicles operating on diesel fuel; including government-owned and controlled
corporations, are hereby directed to use one
WHEREAS, the Coconut Methyl Ester (CME) percent (1%) CME by volume as a blend in
blended with petroleum diesel fuel can petroleum diesel fuel.
reduce harmful emissions such as carbon
particulates and greenhouse gases thereby SEC. 2. The Department of Energy (DOE) shall
improving air quality and at the same time be the lead implementing agency for the CME-
improving the performance of the engines; Diesel Program. The DOE shall coordinate
with various government agencies and private

entities involved in CME activities and shall and instrumentalities of the Government,
prepare a strategic plan outlining national including government-owned and controlled
goals in the development and expanded corporations, are hereby directed to provide
utilization of CME and provide policy the necessary resources which will be utilized
direction for the effective implementation to implement the CME program subject to
and monitoring of the program. existing auditing and accounting rules and
regulations.
SEC. 3. The Philippine Coconut Authority
(PCA) is hereby directed to include in its SEC. 6. All orders, issuances, rules and
national program for the coconut industry regulations or parts thereof, which are
the development of the supply chain for inconsistent with this Circular are hereby
CME, and in consultation/coordination with repealed or modified accordingly.
the other government agencies and the
private sector, shall formulate a program to SEC. 7. If for any reason or reasons, any part
encourage investment and technology for the of this circular is declared unconstitutional
production of CME to meet the needs of the or invalid, the validity of the other provisions
domestic market. shall not be affected by such declaration.

SEC. 4. The DOE, in coordination, with SEC. 8. This Memorandum Circular shall take
the concerned government agencies effect fifteen (15) days after its publication
shall formulate and issue the necessary in at least two (2) newspapers of general
implementing rules and regulations within circulation.
thirty (30) days after the effectivity of this
Circular. Done in the City of Manila, this 9th day
of February, in the year of Our Lord, Two
SEC. 5. All departments, bureaus, offices Thousand and Four.

RULES AND REGULATIONS IMPLEMENTING MEMORANDUM CIRCULAR NO. 55

Pursuant to Section 4 of Memorandum SECTION 1. Title. – This Department

Circular No. 55 issued by the Office of the Circular shall be known and cited as the
President on February 9, 2004, directing RULES AND REGULATIONS IMPLEMENTING
all departments, bureaus, offices, agencies MEMORANDUM CIRCULAR NO. 55.
and instrumentalities of the government,
including government-owned and -controlled SEC. 2. Objective. – The purpose of this
corporations to incorporate the use of one Department Circular is to provide guidelines
percent (1%) by volume Coconut Methyl Ester on the implementation of Memorandum
in their diesel requirements, the Department Circular No. 55.
of Energy, in consultation with concerned
government agencies and private entities, SEC. 3. Scope and Coverage. – This
hereby promulgates and adopts the following Department Circular shall apply to all land
rules and regulations. transport diesel vehicles owned or registered
in the name of all departments, bureaus,
offices, agencies and instrumentalities of

the government, including government- SEC. 5. Roles and Responsibilities of Agencies.
owned and controlled corporations and local – The Department of Energy (DOE), created
government units. pursuant to R.A. No. 7638, shall be the lead
implementing agency for the CME Program
SEC. 4. Definition of Terms. – in petroleum applications beginning with the
CME-Diesel blend. The DOE shall coordinate
(a) “Coconut Methyl Ester or CME” – as with various government agencies and
defined by PNS 2020:2003, shall refer private entities involved in CME activities and
to fatty ester derived from coconut oil shall provide policy direction for the effective
whose alkyl groups range in varying implementation of the program. The DOE
percentage from C8 to C18 suitable for shall register CME products, accredit CME
compression ignition engines and other manufacturers/suppliers and monitor the
similar types of engines. quality of CME. The DOE shall prepare a
strategic plan outlining national goals in the
(b) “CME-Diesel” – shall refer to diesel fuel development, utilization and promotion of
with 1% blend of coconut methyl ester. CME.
The ratio of CME-Diesel blend is thus
defined as 1% CME and 99% of diesel The Department of Environment and Natural
fuel. Resources (DENR), created pursuant to E.O.
No. 192, shall coordinate with DOE and DOTC
(c) “Product Registration” – shall refer to the in terms of data generation of the results of
fuel additive registration requirement emission testing using CME which will serve
under Section 12 of Republic Act (R.A.) as inputs in the emission standard-setting
No. 8479 (Downstream Oil Industry necessary to maintain air quality.
Deregulation Law of 1998) and Section
27 of R.A. No. 8749 (Philippine Clean Air The Department of Science and Technology
Act of 1999). (DOST), created pursuant to R.A. No. 2067,
through the Philippine Council for Industry and
(d) “Accreditation” – shall refer to Energy Research and Development (PCIERD)
the certification issued to a CME and Industrial Technology Development
manufacturer/supplier having complied Institute (ITDI), shall coordinate and provide
with the prescribed technical criteria support on research and development works
(to include, among others, capability on the production and application of CME
to manufacture PNS-compliant CME, being undertaken by the academe, research
distribution network, etc.) of the DOE. institutions and others.

(e) “PNS” – shall refer to the Philippine The Department of Transportation and
National Standard established by the Communications (DOTC), created pursuant
inter-agency committee, Technical to Executive Order Nos. 546 and 125-A, shall
Committee on Petroleum Products and monitor and test emissions of CME-Diesel-
Additives (TCPPA), created pursuant to run vehicles and provide DOE with annual
R.A. No. 8749, on quality parameters, statistics and inventory of land transport diesel
values, and limits of petroleum products vehicles owned and registered in the name of
including CME. all departments, bureaus, offices, agencies
and instrumentalities of the government,
(f) “Diesel Requirements” – shall refer to including government-owned and controlled
the diesel fuel consumption of all land corporations and local government units.
transport diesel vehicles as defined in
Section 3 of this Department Circular.

The Department of Trade and Industry (DTI), specific requirements including storage,
created pursuant to Executive Order No. mode of procurement and existing
133, through the Board of Investments (BOI) logistics and infrastructure.
may provide incentives to investment on
CME production in conjunction with coconut (c) CME suppliers shall make the product
processing provided that the resulting available in small packages for
CME product conforms to PNS 2020:2003 government agencies without storage
promulgated by the Bureau of Product tanks/dispensing pumps, in recyclable/
Standards (BPS). refillable containers.

The Department of Finance (DOF), created (d) CME requirements of the government
pursuant to Executive Order Nos. 127 and agencies including government-owned
127-A, shall develop and recommend fiscal and controlled corporations and their
and nonfiscal incentives as it may deem subsidiaries shall only be procured
appropriate for participating petroleum and from DOE-accredited suppliers of DOE-
oleochemical companies to promote the registered CME products.
sustainable development of this program.
(e) The DOE Energy Utilization Management
The Philippine Coconut Authority (PCA), Bureau (EUMB) shall issue accreditation
created pursuant to Presidential Decree No. to CME manufacturers/suppliers subject
232, in partnership with coconut farmers, to the applicant’s submission of an
processors, refiners and traders shall ensure effective distribution scheme, IEC and
security of coconut oil supply by undertaking after-sales support program, among
an aggressive program for planting, others.
replanting, fertilization, agricultural research
and development, and rehabilitation of (f) The DOE shall provide all government
the coconut industry and shall formulate agencies with list of accredited CME
a program to encourage investments and manufacturers/suppliers and registered
technology for the production of CME to CME products.
meet the needs of the domestic market.
SEC. 7. Mechanics of Blending. – CME can
SEC. 6. Supply and Distribution of 1% CME- be blended directly in the diesel fuel tank or
Diesel. – In the supply and distribution of 1% may be pre-blended with diesel fuel using the
CME-Diesel the following guidelines shall be table below as guide.
observed:
Table for Blending 1% CME

Diesel (in liters) 5 10 15 20 25 30 35 40 50
CME (in milliliters) 50 100 150 200 250 300 350 400 500
*For simplicity in implementation, above CME volume (in milliliters) were rounded off.

(a) Each government agency shall be solely SEC. 8. CME Quality Monitoring. – To ensure
responsible for the blending of CME for appropriate quality, government agencies
its diesel fuel requirements. shall procure CME only from suppliers
accredited by the DOE-EUMB and whose
(b) CME suppliers shall ensure sufficient CME has been duly registered by the DOE
supply and efficient distribution of CME Oil Industry Management Bureau (OIMB)
based on the government agency’s pursuant to R.A. No. 8479 and R.A. No. 8749.

CME products shall be properly labeled and other concerned entities, shall develop
(i.e., DOE registration number, supplier and a database on vehicle information and CME-
accreditation number, batch information/ diesel fuel source and volume requirements of
details including manufacture and expiry government agencies including government-
date, etc.) and must be accompanied by a owned and controlled corporations and other
Quality Certificate indicating the level for related data which shall be accessible to the
its properties (e.g., flash point, water and public in accordance with the guidelines
sediment, kinematic viscosity, copper strip provided in the rules implementing R.A.
corrosion, cloud point, acid number, free and No. 6713, otherwise known as the Code of
total glycerine. Conduct and Ethical Standards for Public
Officials and Employees.
The DOE OIMB and Energy Research and
Testing Laboratory Services (ERTLS) shall DOE, in coordination with concerned entities,
conduct random spot sampling and laboratory shall conduct audit on the data gathered and
testing and analysis of CME products both determine the integrity and accuracy of such
at the manufacturing and distribution/ data.
marketing levels to determine compliance
with PNS. The DOE Visayas and Mindanao SEC. 11. Policy Advisory Group. – A Policy
Field Offices (VFO/MFO) shall conduct the Advisory Group is hereby created to provide
sampling of CME products in their respective policy guidance in the implementation of this
areas and forward the same to ERTLS. A Department Circular. It shall be headed by a
monthly summary report shall be submitted DOE Undersecretary to be assisted by second-
to the Policy Advisory Group. ranking officials of DENR, DOST, DOTC, DTI,
DOF, PCA, representative of the Office of
SEC. 9. Reportorial Requirements. – All the President and the CME manufacturers/
government agencies shall submit monthly suppliers.
reports to the DOE EUMB. Reports from the
Visayas and Mindanao shall be coordinated SEC. 12. Working Group. – A Working Group,
and collated by the DOE VFO/MFO and to be chaired by DOE and composed of DENR,
submitted to EUMB. The EUMB shall submit DOST-PCIERD/ITDI, DOTC, DTI-BOI/BPS, DOF,
a monthly summary to the Policy Advisory PCA, DBM, DILG, DND, academe/research
Group. The report shall contain the following institutions (Technological University of the
information: Philippines, Asian Institute of Petroleum
Studies, Inc., Philippine National Oil Company–
(a) Source of CME and diesel; Energy Research and Development Center),
oil companies, CME producers/suppliers,
(b) Purchase price; Chamber of Automotive Manufacturers of
the Philippines Inc. (CAMPI), transport groups
(c) Volume of CME and diesel fuel and other concerned entities, shall be created
consumption; to:

(d) Mileage; and (a) Formulate a strategic plan outlining the
national goals in the development of
(e) General observations (e.g., emissions, CME;
engine performance, among others).
(b) Conduct field tests and evaluate CME-
SEC. 10. Information Database. – The DOE, related research/activities of various
in coordination with DOTC, DOST, DENR, PCA research and development institutions;


(c) Evaluate the effects of CME on engines R.A. No. 9184, otherwise known as the
and fuel systems including, but not Government Procurement Reform Act and its
limited to, engine performance (power, implementing rules and regulations.
torque and durability), emissions, safety
(storage, transport/handling and use) SEC. 14. Sanctions. – Any person who
and economics (cost-benefit); violates any provision of this Department
Circular shall be imposed the corresponding
(d) Formulate procedures and methodologies criminal, civil and/or administrative sanctions
for monitoring emissions and operational as provided under existing applicable laws,
performance; rules and regulations.

(e) Formulate safety standards in the storage, SEC. 15. Final Provisions. – All Department
transport/handling, packaging and use of orders, rules and regulations inconsistent
CME products; with or contrary to the provisions of this
Department Circular are hereby repealed and
(f) Conduct information, education and modified accordingly.
communication (IEC) activities to induce
public awareness; If any provision of this Department Circular
or the application of said provision to
(g) Identify and address concerns of any person or circumstances is declared
stakeholders (i.e., oil companies and unconstitutional, the remainder of the
car manufacturers) on the national CME Circular or the application of such provision
program (i.e., product liability, supply to other persons or circumstances shall not
sustainability, etc.); be affected by the said declaration.

(h) Submit quarterly assessment reports and SEC. 16. Effectivity. – This Department
recommendations to the Policy Advisory Circular shall take effect ninety (90) days from
Group; the date of its publication in at least two (2)
newspapers of general circulation.
(i) Perform other CME-related functions as
may be assigned by the Policy Advisory The duration of this program shall be one (1)
Group. year from the effectivity of this Department
Circular.
SEC. 13. Budget Appropriation. – Budget
for the implementation of this program Fort Bonifacio, Taguig, Metro Manila, March
shall be chargeable to the available funds of 29, 2004.
the respective agencies subject to the usual
accounting and auditing rules and regulations.
VICENTE S. PÉREZ, JR.
The procurement and supply of CME and Secretary
diesel shall be done in accordance with

PROMOTING THE USE OF COCO-BIODIESEL AS AN ALTERNATIVE CLEAN FUEL

WHEREAS, Republic Act No. 7638, An Act Arroyo signed Memorandum Circular No.
Creating the Department of Energy declares 55 (2004) mandating government agencies,
that it shall be the policy of the State to offices and instrumentalities to mix 1% blend
develop the country’s indigenous energy of Coco-Biodiesel in the fuel of their vehicles
resources taking into consideration the as the first step before full implementation of
active participation of the private sector a national Coco-Biodiesel program.
in the various areas of energy resource
development. WHEREAS, the Department of Energy has been
tasked to monitor and ensure its compliance
WHEREAS, Republic Act 8749, otherwise and success. However, its implementation is
known as the Clean Air Act mandates the constrained by the lack of supply points.
use of environmentally clean fuels which
meets specified emission standards to ensure WHEREAS, there is a need to develop the local
a clean and healthy air for the citizenry and market to enhance interest in accelerating
to contribute to the global effort of reducing coconut replanting as well as in promoting
Greenhouse Gases (GHG). the entry of new plant investments.

WHEREAS, the world crude oil reserve is near NOW THEREFORE, premises considered
halfway mark and projected to be critical by the Department establishes the following
the year 2040. guidelines:

WHEREAS, it is imperative to address problem (1) Oil companies operating in the Philippines
by actively pursuing development of clean are enjoined to support the alternative
fuels through alternative energies for the energy program of the Department
long-term energy security of the country. by making available Coco-Biodiesel (in
bottle) as a retail shelf item in all their
WHEREAS, the development of alternative gas stations nationwide subject to the
energies such as CNG, LNG, LPG, and Ethanol following requirements:
although underway, still require considerable
lead time for the needed logistic infrastructure (a) The coco-biodiesel brand name
and replacement or modification of engines. must be duly registered with the
Department of Energy and must
have been issued a Certificate of
WHEREAS, Coco-Biodiesel as a fuel is already Fuel Additive Registration No. (CFAR
in commercial production and is immediately No.)by the Department of Energy to
available to supply 1% of the country’s ensure proper quality of the product;
diesel fuel volume and requires no logistic
infrastructure nor engine modifications for its (b) The brand owner of the Coco-
full implementation. Biodiesel shall carry the product
liability risk in the unlikely event that
WHEREAS, in recognizing the excellent damage to an engine can be proven
environmental and economic potential of as being caused by such Coco-
Coco-Biodiesel, President Gloria Macapagal- Biodiesel brand;
(c) The supplier of such Coco-Biodiesel similar to the support given by auto
brand (and/or the oil company manufacturers.
itself) shall conduct proper technical
briefing, seminar, or training to gas (3) Local Government Units (LGU’s) are
station dealers to ensure that the likewise enjoined to issue the proper
benefits of coco-biodiesel can be ordinances to ensure compliance with
properly communicated, explained, this Circular.
and promoted to the motoring public
so that misconception, misinfor- This Circular shall take effect immediately.
mation, or simply lack of knowledge,
may not unduly destroy or sabotage Fort Bonifacio, Taguig, Metro Manila, March
the Coco-Biodiesel program. 1, 2005

(2) Oil companies are requested to lend the
expertise of their Technical Managers VINCENT S. PÉREZ
in the development of renewable fuels Secretary
Supreme Court
MEMORANDUM CIRCULAR NO. 07-2004

IN RE: USE OF COCONUT METHYL ESTER (CME)
IN THE DIESEL REQUIREMENTS OF THE COURTS

WHEREAS, Her Excellency President Gloria offices to support the program;

Macapagal-Arroyo on 9 February 2004
signed Memorandum Circular No. 55 WHEREAS, the Court, through the Office of
directing all departments, bureaus, offices Administrative Services, has coordinated with
and instrumentalities of the government the DOE as to the use, supply, mechanics of
including government-owned and controlled blending of CME with diesel fuel;
corporations to incorporate the use of one
percent (1%) by volume Coconut Methyl Ester WHEREAS, the Supreme Court and collegiate
(CME) in their diesel requirements; courts under its supervision use motor
vehicles operating on diesel fuel;
WHEREAS, pursuant to Section 4 of said
Memorandum Circular, the Department WHEREAS, the use of CME blended with
of Energy, in consultation with concerned petroleum diesel fuel can reduce harmful
government agencies and private entities emission such as carbon particulates and
issued Department Circular No. DC 2004- greenhouse gases thereby improving air
04-003 dated 29 March 2004 to provide quality and at the same time improving the
guidelines on the implementation of performance of the engines.
Memorandum Circular No. 55;
NOW, THEREFORE, in compliance with
WHEREAS, on 27 April 2004, the Honorable Memorandum Circular No. 55 and pursuant
Secretary Vincent S. Perez, Jr. of the to the implementing rules and regulations
Department of Energy (DOE) requested the issued by the DOE:
Honorable Chief Justice to enjoin its various
(a) The Chief Administrative Officer of the required in Section 9 of DOE’s DC
Supreme Court is hereby directed to No.-2004-04-03.
instruct the Chief, Motorpool Section,
Property Division to: (b) The Presiding Justices of the Court of
Appeals, the Sandiganbayan and the
(1) make an inventory of all motor Court of Tax Appeals shall likewise instruct
vehicles of the Court, Including those their respective Chief Administrative
of the Presidential Electoral Tribunal, Officer to direct the Chief of their
the Philippine Judicial Academy, Motorpool Section, Property Division, to
the Judicial and Bar Council and the do the same as stated in (A) above insofar
Office of the Court Administrator, as their Courts are concerned.
operating on diesel fuel;

(2) disseminate information to Further, all officials and employees of the
all chauffeurs/drivers of the Judiciary who own vehicles operating on
aforementioned diesel-fed vehicles diesel fuel are hereby enjoined to support
as to the use of CME; the program on the use of CME in their diesel
requirements.
(3) purchase CME from authorized
dealers for use in all Court’s diesel- This Memorandum Circular shall take effect
fed vehicles; and upon its issuance.

(4) make, monthly reports on the use Issued this 23rd day of June 2004.
of CME to the Energy Utilization
Management Bureau, DOE as HILARIO G. DAVIDE, JR.
Chief Justice
Office of the President

MEMORANDUM CIRCULAR NO. 184

DIRECTING ALL DEPARTMENTS, BUREAUS, OFFICES AND INSTRUMENTALITIES OF THE
GOVERNMENT, INCLUDING GOVERNMENT-OWNED AND CONTROLLED CORPORATIONS TO USE
TEN PERCENT (10%) BY VOLUME BIOETHANOL IN THEIR GASOLINE REQUIREMENTS

WHEREAS, under Section 2 (a) of R. A. No. WHEREAS, under Sections 2 and 4 (a) of R.A.
7638, known as the “Department of Energy No. 8749, known as “The Philippine Clean Air
Act of 1992”, it is declared the policy of the Act (PCAA) of 1999”, it is declared the policy
State to ensure a continuous, adequate and of the State to protect and advance the right
economic supply of energy with the end in of the people to a balanced and healthful
view of ultimately achieving self-reliance in ecology in accord with the rhythm and
the country’s energy requirements through harmony of nature and recognize the citizen’s
the integrated and intensive exploration, right to breathe clean air;
production, management and development
of the country’s indigenous energy resources WHEREAS, Republic Act No. 9367 or the
without sacrificing ecological concerns; “Biofuels Act of 2006” was passed in 2006
as a measure to “ensure the availability of

alternative and renewable clean energy, implementing rules and regulations within
without any detriment to the natural thirty (3) days after the effectivity of this
ecosystem, biodiversity and food reserves of Circular.
the country”, thereby mandating a “minimum
ten percent (10%) blend of bioethanol by SEC. 3. All departments, bureaus, offices
volume (Sec. 5.2);” and instrumentalities of the Government,
including government-owned and controlled
WHEREAS, the Government is a major user of corporations are hereby directed to provide
motor vehicles operating on gasoline fuel; the necessary resources to be utilized to
implement the utilization of E10 blended
WHEREAS, the bioethanol blended with gasoline fuel, subject to existing auditing and
petroleum gasoline fuel can reduce harmful accounting rules and regulations.
emissions and carbon monoxide thereby
improving air quality; SEC. 4. The DOE shall conduct information,
education and communication (IEC) activities
WHEREAS, the World Wide Fuel Charter to induce public awareness, identify the
permits the blend of bioethanol up to ten concerns of stakeholders on the use of E10
percent (10%) by volume; blended gasoline fuel and take the necessary
steps in order to address them.
WHEREAS, the use of bioethanol in the
petroleum industry will reinvigorate the SEC. 5. All departments, bureaus, offices
Philippine sugar industry through the creation and instrumentalities of the Government,
of a new domestic market and increased including GOCCs, shall issue internal directive
productivity, thereby improving the lives of in their respective offices implementing this
sugarcane farmers; Circular not later than one (1) month after
the effectivity hereof, copy of which shall be
WHEREAS, ten percent (10%) bioethanol furnished to the Office of the President and
blended gasoline fuel is available in the the Department of Energy.
gasoline retail stations nationwide;
SEC. 6. All orders, issuances, rules and
NOW, THEREFORE, I, GLORIA MACAPAGAL- regulations or parts thereof, which are
ARROYO, President of the Republic of the inconsistent with this Circular are hereby
Philippines, by virtue of the powers vested in repealed or modified accordingly.
me by law, do hereby order:
SEC. 7. If for any reason or reasons, any part
SECTION 1. All departments, bureaus, offices of this Circular is declared unconstitutional or
and instrumentalities of the Government, invalid, the validity of other provisions shall
including, including government-owned and not be affected by such declaration.
controlled corporations, are hereby directed
to strictly purchase E10 blended gasoline fuel SEC. 8. This Memorandum Circular shall take
from oil companies/gas stations as fuel for effect fifteen (15) days after its publication
their motor vehicles operating on gasoline in at least two (2) newspapers of general
fuel. circulation.

SEC. 2. The DOE, in coordination with Done in the City of Manila, this 26th day
the concerned government agencies, of October, in the year of Our Lord, Two
shall formulate and issue the necessary Thousand and Nine.

Chapter 6
ADMINISTRATIVE ORDER NO. 228
ADDRESSING THE RISING COST OF ENERGY
I, GLORIA M. ARROYO, President of the SEC. 4. Agencies shall convert twenty percent
Philippines, by the powers vested in me by (20%) of their vehicles in major cities to
law, do hereby order: liquefied petroleum gas by September 2008.

SECTION 1. All agencies shall reduce SEC. 5. Agencies shall install and/or adopt
transport fuel consumption in liters by ten other energy saving technology, with the
percent (10%) starting June 2008. help of the Department of Energy and/or the
Department of Science and Technology.
SEC. 2. Government buildings shall turn off
airconditioners at 4:30 p.m., except those Done on this 2nd day of June in the year of
with 24-hour work. Our Lord, Two Thousand and Eight.

SEC. 3. Agencies shall implement, starting By the President:
July, plans to replace all incandescent bulbs.
EDUARDO R. ERMITA
Executive Secretary

Chapter 7
AN ACT PROVIDING FOR A COMPREHENSIVE AIR POLLUTION CONTROL POLICY AND FOR
OTHER PURPOSES
Chapter I SEC. 3. Declaration of Policies. – The

General Provisions State shall pursue a policy of balancing
development and environmental protection.
Article 1 To achieve this end, the framework for
Basic Air Quality Policies sustainable development shall be pursued. It
shall be the policy of the State to:
SECTION 1. Short Title. – This Act shall be
known as the “Philippine Clean Air Act of (a) Formulate a holistic national program
1999.” of air pollution management that shall
be implemented by the government
SEC. 2. Declaration of Principles. – The State through proper delegation and effective
shall protect and advance the right of the coordination of functions and activities;
people to a balanced and healthful ecology
in accord with the rhythm and harmony of (b) Encourage cooperation and self-
nature. regulation among citizens and industries
through the application of market-based
The State shall promote and protect the instruments;
global environment to attain sustainable
development while recognizing the primary (c) Focus primarily on pollution prevention
responsibility of local government units to rather than on control and provide for a
deal with environmental problems. comprehensive management program
for air pollution;
The State recognizes that the responsibility
of cleaning the habitat and environment is (d) Promote public information and
primarily area-based. education to encourage the participation
of an informed and active public in air
The State also recognizes the principle that quality planning and monitoring; and
“polluters must pay.”
(e) Formulate and enforce a system of
Finally, the State recognizes that a clean and accountability for short and long-term
healthy environment is for the good of all and adverse environmental impact of a
should, therefore, be the concern of all. project, program or activity. This shall
include the setting up of a funding or
guarantee mechanism for clean-up (h) The right to bring action in court for
and environmental rehabilitation and compensation of personal damages
compensation for personal damages. resulting from the adverse environmental
and public health impact of a project or
SEC. 4. Recognition of Rights. – Pursuant to activity.
the above-declared principles, the following
rights of citizens are hereby sought to be Article 2
recognized and the State shall seek to Definition of Terms
guarantee their enjoyment:
SEC. 5. Definitions. – As used in this Act:
(a) The right to breathe clean air;
a) “Air pollutant” means any matter found
(b) The right to utilize and enjoy all natural in the atmosphere other than oxygen,
resources according to the principle of nitrogen, water vapor, carbon dioxide, and
sustainable development; the inert gases in their natural or normal
concentrations, that is detrimental
(c) The right to participate in the to health or the environment, which
formulation, planning, implementation includes, but not limited to smoke, dust,
and monitoring of environmental policies soot, cinders, fly ash, solid particles of
and programs and in the decision-making any kind, gases, fumes, chemical mists,
process; steam and radio-active substances;
(d) The right to participate in the decision- b) “Air pollution” means any alteration of
making process concerning development the physical, chemical and biological
policies, plans and programs, projects or properties of the atmospheric air, or any
activities that may have adverse impact discharge thereto of any liquid, gaseous
on the environment and public health; or solid substances that will or is likely
to create or to render the air resources
(e) The right to be informed of the nature of the country harmful, detrimental,
and extent of the potential hazard of any or injurious to public health, safety or
activity, undertaking or project and to welfare or which will adversely affect
be served timely notice of any significant their utilization for domestic, commercial,
rise in the level of pollution and the industrial, agricultural, recreational, or
accidental or deliberate release into the other legitimate purposes;
atmosphere of harmful or hazardous
substances; c) “Ambient air quality guideline values”
means the concentration of air over
(f) The right of access to public records specified periods classified as short-
which a citizen may need to exercise his term and long-term which are intended
or her rights effectively under this Act; to serve as goals or objectives for the
protection of health and/or public
(g) The right to bring action in court or quasi- welfare. These values shall be used for
judicial bodies to enjoin all activities air quality management purposes such
in violation of environmental laws and as determining time trends, evaluating
regulations, to compel the rehabilitation stages of deterioration or enhancement
and cleanup of affected area, and to seek of the air quality, and in general, used
the imposition of penal sanctions against as basis for taking positive action in
violators of environmental laws; and preventing, controlling, or abating air
pollution;

d) “Ambient air quality” means the general toxicity by ingestion, inhalation, or skin
amount of pollution present in a broad absorption, corrosivity or other skin
area; and refers to the atmosphere’s or eye contact hazard or the risk of
average purity as distinguished from fire explosion; or (2) long-term toxicity
discharge measurements taken at the upon repeated exposure, carcinogecity
source of pollution; (which in some cases result in acute
exposure but with a long latent period),
e) “Certificate of Conformity” means a resistance to detoxification process
certificate issued by the Department such as biodegradation, the potential to
of Environment and Natural Resources pollute underground or surface waters;
to a vehicle manufacturer/assembler
or importer certifying that a particular k) “Infectious waste” means that portion of
new vehicle or vehicle type meets the medical waste that could transmit an
requirements provided under this Act infectious disease;
and its rules and regulations;
l) “Medical waste” means the materials
f) “Department” means the Department of generated as a result of patient diagnosis,
Environment and Natural Resources; treatment, or immunization of human
beings or animals;
g) “Eco-profile” means the geographic-
based instrument for planners and m) “Mobile source” means any vehicle
decision–makers which present an propelled by or through combustion
evaluation of the environmental quality of carbon-based or other fuel,
and carrying capacity of an area. It is the constructed and operated principally
result of the integration of primary data for the conveyance of persons or the
and secondary data and information on transportation of property goods;
natural resources and anthropogenic
activities on the land which are evaluated n) “Motor vehicle” means any vehicle
by various environmental risk assessment propelled by a gasoline or diesel engine
and forecasting methodologies that or by any other means than human or
enable the Department to anticipate the animal power, constructed and operated
type of development control necessary in principally for the conveyance of persons
the planning area; or the transportation of property or
goods in a public highway or street open
h) “Emission” means any air contaminant, to public use;
pollutant, gas stream or unwanted sound
from a known source which is passed into o) “Municipal waste” means the waste
the atmosphere; materials generated from communities
within a specific locality;
i) “Greenhouse gases” means those gases
that can potentially or can reasonably p) “New vehicle” means a vehicle
be expected to induce global warming, constructed entirely from new parts
which include carbon dioxide, methane that has never been sold or registered
oxides of nitrogen, chloroflourocarbons, with the DOTC or with the appropriate
and the like; agency or authority, and operated on the
highways of the Philippines, any foreign
j) “Hazardous substances” means those state or country;
substances which present either: (1)
short-term acute hazards such as acute

q) “Octane Rating or the Anti-Knock Index control or abate the pollution of air
(AKI)” means the rating of the anti- caused by emissions from identified
knock characteristics of a grade or type pollution sources at levels within the air
of automotive gasoline as determined pollution control standards established
by dividing by two (2) the sum of the by the Department;
Research Octane Number (RON), plus
the Motor Octane Number (MON); v) “Pollution control technology” means
the octane requirement, with respect the pollution control devices, production
to automotive gasoline for use in process, fuel combustion processes or
a motor vehicle or a class thereof, other means that effectively prevent or
whether imported, manufactured, or reduce emissions or effluent;
assembled by a manufacturer, shall
refer to the minimum octane rating of w) “Standard of performance” means a
such automotive gasoline which such standard for emissions of air pollutant
manufacturer recommends for the which reflects the degree of emission
efficient operation of such motor vehicle, limitation achievable through the
or a substantial portion of such class, application of the best system of emission
without knocking; reduction, taking into account the cost of
achieving such reduction and any non-air
r) “Ozone Depleting Substances (ODS)” quality health and environmental impact
means those substances that significantly and energy requirement which the
deplete or otherwise modify the ozone Department determines, and adequately
layer in a manner that is likely to result in demonstrates; and
adverse effects on human health and the
environment such as, but not limited to, x) “Stationary source” means any building
chloroflourocarbons, halons and the like; or immobile structure, facility or
installation which emits or may emit any
s) “Persistent Organic Pollutants (POPs)” air pollutant.
means the organic compounds
that persist in the environment, Chapter II
bioaccumulate through the food web, Air Quality Management System
and pose a risk of causing adverse effects
to human health and the environment. Article 1
These compounds resist photolytic, General Provisions
chemical and biological degradation,
which shall include but not be limited to SEC. 6. Air Quality Monitoring and
dioxin, furan, Polychlorinated Biphenyls Information Network. – The Department
(PCBs), organochlorine pesticides, such as shall prepare an annual National Air Quality
aldrin, dieldrin, DDT, hexachlorobenzene, Status Report which shall be used as the basis
lindane, toxaphere and chlordane; in formulating the Integrated Air Quality
Improvement Framework, as provided for in
t) “Poisonous and toxic fumes” means any Section 7. The said report shall include, but
emissions and fumes which are beyond shall not be limited to the following:
internationally-accepted standards,
including but not limited to the World a) Extent of pollution in the country, per
Health Organization (WHO) guideline type of pollutant and per type of source,
values; based on reports of the Department’s
monitoring stations;
u) “Pollution control device” means any
device or apparatus used to prevent,
b) Analysis and evaluation of the current blueprint with which all government agencies
state, trends and projections of air must comply with to attain and maintain
pollution at the various levels provided ambient air quality standards.
herein;
SEC. 8. Air Quality Control Action Plan. –
c) Identification of critical areas, activities, Within six (6) months after the formulation
or projects which will need closer of the framework, the Department shall,
monitoring or regulation; with public participation, formulate and
implement an air quality control action plan
d) Recommendations for necessary consistent with Section 7 of this Act. The
executive and legislative action; and action plan shall:
e) Other pertinent qualitative and a) Include enforceable emission limitations
quantitative information concerning the and other control measures, means or
extent of air pollution and the air quality techniques, as well as schedules and
performance rating of industries in the time tables for compliance, as may be
country. necessary or appropriate to meet the
applicable requirements of this Act;
The Department, in cooperation with the
National Statistical Coordination Board b) Provide for the establishment
(NSCB), shall design and develop an and operation of appropriate
information network for data storage, devices, methods, systems and
retrieval and exchange. procedures necessary to monitor,
compile and analyze data on ambient air
The Department shall serve as the central quality;
depository of all data and information related
to air quality. c) Include a program to provide for the
following: (1) enforcement of the
SEC. 7. Integrated Air Quality Improvement measures described in subparagraph (a);
Framework. – The Department shall within (2) regulation of the modification and
six (6) months after the effectivity of this construction of any stationary source
Act, establish, with the participation of within the areas covered by the plan,
LGUs, NGOs, POs, the academe and other in accordance with land use policy to
concerned entities from the private sector, ensure that ambient air quality standards
formulate and implement the Integrated are achieved;
Air Quality Improvement Framework for a
comprehensive air pollution management d) Contain adequate provisions, consistent
and control program. The framework shall, with the provisions of this Act, prohibiting
among others, prescribe the emission any source or other types of emissions
reduction goals using permissible standards, activity within the country from emitting
control strategies and control measures to be any air pollutant in amounts which
undertaken within a specified time period, will significantly contribute to the non-
including cost-effective use of economic attainment or will interfere with the
incentives, management strategies, collective maintenance by the Department of any
action and environmental education and such ambient air quality standard required
information. to be included in the implementation
plan to prevent significant deterioration
The Integrated Air Quality Improvement of air quality or to protect visibility;
Framework shall be adopted as the official

e) Include control strategies and control the Department for each LGU to conduct
measures to be undertaken within a periodic inspections of air pollution sources to
specified time period, including cost assess compliance with emission limitations
effective use of economic incentives, contained in their permits.
management strategies, collection
action and environmental education and SEC. 9. Airsheds. – Pursuant to Section
information; 8 of this Act, the designation of airsheds
shall be on the basis of, but not limited to,
f) Designate airsheds; and areas with similar climate, meteorology and
topology which affect the interchange and
g) All other measures necessary for the diffusion of pollutants in the atmosphere, or
effective control and abatement of air areas which share common interest or face
pollution. similar development programs, prospects or
problems.
The adoption of the plan shall clarify the
legal effects on the financial, manpower For a more effective air quality management,
and budgetary resources of the affected a system of planning and coordination shall
government agencies, and on the alignment be established and a common action plan
of their programs with the plans. shall be formulated for each airshed.
In addition to direct regulations, the plan shall To effectively carry out the formulated action
be characterized by a participatory approach plans, a Governing Board is hereby created,
to the pollution problem. The involvement of hereinafter referred to as the Board.
private entities in the monitoring and testing
of emissions from mobile and/or stationary The Board shall be headed by the Secretary of
sources shall be considered. the Department of Environment and Natural
Resources as chairman. The members shall
Likewise, the LGUs, with the assistance from be as follows:
the Department, shall prepare and develop
an action plan consistent with the Integrated a) Provincial Governors from areas
Air Quality Improvement Framework to belonging to the airshed;
attain and maintain the ambient air quality
standards within their respective airsheds as b) City/Municipal Mayors from areas
provided in Section 9 hereof. belonging to the airshed;
The local government units shall develop c) A representative from each concerned
and submit to the Department a procedure government agency;
for carrying out the action plan for their
jurisdiction. The Department, however, d) Representatives from people’s
shall maintain its authority to independently organizations;
inspect the enforcement procedure adopted.
The Department shall have the power to e) Representatives from non-government
closely supervise all or parts of the air organizations; and
quality action plan until such time the local
government unit concerned can assume the f) Representatives from the private sector.
function to enforce the standards set by the
Department. The Board shall perform the following
functions:
A multi-sectoral monitoring team with broad
public representation shall be convened by
a) Formulation of policies; and development program contained
in this Act and upon consultation with
b) Preparation of a common action plan; the appropriate advisory committees,
government agencies and LGUs, shall issue,
c) Coordination of functions among its and from time to time, revise information
members; and on air pollution control techniques.

d) Submission and publication of an annual Such information shall include:
Air Quality Status Report for each airshed.
a) Best available technology and alternative
Upon consultation with appropriate local methods of prevention, management
government authorities, the Department and control of air pollution;
shall, from time to time, revise the designation
of airsheds utilizing eco-profiling techniques b) Best available technology economically
and undertaking scientific studies. achievable which shall refer to the
technological basis/standards for
Emissions trading may be allowed among emission limits applicable to existing,
pollution sources within an airshed. direct industrial emitters of non-
conventional and toxic pollutants; and
SEC. 10. Management of Non-attainment
Areas. – The Department shall designate c) Alternative fuels, processes and
areas where specific pollutants have already operating methods which will result in
exceeded ambient standards as non- the elimination or significant reduction
attainment areas. The Department shall of emissions.
prepare and implement a program that
will prohibit new sources of exceeded air Such information may also include data
pollutant without a corresponding reduction relating to the cost of installation and
in existing resources. operation, energy requirements, emission
reduction benefits, and environmental impact
In coordination with other appropriate or the emission control technology.
government agencies, the LGUs shall
prepare and implement a program and other The issuance of air quality guideline values,
measures including relocation, whenever standards and information on air quality
necessary, to protect the health and welfare control techniques shall be made available
of residents in the area. to the general public: Provided, That the
issuance of information on air quality
For those designated as nonattainment areas, control techniques shall not be construed as
the Department, after consultation with local requiring the purchase of certain pollution
government authorities, non-government control devices by the public.
organizations (NGOs), people’s organizations
(POs) and concerned sectors may revise the SEC. 12. Ambient Air Quality Guideline
designation of such areas and expand its Values and Standards. – The Department, in
coverage to cover larger areas depending on coordination with other concerned agencies,
the condition of the areas. shall review and/or revise and publish
annually a list of hazardous air pollutants
SEC. 11. Air Quality Control Techniques. with corresponding ambient guideline values
– Simultaneous with the issuance of and/or standard necessary to protect public
the guideline values and standards, health and safety, and general welfare. The
the Department, through the research initial list and values of the hazardous air
pollutants shall be as follows:
a) For National Ambient Air Quality Guideline for Criteria Pollutants:

Pollutants
Short Term a Long Term b
µg/Ncm ppm Averaging Time µg/Ncm ppm Ave. Time
Suspended Particulate
230 d
24 hours 90 ---- 1 yeare
Matter-TSP c
-PM-10 150f 24 hours 60 ---- 1 yeare
Sulfur Dioxide e
180 0.07 24 hours 80 0.03 1 year
Nitrogen Dioxide 150 0.08 24 hours ---- ---- ----
Photochemical Oxidants 140 0.07 1 hour Pollutants ---- ---- ----
As Ozone 60 0.03 8 hours ---- ---- ----
Carbon Monoxide 35 30 mg/Ncm 1 hour ---- ---- ---- ----
10 mg/Ncm 9 8 hours ---- ---- ----
Lead g 1.5 ---- 3 monthsg 1.0 ---- 1 year
a
Maximum limits represented by ninety-eight percentile (98%) values not to be exceed more than once a year.
b
Arithmetic mean
c
SO2 and Suspended Particulate matter are sampled once every six days when using the manual methods. A minimum of
twelve sampling days per quarter of forty-eight sampling days each year is required for these methods. Daily sampling may
be done in the future once continuous analyzers are procured and become available.
d
Limits for Total Suspended Particulate Matter with mass median diameter less than 25-50 um.
e
Annual Geometric Mean
f.
Provisional limits for Suspended Particulate Matter with mass median diameter less than 10 microns and below until
sufficient monitoring data are gathered to base a proper guideline.
g
Evaluation of this guideline is carried out for 24-hour averaging time and averaged over three moving calendar months. The
monitored average value for any three months shall not exceed the guideline value.
b) For National Ambient Air Quality Standards for Source Specific Air Pollutants from:
Industrial Sources/ Operations:
Averaging
Pollutants1 Concentration2 Method of Analysis/ Measurement3
time (min.)
µ/Ncm ppm
1. Ammonia 200 0.28 30 Nesselerization/ Indo Phenol
2. Carbon Disulfide 30 0.01 30 Tischer Method
3. Chlorine and Chlorine
100 0.03 5 Methyl Orange
Compounds expressed as Cl2
Chromotropic acid Method or MBTH
4. Formaldehyde 50 0.04 30
Colorimetric Method
5. Hydrogen Chloride 200 0.13 30 Volhard Titration with Iodine Solution
6. Hydrogen Sulfide 100 0.07 30 Methylene Blue
7. Lead 20 30 AASc
8. Nitrogen Dioxide 375,260 0.20,0.14 30,60 Greiss-Saltzman
9. Phenol 100 0.03 30 4-Aminoantiphyrine
10. Sulfur Dioxide 470, 340 0.18, 0.13 30,60 Colorimetric-Pararosaniline
11. Suspended Particulate
300 ---- 60 Gravimetric
Matter-TSP
1
Pertinent ambient standards for Antimony, Arsenic, Cadmium, Asbestos, Nitric Acid and Sulfuric Acid Mists in the 1978
NPCC Rules and Regulations may be considered as guides in determining compliance.
2
Ninety-eight percentile (98%) values of 30-minute sampling measured at 250C and one atmosphere pressure.
3
Other equivalent methods approved by the Department may be used.

The basis in setting up the ambient air quality SEC. 14. Air Quality Management Fund. –
guideline values and standards shall reflect, An Air Quality Management Fund to be
among others, the latest scientific knowledge administered by the Department as a special
including information on: account in the National Treasury is hereby
established to finance containment, removal,
a) Variable, factors, including atmospheric and clean-up operations of the Government
conditions, which of themselves or in in air pollution cases, guarantee restoration
combination with other factors may alter of ecosystems and rehabilitate areas affected
the effects on public health or welfare of by the acts of violators of this Act, to support
such air pollutant; research, enforcement and monitoring
activities and capabilities of the relevant
b) The other types of air pollutants which agencies, as well as to provide technical
may interact with such pollutant to assistance to the relevant agencies. Such
produce an adverse effect on public fund may likewise be allocated per airshed for
health or welfare; and the undertakings herein stated.
c) The kind and extent of all identifiable The Fund shall be sourced from the fines
effects on public health or welfare which imposed and damages awarded to the
may be expected from presence of such Republic of the Philippines by the Pollution
pollutant in the ambient air, in varying Adjudication Board (PAB), proceeds
quantities. of licenses and permits issued by the
Department under this Act, emission fees and
The Department shall base such ambient from donations, endowments and grants in
air quality standards on World Health the forms of contributions. Contributions to
Organization (WHO) standards, but shall not the Fund shall be exempted from donor taxes
be limited to nor be less stringent than such and all other taxes, charges or fees imposed
standards. by the Government.
SEC. 13. Emission Charge System. – The SEC. 15. Air Pollution Research and
Department, in case of industrial dischargers, Development Program. – The Department, in
and the Department of Transportation coordination with the Department of Science
and Communication (DOTC), in case of and Technology (DOST), other agencies,
motor vehicle dischargers, shall, based on the private sector, the academe, NGOs and
environmental techniques, design, impose POs, shall establish a National Research and
on and collect regular emission fees from Development Program for the prevention and
said dischargers as part of the emission control of air pollution. The Department shall
permitting system or vehicle registration give special emphasis to research on and the
renewal system, as the case may be. The development of improved methods having
system shall encourage the industries and industry-wide application for the prevention
motor vehicles to abate, reduce, or prevent and control of air pollution.
pollution. The basis of the fees include, but is
not limited to, the volume and toxicity of any Such a research and development
emitted pollutant. Industries, which shall program shall develop air quality guideline
install pollution control devices or retrofit values and standards in addition to
their existing facilities with mechanisms internationally-accepted standards. It shall
that reduce pollution shall be entitled to also consider the socio-cultural, political
tax incentives such as but not limited to and economic implications of air quality
tax credits and/or accelerated depreciation management and pollution control.
deductions.

Article 2 to that program or project and for a definite
Air Pollution Clearances period to be determined by the Department
and Permits for Stationary Sources and incorporated into the environmental
compliance certificate.
SEC. 16. Permits. – Consistent with the
provisions of this Act, the Department shall Financial liability instruments may be in the
have the authority to issue permits as it may form a trust fund, environmental insurance,
determine necessary for the prevention and surety bonds, letters of credit, as well as
abatement of air pollution. self-insurance. The choice of the guarantee
instrument or combinations thereof shall
Said permits shall cover emission limitations depend, among others, on the assessment
for the regulated air pollutants to help of the risks involved. Proponents required to
attain and maintain the ambient air quality put up guarantee instruments shall furnish
standards. These permits shall serve as the Department with evidence of availment
management tools for the LGUs in the of such instruments.
development of their action plan.
Article 3
SEC. 17. Emission Quotas. – The Department Pollution from Stationary Sources
may allow each regional industrial center
that is designated as special airshed to SEC. 19. Pollution From Stationary Sources.
allocate emission quotas to pollution sources – The Department shall, within two (2)
within its jurisdiction that qualify under years from the effectivity of this Act, and
an environmental impact assessment system every two (2) years thereafter, review, or as
programmatic compliance program pursuant the need therefor arises, revise and publish
to the implementing rules and regulations of emission standards, to further improve the
Presidential Decree No. 1586. emission standards for stationary sources of
air pollution. Such emission standards shall
SEC. 18. Financial Liability for Environmental be based on mass rate of emission for all
Rehabilitation. – As part of the stationary sources of air pollution based on
environmental management plan attached internationally-accepted standards, but not
to the environmental compliance certificate be limited to, nor be less stringent than such
pursuant to Presidential Decree No. 1586 standards and with the standards set forth
and rules and regulations set therefor, the in this section. The standards, whichever
Department shall require program and project is applicable, shall be the limit on the
proponents to put up financial guarantee acceptable level of pollutants emitted from
mechanisms to finance the needs for a stationary source for the protection of the
emergency response, clean-up rehabilitation public’s health and welfare.
of areas that may be damaged during the
program or project’s actual implementation. With respect to any trade, industry, process
Liability for damages shall continue even and fuel-burning equipment or industrial plant
after the termination of a program or project, emitting air pollutants, the concentration at
where such damages are clearly attributable the point of emission shall not exceed the
following limits:

Maximum Permissible
Pollutants Standard Applicable to Source Method of Analysisa
Limits (mg/Ncm)
1. Antimony and Its compounds Any source 10 as Sb AASb
2. Arsenic and its compounds Any source 10 as As AASb
3. Cadmium and its compounds Any source 10 as Cd AASb
4. Carbon Monoxide Any industrial Source 500 as CO Orsat analysis
5. Copper and its Compounds Any industrial source 100 ax Cu AASb
Any source other than the
6. Hydrofluoric Acids and Titration with Ammonium
manufacture of Aluminum from 50 as HF
Fluoride compounds Thiocyanate
Alumina
7. Hydrogen Sulfide i) Geothermal Power Plants c, d Cadmium Sulfide Method
ii) Geothermal Exploration and
e
well-testing
iii) Any source other than (i) and (ii) 7 as H2S Cadmium Sulfide Method
8. Lead Any trade, industry or process 10 as Pb AASb
AASb/Cold-Vapor Technique or Hg
9. Mercury Any Source 5 as elemental Hg
Analyzer
10. Nickel and its compounds,
Any source 20 as Ni AASb
except Nickel Carbonyl f
2,000 as acid and NOx and
11. NOx i) Manufacture of Nitric Acid Phenol-disulfonic acid Method
calculated as NO2
ii) Fuel burning steam generators 1,500 as NO2 Phenol-disulfonic acid Method
Existing Source 1,000 as NO2
New Source 500 as NO2
• Coal-Fired
• Oil-Fired
iii) Any source other than (i) adn (ii) Phenol-disulfonic acid Method
Existing Source 1000 as NO2
New Source 500 as NO2
12. Phosphorus Pentoxideg Any source 200 as P2O5 Spectrophotometry
13. Zinc and its Compounds Any source 100 as Zn AASb
a
b
Atomic Absorption Specttrophotometry
c
All new geothermal power plants starting construction by 01 January 1995 shall control HsS emissions to not more than 150
g/GMW-Hr
d
All existing geothermal power plants shall control HsS emissions to not more than 200 g/GMW-Hr within 5 years from the
date of effectivity of these revised regulations.
e
Best practicable control technology for air emissions and liquid discharges. Compliance with air and water quality standards
is required.
f
Emission limit of Nickel Carbonyl shall not exceed 0.5 mg/Ncm.
g
Provisional Guideline
Provided, That the maximum limits in mg/NCM particulates in said sources shall be:

1. Fuel Burning Equipment
a) Urban or Industrial Area 150 mg/Ncm
b) Other Area 200 mg/Ncm
2. Cement Plants (Kilns, etc.) 150 mg/Ncm
3. Smelting Furnaces 150 mg/Ncm
4. Other Stationary Sourcesa 200 mg/Ncm
a
Other Stationary Sources means a trade, process, industrial plant, or fuel burning equipment other than thermal power
plants, industrial boilers, cement plants, incinerators and smelting furnaces.

Provided, further, That the maximum limits for sulfur oxides in said sources shall be:

(1) Existing Sources
(i) Manufacture of Sulfuric Acid and Sulf(on)ation Process 2.0gm.Ncm as SO3
(ii) Fuel burning Equipment 1.5gm.Ncm as SO2
(iii) Other Stationary Sourcesa 1.0gm.Ncm as SO3
(2) New Sources
(i) Manufacture of Sulfuric Acid and Sulf(on)ation Process 1.5 gm.Ncm as SO3
(ii) Fuel Burning Equipment 0.7 gm.Ncm as SO2
(iii) Other Stationary Sourcesa 0.2 gm.Ncm as SO3
a
Other Stationary Sources refer to existing and new stationary sources other than those caused by the manufacture of
sulfuric acid and sulfonation process, fuel burning equipment and incineration.
For stationary sources of pollution not specifically included in the immediately preceding paragraph,
the following emission standards shall not be exceeded in the exhaust gas:
I. Daily And Half Hourly Average Values
Daily Average Values Half Hourly Average Values

Total dust 10 mg/m3 30 mg/m3
Gaseous and vaporous organic substances, expressed as total
10 mg/m3 20 mg/m3
organic carbon
Hydrogen chloride (HCl) 10 mg/m3 60 mg/m3
Hydrogen fluoride (HF) 1 mg/m3 4 mg/m3
Sulfur dioxide (SO2) 50 mg/m3 200 mg/m3
Nitrogen monoxide (NO) and Nitrogen dioxide (NO2),
expressed as nitrogen dioxide for incineration plants 200 mg/m3 400 mg/m3
with a capacity exceeding 3 tonnes per hour
Nitrogen monoxide (NO) and nitrogen dioxide (NO2),
expressed as nitrogen dioxide for incineration plants 300 mg/m3
with a capacity of 3 tonnes per hour or less
Ammonia 10 mg/m3 20 mg/m3
II. All the Average Values Over the Sample Period of a Minimum of 4 and Maximum of 8 Hours.
Cadmium and its compounds, expressed as cadmium (Cd) total 0.05

Thallium and its compounds, expressed as thallium (Tl) mg/m3
Mercury and its Compounds, expressed as mercury (Hg) 0.05 mg/m3
Antimony and its compounds, expressed as antimony (Sb)
Arsenic and its compounds, expressed as arsenic (As) total 0.5 mg/m3
Lead and its compounds, expressed as lead ( Pb)
Chromium and its compounds, expressed as chromium (Cr)
Cobalt and its compounds, expressed as cobalt (Co)
Copper and its compounds, expressed as copper (Cu)
Manganese and its compounds, expressed as manganese (Mn)
Nickel and its compounds, expressed as nickel (Ni)
Vanadium and its compounds, expressed as vanadium (V)
Tin and its compounds, expressed as tin (Sn)
These average values cover also gaseous the Department.
and the vapor forms of the relevant heavy
metal emissions as well as their compounds: Local government units are hereby mandated
Provided, That the emission of dioxins and to promote, encourage and implement in
furans into the air shall be reduced by the their respective jurisdiction a comprehensive
most progressive techniques: Provided, ecological waste management that includes
further, That all average of dioxin and waste segregation, recycling and composting.
furans measured over the sample period of
a minimum of 6 hours and maximum of 8 With due concern on the effects of climate
hours must not exceed the limit value of 0.1 change, the Department shall promote the
nanogram/m3. use of state-of-the-art, environmentally-
sound and safe non-burn technologies
Pursuant to Section 8 of this Act, the for the handling, treatment, thermal
Department shall prepare a detailed action destruction, utilization, and disposal of
plan setting the emission standards or sorted, unrecycled, uncomposted municipal,
standards of performance for any stationary biomedical and hazardous wastes.
source, the procedure for testing emissions
for each type of pollutant, and the procedure Article 4
for enforcement of said standards. Pollution from Motor Vehicles
Existing industries, which are proven to SEC. 21. Pollution from Motor Vehicles. –
exceed emission rates established by the a) The DOTC shall implement the emission
Department in consultation with stakeholders, standards for motor vehicles set pursuant to
after a thorough, credible and transparent and as provided in this Act. To further improve
measurement process shall be allowed a the emission standards, the Department shall
grace period of eighteen (18) months for review, revise and publish the standards every
the establishment of an environmental two (2) years, or as the need arises. It shall
management system and the installation of consider the maximum limits for all major
an appropriate air pollution control device: pollutants to ensure substantial improvement
Provided, That an extension of not more than in air quality for the health, safety and welfare
twelve (12) months may be allowed by the of the general public.
Department on meritorious grounds.
The following emission standards for type
SEC. 20. Ban on Incineration. – Incineration, approval of motor vehicles shall be effective
hereby defined as the burning of municipal, by the year 2003:
biomedical and hazardous waste, which
process emits poisonous and toxic fumes is a) For light duty vehicles, the exhaust
hereby prohibited: Provided, however, That emission limits for gaseous pollutants
the prohibition shall not apply to traditional shall be:
small-scale method of community/
neighborhood sanitation “siga”, traditional, Emission Limits for Light Duty Vehicles
agricultural, cultural, health, and food TypeApproval
preparation and crematoria: Provided, (Directive 91/441/EEC)
further, That existing incinerators dealing
with a biomedical wastes shall be phased CO HC + NOx PMa
out within three (3) years after the effectivity (g/km) (g/km) (g/km)
of this Act: Provided, finally, that in the 2.72 0.97 0.14
interim, such units shall be limited to the a
for compression-ignition engines only
burning of pathological and infectious
wastes, and subject to close monitoring by
b) For light commercial vehicles, the exhaust
emission limit of gaseous pollutants as a
function of the given reference mass shall
be:
Emission Limits for Light Commercial Vehicles Type Approval (Directive 93/59/EEC)
Reference Weight (RW) (kg) CO (g/km) HC + NOx (g/km) PMa (g/km)
Category 1 1250< RW 2.72 0.97 0.14

Category 2 1250< RW<1700 5.17 1.4 0.19
Category 3 RW>1700 6.9 1.7 0.25
a
for compression-ignition engines only
c) For heavy–duty vehicles, the exhaust any area or street at specified times; and
emission limits of gaseous pollutants
shall be: (3) Authorize private emission testing
centers duly accredited by the DTI.
Emission Limits for Heavy Duty Vehicles Type
Approval (Directive 93/59/EEC) The DOTC, together with the DTI and the
Department, shall establish the procedures
CO HC NOx PM
(g/k/Wh) (g/k/Wh) (g/k/Wh) (g/k/Wh) for the inspection of motor vehicles and the
testing of their emissions for the purpose of
4.5 1.1 8.0 0.36a
determining the concentration and/or rate of
a
In the case of engines of 85 kW or less, the limit value for pollutants discharged by said sources.
particular emissions is increased by multiplying the quoted
limit by a coefficient of 1.7 In order to ensure the substantial reduction
of emissions from motor vehicles, the
Fuel evaporative emission for spark-
Department of Trade and Industry (DTI),
ignition engines shall not exceed 2.0 grams
together with the DOTC and the Department,
hydrocarbons per test. Likewise, it shall not
shall formulate and implement a national
allow any emission of gases from crankcase
motor vehicle inspection and maintenance
ventilation system into the atmosphere.
program that will promote efficient and safe
operation of all motor vehicles. In this regard,
The Department, in collaboration with the
the DTI shall develop and implement standards
DOTC, DTI and LGUs, shall develop an action
and procedures for the certification of
plan for the control and management of
training institutions, instructors and facilities
air pollution from motor vehicles consistent
and the licensing of qualified private service
with the Integrated Air Quality Framework.
centers and their technicians as prerequisite
The DOTC shall enforce compliance with the
for performing the testing, servicing, repair
emission standards for motor vehicles set by
and the required adjustment to the vehicle
the Department. The DOTC may deputize
emission system. The DTI shall likewise
other law enforcement agencies and LGUs
prescribe regulations requiring the disclosure
for this purpose. To this end, the DOTC shall
of odometer readings and the use of tamper-
have the power to:
resistant odometers for all motor vehicles
including tamper-resistant fuel management
(1) Inspect and monitor the emissions of
systems for the effective implementation of
motor vehicles;
the inspection and maintenance program.
(2) Prohibit or enjoin the use of motor
vehicles or a class of motor vehicles in

SEC. 22. Regulation of All Motor Vehicles Article 5
and Engines. – Any imported new or locally- Pollution from Other Sources
assembled new motor vehicle shall not
be registered unless it complies with the SEC. 24. Pollution from Smoking. – Smoking
emission standards set pursuant to this Act, inside a public building or an enclosed public
as evidenced by a Certificate of Conformity place including public vehicles and other
(COC) issued by the Department. means of transport or in any enclosed area
outside of one’s private residence, private
Any imported new motor vehicle engine place of work or any duly designated smoking
shall not be introduced into commerce, sold area is hereby prohibited under this Act. This
or used unless it complies with emission provision shall be implemented by the LGUs.
standards set pursuant to this Act.
SEC. 25. Pollution from Other Mobile
Any imported used motor vehicle or rebuilt Sources. – The Department, in coordination
motor vehicle using new or used engines, with appropriate agencies, shall formulate
major parts or components shall not be and establish the necessary standards for
registered unless it complies with the all mobile sources other than those referred
emission standards. to in Section 21 of this Act. The imposition
of the appropriate fines and penalties from
In case of non-compliance, the importer these sources for any violation of emission
or consignee may be allowed to modify standards shall be under the jurisdiction of
or rebuild the vehicle or engine so it will the DOTC.
be in compliance with applicable emission
standards. Chapter III
Fuels, Additives, Substances and Pollutants
No motor vehicle registration (MVR) shall be
issued unless such motor vehicle passes the Article 1
emission testing requirement promulgated in Fuels, Additives and Substances
accordance with this Act. Such testing shall
be conducted by the DOTC or its authorized SEC. 26. Fuels and Additives. – Pursuant
inspection centers within sixty (60) days prior to the Air Quality Framework to be
to date of registration. established under Section 7 of this Act, the
Department of Energy (DOE), co-chaired by
The DTI shall promulgate the necessary the Department of Environment and Natural
regulations prescribing the useful life of Resources (DENR), in consultation with the
vehicles and engines including devices Bureau of Product Standards (BPS) of the
in order to ensure that such vehicles will DTI, the DOST, the representatives of the fuel
conform to the emissions which they were and automotive industries, academe and the
certified to meet. These regulations shall consumers shall set the specifications for
include provisions for ensuring the durability all types of fuel and fuel-related products,
of emission devices. to improve fuel composition for increased
efficiency and reduced emissions: Provided,
SEC. 23. Second-Hand Motor Vehicle Engines. however, That the specifications for all types
– Any imported second-hand motor vehicle of fuel and fuel-related products set-forth
engine shall not be introduced into commerce, pursuant to this section shall be adopted
sold or used unless it complies with emission by the BPS as Philippine National Standards
standards set pursuant to this Act. (PNS).

The DOE shall also specify the allowable c) not later than eighteen (18) months after
content of additives in all types of fuels and the effectivity of this Act, no person shall
fuel-related products. Such standards shall be manufacture, import, sell, supply, offer
based primarily on threshold levels of health for sale, dispense, transport or introduce
and research studies. On the basis of such into commerce industrial diesel fuel
specifications, the DOE shall likewise limit the which contains a concentration of sulfur
content or begin that phase-out of additives in excess of 0.30% (by weight).
in all types of fuels and fuel-related products
as it may deem necessary. Other agencies Every two (2) years thereafter or as the
involved in the performance of this function need arises, the specifications of unleaded
shall be required to coordinate with the DOE gasoline and of automotive and industrial
and transfer all documents and information diesel fuels shall be reviewed and revised
necessary for the implementation of this for further improvement in formulation and
provision. in accordance with the provisions of this Act.
Consistent with the provisions of the The fuels characterized above shall be
preceding paragraphs under this section, it is commercially available. Likewise, the same
declared that: shall be the reference fuels for emission
and testing procedures to be established in
a) not later than eighteen (18) months accordance with the provisions of this Act.
after the effectivity of this Act, no person
shall manufacture, import, sell, supply, Any proposed additive shall not in any way
offer for sale, dispense, transport or increase emissions of any of the regulated
introduce into commerce unleaded gases which shall include, but not limited to
premium gasoline fuel which has an carbon monoxide, hydrocarbons, and oxides
anti-knock index (AKI) of not less that of nitrogen and particulate matter, in order to
87.5 and Reid vapor pressure of not be approved and certified by the Department.
more than 9 psi. Within six (6) months
after the effectivity of this Act, unleaded SEC. 27. Regulation of Fuels and Fuel
gasoline fuel shall contain aromatics not Additives. – The DOE, in coordination with
to exceed forty-five percent (45%) by the Department and the BPS, shall regulate
volume and benzene not to exceed four the use of any fuel or fuel additive. No
percent (4%) by volume: Provided, That manufacturer, processor or trader of any fuel
by year 2003, unleaded gasoline fuel or additive may import, sell, offer for sale, or
should contain aromatics not to exceed introduce into commerce such fuel or additive
thirty-five percent (35%) by volume and unless the same has been registered with the
benzene not to exceed two percent (2%) DOE. Prior to registration, the manufacturer,
by volume; processor or trader shall provide the DOE
with the following relevant information:
b) not later than eighteen (18) months after
the effectivity of this Act, no person shall a) Product identity and composition to
manufacture, import, sell, supply, offer determine the potential health effects of
for sale, dispense, transport or introduce such fuel additives;
into commerce automotive diesel fuel
which contains a concentration of sulfur b) Description of the analytical technique
in excess of 0.20% by weight with a that can be used to detect and measure
cetane number of index of not less than the additive in any fuel;
forty-eight (48): Provided, That by year
2004, content of said sulfur shall be c) Recommended range of concentration;
0.05% by weight; and and
d) Purpose in the use of the fuel and layer.
additive.
SEC. 31. Greenhouse Gases. – The Philippine
SEC. 28. Misfueling. – In order to prevent Atmospheric, Geophysical and Astronomical
the disabling of any emission control device Service Administration (PAGASA) shall
by lead contamination, no person shall regularly monitor meteorological factors
introduce or cause or allow the introduction affecting environmental conditions including
of leaded gasoline into any motor vehicle ozone depletion and greenhouse gases and
equipped with a gasoline tank filler inlet coordinate with the Department in order to
and labeled “unleaded gasoline only“. This effectively guide air pollution monitoring and
prohibition shall also apply to any person standard-setting activities.
who knows or should know that such vehicle
is designed solely for the use of unleaded The Department, together with concerned
gasoline. agencies and local government units, shall
prepare and fully implement a national plan
SEC. 29. Prohibition on Manufacture, consistent with the United Nations Framework
Import and Sale of Leaded Gasoline and Convention on Climate Change and other
of Engines and/or Components Requiring international agreements, conventions and
Leaded Gasoline. – Effective not later than protocols on the reduction of greenhouse gas
eighteen (18) months after the enactment emissions in the country.
of this Act, no person shall manufacture,
import, sell, offer for sale, introduce into SEC. 32. Persistent Organic Pollutants. – The
commerce, convey or otherwise dispose of, Department shall, within a period of two
in any manner, leaded gasoline and engines (2) years after the enactment of this Act,
and components requiring the use of leaded establish an inventory list of all sources of
gasoline. Persistent Organic Pollutants (POPs) in the
country. The Department shall develop short-
For existing vehicles, the DTI shall formulate term and long-term national government
standards and procedures that will allow non- programs on the reduction and elimination
conforming engines to comply with the use of of POPs such as dioxins and furans. Such
unleaded fuel within five(5) years after the programs shall be formulated within a year
effectivity of this Act. after the establishment of the inventory list.
Article 2 SEC. 33. Radioactive Emissions. – All projects

Other Pollutants which will involve the use of atomic and/or
nuclear energy, and will entail release and
SEC. 30. Ozone-Depleting Substances. – emission of radioactive substances into the
Consistent with the terms and conditions environment, incident to the establishment
of the Montreal Protocol on Substances or possession of nuclear energy facilities and
that Deplete the Ozone Layer and other radioactive materials, handling, transport,
international agreements and protocols production, storage, and use of radioactive
to which the Philippines is a signatory, the materials, shall be regulated in the interest
Department shall phase out ozone-depleting of public health and welfare by the Philippine
substances. Nuclear Research Institute (PNRI), in
coordination with Department and other
Within sixty (60) days after the enactment appropriate government agencies.
of this Act, the Department shall publish a
list of substances which are known to cause
harmful effects on the stratospheric ozone

Chapter IV province, city or municipality in accordance
Institutional Mechanism with the provisions of Section 484 of Republic
Act No. 7160. Its powers and duties, among
SEC. 34. Lead Agency. – The Department, others, are:
unless otherwise provided herein, shall be the
primary government agency responsible for a) To prepare comprehensive air quality
the implementation and enforcement of this management programs, plans and
Act. To be more effective in this regard, the strategies within the limits set forth in
Department’s Environmental Management Republic Act. No. 7160 and this Act
Bureau (EMB) shall be converted from a staff which shall be implemented within its
bureau to a line bureau for a period of no territorial jurisdiction upon the approval
more than two (2) years, unless a separate, of the sanggunian;
comprehensive environmental management
agency is created. b) To provide technical assistance and
support to the governor or mayor, as the
SEC. 35. Linkage Mechanism. – The case may be, in carrying out measures
Department shall consult, participate, to ensure the delivery of basic services
cooperate and enter into agreement with and the provision of adequate facilities
other government agencies, or with affected relative to air quality;
non-governmental (NGOs) or people’s
organizations (POs),or private enterprises in c) To take the lead in all efforts concerning
the furtherance of the objectives of this Act. air quality protection and rehabilitation;
SEC. 36. Role of Local Government Units. – d) To recommend to the Board air quality
Local Government Units (LGUs) shall share standards which shall not exceed the
the responsibility in the management and maximum permissible standards set by
maintenance of air quality within their rational laws;
territorial jurisdiction. Consistent with
Sections 7, 8 and 9 of this Act, LGUs shall e) To coordinate with other government
implement air quality standards set by the agencies and non-governmental
Board in areas within their jurisdiction: organizations in the implementation of
Provided, however, That in case where the measures to prevent and control air
board has not been duly constituted and has pollution; and
not promulgated its standards, the standards
set forth in this Act shall apply. f) Exercise such other powers and perform
such duties and functions as may
The Department shall provide the LGUs be prescribed by law or ordinance:
with technical assistance, trainings and a Provided, however, That in provinces/
continuing capability-building program to cities/municipalities where there are
prepare them to undertake full administration no environment and natural resources
of the air quality management and regulation officers, the local executive concerned
within their territorial jurisdiction. may designate any of his official and/or
chief of office preferably the provincial,
SEC. 37. Environmental and Natural city or municipal agriculturist, or any of
Resources Office. – There may be established his employee: Provided, finally, That in
an Environment and Natural Resources case an employee is designated as such,
Office in every province, city, or municipality he must have sufficient experience in
which shall be headed by the environment environmental and natural resources
and natural resources officer and shall be management, conservation and
appointed by the Chief Executive of every utilization.
SEC. 38. Record-keeping, Inspection, or information shall likewise be incorporated
Monitoring and Entry by the Department. – in the Department’s industrial rating system.
The Department or its duly accredited entity
shall, after proper consultation and notice, SEC. 39. Public Education and Information
require any person who owns or operates Campaign. – A continuing air quality
any emission source or who is subject to any information and education campaign
requirement of this Act to: shall promoted by the Department, the
Department of Education, Culture and
(a) establish and maintain relevant records; Sports (DECS), the Department of the
Interior and Local Government (DILG),
(b) make relevant reports; the Department of Agriculture (DA) and
the Philippine Information Agency (PIA).
(c) install, use and maintain monitoring Consistent with Section 7 of this Act, such
equipment or methods; campaign shall encourage the participation
of other government agencies and the private
(d) sample emission, in accordance with the sector including NGOs, POs, the academe,
methods, locations, intervals and manner environmental groups and other private
prescribed by the Department; entities in a multi-sectoral information
campaign.
(e) keep records on control equipment
parameters, production variables or other Chapter V
indirect data when direct monitoring of Actions
emissions is impractical; and
SEC. 40. Administrative Action. – Without
(f) provide such other information as the prejudice to the right of any affected
Department may reasonably require. person to file an administrative action, the
Department shall, on its own instance or
Pursuant to this Act, the Department, through upon verified complaint by any person,
its authorized representatives, shall have the institute administrative proceedings against
right of: any person who violates:
(a) entry or access to any premises including (a) Standards or limitation provided under
documents and relevant materials as this Act; or
referred to in the herein preceding
paragraphs; (b) Any order, rule or regulation issued by
the Department with respect to such
(b) inspect any pollution or waste source, standard or limitation.
control device, monitoring equipment or
method required; and SEC. 41. Citizen Suits. – For purposes of
enforcing the provisions of this Act or its
(c) test any emission. implementing rules and regulations, any
citizen may file an appropriate civil, criminal
Any record, report or information obtained or administrative action in the proper
under this section shall be made available to courts against:
the public, except upon a satisfactory showing
to the Department by the entity concerned (a) Any person who violates or fails to
that the record, report or information, or parts comply with the provisions of this Act or
thereof, if made public, would divulge secret its implementing rules and regulations;
methods or processes entitled to protection or
as intellectual property. Such record, report
(b) The Department or other implementing determination not exceeding thirty (30) days
agencies with respect to orders, rules whether said legal action has been filed to
and regulations issued inconsistent with harass, vex, exert undue pressure or stifle such
this Act; and/or legal recourses of the person complaining of
or enforcing the provisions of this Act. Upon
(c) Any public officer who willfully or determination thereof, evidence warranting
grossly neglects the performance of an the same, the court shall dismiss the case and
act specifically enjoined as a duty by award attorney’s fees and double damages.
this Act or its implementing rules and
regulations; or abuses his authority in This provision shall also apply and benefit
the performance of his duty; or, in any public officers who are sued for acts
manner, improperly performs his duties committed in their official capacity, there
under this Act or its implementing rules being no grave abuse of authority, and done
and regulations: Provided, however, That in the course of enforcing this Act.
no suit can be filed until thirty-day (30)
notice has been given to the public officer SEC. 44. Lien Upon Personal and Immovable
and the alleged violator concerned and Properties of Violators. – Fines and penalties
no appropriate action has been taken imposed pursuant to this Act shall be liens
thereon. upon personal or immovable properties
of the violator. Such lien shall, in case of
The court shall exempt such action from the insolvency of the respondent violator, enjoy
payment of filing fees, except fees for actions preference subsequent to laborer’s wages
not capable of pecuniary estimations, and under Articles 2241 and 2242 of Republic Act
shall, likewise, upon prima facie showing of No. 386, otherwise known as the New Civil
the non-enforcement or violation complained Code of the Philippines.
of, exempt the plaintiff from the filing of
an injunction bond for the issuance of a Chapter VI
preliminary injunction. Fines and Penalties
Within thirty (30) days, the court shall make SEC. 45. Violation of Standards for
a determination if the compliant herein Stationary Sources. – For actual exceedance
is malicious and/or baseless and shall of any pollution or air quality standards
accordingly dismiss the action and award under this Act or its rules and regulations,
attorney’s fees and damages. the Department, through the Pollution
Adjudication Board (PAB), shall impose a fine
SEC. 42. Independence of Action. – The filing of not more than One hundred thousand
of an administrative suit against such person/ pesos (Php 100,000.00) for every day of
entity does not preclude the right of any violation against the owner or operator of
other person to file any criminal or civil action. a stationary source until such time that the
Such civil action shall proceed independently. standards have been complied with.
SEC. 43. Suits and Strategic Legal Actions For purposes of the application of the
Against Public Participation and the fines, the PAB shall prepare a fine rating
Enforcement of This Act. – Where a suit is system to adjust the maximum fine based
brought against a person who filed an action on the violator’s ability to pay, degree of
as provided in Section 41 of this Act, or against willfulness, degree of negligence, history of
any person, institution or government agency non-compliance and degree of recalcitrance:
that implements this Act, it shall be the duty Provided, That in case of negligence, the first
of the investigating prosecutor or the court, time offender’s ability to pay may likewise
as the case may be, to immediately make a be considered by the Pollution Adjudication
Board: Provided, further, That in the continuing custody of the impounded vehicle
absence of any extenuating or aggravating unless the appropriate penalties are fully
circumstances, the amount of fine for paid, and the license plate is surrendered
negligence shall be equivalent to one-half of to the DOTC pending the fulfillment of
the fine for willful violation. the undertaking by the owner/operator of
the motor vehicle to make the necessary
The fines herein prescribed shall be increased repairs so as to comply with the standards.
by at least ten percent (10%), every three A pass shall herein be issued by the DOTC
(3) years to compensate for inflation and to to authorize the use of the motor vehicle
maintain the deterrent function of such fines. within a specified period that shall not
exceed seven (7) days for the sole purpose
In addition to the fines, the PAB shall order of making the necessary repairs on the said
closure, suspension of development, vehicle. The owner/operator of the vehicle
construction, or operations of the stationary shall be required to correct its defects and
sources until such time that proper show proof of compliance to the appropriate
environmental safeguards are put in place: pollution control office before the vehicle
Provided, That an establishment found liable can be allowed to be driven on any public or
for a third offense shall suffer permanent subdivision roads.
closure immediately. This paragraph shall
be without prejudice to the immediate In addition, the driver and operator of the
issuance of an ex parte order for such closure, apprehended vehicle shall undergo a seminar
suspension of development or construction, on pollution control management conducted
or cessation of operations during the by the DOTC and shall also suffer the following
pendency of the case upon prima facie penalties:
evidence that there is imminent threat to life,
public health, safety or general welfare, or to a) First Offense – a fine not to exceed Two
plant or animal life, or whenever there is an Thousand Pesos (Php2,000.00);
exceedance of the emission standards set by
the Department and/or the Board and/or the b) Second Offense – a fine not less than
appropriate LGU. Two Thousand Pesos (Php2,000.00)
and not to exceed Four Thousand Pesos
SEC. 46. Violation of Standards for Motor (Php4,000.00); and
Vehicles. – No motor vehicle shall be
registered with the DOTC unless it meets the c) Third offense – one (1) year suspension
emission standards set by the Department as of the Motor Vehicle Registration (MVR)
provided in Section 21 hereof. and a fine of not less than Four Thousand
Pesos (Php4,000.00) and not more than
Any vehicle suspected of violation of Six thousand pesos (Php6,000.00).
emission standards through visual signs,
such as, but not limited to smoke-belching, Any violation of the provisions of Section
shall be subjected to an emission test by 21 paragraph (d) with regard to national
a duly authorized testing center, for this inspection and maintenance program,
purpose, the DOTC or its authorized testing including technicians and facility compliance
center shall establish a roadside inspection shall penalized with a fine of not less than
system. Should it be shown that there was no Thirty Thousand Pesos (Php30,000.00) or
violation of emission standards, the vehicle cancellation of license of both the technician
shall be immediately released. Otherwise, a and the center, or both, as determined by the
testing result indicating an exceedance of DTI.
the emission standards would warrant the

All law enforcement officials and deputized Offenders shall be punished with
agents accredited to conduct vehicle imprisonment of not less than six (6) years but
emissions testing and apprehensions shall not more than ten (10) years at the discretion
undergo a mandatory training on emission of the court. If the offender is a juridical
standards and regulations. For this purpose, person, the president, manager, directors,
the Department, together with the DOTC, trustees, the pollution control officer or the
DTI, DOST, Philippine National Police (PNP) officials directly in charge of the operations
and other concerned agencies and private shall suffer the penalty herein provided.
entities shall design a training program.
Chapter VII
SEC. 47. Fines and Penalties for Violations of Final Provisions
Other Provisions in the Act. – For violations of
all other provisions provided in this Act and of SEC. 49. Potential Loss or Shifts of Employment.
the rules and regulations thereof, a fine of not – The Secretary of Labor is hereby authorized
less than Ten thousand pesos (Php 10,000) to establish a compensation, retraining and
but not more than One Hundred thousand relocation program to assist workers laid off
Pesos (Php 100,000) or six (6) months to due to a company’s compliance with the
six (6) years imprisonment or both shall be provisions of this Act.
imposed. If the offender is a juridical person,
the president, manager, directors, trustees, SEC. 50. Appropriations. – An amount of
the pollution control officer or the officials Seven Hundred Fifty Million Pesos (Php
directly in charge of the operations shall 750,000,000.00) shall be appropriated for the
suffer the penalty herein provided. initial implementation of this Act, of which,
the amount of Three Hundred Million Pesos
SEC. 48. Gross Violations. – In case of gross (Php 300,000,000.00) shall be appropriated to
violation of this Act or its implementing rules the Department; Two Hundred Million Pesos
and regulations, the PAB shall recommend (Php 200,000,000.00) to the DTI; One Hundred
to the proper government agencies to file Fifty Million Pesos (Php 150,000,000.00) to
the appropriate criminal charges against the DOTC; and One Hundred Million Pesos
the violators. The PAB shall assist the public (Php 100,000,000.00) to the DOE.
prosecutor in the litigation of the case. Gross
violation shall mean: Thereafter, the amount necessary to
effectively carry out the provisions of
(a) three (3) or more specific offenses within this Act shall be included in the General
a period of one (1) year; Appropriations Act.
(b) three (3) or more specific offenses within SEC. 51. Implementing Rules and Regulations.
three (3) consecutive years; – The Department, in coordination with the
Committees on Environment and Ecology of
(c) blatant disregard of the orders of the PAB, the Senate and House of Representatives,
such as but not limited to the breaking of respectively and other concerned agencies,
seal, padlocks and other similar devices, shall promulgate the implementing rules and
or operating despite the existence of regulations for this Act, within one (1) year
an order for closure, discontinuance or after the enactment of this Act: Provided,
cessation of operation; and That rules and regulations issued by other
government agencies and instrumentalities
(d) irreparable or grave damage to the for the prevention and/or abatement of
environment as a consequence of any pollution not inconsistent with this Act shall
violation of the provisions of this Act. supplement the rules and regulations issued

by the Department pursuant to the provisions Speaker of the House of Representatives,
of this Act. respectively.
The draft of the implementing rules and The mandate given to the joint congressional
regulations shall be published and be the oversight committee under this Act shall be
subject of public consultations with affected without prejudice to the performance of
sectors. the duties and functions by the respective
existing oversight committees of the Senate
There shall be a mandatory review of the and the House of Representatives.
implementing rules and regulations and
standards set pursuant to the provisions of SEC. 54. Separability of Provisions. – If any
this Act. provision of this Act or the application of such
provision to any person or circumstances is
SEC. 52. Report to Congress. – The declared unconstitutional, the remainder of
Department shall report to Congress, not the Act or the application of such provision
later than March 30 of every year following to other persons or circumstances shall not
the approval of this Act, the progress of be affected by such declaration.
the pollution control efforts and make the
necessary recommendations in areas where SEC. 55. Repealing Clause. – Presidential
there is need for legislative action. Decree No. 1181 is hereby repealed.
Presidential Decrees Nos. 1152, 1586 and
SEC. 53. Joint Congressional Oversight Presidential Decree No. 984 are partly
Committee. – There is hereby created a modified. All other laws, orders, issuance,
joint congressional oversight committee to rules and regulations inconsistent herewith
monitor the implementation of this Act. The are hereby repealed or modified accordingly.
committee shall be composed of five (5)
senators and five (5) representatives to be SEC. 56. Effectivity. – This Act shall take
appointed by the Senate President and the effect fifteen (15) days from the date of its
Speaker of the House of Representatives, publication in the Official Gazette or in at least
respectively. The oversight committee shall be two (2) newspapers of general circulation.
co-chaired by a senator and a representative
designated by the Senate President and the Approved, 23 June 1999

MANDATING THE PHASE-OUT OF LEADED GASOLINE AS ONE OF THE MEANS OF SOLVING AIR
POLLUTION
WHEREAS, Section 16, Article II of the 1987 and supervise the implementation of the
Constitution provides that “The State shall government’s policies, plans and programs
protect and advance the right of the people pertaining to the management, conservation,
to a balanced and healthful ecology in accord development, use and replenishment of the
with the rhythm and harmony of nature;” country’s natural resource;”

WHEREAS, Section 4, Chapter I Title XIV, Book IV WHEREAS, the use of lead in gasoline is one
of the Administrative Code of 1987 empowers of the main causes of air pollution particularly
the Department of Environment and Natural in Metro Manila;
Resources (DENR) to “formulate, implement
WHEREAS, lead affects virtually every part of SEC. 3. The DENR, in coordination with
the body and has long been recognized as a the Department of Transportation and
neurotoxin with deleterious effects on the Communication (DOTC), DOE, DTI, and DOST
intelligence of human beings; on the other shall promote the adoption of necessary
hand, it is an additive for gasoline to prevent measures such as, but not limited to, the
knocking of engines as well as provide inspection, maintenance and use of emission
lubricity to engines with soft valves, and control systems in motor vehicles to control
the removal of such would require changes and reduce the pollution from motor vehicle
in the gasoline formulation and/or use of emissions.
replacement additives;
SEC. 4. The DENR, in coordination with the
WHEREAS, changes in the fuel formulation DOE, DOTC, DTI and non-governmental
may need corresponding complementing organizations (NGOs) shall conduct continuous
measures on its use, storage, handling and evaluation, monitoring and assessment of the
distribution; and phase-out activities and their impacts.

WHEREAS, it is the role of the government SEC. 5. The DENR in coordination with the
to ensure adequate and continuous supply Department of Education, Culture and Sports
of fuels, and at the same time ensure that (DECS), the Philippine Information Agency
other possible additives, contaminants, and (PIA), the Department of Interior and Local
components shall not reach harmful levels. Government (DILG), and other concerned
agencies and NGOs shall be involved in
NOW, THEREFORE, I, FIDEL V. RAMOS, a concerted effort for public information
President of the Republic of the Philippines, dissemination on this matter.
by virtue of the powers vested in me by law,
do hereby order: SEC. 6. In the implementation of this Executive
Order, the Secretary of Environment and
SECTION 1. The DENR, in coordination Natural Resources shall require manufacturers
with the Department of Energy (DOE), the and suppliers of fuel additives, and motor
Department of Trade and Industry (DTI), vehicles, as well as other entities that may be
and the Department of Finance (DOF) shall identified to:
mandate the phase-out of leaded gasoline
and the phase-in of unleaded gasoline (1) Coordinate with the DENR, DOE, DTI,
and other suitable unleaded replacement Department of Health (DOH) and DOST in
not later than 01 January 2000, in Metro the conduct of test/studies to determine
Manila, and nationwide by 01 January 2001 potential public health effects of such fuel
provided that unleaded gasoline and other or additive, including, but not limited to
unleaded replacements shall not result in the carcinogenic, teratogenic, or mutagenic
aggravation of pollution problems an undue effects; and
economic difficulties to users.
(2) Furnish the description of any analytical
SEC. 2. The DENR, in coordination with the technique that can be used to detect
DOE, DTI and the Department of Science and measure the recommended range
and Technology (DOST) shall formulate and or concentration of additive, and other
implement appropriate measures such as, necessary information to determine:
but not limited to, quality standards for the
fuel and facilities in the manufacture, storage, (i) the emissions resulting from the use
handling and distribution of unleaded gasoline of the fuel or the additive contained
and other suitable unleaded substitutes. in such fuel;

(ii) the effect of such fuel or additive on promulgate such rules and regulations as may
the emission control performance of be necessary for the effective implementation
any vehicle engine; and of this Executive Order.
(iii) the effect of fuel emission on public
health or welfare. SEC. 8. This Executive Order shall take effect
thirty (30) days following its publication in a
SEC. 7. Consistent with the Philippine newspaper of general circulation.
Agenda 21, the DENR, in coordination and
consultation with the concerned agencies Done in the City of Manila, this 26th day of
and sectors including business, labor and September in the year of Our Lord, Nineteen
civil society, shall, within six (6) months, Hundred and Ninety-Seven.
DENR ADMINISTRATIVE ORDER NO. 47

Series of 1998
IMPLEMENTING RULES AND REGULATIONS (IRR) FOR MANDATING THE PHASE-OUT OF

LEADED GASOLINE AS ONE OF THE MEANS OF SOLVING AIR POLLUTION.
Pursuant to Executive Order No. 446, series 3.1 Bulk Plant/Terminal/Depot – refers to
of 1997, entitled “Mandating the Phase-out an intermediate gasoline distribution
of Leaded Gasoline as One of the Means of facility where delivery of gasoline to
Solving Air Pollution,” the Department of and from the facility is solely by trucks,
Environment and Natural Resources hereby ships, barges, pipes, and other modes of
adopts and promulgates the following Rules transport.
and Regulations:
3.2 Department – refers to the Department
Chapter I of Environment and Natural Resources.
General Provisions and
Administrative Procedures 3.3 Final distribution facility – refers to
the facility where the gasoline will be
SECTION 1. Title. – These Rules and dispensed to the motor vehicles.
Regulations shall be cited as the “Implementing
Rules and Regulations Mandating the Phase- 3.4 Gasoline – refers to a volatile mixture of
out of Leaded Gasoline as One of the Means liquid hydrocarbons, generally containing
of Solving Air Pollution (1998).” small amounts of additives, suitable for
use as a fuel in spark-ignition internal
SEC. 2. Scope. – These Rules and Regulations combustion engines.
shall govern the implementation and
enforcement of Executive Order No. 446. 3.5 Gross Vehicle Mass or “GVM” –
refers to the technically permissible
SEC. 3. Definitions. – For the purpose of these maximum mass declared by the vehicle
Rules and Regulations, the following terms manufacturer.
shall, unless the context otherwise indicates,
have the following meanings: 3.6 Import facility – refers to the facility which
first receives the imported gasoline into
the country.

3.7 Production facility – refers to a facility for supply, gasoline from bulk plant or
that produces gasoline. final distribution facility in Metro Manila
unless the gasoline complies with the
3.8 Refiner – refers to any person who owns, latest issue of the Philippine National
leases, operates, controls or supervises a Standards (PNS): 1131 “Specifications for
refinery. Unleaded Motor Gasoline.” Nor shall any
person import leaded gasoline and lead-
3.9 Supply – means to provide or transfer a containing fuel additives after December
product to a physically separate facility, 31, 1999, except those that shall be used
vehicle, or transportation system. in areas outside of Metro Manila.

3.10 Motor Vehicle – means any vehicle 5.2 Beginning January 1, 2001, no person
propelled by a gasoline or diesel engine shall manufacture, sell, offer for sale,
or any other means other than human or dispense, transport or introduce into
animal power, constructed and operated commerce gasoline unless the gasoline
principally for the conveyance of persons complies with the latest issue of PNS:
or the transporting of property or goods 1131. However, beginning October 1,
on a public highway or street opened to 2000, no person shall import leaded
public use. gasoline and lead-containing fuel
additives.
3.11 Refinery – refers to a facility which
produces liquid fuels by distillation and Chapter II
other processes. Fuels and Facilities Quality Standards

SEC. 4. Department of Environment and SEC. 6. Standards: Fuel Quality Standards. –
Natural Resources (DENR) as Lead Agency.
– The DENR, through the Environmental 6.1 Scope: Standard for unleaded motor
Management Bureau (EMB) shall take gasoline shall refer to the latest issue of
the lead in implementing these rules and PNS 1131.
regulations, and shall in coordination and
consultation with other government agencies, 6.2 The specifications for unleaded motor
non-government organizations, private gasoline facilities such as but not limited
entities and institutions, pursuant to Sections to distribution pipes, storage tanks,
1 to 6 of Executive Order No. 446, enter dispensing units, shall be in accordance
into a Memorandum of Agreement (MOA) with the PNS for such facilities.
and/or other necessary and appropriate
legally binding instruments for the effective Chapter III
administration and enforcement of these Monitoring, Evaluation and Assessment
Rules and Regulations. Copies of all pertinent
reports, researches, studies, surveys, plans, SEC. 7. Scope. – This Chapter shall cover
programs and other documents to be the provisions on the monitoring, evaluation
submitted under these rules shall be furnished and assessment of the lead phase-out
to the EMB-DENR for the centralization of all activities and the corresponding institution to
necessary data. undertake the same.

SEC. 5. Applicability of Standards. – SEC. 8. Functions, Duties and Responsibilities.
– In line with Section 4 of these Rules
5.1 Beginning January 1, 2000, no person and Regulations, and in order to ensure
shall sell, offer for sale, supply or offer the effective monitoring, evaluation and

assessment of these rules and regulations, and regulate importation of spare parts
the following shall be the functions, duties designed for leaded gasoline.
and responsibilities of the various relevant
government agencies, which should not Chapter IV
exclude however, all other functions, duties Inspection/Maintenance and Emission
and responsibilities that are necessary and Control System
incidental to the implementation of these
Rules and Regulations. SEC. 9. Scope. – This Chapter shall pertain to
the control of exhaust emissions for gasoline-
The DENR shall conduct ambient air sampling fueled motor vehicles emphasizing regular
activities to determine the level of lead and proper vehicle maintenance and utilizing
and other fuel-related emissions in the air; appropriate test procedures and equipment.
conduct statistical evaluation of the results of
the ambient air sampling activities; monitor SEC. 10. Mandatory Periodic Inspection. –
the full and strict compliance of gasoline The mandatory periodic emission inspection
manufacturers, suppliers, distributors or for this type of vehicle shall be undertaken by
dealers of their duly approved phase-out the DOTC/Land Transportation Office (DOTC/
programs; and monitor the reduction of LTO) in coordination with the DENR under the
greenhouse gases and other toxic gases latter’s pertinent rules and regulations.
emissions.
SEC. 11. The DTI, in coordination with the
The Department of Energy (DOE) shall Chamber of Automotive Manufacturers of
monitor compliance with PNS 1131 through the Philippines, Inc. (CAMPI) shall ensure that
periodic random sampling and testing of all newly-manufactured/assembled gasoline-
unleaded gasoline samples from various fuelled motor vehicles, including motorcycles
facilities nationwide such as manufacturers, and mopeds to be introduced into the market
suppliers, dealers and other sources. It or imported effective January 1, 2000 shall be
shall also conduct studies on the effects of designed to operate on unleaded gasoline.
the phase-out to the relevant sectors but
not limited to the gasoline manufacturers, SEC. 12. Effective January 1, 2000, all newly-
dealers as well as the fuel users. manufactured/assembled vehicles, including
motorcycles and mopeds shall be equipped
The Department of Transportation and with anti-pollution devices necessary to meet
Communication (DOTC) and the University of the standards on exhaust emission.
the Philippines/National Center for Transport
Studies (UP/NCTS) shall establish estimates on Chapter V
the type of vehicles using lead and unleaded Public Information Dissemination
gasoline.
SEC. 13. The following shall be the duties
The Department of Health (DOH) shall and responsibilities of the various institutions
conduct monitoring activities on the health concerned:
impacts of the ambient air quality levels.
The Philippine Information Agency
The National Economic Development (PIA) shall coordinate the formulation
Authority (NEDA) shall conduct monitoring and implementation of an integrated
activities on the economic impacts of the Communications Plan on unleaded gasoline,
phase-out of leaded gasoline. and produce the necessary information,
education and communications materials
The Department of Trade and Industry (DTI) of such Plan, which shall include but not
shall act on complaints related to fuel quality be limited to the environmental, health,
economic and social implications and College of Public Health (CPH), DOH and
effects of the lead phase-out, and the NCTS shall come up with a research/study
phase-out schedules, programs and specific on the emission control applicable to the
requirements of gasoline manufacturers, unleaded gasoline. Likewise, in coordination
suppliers, distributors and dealers. It with concerned agencies, it shall undertake
shall also provide technical assistance in research to assess the effectiveness of various
the conceptualization of IEC materials on air pollution gadgets (e.g. catalytic converter)
unleaded gasoline and utilize its regional in reducing greenhouse and toxic gases
information centers in the dissemination of (carbon monoxide, nitrogen oxides, sulfur
information on the environmental, health, oxides, aromatics and benzene) emitted by
economic and social benefits of unleaded unleaded gasoline-fed vehicles and assess
gasoline. the resulting environmental and health
improvements of these gadgets.
The DENR/EMB, Public Affairs Office and
the Regional Offices, shall support the The DOST and DOH shall undertake the
Communications Plan implementation by quantitative analysis of volatile organics and
producing IEC materials such as radio and benzene on ambient air in Metro Manila
television plugs, brochures giving particular and appraise the potential health impacts of
emphasis on the environmental implications these substances.
and effects of unleaded gasoline.
The UP/College of Engineering (COE) shall
The Department of Education, Culture and undertake study on the engine performance
Sports (DECS), the Communication on Higher (e.g., fuel combustion, accumulation of
Education (CHED) and the Technical Education gasoline residues, etc.) on unleaded gasoline-
and Skills Development Authority (TESDA) fed vehicles.
shall mandate in schools the inclusion of
the teaching of the benefits of clean air The DOH and UP-CPH shall undertake
and unleaded gasoline in their curricula research on the health impact of unleaded
and teacher training programs. It shall also gasoline emissions.
launch and initiate information dissemination
campaigns on unleaded gasoline to the school SEC. 15. Fuel Additives. – The DOST shall
system, in the formal and non-formal levels. undertake research on the use of other
octane-enhancer additives (e.g. methyl
The Department of Interior and Local tertiary butyl ether etc. for unleaded
Government (DILG) shall support the gasoline); engine performance efficiency
Communications Plan implementation by using the alternative additives in comparison
producing IEC material on leaded gasoline with the leaded gasoline; and the quality and
phase-out. quantity of gas emitted using the alternative
additives.
All concerned agencies shall conduct public
information campaigns in support of the The DOST, in coordination with DOE and other
Communication Plan on unleaded gasoline concerned agencies shall conduct study/
phase-out. research on the alternative fuel additives for
unleaded gasoline.
Chapter VI
Research and Development Chapter VII
Prohibited Acts and Penalties
SEC. 14. Emission Control. – The DOST, in
coordination with the concerned agencies SEC. 16. Prohibitions. –
(DOTC/LTO, DENR/EMB, UP/COE, UP/
16.1 No person shall import, sell, offer for SEC. 18. Separability Clause. – If any section
sale, supply, or offer for supply gasoline or provision of these Rules and Regulations or
and lead containing fuel additive, part thereof, is declared unconstitutional or
the specifications of which are not invalid by a competent court, other sections
in conformity with those indicated in or provisions thereof, which are not thereby
Sections (5) and (6) of these rules and affected, shall continue to be in full force and
regulations. effect as though the sections or provisions
so annulled or voided had never been
16.2 No person shall import, sell, register or incorporated herein.
operate any new imported or locally
manufactured/assembled motor vehicle SEC. 19. Amendments. – These rules and
including motorcycle and moped that is regulations may be amended accordingly
not designed to use unleaded gasoline whenever deemed necessary and appropriate
immediately upon the publication of by the Department.
these Rules and Regulations.
SEC. 20. Repealing Clause. – All other
16.3 No person shall do other acts that issuances, policies, rules and regulations
are prohibited under these Rules and inconsistent with these rules are hereby
Regulations. revised, amended, modified, and/or
superseded accordingly.
SEC. 17. Penalties. – All acts and omissions
in violation of the provisions of these rules SEC. 21. Effectivity. – These rules and
and regulations shall be subject to the regulations shall take effect fifteen days
appropriate penalties provided for in the after publication in a newspaper of general
pertinent laws, Rules and Regulations of the circulation.
concerned government agencies.
VICTOR O. RAMOS
Chapter VIII Secretary
Final Provisions 29 June 1998

DENR ADMINISTRATIVE ORDER NO. 81, Series of 2000

Subject: IMPLEMENTING RULES AND REGULATIONS FOR RA 8749

Pursuant to the provisions of Section 51 of PART I

Republic Act No. 8749, otherwise known as GENERAL PROVISIONS
the “Philippine Clean Air Act of 1999,” and
by virtue of Executive Order No. 192, Series RULE I
of 1987, the Department of Environment PRELIMINARY PROVISIONS
and Natural Resources hereby adopts
and promulgates the following rules and Section 1. Title
regulations:
These Rules shall be known and cited as the
“Implementing Rules and Regulations of the
Philippine Clean Air Act of 1999.”

Section 2. Purpose RULE III
AIR QUALITY PRINCIPLES
The purpose of these Rules is to provide
guidelines on the operationalization of the Section 1. Air Quality Principles
Philippine Clean Air Act of 1999.
a. The State shall promote and protect
Section 3. Scope the global environment to attain
sustainable development while
These Rules shall lay down the powers and recognizing the primary responsibility
functions of the Department of Environment of local government units to deal with
and Natural Resources, the Department environmental problems.
of Transportation and Communication,
the Department of Trade and Industry, b. The State recognizes that the
the Department of Energy and all other responsibility of cleaning the habitat and
concerned agencies, the rights and obligations environment is primarily area-based and
of stakeholders and the rights and duties of that air quality management and control
the people with respect to the Air Quality is most effective at the level of airsheds.
Management and Control Program.
c. The State recognizes the principle that
Section 4. Construction “polluters must pay” and the important
role of economic instruments in air
These Implementing Rules and Regulations quality management and control.
shall be liberally construed to carry out the
national policy of balancing development d. The State recognizes that a clean and
and environmental protection through the healthy environment is for the good of all
pursuance of the framework of sustainable and should therefore be a concern of all.
development. Sustainable development shall
refer to development that meets the needs RULE IV
of the present without compromising the AIR QUALITY POLICIES
ability of future generations to meet their
own needs. Section 1. Air Quality Policies

RULE II It is the policy of the State to:
DECLARATION OF STATE POLICY
a. Formulate a comprehensive national
Section 1. Declaration of Policy program of air pollution management
that shall be implemented by the
It is the policy of the State to protect and government through proper delegation
advance the right of people to a balanced and and effective coordination of functions
healthful ecology in accord with the rhythm and activities;
and harmony of nature.
b. Encourage cooperation and self-
It is also the policy of the State to attain and regulation among citizens and industries
maintain a balance between development through the application of market-based
and environmental protection. instruments;

Finally, it is the policy of the State to maintain c. Focus primarily on pollution prevention
a quality of air that protects human health rather than on control and provide for
and welfare. a comprehensive management program
for air pollution, such as the promotion
of non-motorized transport, emphasis served timely notice of any significant
on public transport, and travel demand rise in the level of pollution and the
measures; accidental or deliberate release into the
atmosphere of harmful or hazardous
d. Promote public information and education substances;
and to encourage the participation of an
informed and active public in air quality f. The right of access to public records
planning and monitoring; and which a citizen may need to exercise his
or her rights effectively under the Act;
e. Formulate and enforce a system of
accountability for short and long-term g The right to bring action in court or quasi-
adverse environmental impact of a judicial bodies to enjoin all activities
project, program or activity. This shall in violation of environmental laws and
include the setting up of a funding or regulations, to compel the rehabilitation
guarantee mechanism for clean-up and clean-up of affected area, and to
and environmental rehabilitation and seek the imposition of penal sanctions
compensation for personal damages. against violators of environmental laws;
and
RULE V
RIGHTS
g. The right to bring action in court for

compensation of personal damages
Section 1. Recognition of Rights
resulting from the adverse environmental

and public health impact of a project or
Pursuant to the above-declared principles,
activity.
the following rights of citizens are hereby

sought to be recognized and the State shall
RULE VI
seek to guarantee their enjoyment:
DEFINITION OF TERMS

a. The right to breathe clean air;
Section 1. Definitions

b. The right to utilize and enjoy all natural
The following terms as used in these
resources according to the principles of
Implementing Rules and Regulations shall be
sustainable development;
defined as follows:

c. The right to participate in the
“Act”refers to Republic Act No. 8749,
formulation, planning, implementation
otherwise known as the “Philippine Clean Air
and monitoring of environmental policies
Act of 1999;”
and programs and in the decision-making

process;
“Air pollutant” means any matter found
in the atmosphere other than oxygen,
d. The right to participate in the decision-
nitrogen, water vapor, carbon dioxide, and
making process concerning development
the inert gases all in their natural or normal
policies, plans and programs projects or
concentrations, that is detrimental to health
activities that may have adverse impact
or the environment, which includes but not
on the environment and public health;
limited to smoke, dust, soot, cinder, fly ash,
solid particles of any kind, gases, fumes,
e. The right to be informed of the nature
chemical mists, contaminated steam and
and extent of the potential hazard of any
radioactive substances;
activity, undertaking or project and to be

“Air pollution” means any alteration of the in order to protect public health and/or
physical, chemical and biological properties public welfare, shall not be exceeded in the
of the atmosphere, or any discharge thereto breathing zone, at any time. Standards are
of any liquid, gaseous or solid substances enforceable and must be complied with by
that will or is likely to create or to render the owner or person in-charge of an industrial
the air resources of the country harmful, operation, process or trade;
detrimental, or injurious to public health,
safety or welfare or which will adversely affect “Authority to Construct” refers to the legal
their utilization for domestic, commercial, authorization granted by the Bureau to install
industrial, agricultural, recreational, or other a new source or modify an existing source;
legitimate purposes;
“Best Available Control Technology” refers to
“Air quality performance rating”refers to approaches, techniques or equipment which
a rating system to be developed by the when used, result in lower air emissions but
Department through the Bureau. the air in a cost-effective manner. BACT results in
quality performance ratings will be grouped lower emission rates than those specified in
by industry, and will compare emissions the National Emission Standards for Source
data for industrial sources to the relevant Specific Air Pollutants;
national ambient air quality standards and
the relevant national emissions standards for “Bio-medical waste” refers to pathological
source specific air pollutants; wastes, pharmaceutical wastes, chemical
wastes and sharps defined as follows:
“Airshed” refers to areas with common
weather or meteorological conditions and “Pathological wastes” include all
sources of air pollution which affect the human tissue (whether infected or
interchange and diffusion of pollution in the not) such as limbs, organs, fetuses
surrounding atmosphere; and body fluid; animal carcasses
and tissue, together with all related
“Ambient air quality” refers to the swabs and dressings;
atmosphere’s average purity in a broad area as
distinguished from discharge measurements “Pharmaceutical wastes” include
taken at the source of pollution or the present pharmaceutical products; drugs and
characteristic or nature of the surrounding chemicals that have been returned
atmosphere; from wards; have been spilled or
soiled; are expired or contaminated;
“Ambient air quality guideline values” refers or are to be discarded for any reason;
to the concentration of air over specified
periods classified as short-term and/or long- “Chemical wastes” include discarded
term which are intended to serve as goals or solid, liquid or gaseous chemicals from
objectives for the protection of health and/ laboratories or other sources such
or public welfare. These values shall be used as diagnostic work, environmental
for air quality management purposes such as work, cleaning, housekeeping and
determining time trends, evaluating stages disinfecting procedures;
of deterioration or enhancement of the air
quality. In general, used as a basis for taking “Sharps” include needles, syringes,
positive action in preventing, controlling, or scalpels, blades and any other items
abating health impacts from air pollution; that could cut or puncture;

“Ambient air quality standard” means the “Bureau” refers to the Central Office of the
concentration of an air pollutant which, Environmental Management Bureau and its
Regional Offices under the Department; months of notification of non-compliance by
the Bureau. The plan must include a schedule
“Cease and Desist Order” refers to the ex that will be enforceable;
parte Order directing the discontinuance
of the operation resulting in the emission “Compression Ignition Engine” means
or discharge of pollutants exceeding the an internal combustion engine in which
emission standards or whenever such atomized fuel temperature is raised through
emission or discharge constitutes imminent compression, resulting in ignition, e.g. diesel
threat to human, animal or plant life, public engines;
health or public safety. Non-compliance with
an undertaking or agreement submitted to “Completely Knocked-Down”(CKD) refers to
the Department shall likewise be a ground for new parts and components and/or engines
issuance of a CDO; that are imported in disassembled condition
for purposes of assembly. It may include not
“Certificate of Compliance to Emission only parts and components but also sub-
Standard” refers to a certificate issued by assemblies and assemblies, e.g. engines,
DOTC to a rebuilt vehicle(s) or second hand transmissions, axle assemblies, chassis and
vehicle(s) imported into the country based body assemblies;
on an inspection by the DOTC MVIS in
accordance with the emission standards of “Conformity of Production” refers to
these Implementing Rules and Regulations, the verification of the production units’
and as a requirement for initial registration of conformity with the requirements of the
the subject vehicle(s); Clean Air Act and these Implementing Rules
and Regulations;
“Certificate of Conformity” refers to the
certificate issued by the Department to a “Continuous Emission Monitoring System”
vehicle manufacturer/assembler or importer means the total equipment, required under
certifying that a particular new vehicle these Implementing Rules and Regulations
or vehicle type meets the requirements or as directed by the Bureau, used to sample
provided under this Act and its Implementing and condition (if applicable), analyze, and
Rules and Regulations; provide a permanent record of emissions or
process parameters. Such record shall be
“Certificate of Emission Compliance” refers the basis of the firm’s compliance with the
to a certificate issued by the DOTC or its emission standards. Further, it may be an
authorized emission testing center(s) for approved monitoring system for continuously
a vehicle apprehended during roadside measuring the emission of a pollutant from
inspection, certifying that the particular an affected source or facility and as such, may
vehicle meets the emission requirements of be used in computing annual emission fees;
these Implementing Rules and Regulations,
and which shall have no validity period; “Criteria Pollutants”are air pollutants for
which National Ambient Air Quality Guideline
“Completely Built-up Unit (CBU)” refers to Values have been established;
vehicles imported into the country either
brand new or used and ready for operation; “Department”refers to the Department of
Environment and Natural Resources;
“Compliance Plan”refers to a plan submitted
to the Bureau for approval which details how “Detoxification process”refers to the process
an existing stationary air emissions source of diminishing or removing the poisonous
will be brought into compliance. The owner quality of any substance using chelating agents
of the facility must submit the plan within two to prevent or reverse toxicity particularly for
those substances (e.g., heavy metals) that are emission rate for its typical annual operating
cumulative or persistent in the body; hours. Sources that are subject to different
allowable emission rates, such as National
“Director”means the Director of the Bureau; Emission Standards and Ambient Air Quality
Standards, must estimate the minimum
“Eco-profile”shall refer to the geographic- regulatory level on the standard that provides
based instrument for planners and decision- the lowest annual allowable tonnage. An
makers which presents an evaluation of the emission credit is equal to one ton of an air
environmental quality and carrying capacity pollutant;
of an area. It is the result of the integration
of various primary and secondary data “Environmental Management Systems”that
and information on natural resources and part of the overall, management system
anthropogenic activities on the land which that includes organizational structure,
are evaluated by various environmental risk planning activities, responsibilities, practices,
assessment and forecasting methodologies. procedures, processes and resources for
This will enable the Department to anticipate developing, implementing, achieving,
the type of development control that is reviewing and maintaining the environmental
necessary in the planning area; policy;

“Environmental Management Plan/
“Emission” means any measurable air Program”this is the plan or program for
contaminant, pollutant, gas stream or achieving the environmental objectives
unwanted sound from a known source which and targets of a project or undertaking. It
is passed into the atmosphere; includes the designation of responsibility
for achieving objectives and targets and the
“Emission averaging”is a technique whereby a means and time-frame by which they are
facility having more than one source of a given to be achieved. It details the prevention,
pollutant may, under certain circumstances mitigation, compensation, contingency and
and with Bureau approval, reduce emissions monitoring measures to enhance positive
from one or more sources sufficiently so impacts and minimize negative impacts of a
that the average of all the facility’s source project or undertaking;
emissions is equal to or below the applicable
standard for a particular pollutant. Emission “Environmental Management Systems
averaging is computed on an annual potential Audit” a systematic and documented
ton per year basis; verification process of objectively obtaining
and evaluating evidence to determine
“Emission Charge” refers to a fee whether an organization’s EMS conforms to
corresponding to the quality, quantity, volume the EMS audit criteria set by the organization
and toxicity of emissions from an industrial or and for communication of the results of this
mobile source; process to management;

“Emission Credits” are generated by sources “Episode” means a series of short-term air
that reduce their annual mass emissions pollution events that significantly alter the
below the equivalent minimum regulatory ambient air quality of an affected area;
level by either installing and operating
pollution control devices or by using other “Equivalent Method” refers to any technique
Bureau approved methods. The equivalent or procedure for sampling and/or analyzing
minimum regulatory level is based upon the an air pollutant which has been approved
lowest annual emissions in tons that results by the Bureau and demonstrated to have
when the source operates at its permitted a consistent and quantitatively known
relationship with the designated standard underground or surface waters, whether
method; shipped into the country or generated locally;

“Existing Source” means any source already “Hazardous wastes” are hazardous substances
erected, installed, and in operation; or any that are without any safe commercial,
source for which construction has been industrial, agricultural or economic usage and
offered for bidding or actual construction has are shipped, transported or brought from the
commenced prior to the date of effectivity of country of origin for dumping or disposal into
these Implementing Rules and Regulations. or in transit through any part of the territory
Any existing source which in the opinion of the of the Philippines. Hazardous wastes shall
Department has undergone a modification also refer to hazardous substances that are
after the date of adoption of an applicable by-products, side-products, process residues,
rule and regulation, shall be reclassified and spent reaction media, contaminated plant
considered a new source; or equipment or other substances from
manufacturing operations, and as consumer
“Governing Board”refers to a multi-sectoral discards of manufactured products;
body created under Section 9 of the Act to
effectively carry out and implement the air “Imported Used/Second-Hand Vehicle”
quality action plan of an airshed; means any used or second-hand motor
vehicle imported and registered in the
country of origin;
“Greenhouse gases” refers to those gases
such as carbon dioxide, methane, and oxides “Incineration”means the burning of
of nitrogen, chlorofluoro-carbons, and the municipal, bio-medical and hazardous wastes
others that can potentially or can reasonably which process emits toxic and poisonous
be expected to induce global warming; fumes;

“Gross Vehicle Mass or Weight” means the “Infectious waste” refers to soiled surgical
sum of the vehicle mass or weight and the dressings, swabs and other contaminated
allowable maximum payload as declared by waste from treatment areas; materials which
the vehicle manufacturer; have been in contact with persons or animals
suffering from infectious diseases; cultures
“Guideline” means an official and stocks of infectious agents from laboratory
recommendation or guidance on the work; dialysis equipment; apparatus and
protection of human beings or receptors in disposable gowns, aprons, gloves, towels, etc;
the environment from the adverse effects of waste from dialysis treatment area; waste
air pollutants; from patients in isolation wards; all materials
which may contain pathogens in sufficient
“Hazardous substances” refers to those concentration or quality that exposure to
substances which present either: (1) short- could result in disease;
term acute hazards such as acute toxicity
by ingestion, inhalation, or skin absorption, “Installation” means any structure,
corrosivity or other skin or eye contact hazard equipment, facility or appurtenances thereto,
or the risk of fire explosion; or (2) long-term operation of which may be a source of
toxicity upon repeated exposure, including pollution or a means to control the same;
carcinogenicity (which in some cases may
result in acute exposure but with a long “In-Use Vehicle” means a motor vehicle duly
latent period), resistance to the detoxification registered with the LTO;
process, or the potential to pollute

“Light Duty Vehicles” are motor vehicles “Modification”means any physical change or
whose gross vehicle weight is equal to or alteration in the method of operation of an
less than 3,500 kgs, in accordance with the existing source which increases the amount of
definition contained in Philippine National any air pollutant (to which a standard applies)
Standards (PNS) 1891. This also refers to emitted into the atmosphere by that source,
“Light Commercial Vehicles;” or which results in the emission of any air
pollutant (to which a standard applies) into
“Lowest Achievable Emission Rate” refers the atmosphere not previously permitted.
to any technology or combination of The following are exempted from the said
technologies and process controls that result definition:
in the lowest possible emissions of a given
air pollutant. Cost is not a consideration Routine maintenance, repair and
in determining applicable LAER for a given replacement shall not be considered
source; however, technical feasibility is. The physical changes if not intended to
technology must be reasonably demonstrated extend the useful life beyond the
to be appropriate and reliable for each equipment manufacturer’s design;
application;
An increase in the production rate
“Mandatory Inspection”refers to the interval provided the facility is permitted to
between testing and the tests performed, operate at the increased level and
as partial pre-condition for the renewal of such increase does not exceed the
registration of in-use motor vehicles; designed capacity of the existing
source; and

“Manufacturer or Assembler” means any An increase in hours of operation
entity or person who manufactures or provided that the facility is permitted
assembles motor vehicles, for eventual use in to operate for the increase in hours.
the Philippines;
“Motorcycle” refers to any two-wheeled
“Medical waste” means any solid waste that motor vehicle with at least one headlight,
is generated in the diagnosis, treatment, or taillight and stoplight, and one or more
immunization of human beings or animals, saddle seats. For purposes of these rules,
in research pertaining thereto, or in the motorcycles shall include motorcycles with
production or testing of biologicals; attached cars also known as “tricycles;”

“Medium/Heavy Duty Vehicles”refers to “Motor Vehicle” means any vehicle propelled
motor vehicles whose gross vehicle weight by a gasoline or diesel engine or by any
is greater than 3,500 kgs, in accordance with means other than human or animal power
the definition contained in PNS 1891; constructed and operated principally for the
conveyance of persons or the transportation
“Mobile source” means any vehicle/ of goods;
machine propelled by or through oxidation or
reduction reactions, including combustion of “Motor Vehicle Registration”refers to the
carbon-based or other fuel, constructed and official recording of a motor vehicle by the
operated principally for the conveyance of Land Transportation Office (LTO) subject to
persons or the transportation of property or the conformance of the vehicle to the safety
goods, that emit air pollutants as a reaction and emission standards provided under
product; Section 21 of the Act, including the pre-
evaluation of the documents/ requirements

pursuant to Section 5 of Republic Act 4136, knock characteristics of a grade or type
as amended, otherwise known as the Land of automotive gasoline as determined by
Transportation Code; dividing by two (2) the sum of the Research
Octane Number (RON), plus the Motor Octane
“Municipal waste” refers to the waste Number (MON). The octane requirement,
materials generated from communities within with respect to automotive gasoline for use
a specific locality; in a motor vehicle or a class thereof, whether
imported, manufactured, or assembled by a
“National Ambient Air Quality Guideline manufacturer, refers to the minimum octane
Values”are limits on criteria air pollutant rating or such automotive gasoline which
concentrations published by the Department, such manufacturer recommends for the
intended for the protection of public health, efficient operation of such motor vehicle,
safety, and general welfare; or substantial portion of such class, without
knocking;
“National Motor Vehicle Inspection and
Maintenance Program” refers to the set of “Opacity”means the amount of light obscured
projects and other activities and efforts all by particle pollution in the atmosphere;
designed to reduce the damaging impact of
air pollution and unsafe vehicles on health “Operator”means a person or entity that
and safety of the people, through adoption of manages a transport business but not
standards for emission and vehicle safety, and necessarily a vehicle owner;
a series of measures to ensure compliance
with them; “Owner” means the person or entity
identified as the motor vehicle owner in the
“New Motor Vehicle” means a vehicle motor vehicle registration or by a valid deed
constructed entirely from new parts that of sale;
has never been sold or registered with the
DOTC or with the appropriate agency or “Ozone Depleting Substances”(ODS) refers to
authority, and operated on the highways of those substances that significantly deplete or
the Philippines, any foreign state or country; otherwise modify the ozone layer in a manner
that is likely to result in adverse effects on
“New Source”means any plant, equipment, human health and the environment such
or installation in any trade, business or as, but not limited to, chlorofluorocarbons,
establishment which generates, emits or halons, and the like;
disposes air emissions into the atmosphere
and constructed after the date of effectivity “Particulate Matter” or “Suspended
of these Implementing Rules and Regulations. Particulate”means any material, other than
This includes any existing stationary source uncombined water, which exists in a finely
transferred or moved to a different location or divided form as a liquid or solid;
site for the purpose of installation, operation
or use after such date; “Passenger Car” refers to a four-wheeled
motor vehicle used for the carriage of not
“Normal Cubic Meter” (NCM) means the more than six passengers including the driver
volume of dry gas which occupies a cubic and having a gross vehicle mass not exceeding
meter measured at twenty five degrees Celsius 2,500 kg in accordance with the definition
(25o) at an absolute pressure equivalent to contained in PNS 1891;
seven hundred sixty (760) mm Hg;
“Permit”refers to the legal authorization
“Octane Rating”or the “Anti-Knock to engage in or conduct any construction,
Index”(AKI) means the rating of the anti- operation, modification or expansion of any
installation, operation or activity which will “Potential to emit” refers to the annual mass
be reasonably expected to be a source of emissions that would result from a source
pollution; when operating 8,760 hours per year. Actual
emissions are based on the actual hours of
“Permittee”refers to the owner, operator or operation per year;
entity who owns, leases, operates, controls
or supervises any source, facility, machine or “Rebuilt Motor Vehicle”means a locally
equipment; assembled vehicle using new or used engine,
major parts or components;
“Permit to Operate”refers to the legal
authorization granted by the Bureau to “Reference Mass or Weight” means the mass
operate or maintain any installation for a or weight of the vehicle in running order
specified period of time; with a full fuel tank and including the set of
tools and spare wheel, plus 100 kilograms but
“Permit Condition” refers to a statement or does not include the mass or weight of the
stipulation issued with a permit, compliance passengers and driver;
with which is necessary for continued validity
of the permit; “Regional Director”means the Regional
Director of any Regional Office;
“Persistent Organic Pollutants”(POPs)
means organic compounds that persist “Regional Office”means one of the Regional
in the environment, bio-accumulate Offices of the Bureau;
through the food web, and pose a risk of
causing adverse effects to human health “Ringelmann Chart” means the chart
and the environment. These compounds described in the U.S. Bureau of Mines,
resist photolytic, chemical and biological Information Circular No. 8333 and No. 7718,
degradation, and include but are not limited and used for measuring smoke opacity;
to dioxin, furan, Polychlorinated Biphenyls
(PCBs), organochlorine pesticides, such as “Siga” means the traditional small scale
aldrin, dieldrin, DDT, hexachlorobenzene, method of burning of wastes resulting from
lindane, toxaphene and chlordane; cleaning the backyard such as fallen leaves,
twigs, stems, and other similar matter from
“Poisonous and toxic fumes” means any plants and trees in the backyard where the
emission and fumes which do not conform to burning is done;
internationally-accepted standards, including
but not limited to, World Health Organization “Smoke Opacity Meter (or Opacimeter)”
(WHO) guideline values; means an instrument which determines the
smoke opacity in exhaust gases emitted by
“Pollution control device” refers to any the engine system.
device or apparatus that is used to prevent,
control, or abate the pollution of air caused “Spark-Ignition Engine” means an internal
by emissions from identified sources at levels combustion engine in which the air/fuel
within the air pollution standards established mixture is ignited by a spark plug, e.g., a
by the Department; gasoline engine;

“Pollution control technology”refers to “Standard of performance” means a standard
pollution control devices, production for emission of air pollutants which reflects
processes, fuel combustion processes or the degree of emission limitation achievable
other means that effectively prevent or through the application of the best system of
reduce emissions or effluents;
emission reduction, taking into account the “Useful Life of Vehicles and Engines” refers
cost of achieving such reduction and any non- to the period of time a vehicle and/or engine
air quality health and environment impact can be used, and meet standards of road
and energy requirement as determined by worthiness and engine emissions;
the Department through the Bureau;
“Vehicle Type”means a category of power-
“Stationary source”refers to any building or driven vehicles which do not differ in such
fixed structure, facility or installation that essentials as reference mass or weight,
emits or may emit any air pollutant; engine type, number of cylinders, body
configuration, manner of transmission, fuel
“Type Approval”refers to the official used and similar characteristics;
ratification of the compliance of a vehicle
type with applicable national or international
regulations;

PART II
NATIONAL AMBIENT AIR QUALITY GUIDELINES

RULE VII
NATIONAL AIR QUALITY

Section 1. National Ambient Air Quality Guideline Values
a. Pursuant to Section 12 of Republic Act 8749, the initial set of National Ambient Air Quality
Guideline Values necessary to protect public health and safety and general welfare shall be as
follows:
Table 1 National Ambient Air Quality Guideline Values

Short Terma Long Termb
Pollutants
µg/NCM ppm Averaging Time µg/NCM ppm Averaging Time
Suspended Particulate Matterc –
TSP 230d 24 hours 90 1 yeare
PM-10 150f 24 hours 60 1 yeare
Sulfur Dioxidec 180 0.07 24 hours 80 0.03 1 year
Nitrogen Dioxide 150 0.08 24 hours
140 0.07 1 hour
Photochemical Oxidants as Ozone
60 0.03 8 hours
35 mg/NCM 30 1 hour
Carbon Monoxide
10 mg/NCM 9 8 hours
Lead g
1.5 3 monthsg 1.0 1 year
a
Maximum limits represented by ninety- or forty-eight sampling days each year
eight percentile (98%) values not to is required for these methods. Daily
exceed more than once a year. sampling may be done in the future once
b
Arithmetic mean. continuous analyzers are procured and
become available.
c
SO2 and Suspended Particulate matter
are sampled once every six days when
d
Limits for Total Suspended Particulate
using the manual methods. A minimum Matter with mass median diameter less
of twelve sampling days per quarter than 25-50 m m.

e
Annual Geometric Mean. (c) An analyzer based on the principles and
f
Provisional limits for Suspended methods cited above will be considered
Particulate Matter with mass median a reference method only if it has been
diameter less than 10 m m and below designated as a reference method in
until sufficient monitoring data are accordance with 40 CFR, Part 53.
gathered to base a proper guideline.
(d) Other equivalent methods approved by
g
Evaluation of this guideline is carried out the Bureau may be adopted.
for 24-hour averaging time and averaged
over three moving calendar months. The Section 2. Review of Air Quality Guideline
monitored average value for any three Values
months shall not exceed the guideline
value. The Department through the Bureau shall,
on a routine basis, in coordination with other
(b) The applicable methods for sampling concerned agencies and programs such as the
measurement of the above pollutants are National Research and Development Program
as follows: for the Prevention and Control of Air Pollution,
review the list of Hazardous Air Pollutants
TSP – High Volume – Gravimetric, USEPA and Guideline Values and recommend to the
40 CFR, Part 50, Appendix B Secretary of the Department the revision
thereof whenever necessary to protect
PM-10 – High Volume with 10 micron public health and safety, and general welfare,
particle-size inlet; Gravimetric, consistent with the requirements of Rule XVII,
USEPA 40 CFR, Part 50, Appendix J Section 3.

Sulfur Dioxide – Gas Bubbler and Section 3. Publication of Revised Values
Pararosaniline Method (West
and Gaeke Method), or Flame Upon approval by the Secretary, the revised
Photometric Detector, USEPA 40 CFR, Ambient Air Quality Guideline Values shall be
Part 50, Appendix A published in one (1) newspaper of general
circulation and shall be posted on a public
Nitrogen Dioxide – Gas Bubbler Griess- Internet website.
Saltzman, or Chemiluminescence
Method, USEPA 40 CFR, Part 50, Section 4. Air Quality Indices
Appendix F
The Department through the Bureau, and in
Ozone – Neutral Buffer Potassium Iodide conjunction with the Department of Health
(NBKI), or Chemiluminescence (DOH) may formulate a pollution standard
Method,USEPA 40 CFR, Part 50, index of air quality to protect public health,
Appendix D safety and general welfare. Implementation
and enforcement of corrective actions
Carbon Monoxide – Non-dispersive contained in the index will be at the local
Infra-red Spectrophotometry (NDIR), government unit (LGU) level. Annex A contains
USEPA 40 CFR, Part 50, Appendix C the air quality indices and recommended
actions that each LGU may opt to follow.
Lead – High Volume and Atomic
Absorption Spectrophotometry,
USEPA 40 CFR, Part 50, Appendix G

PART III owner of the facility must submit the plan
MAINTENANCE OF within two (2) months of notification of non-
ATTAINMENT AREAS compliance by the Bureau. The plan must
include a schedule that will be enforceable
RULE VIII and may provide for as long as eighteen (18)
ATTAINMENT AREAS – GENERAL months to meet the applicable standards
after notice of non-compliance by the Bureau.
Section 1. Designation of Attainment Areas The Bureau may grant an extension of up to
twelve (12) months for good-faith actions
The Bureau shall delineate areas where the from the source owner.
existing ambient air quality is at or below
(that is, complies with) National Ambient Air Section 3. Emission Averaging and Emission
Quality Guideline Values given in Part II, and Trading
shall designate such areas as “attainment
areas.” Designation of attainment areas Compliance plans submitted under Section 2
will be based on monitoring data collected above may include use of emission averaging
using the reference methods in Part II and/ and emission trading as approved by the
or other relevant information, including Bureau and described in Rules XXI and XXII
meteorological data, and data covering respectively.
existing nearby sources. The Department
through the Bureau will designate attainment Section 4. Modification of Sources
and non-attainment areas, and will review
and revise these designations from time to Any existing source in an attainment area
time as relevant data become available. making a change or modification to its
process or production which results in an
Section 2. Review of Area Designation increase of POTENTIAL emissions equal to or
greater than the following shall be considered
The Bureau shall revise area designations as significant and subject to Rule X for the
additional data, whether monitoring, source affected pollutant(s).
or general knowledge, become available.
Results from reviews of area designations will Carbon Monoxide................. 100 tons per year
be made available for public comment. Nitrogen Oxides.................... 40 tons per year
Sulfur Dioxide....................... 40 tons per year
RULE IX TSP........................................ 25 tons per year
PM10.................................... 15 tons per year
EXISTING SOURCES IN ATTAINMENT AREAS
Volatile Organic

Compounds.......................... 40 tons per year
Section 1. Standards
Hydrogen Sulfide.................. 10 tons per year

Existing sources must comply with National
RULE X
Emission Standards for Source Specific Air
NEW/MODIFIED SOURCES
Pollution and Ambient Air Quality Standards
IN ATTAINMENT AREAS
pertaining to the source.

Section 1. Standards
Section 2. Non-compliance

New or modified sources must comply with
Sources not in compliance with Section 1
National Emission Standards for Source
above must submit a Compliance Plan to the
Specific Air Pollution and Ambient Air Quality
Bureau for approval, which details how the
Standards pertaining to the source.
source will be brought into compliance. The

Section 2. Best Available Control Technology Section 4. Emission Averaging and Emission
Trading
Sources subject to this Rule shall, in addition
to meeting the requirements of Section 1 of Sources subject to provision of this Rule
this Rule, install and operate Best Available shall not be eligible for emission averaging
Control Technology for each regulated however they may generate emission credits
pollutant with the potential to be emitted in for purposes of an acceptable emission
quantities equal to or greater than 100 tons trading program.
per year. Selection of the appropriate control
technology will be made in consultation and Section 5. Continuous Emission Monitoring
with the approval of the Bureau but in no
case shall it result in non-compliance with New and modified sources shall install
requirements of Section 1. Installation of and operate, according to manufacturer
the control equipment will be at the time of specifications, continuous emission
source construction or modification. monitoring systems (CEMS) for each
applicable pollutant listed in Section 4, Rule
Section 3. Increment Consumption IX that the source has the POTENTIAL to emit
in quantities equal to or greater than 100 tons
No new source may be constructed or per year. TSP and PM-10 fractions are not
existing source modified if emissions from the differentiated for purposes of this section;
proposed source or modification will, based therefore, applicability will be determined
on computer dispersion modeling, result in: by the total particulate matter expected to
be emitted for new sources, or as collected
Exceedance of the National Ambient Air by 40 CFR Part 60, Appendix A, Method 5 for
Quality Guideline Values; or modified sources. CEMS shall be applied as
follows:
An increase in existing ambient air levels
above the levels shown below All sources subject to this section: Sources
shall install and operate a CEMS for carbon
PM-10, annual arithmetic mean 17 dioxide and oxygen that meets criteria
micrograms per cubic meter provided in USEPA 40 CFR Part 60 Appendix
B, Performance Specification 3. Additionally,
PM-10, 24-hr maximum 30 micrograms per each source shall, as appropriate meet the
cubic meter following requirements:
Sulfur Dioxide, annual arithmetic mean 20 a. Particulate matter: Sources shall install
micrograms per cubic meter and operate a CEMS for opacity that
meets criteria provided in USEPA 40
Sulfur Dioxide, 24-hr maximum 91 micrograms CFR Part 60 Appendix B, Performance
per cubic meter Specification 1. The owner shall have the
additional requirement of establishing a
Nitrogen Dioxide, annual arithmetic mean 25 calibration curve showing the relationship
micrograms per cubic meter between opacity as measured by the
CEMS and mass particulate emission
In the case of multiple point sources at a rate as determined by Method 5. The
single facility, the net emissions from all calibration curve shall cover the full
affected sources shall be included in a single range of reasonably expected operating
increment analysis. conditions and/or process rates of the
source and shall consist of at least three
data points, one at maximum permitted
operations, one at maximum design Part II or as may be reasonably expected from
capacity, and one at 80% of the maximum existing nearby sources and meteorological
permitted rate. The Bureau may waive conditions. Special consideration will be
one test point if the permitted rate and given to populated areas where greater
maximum design capacity rate are the numbers of people may be exposed to
same. unhealthy air. The Department through the
Bureau will designate attainment and non-
b. Sulfur Dioxide and Nitrogen Oxides: attainment areas, and will review and revise
Sources shall install and operate a these designations from time to time as
CEMS for these parameters that meet relevant data becomes available.
criteria provided in USEPA 40 CFR Part 60
Appendix B, Performance Specification 2. An area may be designated as non-attainment
for one or more criteria pollutants, and may
c. Carbon Monoxide: Sources shall install be an attainment area for the remaining
and operate a CEMS for this parameter criteria pollutants.
that meets criteria provided in USEPA
40 CFR Part 60 Appendix B, Performance Section 2. Review of Area Designation
Specification 4 or 4A. The Bureau shall revise and/or confirm area
designations as additional data, whether
d. Hydrogen Sulfide: Sources shall install monitoring, sampling, source specific or
and operate a CEMS for this parameter general knowledge, becomes available.
that meets criteria provided in USEPA Results from reviews of area designations
40 CFR Part 60 Appendix B, Performance will be made available for public comment/
Specification 7. review.

The CEMS requirements under this Section RULE XII
shall not apply to refinery flares, as well as to EXISTING SOURCES IN
volatile organic compounds, unless a specific NON-ATTAINMENT AREAS
provision requires CEMS for volatile organic
compounds is included in the facility’s permit Section 1. Standards
to operate.
Existing sources must comply with all National
PART IV Emission Standards for Source Specific Air
MANAGEMENT OF Pollution and Ambient Air Quality Standards
NON-ATTAINMENT AREAS pertaining to the source.

RULE XI Section 2. Non-compliance
NON-ATTAINMENT AREAS – GENERAL
Sources not in compliance with Section 1
Section 1. Designation of Non-Attainment above must submit a Compliance Plan to the
Areas Bureau for approval which details how the
source will be brought into compliance. The
The Bureau shall designate and delineate owner of the facility must submit the plan
areas where the existing ambient air quality within two (2) months of notification of non-
is not in conformance with National Ambient compliance by the Bureau. The plan must
Air Quality Guideline values given in Part II as include a schedule that will be enforceable
“non-attainment areas.” Designation of non- and may provide for as long as eighteen (18)
attainment areas will be based on monitoring months to meet the applicable standards
data collected using the reference methods in after notice of non-compliance by the

Bureau. Extensions or grace periods will not (i.e., 200% of base) for any penalties or fines
be allowed in non-attainment areas. relating to a violation of the non-attainment
provisions.
Should the source failed to comply with its
commitment within the specified period RULE XIII
in the compliance plan, the Bureau shall NEW/MODIFIED SOURCES IN NON-
impose penalties and fines to be computed ATTAINMENT AREAS
retroactive from the time the notification of
non-compliance was served. Section 1. Standards

Section 3. Emission Averaging and Emission New or modified sources must comply with
Trading all National Emission Standards for Source
Specific Air Pollution and Ambient Air Quality
Existing sources located in non-attainment Standards pertaining to the source.
areas will be allowed to use emission
averaging for compliance purposes however, Section 2. Lowest Achievable Emission Rate
they will not be allowed to participate
in emission trading for the pollutant or New and modified sources (as defined in
pollutants for which the area is designated as Section 4 of Rule XII) shall install and operate
a non-attainment area, except as a generator air pollution control technology which will
(not user) of emission reduction credits. provide the lowest achievable emission rate
(LAER) of the pollutant for which the area is
Section 4. Modification of Sources designated non-attainment. The affected
firm will propose technologies it believes will
Any existing source located in a non- meet the intent of this regulation. The Bureau
attainment area and making a change in will approve the use of lowest achievable
process or production which increases emission rate control technologies on a case-
POTENTIAL emissions from the source of the by-case basis.
pollutant for which the area is designated non-
attainment, shall be classified as modified Section 3. Emission Offsets
and subject to Rule XIII. Equipment overhaul,
refurbishment, or upgrade to extend the life New and modified sources must provide
of the equipment beyond its normal useful offsets in existing actual emission within the
life is considered to be a modification if it non-attainment area in a ratio of 1:1.2 to the
result in the increase of POTENTIAL emissions POTENTIAL emission level of the proposed
for purposes of this Section. new or modified source. The offsets may
be made from any existing source in the
Section 5. Emission Fee Surcharge non-attainment area but must be actual,
demonstrable, enforceable and permanent.
Sources subject to the non-attainment The proposed offsets are subject to approval
provisions will be assessed a 50% surcharge by the Bureau.
(i.e., 150% of base) on the annual emission
fees for the pollutant(s) for which the area is Section 4. Emission Averaging and Emission
designated non-attainment. Trading

Section 6. Penalty and Fine Surcharge New and modified sources subject to the non-
attainment provisions may not use emission
Sources subject to the non-attainment trading or emission averaging for compliance
provisions will be subject to a 100% surcharge purposes.

Section 5. Continuous Emission Monitoring and stored in a manner accessible to the
public and shall contain data collected from
New and modified sources must install the Ambient Air Monitoring Network and
and operate, according to manufacturer the Emissions Inventory. The Bureau shall
specifications, continuous emission maintain and update the Air Quality Database.
monitoring devices for each pollutant for
which the area is in non-attainment and which Section 4. National Air Quality Status Report
the source emits. Application, installation
and operation of the CEMS shall meet criteria The Bureau shall prepare the Annual National
provided in Rule X Section 5. Air Quality Status Report which shall contain:

Section 6. Emission Fee, Penalty and Fine a. A summary of the extent of air pollution
Surcharge in the country, per type of pollutant and
per type of source;
Sections 5 and 6 of Rule XII above shall
apply to new and modified sources in non- b. An analysis and evaluation of the current
attainment areas. state, trends and projections of air
pollution;
PART V
AIR QUALITY MANAGEMENT SYSTEM c. An identification of critical areas,
activities, or projects which will need
RULE XIV closer monitoring or regulation;
AIR QUALITY MANAGEMENT
INFORMATION SYSTEM d. Recommendations for necessary
executive and legislative action, and
Section 1. Ambient Air Monitoring Network
e. Other pertinent qualitative and
The Bureau shall, within two (2) years from quantitative information concerning the
the effectivity of these Rules, design and extent of air pollution and the air quality
establish an Ambient Air Monitoring Network performance rating of industries in the
for the assessment of ambient air quality. country.
The Ambient Air Monitoring Network shall
be expanded gradually to cover the entire Upon approval by the Secretary of the
country. Department, the National Air Quality Status
Report shall be submitted to the Office of the
Section 2. Emissions Inventory President and to Congress on or before March
31 of every year and shall cover the preceding
The Bureau shall, within three (3) years from calendar year. The National Air Quality Status
the date of effectivity of these Rules, and every Report and other related reports shall be
three (3) years thereafter, make an inventory made available to the public.
of emissions from stationary, mobile and area
sources. Where possible, the Bureau shall RULE XV
coordinate with the Governing Boards. AIRSHEDS

Section 3. Air Quality Database Section 1. Authority

The Bureau and the National Statistical The Secretary of the Department, upon the
Coordination Board shall design the Air recommendation of the Bureau, shall divide
Quality Database which shall be computerized the geo-political regions of the country into
airsheds.
Section 2. Designation of Airsheds d. Representatives from people’s
organizations;
Designation of airsheds shall be on the
basis of, but not limited to, areas with e. Representatives from non-government
similar climate, weather, meteorology and organizations; and
topology which affect the interchange and
diffusion of pollutants in the atmosphere, or f. Representatives from the private sector.
areas which share common interest or face
similar development programs, prospects or There shall be two Deputy Chairpersons,
problems. Designation of airsheds shall be namely, the Department’s Regional Executive
revised as additional data, needs or situations Director and the Bureau’s Regional Director
arise. in the region where the airshed is located.
The ratio of Board representatives from
For a more effective air quality management, government agencies to those from the
a system of planning and coordination shall private sector and from civil society shall be
be established and a common action plan on the order of 5:2:2.
shall be formulated for each airshed.
Within six (6) months from the designation
Section 3. Initial Designation of Airsheds of a particular airshed, concerned POs, NGOs
and private business sector in the airshed or
The Department through the Bureau will with recognized interests in the airshed shall
designate the airshed, determine the choose their representatives by and among
attainment and non-attainment areas, and themselves through sectoral assemblies
will review and revise these designations convened for the purpose.
from time to time as relevant data becomes
available. Members of the governing board shall
serve for a term of three (3) years (or such
Section 4. Governing Board lesser time as may be permitted by the
term of office if publicly-elected officials)
Pursuant to Section 9 of the Act, a Governing without compensation, except for actual and
Board will be created for each airshed, to necessary expenses (i.e. traveling) incurred
effectively carry out the formulated action in the performance of their duty. When a
plans. vacancy occurs during the term of a member
from a PO, NGO or the private business
Section 5. Composition and Organizational sector, a new member shall be appointed by
Set-up of the Board the Governing Board for the remainder of the
unfinished term.
Each Governing Board shall be headed by the
Secretary of the Department as Chairman. Section 6. Functions of the Board
The members shall be as follows:
Each Governing Board shall perform the
a. Provincial Governors from areas following functions within its jurisdiction
belonging to the airshed; (airshed):
b. City/Municipal Mayors from areas a. Formulation of policies and standard-

belonging to the airshed or the MMDA setting subject to laws of national
Chairman in the case of Metro Manila; application;
c. A representative from each concerned b. Preparation of a common action plan;

government agency;
c. Coordination of functions among its Section 11. Governing Rules
members; and
Governing rules shall be formulated by and
d. Submission and publication of an annual for the individual Governing Boards. These
Air Quality Status Report for each airshed. governing rules shall be submitted for review
and comments by the Department to advise
Section 7. Executive Committee the Governing Boards of conflict in policies
and laws of national application.
An Executive Committee will be formed, for
the purpose of carrying out the day-to-day Section 12. Re-designation of Airshed
functions of the Governing Board, consisting Boundaries
of nine (9) persons: the Chairperson, two (2)
Deputy Chairpersons and six (6) members Upon consultation with appropriate local
while respecting the ratio of government government authorities, the Secretary of the
representatives to representatives from the Department, upon recommendation of the
private sector and civil society of 5:2:2. The Bureau shall, from time to time, revise the
members of the Committee shall be elected designation of airsheds utilizing eco-profiling
by the governing board at large for a term techniques and undertaking scientific studies.
of two (2) years. Where possible, members
of the Committee will be selected for their RULE XVI
expertise in the subject area. Representatives AIR QUALITY MANAGEMENT FUND
will be selected from the appropriate region.
Section 1. Air Quality Management Fund
Section 8. Technical Working Groups
An Air Quality Management Fund (AQMF)
Technical working groups will be formed to to be administered by the Department
ensure broad-based participation in the work through the Bureau as a special account in
of the Governing Boards. the National Treasury is hereby established to
finance containment, removal, and clean-up
Section 9. Technical Administrative operations of the Government in air pollution
Secretariat cases, guarantee restoration of ecosystems
and rehabilitate areas affected by the acts
The Bureau shall serve as the technical- of violators of this Act, to support research,
administrative secretariat for each Governing enforcement and monitoring activities and
Board. capabilities of the relevant agencies, as well
as to provide technical assistance to the
Section 10. Meetings relevant agencies. Such fund may likewise
be allocated per airshed for the undertakings
The Department shall provide basic funding herein stated.
from the Air Quality Management Fund for the
conduct of regular meetings of the Governing Section 2. Uses of Fund
Boards, the Executive Committee, Technical
Working Groups and other activities to be The AQMF will be used for activities that are
conducted in the implementation of the Act. in direct support of objectives outlined in the
Additional funding shall be made available to Air Quality Action Plan of the airsheds. The
support civil society activities aligned with AQMF will be reserved for national purposes
the implementation of the Act provided these and will be allocated among the airsheds.
activities are included in the common action This can mean support, grant, finance or
plan of the concerned airshed. otherwise assist activities such as, but not
limited to:
a. purchase of equipment related to reporting and project accounting) of qualified
air quality monitoring, reporting or or eligible projects and activities to be
management; supported by the AQMF. Individual Governing
Boards shall follow these criteria in allocating
b. running costs for special campaigns, those funds that are put at their disposal
monitoring, enforcement or public by the Department. Individual Governing
awareness raising; Boards shall set up special committees for this
purpose with members drawn from both the
c. costs for special events related to air government, private sector and civil society
quality monitoring, enforcement etc. members of each Governing Board.

d. funding of temporary staff positions in In order to promote transparency and
accredited organizations, of persons accountability, the Department will formulate
who have a TOR directly related to business standards, which will describe
implementation of AQAP; the scrutiny mechanisms of proposals as
well as maximum response times. The
e. research on air related issues; and Department will ensure the publication of
an Annual Report which specifies income
f. running costs of Governing Boards and and expenditure of the AQMF, together
their Technical Secretariats with a summary of initiatives supported and
refused. This Annual Report will be available
Section 3. Sources for the Air Quality within two (2) months after the end of the
Management Fund fiscal year.

Sources for the AQMF shall include: Section 5. Air Emission Fees for Stationary
Sources and for Mobile Sources
a. air emission charges from industrial
facilities; Air emission fees will initially be determined
based on the amount of revenue necessary
b. air emission charges from motor vehicles; to assure the successful implementation of
the Act as described in these Implementing
c. fines and penalties for non-compliance Rules and Regulations. The air emission fees
with environmental standards. This shall then be apportioned to stationary and
relates to both vehicular and industrial mobile sources based on estimated annual
related air pollution; mass emissions.

d. grants from both private sector and The Bureau shall use data contained in a
donor organizations.; and facility’s operating permit to estimate annual
mass emissions. Other data sources such as
e. a limited percentage (5-10%) of the annual fuel consumption and/or production
proceeds of the Program Loan for the rates may also be used as well as appropriate
Metro Manila Air Quality Improvement emission factors. Facility owners may, at
Sector Development Program. their option, install CEMS to determine actual
emission rates for purposes of calculating
Section 4. Decision Making on the Use of the annual emission fees. CEMS used for this
Air Quality Management Fund (AQMF) purpose must be installed and operated as
per criteria provided in Rule X Section 5.
The Department through the Bureau shall
formulate a detailed set of criteria (project The base air emission fee may be adjusted
design, project management, project in later years as new data becomes
available regarding the success of individual programmatic compliance program pursuant
components of the Act. to the implementing rules and regulations
of Presidential Decree No. 1586. However,
RULE XVII such sources shall remain subject to the
AIR POLLUTION RESEARCH AND requirements of these Implementing Rules
DEVELOPMENT PROGRAM and Regulations.

Section 1. National Research and Prior to implementation thereof, the
Development Program for the Prevention Department through the Bureau shall
and Control of Air Pollution consider, among others, the emission
inventory and the mass rate emission
The Department through the Bureau, in standards.
coordination with the Department of Science
and Technology (DOST), other agencies, PART VI
the private sector, the academe, NGOs and AIR POLLUTION CLEARANCES AND
POs shall, establish a National Research and PERMITS FOR STATIONARY SOURCES
Development Program for the Prevention and
Control of Air Pollution. RULE XIX
PERMIT REGULATIONS
Section 2. Development of Industry Wide
Applicable Methods Section 1. Permits Required

The Bureau shall give special emphasis to All sources of air pollution subject to these
research on and the development of improved Implementing Rules and Regulations must
methods having industry-wide application for have a valid Permit to Operate issued by the
the prevention and control of air pollution. Director. New or modified sources must first
obtain an Authority to Construct issued by
Section 3. Development of Air Quality the Director.
Guidelines
Section 2. Filing Fees for Applications
The National Research and Development
Program for the Prevention and Control of Air A fee to be determined by the Department
Pollution shall develop air quality guideline through the Bureau shall be paid upon the
values in addition to internationally-accepted filing of any of the following applications:
standards. It shall consider the socio-cultural,
political and economic implications of air a. Authority to Construct;
quality management and pollution control.
b. Permit to Operate;
RULE XVIII
EMISSION QUOTAS c. Transfer of an existing and valid Permit to
Operate by reason of transfer of location
Section 1. Emission Quotas of the installation or change of permittee
or both;
Subject to approval of the Department
through the Bureau, each regional industrial d. Revision of any existing and valid Authority
center designated as a special airshed can to Construct or Permit to Operate
allocate emission quotas to pollution sources involving alteration or replacement of
within its jurisdiction that qualify under an the installation;
environmental impact assessment system

e. Renewal of an expired Authority to or chemical engineer or a combination
Construct or Permit to Operate; of any two or all of them as may be
required by the Bureau depending upon
f. Any other application for a permit not the nature of the construction, operation
otherwise enumerated above. or activity sought to be covered by the
Authority to Construct. The plans shall
Filing fees for applications which have been clearly show in adequate detail the
denied shall not be refunded nor applied to proposed arrangement, location and
subsequent applications. size of the pollution control equipment
or facilities, including their accessories,
Section 3. Authority to Construct cross-sections and construction details.
The specifications shall be in sufficient
All proposed or planned construction or detail so that, when read in conjunction
modification of sources that has the potential with the plans, they clearly reveal the
to emit 100 tons per year or more of any of proposed means and methods for the
the regulated pollutants are hereby required control of pollution and their expected
an Authority to Construct approved by the performance efficiency.
Bureau before construction or modification
activities can take place. Applications shall c. The project proponent shall conduct an
be filed in four (4) copies and supported by air quality impact analysis using Bureau-
the official receipt of the filing fees and by approved computer dispersion models
such documents, information and data as and techniques. The impact analysis
may be required by the Bureau, including the shall estimate the resulting ambient air
following: concentrations for all significant pollutants
from the facility, and shall include the
a. An engineering report covering the plant existing ambient air concentrations as
description and operations, the estimated a baseline. The impact analysis will be
types, concentrations and quantities used by the Bureau, together with other
of all emissions to the atmosphere, the relevant information, to determine if the
proposed control facilities, the emission proposed construction or modification
rate and annual mass emission objectives, will result in a violation of an applicable
the design criteria for air pollution air quality standard.
control equipment to be used, and
other relevant information. The design d. A vicinity map adequately identifying the
criteria, if warranted, shall be based on street address, if any, of the location or
the results of laboratory and pilot plant premises of the installation.
scale studies. The design efficiencies of
the proposed air control equipment and The Bureau shall, within a reasonable time, act
the quantities and types of pollutants on the application for Authority to Construct
in the final emissions shall be indicated. either by issuing the corresponding Authority
Where confidential records are involved, to Construct or by denying the application in
the Bureau may limit the full disclosure writing stating the reason or reasons thereof.
of the same after discussions with the
applicant; The Authority to Construct shall be issued
subject to such conditions as the Department
b. The plans and specifications of the through the Bureau may deem reasonable
installation and its control facilities (in to impose and upon payment of the fees in
standard size of 50 cm by 90 cm) duly accordance with the schedule to be prepared
certified by a registered professional by the Bureau.
mechanical engineer, sanitary engineer
In case the application is denied, the applicant gathering techniques acceptable to the
may, within ten (10) days from notice of Bureau.
such denial, file only one written petition
for reconsideration. The decision on said c. A statement of compliance or non-
petition shall become final after ten (10) days compliance with Rule XXVI, Ambient
from receipt thereof. Air Quality Standards. The statement
of compliance shall be supported by
Section 4. Conversion of Authority to dispersion modeling data using modeling
Construct to Permit to Operate techniques and sampling approved by
the Bureau. For cases in which source
Once new source construction or sampling and analysis is not practical, the
modification is completed the source owner Bureau may approve the use of actual
shall, within sixty (60) days of startup, ambient air test data to demonstrate
request the authorizing agency (generally the compliance with the Ambient Air Quality
Department through the Bureau) to convert Standards, so long as the location and
the Authority to Construct to a Permit to conditions of the testing conform to a
Operate. A valid Permit to Operate will be “worst case” scenario as demonstrated
issued once the owner has demonstrated by air dispersion modeling.
to the satisfaction of the authorizing agency
that all permit conditions have been or will d. A compliance action plan for sources not
be met and that no air quality standards or meeting regulatory requirements. The
guidelines will be exceeded. The owner shall Compliance Plan may include provision
conduct source testing using methods and for use of emission averaging and/or
techniques approved by the Bureau as part of trading as allowed under Parts III and IV.
the demonstration.
e. A certification signed by the applicant
Section 5. Application for Permit to Operate attesting to the accuracy and
completeness of the application.
An application for a Permit to Operate shall
be filed for each source emitting regulated f. A signed copy of the appointment or
air pollutants. Facilities having more than designation of the pollution control
one source may group the sources under officer of the applicant; and
a single permit application, provided the
requirements below are met for each g. Other documents, information and data
individual source. Applications shall be made as may be required by the Department
in a format prescribed by the Department through the Bureau.
through the Bureau, filed in triplicate copies,
together with a copy of the official receipt of Requirements in the Permit to Operate will be
the filing fees and including the following: based on operating conditions at the time of
the test. For example, if the facility passes the
a. The information listed in Section 3 of this stack sampling test at 50% operating capacity,
Rule; then the Permit to Operate will require the
facility to operate at or below 50% operating
b. A statement of compliance or non- capacity.
compliance with Rule XXV (or, in the
case of incinerators, a statement of Section 6. Action on the Application for
compliance or non-compliance with Rule Permit to Operate
XXVIII. The statement of compliance
shall be supported with actual test data Within thirty (30) days from submission of
(such as stack sampling test data), or data the complete requirements, the Department
through the Bureau shall act on the application renewed by filing an application for renewal
for Permit to Operate by approving or denying at least thirty (30) days before its expiration
the same in writing. The Department through date and upon payment of the required fees
the Bureau may deny an application having and compliance with requirements.
incomplete requirements when the applicant
fails or refuses to complete the same despite Issuance of the permit shall not relieve
being given reasonable time to do so. the permittee from complying with the
requirements of the Act and these Rules
The Permit to Operate shall be issued or and that commencement of the work or
renewed every year subject to such conditions operation under such permit shall be deemed
as the Department through the Bureau acceptance of all the conditions therein
may deem reasonable to impose, and upon specified.
payment of the permit fees for air pollution
source and control facilities. Section 9. Grounds for Modification of
Permit Conditions
In case the application is denied, the applicant
may, within ten (10) days from notice of After due notice and public hearing, the
such denial file only one written petition Department through the Bureau may modify
for reconsideration. The decision on said any existing and valid permit by imposing new
petition shall become final after ten (10) days or additional conditions, provided that the
from receipt thereof. permittee is given reasonable time to comply
with such new or additional conditions, upon
Applications for a Permit to Operate shall be showing:
available for public review at the Department
Regional Office for the Region in which the a. That an improvement in emission quality
applicant’s facility is located. Any interested or quantity can be accomplished because
person may oppose the application for of technological advance without
a Permit to Operate in writing before its unreasonable hardship;
approval. In such a case, the Bureau may
conduct a public hearing on the application. b. That a higher degree of treatment is
necessary to effect the intents and
Section 7. Temporary Permit to Operate purposes of the applicable provisions of
these Rules and Regulations;
For purposes of sampling, planning, research
and other similar purposes, the Department c. That a change in the environment
through the Bureau, upon submission of or surrounding conditions requires a
satisfactory proof, may issue a Temporary modification of the installation covered
Permit to Operate not to exceed ninety by a permit to conform to applicable air
(90) days, provided that the applicant has a quality standards, as the case may be;
pending application for a Permit to Operate
under Section 5. d. That the area in which the permitted
facility is located has been changed from
Section 8. Life and General Conditions of an undesignated area or an attainment
Permit area to a non-attainment area for one or
more criteria pollutants, or;
A permit duly issued by the Department
through the Bureau shall be valid for the e. That the Act or these Rules and
period specified therein but not beyond one Regulations requires the modification of
(1) year from the date of issuance unless the permit conditions.
sooner suspended or revoked. It may be
Section 10. Grounds for Suspension or by reason of such transfer. It shall be the duty
Revocation of Permits of the transferee to file an application for
transfer of the permit in his name within ten
After due notice and hearing, the Department (10) days from notification of the Department
through the Bureau may suspend or revoke through the Bureau.
any existing and valid permit on any of the
following grounds: Section 13. Plant Operational Problems
In the event that the permittee is temporarily

a. Non-compliance with, or violation of
unable to comply with any of the conditions
any provision of act, these Rules and
of the Permit to Operate due to a breakdown
Regulations, and/or permit conditions;
of the installation covered by the permit
b. False or inaccurate information in the for any cause, he or his pollution control
application for permit that led to the officer shall immediately notify within 24
issuance of the permit; hours from occurrence of such breakdown
the Department through the Bureau of such
c. False or inaccurate information in the cause(s), and the steps being taken to solve the
monitoring data or in reports required by problem and prevent its recurrence, including
the Permit to Operate; the estimated duration of the breakdown,
the intent toward reconstruction or repair
d. Refusal to allow lawful inspection of such installation and such other relevant
conducted by the Department through information or data as may be required by
the Bureau of duly authorized personnel; the Department through the Bureau. The
e. Non-payment of the appropriate fees; Department through the Bureau shall be
immediately notified when the condition
f. Other valid purposes. causing the failure or breakdown has been
corrected and such source equipment or
Section 11. Posting of Permit facility is again in operation.

The permittee shall display the permit upon In such a case, the permittee may be subject to
the installation itself in such manner as to the payment of fines or penalties as provided
be clearly visible and accessible at all times. under Part XIII of these Implementing Rules
In the event that the permit cannot be so and Regulations.
placed, it shall be mounted in an accessible
and visible place near the installation covered Section 14. Monitoring and Reporting
by the permit.
The owner or the pollution control officer
No person shall willfully deface, alter, forge, in charge of the installation subject to the
counterfeit, or falsify any permit. provisions of these Implementing Rules
and Regulations shall keep a record of its
Section 12. Transfer of Permits operational data and control test indicating
its operational efficiency, and shall furnish a
In case of sale or legal transfer of a facility copy of the same to the Department through
covered by a permit, the permittee shall notify the Bureau quarterly in accordance with the
the Department through the Bureau of such procedures and/or programs approved by
and the name and address of the transferee the Department through the Bureau for this
within thirty (30) days from the date of sale purpose.
or transfer. In case of failure to do so, he shall
be liable for any violation of these Rules and A permit issued by the Department
Regulations that the transferee may commit through the Bureau will generally contain

source-specific monitoring and reporting RULE XXI
requirements for air pollutant concentrations EMISSION AVERAGING
at the point of emission, for determination
of compliance with the requirements of Rule Section 1. Applicability
XXV. These requirements may include, where
applicable, a provision that sample results Facilities having multiple sources within
for particulate matter shall be corrected a contiguous property and owned by the
to standard operating (or combustion) same entity may use emission averaging for
conditions such as 12% carbon dioxide. compliance purposes if provided for in either
Part III or Part IV.
RULE XX
FINANCIAL LIABILITY FOR ENVIRONMENTAL Section 2. Approach
REHABILITATION
Facility owners wishing to use emission
Section 1. Financial Guarantee Mechanisms averaging for compliance purposes must do
so through an enforceable Compliance Plan
As part of the environmental management submitted as a part of the operating permit
plan attached to the environmental application. The Bureau must approve the
compliance certificate (ECC) pursuant to Compliance Plan and application of emission
Presidential Decree No. 1586 and its rules averaging for it to be effective.
and regulations, the Bureau shall require
program and project proponents to put up Section 3. Requirements
financial guarantee mechanisms to finance
the needs for emergency response, clean- Facilities must install a CEMS approved by the
up or rehabilitation of areas that may be Bureau for the pollutant(s) to which emission
damaged during the program or actual averaging is being applied. The continuous
project implementation. Liability for damages emission monitoring system must be installed
shall continue even after the termination of a on each source subject to emission averaging.
program or project, where such damages are Application, installation and operation of the
clearly attributable to that program or project CEMS shall meet criteria provided in Rule X
and for a definite period to be determined by Section 5.
the Bureau and incorporated into the ECC.
RULE XXII
The Bureau may promulgate guidelines for EMISSIONS TRADING
the effective implementation of said financial
guarantee mechanisms. Section 1. Applicability

Section 2. Financial Liability Instruments Emissions trading may be allowed among
pollution sources within an airshed as
Financial liability instruments may be in the provided in Parts III and IV. Facilities located
form of a trust fund, environmental insurance, in different airsheds may use trading as
surety bonds, letters of credit, as well as approved by the Bureau.
self-insurance. The choice of the guarantee
instrument or combinations thereof shall Section 2. Approach
depend, among others, on the assessment
of risks involved. Proponents required to put Facility owners wishing to use emission
up guarantee instruments shall furnish the trading for compliance purposes must do
Bureau with evidence of availment of such so through an enforceable Compliance Plan
instruments. submitted as a part of the operating permit
application of each facility. The Bureau must
approve the Compliance Plan and application monitoring of emissions is impractical; and
of emission trading for it to be effective. (f) provide such other information as the
Environmental Management Bureau may
Section 3. Requirements reasonably require.

Facilities must install a CEMS approved by the Section 2. Right of Entry, Inspection and
Bureau for the pollutant(s) to which emission Testing
trading is being applied. The continuous
emission monitoring system must be installed Pursuant to the Act, the Bureau, through its
on each source that is being used to generate authorized representatives, shall have the
the emission reduction credits. Application, right of:
installation and operation of the CEMS shall
meet criteria provided in Rule X Section 5. (a) entry or access to any premises including
documents and relevant materials as
RULE XXIII referred to in the herein proceeding
SYSTEM OF INCENTIVES paragraph;

(b) inspect any pollution or waste source,
Section 1. Tax Incentives
control device, monitoring equipment or

method required; and
Industries, which shall install pollution control
devices or retrofit their existing facilities with (c) test any emission.
mechanisms that reduce pollution, shall be
entitled to tax incentives such as but not Section 3. Records Available to the Public
limited to tax credits and/or accelerated
depreciation deductions. The Department Any record, report or information obtained
in coordination with the DTI, DOF, NEDA and under this section shall be made available to
other concerned agencies shall develop the the public, except upon a satisfactory showing
guidelines on tax incentives. to the Bureau by the entity concerned that
the record, report or information, or parts
RULE XXIV thereof, if made public, would divulge secret
RECORD KEEPING, INSPECTION, methods or processes entitled to protection
MONITORING AND ENTRY as intellectual property. Such record, report
or information shall likewise be incorporated
Section 1. Required Relevant Reports and in the Bureau’s industrial rating system.
Records
The Bureau or its duly accredited entity PART VII

shall, after proper consultation and notice, POLLUTION FROM STATIONARY SOURCES
require any person who owns or operates
any emissions source or who is subject RULE XXV
to any requirement of this Act to : (a) STATIONARY SOURCES – GENERAL
establish and maintain relevant records;
(b) make relevant reports; (c) install, use Section 1. National Emission Standards for
and maintain monitoring equipment or Source Specific Air Pollutants
methods; (d) sample emission, in accordance
with the methods, locations, intervals and For any trade, industry, process, fuel-burning
manner prescribed by the Environmental equipment or industrial plant emitting air
Management Bureau; (e) keep records on pollutants, the concentration at the point of
control equipment parameters, production emission shall not exceed the limits set in
variables or other indirect data when direct Table 2.
Table 2
National Emission Standards for Source Specific Air Pollutants (NESSAP)
STANDARD MAXIMUM
METHOD OF
POLLUTANT APPLICABLE PERMISSIBLE METHOD OF ANALYSISa
SAMPLINGa
TO SOURCE LIMITS (mg/NCM)
USEPA Methods 1 AASb or per sampling
Antimony and its Cmpds. Any source 10 as Sb
through 5 or 29 method
Arsenic and its Cmpds. Any source 10 as As
10
Cadmium and its Cmpds. Any source as
Cd
Carbon Monoxide Any industrial source 500 as CO USEPA Method 3 or 10 Orsat Analysis or NDIR

Copper and its Cmpds. Any industrial source 100 as Cu
Hydrofluoric Acid and Any source other than manufacture of USEPA Method 13 or 14
50 as HF As per sampling method
Fluoride Compounds Aluminum from Alumina as appropriate
i) Geothermal power plants

c d
, Cadmium Sulfide Method
e
ii) Geothermal Exploration And Well USEPA Method 11, 15 or
Hydrogen Sulfide Testing
or 16 as appropriate
iii) Any source other than (i) and (ii) 7 as H2S per sampling method

Lead Any trade, industry or process 10 as Pb
through 5or 12 or 29 method
USEPA Methods 1 AASb / Cold-Vapor

Mercury Any source 5 as elemental Hg
through 5 or 29 or 101 Technique or Hg Analyzer
Nickel and its Cmpds. USEPA Methods 1 AASb or per sampling

Any source 20 as Ni
Except Nickel Carbonylf through 5 or 29 method
1. Manufacture of Nitric Acid
2. Fuel burning steam generators
2,000 as acid & NO2
a. Existing Source
calculated as NO2
b. New Source
1,500 as NO2
i. Coal-fired
1,000 as NO2
ii. Oil-fired
NOx 500 as NO2 USEPA Methods 1 Phenol-disulfonic acid
3. Diesel-powered electricity
2,000 as NO2 through 4 and Method Method or per sampling
generators
7 method
4. Any source other than (1), (2)
1,000 as NO2
and (3)
500 as NO2
a. Existing Source
b. New Source
1. Fuel Burning Equipment

150
a. Urbang and Industrial Areah
200
b. Other AreaI USEPA Methods 1 Gravimetric per sampling
Particulates 150
2. Cement Plants (kilns, etc.) through 5 method
150
3. Smelting Furnaces
200
4. Other Stationary Sourcesj
USEPA Methods 1 Spectrophotometry or per

Phosphorus Pentoxidek Any source 200 as P2O5
through 5 or 29 sampling method
1. Existing Sources
a. Manufacture of Sulfuric Acid and 2,000 as SO3
Sulf(on)ation Process 1,500 as SO2 USEPA Methods 1 As per sampling method
b. Fuel Burning Equipment 1,000 as SO3 through 4 and 6 or 8 as
c. Other Stationary Sourcesl appropriate
Sulfur Oxides 2. New Sources
a. Manufacture of Sulfuric Acid and 1,500 as SO3
Sulf(on)ation Process 700 as SO2
b. Fuel Burning Equipment 200 as SO3
c. Other Stationary Sourcesl
Zinc and its Compounds Any source 100 as Zn
a
Atomic Absorption Spectrophotometry.

b

c
All new geothermal power plants starting construction by support infrastructures, facilities and services such as
01 January 1995 shall control H2S emissions to not more roads, water supply, power supply, communication
than 150 g/GMW-Hr. systems, housing, storm drainage, sanitary sewerage
systems, industrial wastewater treatment facilities, etc.
d
All existing geothermal power plants shall control H2S These areas which are usually from 200 to 500 hectares
emissions to not more than 200 g/GMW-Hr. in size as registered with the (Housing and Land Use
Regulatory Board (HLURB ) or any other duly authorized
e
Best available control technology for air emissions and government entities as industrial estates, parks or area.
liquid discharges. Compliance with air and water quality Export processing zones also fall under this category of
standards is required. land use.
f
Emission limit of Nickel Carbonyl shall not exceed 0.5 mg/ i
Other Areas mean all areas other than an urban or
NCM. industrial area.
g
Urban Area means a poblacion or central district of cities j
Other Stationary Sources (particulate) means a trade,
or municipalities having at least 50,000 population, or process, industrial plant, or fuel burning equipment other
twin political subdivisions with contiguous boundary than thermal power plant, industrial boilers, cement
which essentially form one community whose population plants, incinerators, smelting furnaces.
is more than 50,000 inhabitants. Inside these centers or
population are some scattered industrial establishments. k
Provisional guideline.
h
Industrial Area means a well-defined, exclusive land use l
Other Stationary Sources (sulfur oxides) refers to existing
area in various stages of development that are primarily and new stationary sources other than those caused by
established for industrial subdivisions, manufacturing the manufacture of sulfuric acid and sulfonation process,
and other industry mixes with provisions for common fuel burning equipment and incineration.
Section 2. Visible Emission Standards for an aggregate of fifteen (15) minutes in
Smoke and Opacity any twenty-four (24) hours; provided
further, that at no time should the opacity
Visible opacity standards for smoke are as be darker than shade 3 of the chart; and
follows: provided finally, that this provisions shall
not apply to cases of dark emissions
a. The opacity of light or dark smoke emitted resulting from cold-start and up-set
from any emission point in all stationary conditions. Measurements of opacity
sources shall be such that, when shall be made in the manner specified by
compared in the appropriate manner the approved method employed for this
with the Ringelmann Chart method, or purpose.
using USEPA Method 9 (40 CFR, Part 60,
Appendix A), or an equivalent method Section 3. Absence of Emission Standard for
approved by the Department through the Other Air Pollutants
Bureau, visible emissions shall not appear
darker than shade 1 on the Ringelmann Where no emission or ambient standard is
Chart, nor exceed 20% opacity using prescribed hereof for a specific air pollutant
USEPA Method 9. that is potentially harmful to public health
and/or public welfare, the owner or operator
b. Exceptions to the requirements stated of an industrial plant or stationary source
herein may be allowed under the shall conduct its operation or process by the
following circumstances: The opacity best practicable means as may be necessary
limit hereinbefore prescribed shall not to prevent or minimize air pollution through
apply to the emission of dark smoke for the employment of cleaner production
less than five (5) minutes in a period technology and sound environmental
of one (1) hour provided that the total management practices.
period of such emission shall not exceed
a. The absence of the ambient air or emission the boiler room, furnace room,
standard for a specific air pollutant shall or control room;
not preclude the Department through
the Bureau to take appropriate action c. A smoke density indicator and
to control such pollutants to assure alarm installed so as to indicate
the health, welfare and comfort of the adequately in the boiler room,
general population. furnace room and control room
the density of smoke being
Section 4. Sampling Methods discharged;

Sampling for compliance purposes shall be d. A closed circuit television
conducted using the methods prescribed installation with the receiver
above or other equivalent method as located in the boiler room,
approved by the Department through the furnace room, or control room;
Bureau. Sampling shall be conducted under
routine operating conditions at the facility. e. Any similar device which may be
Operating conditions at the facility during approved by the Secretary.
compliance testing will be used by the Bureau
to establish permit conditions under which 2. All oil-burning equipment shall have
the facility may operate. heaters capable of heating oil to a
temperature appropriate for the oil
Section 5. Miscellaneous provisions and and burner.
Equipment
3. The following major industries
a. Stationary Fuel-Burning Equipment are required to install continuous
emission monitoring systems (CEMS)
1. The owner or operator of a stationary for particulate and sulfur oxide
fuel-burning equipment shall, if so emissions:
required by the Department through
the Bureau, provide a means to the a. Fossil fuel-fired power plant over
satisfaction of Secretary whereby 10 MW rating (including NOx);
a person in charge of such a plant
or equipment may at all times b. Petroleum refinery, petrochemical
ascertain without leaving the boiler Industries (including NOx);
room, furnace room, or control
room, whether or not dark smoke is c. Primary copper smelter
discharging from any stack or such (including NOx);
installation, such mean may include
one or more of the following: d. Steel plant, ferro-alloy
production facility (particulate
a. Window or opening through only); and
which an unobstructed view
of the top of the stack may be e. Cement Plant (par ticulate only).
obtained from the boiler room,
furnace room or control room; 4. New and existing sources falling
under paragraph (3) a), b), c) and
b. A mirror so placed as to reflect d) and new sources falling under
the top of the stack, which paragraph (3) e) shall comply with
reflection shall be visible from the requirements of installing

CEMS upon the effectivity of these protection of the public’s health and welfare.
Implementing Rules and Regulations.
Section 7. Harmonization with International
5. All existing sources falling under Standards
paragraph (3) e) shall comply with
the requirements of installing CEMS In the review and revision of emission
within twenty-four (24) months from standards, the Bureau shall, as appropriate,
the effectivity of these Implementing endeavor to achieve the harmonization of
Rules and Regulations. Application, national emissions standards with those set
installation and operation of the by regional bodies such as the Association of
CEMS shall meet criteria provided in South East Asian Nations (ASEAN).
Rule X Section 5.
Section 8. Self Monitoring Reports
b. Miscellaneous Equipment.
Each existing stationary source shall submit
Re-heating furnaces, smoke ovens, bake to the Bureau Regional Office where the
ovens, coffee heaters, varnish kettles, paint facility is located, a self-monitoring report
booths and similar equivalent shall be so of its emission rates, indicating the status of
designed that when operating, there is no compliance with current standards. The self-
free flow of objectionable gases into the monitoring report shall be submitted to the
atmosphere. To minimize the escape of Bureau within six (6) months of the effectivity
smoke, odors, fly ash or fumes, appropriate of these Implementing Rules & Regulations,
air pollution control facilities shall be installed. and within six (6) months of each official
revision of emission standards applicable to
Section 6. Review and Revision of Emission the source. The party or person responsible
Standards for the source shall assume responsibility for
demonstrating proof of compliance, which
The Bureau shall provide industries, non- the Bureau may subject to independent
government organizations (NGOs) and other verification if it deems necessary.
stakeholders the opportunity to participate
in the formulation and revision of standards, Section 9. Consent Agreement
determination of the technical feasibility of
the revised standards, setting the schedule of The Department, through the Pollution
implementation of the revised standards, and Adjudication Board (PAB) may reduce
other related concerns. Pursuant to Section penalties or fines to be imposed upon
19 of the Act, the Department through the stationary sources proven to exceed the
Bureau shall review, or as the need arises, emission rate requirements of its Permit to
revise and publish emissions standards to Operate or of these Implementing Rules and
further improve the emission standards for Regulations, provided that the person or
stationary sources of air pollution. Such party responsible for the source enters into a
emission standards shall be based on mass consent agreement with the Bureau, subject
rate of emission for all stationary sources to confirmation by the PAB, in which the
of air pollution based on internationally- responsible party shall:
accepted standards, but not be limited to,
nor be less stringent than such standards and a. Implement an Environmental
with the standards set forth in this Rule. The Management System (EMS) within
standards, whichever is applicable, shall be eighteen (18) months of entering into said
the limit on the acceptable level of pollutants agreement using scope and procedures
emitted from a stationary source for the specified in Philippine National Standard
1701 on establishing an EMS;
b. Submit an Environmental Management This report, including a determination of
Plan (EMP) derived from the EMS process the EMS’s conformity to PNS 1701, shall be
within six (6) months of entering into a submitted for review and acceptance by the
consent agreement. The EMP shall specify Bureau Regional Director within eighteen
a timetable for attaining compliance with (18) months from the signing of a consent
all environmental regulations as well agreement.
as the means with which to accomplish
compliance, with emphasis on pollution Section 12. Failure to Comply with Consent
prevention methods and not limited to Agreement
installation of pollution control devices;
Failure of the stationary source to comply
c. Post a performance bond acceptable to with the timetable specified in the consent
the PAB, not to exceed P 500,000 but not agreement shall be sufficient ground for
less that P 50,000 depending on the size of closure through a Cease and Desist Order
the facility, which shall be forfeited upon (CDO) issued by the PAB. Further, the facility
failure to submit proof of an approved owner shall be subject to the reimposition of
EMS within eighteen (18) months, and the original penalty (subject of the reduction)
provided that an extension of not more as well as additional appropriate penalties
than twelve (12) months may be allowed computed on a daily basis pursuant to Section
by the Bureau on meritorious grounds. 45 of the Act.

The consent agreement shall incorporate Section 13. Prohibited Acts
requirements for environmental performance
through timetables and reporting of a. Fugitive Particulates.
performance, in addition to commitments
and procedures adopted in the EMP. The No person shall cause, let, permit, suffer
consent agreement shall be without prejudice or allow the emission of particulate
to possible payment/liability for damages to matter from any source whatsoever,
third parties (e.g. private persons). including, but not limited to, vehicular
movement, transportation of materials,
Section 10. Compliance Timetable Beyond construction, alternation, demolition or
Eighteen (18) Months wrecking or industry related activities
such as loading, storing or “handling,”
Sources proposing timetables longer than without taking reasonable precautions to
eighteen (18) months for reaching compliance prevent such emission. Such reasonable
shall be required to first conduct a public precaution shall include, but not be
consultation before the consent agreement limited to, the following:
be finalized.
1. Use, where possible, of water or
Section 11. Proof of an Environmental chemicals for control of dust in the
Management System demolition of existing buildings or
structure, construction, operations,
Proof of an approved EMS shall be in the form the grinding of rock, quarry or
of an EMS audit report prepared internally clearing of lands.
by the person or party responsible for the
facility, or one prepared by a third party EMS 2. Application of asphalt, oil water,
auditor. The audit report shall be prepared or suitable chemicals on roads,
by a person or company certified under an materials stockpiles, and other
international EMS standard such as ISO 14001 surface which create airborne dust
or an equivalent approved by the Bureau. problem; and
3. Installation and use of hoods fans quantity. Violators, upon determination
and fabric filters or other suitable by the Department through the Bureau,
control devices to enclose and vent shall be penalized in accordance with
the handling of dusty materials. the provisions of Part XIII of these
Adequate containment methods shall Implementing Rules and Regulations.
be employed during sandblasting or
other similar operations. e. General Restrictions

b. Volatile Organic Compounds or Organic 1. No plant or source shall operate at
Solvent Emissions. capacities which exceed the limits of
operation or capability of a control
No person shall store, pump, handle, device to maintain the air emission
process, unload or use in any process or within the standard limita-tions
installation, volatile compound or organic imposed by the Act or by relevant
solvents without applying known existing permit conditions issued by the
vapor emission control devices or systems Department through the Bureau.
deemed necessary and approved by the
Department through the Bureau. 2. No person shall build, erect,
construct, install, or implant any
c. Nuisance. new source, or operate, modify, or
rebuild an existing source, or by any
No person shall discharge from any other means release or take action
source whatsoever such quantities of air which would result in, together with
contaminants or other material which the concentrations of existing air
constitute nuisance as defined under pollutants, ambient air concentration
Articles 694 to 707 of Republic Act No. greater than the ambient air quality
385, otherwise known as the Civil Code standards specified in Section 12 (b)
of the Philippines. of the Act.

d. Open Burning. 3. No person shall build, erect install or
use any article, machine, equipment
No person shall be allowed to burn any or other contrivance, the use of
materials in any quantities which shall which will conceal an emission
cause the emission of toxic and poisonous which would otherwise constitute
fumes. Such materials include but are a violation of any of the provisions
not limited to plastic, polyvinyl chloride, of these Implemen-ting Rules and
paints, ink, wastes containing heavy Regulations.
metals, organic chemicals, petroleum
related compound, industrial wastes, 4. No person shall cause or permit the
ozone depleting substances and other installation or use of any device or
similar toxic and hazardous substances. any means which, without resulting
in reduction in the total amount of
Further, no establishment, firm, air contaminant emitted, conceals
company, government or private entity or dilutes any emission of air
or organizations shall be allowed to contaminant which would otherwise
burn or cause open burning of waste violate the provisions of permit
materials in their premises, area of regulations of Rule XIX.
jurisdiction, including recognized or
unrecognized dumpsites in any quality or

5. All pollution control devices and in airborne concentrations in excess of the
systems shall be properly and National Ambient Air Quality Standards
consistently maintained and shown in Table 3 shall not be permitted.
correctly operated in order to Sampling shall be done at the location of
maintain emission in compliance highest expected concentration. Location
with the provisions and standards of shall be determined using dispersion
Section 19 of the Act. No facilities modeling. Bureau-approved techniques
shall be operated without the control shall be followed in developing sampling
equipment in proper operation, plans. For example, the Bureau’s Air Quality
except with the permission of the Monitoring Manual specifies that sampling
Department through the Bureau shall be done at an elevation of at least two
when special circumstances arise. (2) meters above the ground level, and shall
be conducted either at the property line or at
RULE XXVI a downwind distance of five (5) to twenty (20)
SOURCES SPECIFIC AMBIENT AIR QUALITY times the stack height, whichever is more
STANDARDS stringent. However, the Bureau may approve
the adoption of a different procedure in the
Section 1. National Ambient Air Quality choice of the location of the monitoring
Standards equipment depending upon the physical
surrounding and other relevant factors in the
For any industrial establishment or operation, area where the sampling is to be conducted.
the discharge of air pollutants that result
Table 3
National Ambient Air Quality Standards for Source Specific Air Pollutants
from Industrial Sources/Operations
Concentration a Averaging
Pollutants µg/NCM Ppm Time (min) Method of Analysis/Measurement c
Ammonia 200 .028 30 Nesselerization / Indo Phenol
Carbon Disulfide 30 0.01 30 Tischer Method
Chlorine and Chlorine cmpds expressed as CL2 100 0.03 5 Methyl Orange
Chromotropic Acid method or MBTH
Formaldehyde 50 0.04 30
Colorimetric method
Hydrogen Chloride 200 0.13 30 Volhard Titration with Iodine solution
Hydrogen Sulfide 100 0.07 30 Methylene Blue
Lead 20 30 AASb
375 0.20 30
Nitrogen Dioxide Griess-Saltzman
260 0.14 60
Phenol 100 0.03 30 4-Aminoantipyrine
470 0.18 30
Sulfur Dioxide Colorimeteric-Pararosaline
340 0.13 60
Suspended Particulate Matter – TSP 300 -- 60 Gravimetric
PM-10 200 -- 60 Gravimetric
Antimony 0.02 mg/NCM -- 30 AASb
Arsenic 0.02 mg/NCM -- 30 AASb
Cadmium 0.01 mg/NCM -- 30 AASb
2 x 10 6
Asbestos Particulate/NCM -- 30 Light Microscopy

(over 5 micrometer in size)
Sulfuric Acid 0.3 mg/NCM -- 30 Titration

Nitric Acid 0.4 mg/NCM -- 30 Titration
a
Ninety-eight percentile (98%) values of 30-min. sampling measured at 25 C and one atmosphere pressure
o
b
Atomic Absorption Spectrophotometry.
c
Other equivalent methods approved by the Department through the Bureau may be used.

Section 2. Review of Ambient Air Quality technological basis/standards for
Standards emission limits applicable to existing,
direct industrial emitters of non-
The Bureau shall provide industries, non- conventional and toxic pollutants; and
government organizations (NGOs) and other
stakeholders the opportunity to participate c. Alternative fuels, processes and
in the formulation and revision of standards, operating methods which will result in
determination of the technical feasibility of the elimination or significant reduction
the revised standards, setting the schedule of emissions.
of implementation of the revised standards,
and other related concerns. The Bureau Such information may also include data
shall, on an annual basis, in coordination with relating to the cost of installation and
other concerned agencies, review the list of operation, energy requirement, emissions
Hazardous Air Pollutants and the National reduction benefits, and environmental impact
Ambient Air Quality Standards for Source or the emission control technology.
Specific Air Pollutants under Section 12 of
the Act and recommend to the Secretary of Section 2. Air Quality Control Techniques
the Department the revision thereof when Database
necessary to protect public health and safety,
and general welfare. The Bureau may establish an Air Quality
Control Techniques Database.
Section 3. Publication of Revised Standards
RULE XXVIII
Upon approval by the Secretary of the NON-BURN TECHNOLOGIES
Department, the revised Ambient Air Quality
Standards shall be published in a newspaper Section 1. Incineration Prohibited
of general circulation and may be posted on a
public Internet website. Pursuant to Section 20 of the Act, incineration,
hereby defined as the burning of municipal,
RULE XXVII bio-medical and hazardous wastes, which
AIR QUALITY CONTROL TECHNIQUES process emits toxic and poisonous fumes is
prohibited.
Section 1. Air Quality Control Techniques
Section 2. Non-Burn Technologies
Simultaneous with the issuance of the
Ambient Air Quality Guideline Values, the With due concern on the effects of climate
Bureau, through the National Research and change, the Bureau shall promote the use of
Development Program contained in the Act, state-of-the-art, environmentally-sound and
and upon consultation with the appropriate safe thermal and non-burn technologies for
advisory committees, government agencies the handling, treatment, thermal destruction,
and LGUs, shall issue, and from time to time, utilization, and disposal of sorted, un-
revise information on air pollution control recycled, un-composted, biomedical and
techniques. Such information shall include: hazardous wastes.

a. Best available technology and alternative Non-burn technologies are technologies
methods of prevention, management used for the destruction, decomposition or
and control of air pollution; conversion of wastes other than through the
use of combustion and which comply with at
b. Best available technology economically least one of the following conditions:
achievable which refers to the
a. The environment within the destruction c. Compliance with all other relevant
chamber is free of Oxygen; or requirements of these Implementing
b. Fire is not used within the destruction Rules and Regulations. In cases where
chamber; or the requirements of this Rule are more
restrictive than those of the other
c. The source of heat is not fire; or requirements of the Implementing Rules
d. A heat-conducting material or medium, and Regulations, the more restrictive
whether of a solid, liquid, gaseous, sol or requirements shall apply.
gel form, is used to destroy the waste.
Section 3. Emission Standards for Treatment
Non-burn technologies may be used provided Facilities Using Non-Burn Technologies
that the following conditions are strictly
complied with: Emissions from treatment facilities using
non burn technologies shall be deemed
a. Applicable emission standards are not toxic and poisonous when they result from
exceeded; the processing of chlorinated compounds,
or when they exceed the following emission
b. Installation and approved use of CEMS
standards set forth in Tables 4 and 5.
measuring PM, NO2, CO, Chlorine and
temperature;
Table 4
Daily and Half Hourly Average Limits – Treatment Facilities
Using Non-burn Technologies
Daily Average
Item Half Hourly Average Values
Values
Particulates (total dust) 10 mg/NCM 30 mg/NCM
Gaseous and vaporous organic substances, expressed
10 mg/NCM 20 mg/NCM
as total organic carbon
Hydrogen chloride (HCl) 10 mg/NCM 60 mg/NCM
Hydrogen fluoride (HF) 1 mg/NCM 4 mg/NCM
Sulfur dioxide (SO2) 50 mg/NCM 200 mg/NCM
Nitrogen monoxide (NO) and Nitrogen dioxide (NO2),
expressed as nitrogen dioxide for incineration plants 200 mg/NCM 400 mg/NCM
with a capacity exceeding 3 tonnes per hour
Nitrogen monoxide (NO) and nitrogen dioxide (NO2),
expressed as nitrogen dioxide for incineration plants 300 mg/NCM --
with a capacity of 3 tonnes per hour or less
Ammonia 10 mg/NCM 20 mg/NCM

Table 5
Limits for Metals, Dioxins and Furans – Treatment Facilities Using Non-burn Technologies
Item Average Valuesa

Cadmium and its compounds, expressed as cadmium (Cd)
total 0.05mg/NCM
Thallium and its compounds, expressed as thallium (Tl)
Mercury and its Compounds, expressed as mercury (Hg) 0.05 mg/NCM
Antimony and its compounds, expressed as antimony (Sb)
Arsenic and its compounds, expressed as arsenic (As)
Lead and its compounds, expressed as lead ( Pb)
Chromium and its compounds, expressed as chromium (Cr)
Cobalt and its compounds, expressed as cobalt (Co)
total 0.5 mg/NCM
Copper and its compounds, expressed as copper (Cu)
Manganese and its compounds, expressed as manganese (Mn)
Nickel and its compounds, expressed as nickel (Ni)
Vanadium and its compounds, expressed as vanadium (V)
Tin and its compounds, expressed as tin (Sn)
Dioxins and Furans 0.1 nanogram/NCM
a
These average values cover gaseous and the vapor forms of the relevant heavy metal emission as well as
their compounds. Provided, that the emission of dioxins and furans into the air shall be reduced by the most
progressive techniques. The average values shall be measured over a sample period of a minimum of four (4)
hours and a maximum of eight (8) hours, except that all averages of dioxins and furans shall be measured over
a sample period of a minimum of six (6) hours and maximum of eight (8) hours.
Section 4. Non-applicability of the Section 6. Monitoring

Prohibition
There shall be public participation in the
The prohibition shall not apply to traditional monitoring of thermal treatment facilities.
small-scale method of community/
neighborhood sanitation “siga”, traditional, PART VIII
agricultural, cultural, health, and food POLLUTION FROM OTHER SOURCES
preparation and crematoria.
RULE XXIX
Section 5. Phase-out of Incinerators Dealing POLLUTION FROM OTHER SOURCES –
with Biomedical Wastes GENERAL

Existing incinerators dealing with a biomedical Section 1. Ban on Smoking
wastes shall be phased out on or before 17 July
2003 provided that in the interim, such units The Local Government Units (LGUs) shall,
shall be limited to the burning of pathological within six (6) months from the effectivity of
and infectious wastes, and subject to close these Implementing Rules and Regulations,
monitoring by the Bureau. After the said implement or enforce a ban on smoking inside
grace period, facilities that process or treat a public building or an enclosed public place
biomedical wastes shall utilize state-of the including public vehicles and other means of
art, environmentally-sound and safe non- transport or in any enclosed area outside of
burn technologies. one’s private residence, private place of work

or any duly designated smoking area which c. Implementation of the National Motor
shall be enclosed. Vehicle Inspection and Maintenance
Program including accreditation and
Section 2. Regulation of Other Sources authorization of private emission testing
centers and certification of inspectors
The DOTC shall regulate and implement and mechanics, and;
emission standards on mobile sources other
than those referred to under Section 21 of d. Roadside inspection of motor vehicles.
the Act. For this purpose, the Department
through the Bureau, shall formulate and RULE XXXI
establish the necessary standard for these EMISSION CONTROL FOR
other mobile sources. The DOTC shall collect NEW MOTOR VEHICLES
fines and penalties provided for under
Section 46 of the Act from those found to Section 1. Certificate of Conformity
be in violation of the applicable emissions
standards for other mobile sources. A COC shall be issued by the Department
through the Bureau to a motor vehicle
PART IX manufacturer, assembler, or importer
POLLUTION FROM MOTOR VEHICLES certifying that a motor vehicle type complies
with the numerical emission standards in this
RULE XXX Rule, using the relevant ECE test procedures
MOTOR VEHICLE COVERAGE or their equivalent as approved by the
Department. No new motor vehicle shall
Section 1. Scope be allowed initial registration unless a valid
COC issued by the Department through the
These provisions, in the interest of public Bureau is granted. New motor vehicles shall
safety and conservation of the environment, refer to the following:
are applicable with respect to:
a. Motor vehicles designed and
a. Manufacture, local assembly or manufactured in the Philippines using
importation into the country of new brand new engines and spare parts;
motor vehicle as classified under PNS
1891 shall be covered by a Certificate of b. Motor vehicles assembled in the
Conformity (COC) to be issued pursuant Philippines using original and brand new
to the following sections of this Rule, parts and components imported into the
provided, however, that those motor country completely knocked down (CKD);
vehicle types already covered by the COC
at the time of the effectivity of these rules c. New motor vehicles completely built up
shall not be subject to these provisions (CBU) imported into the country.
unless the Department finds justifiable
reason to suspend, cancel or revoke such The emission test for type approval shall
a certificate; be carried out by the DOTC/LTO under the
policy, regulation and guidelines supervision
b. Enforcement of permissible emission of the Department. The facility where the
levels of motor vehicles to be tests will be conducted shall be chosen by the
manufactured, marketed and/or Department utilizing the motor vehicle type
operated in the country; approval system testing center of the DOTC/
LTO. It shall also have visitorial powers over
the LTO Motor Vehicle Inspection Station and

Vehicle Type Approval System Testing Center Section 2. Transitory Emission Limits
where these tests are carried out.
As a condition for the issuance of a COC,
While the DOTC/LTO is developing inspection exhaust emission limits for new motor vehicle
capability of the motor vehicle type approval types, to be introduced into the market up
system test, the previous emission test to 31 December 2002, shall not exceed the
results of pre-production engine vehicle following:
type duly authenticated by the Philippine
Embassy/Consulate of the country of origin For cars and light duty motor vehicles, the
or manufacture of subject motor vehicle shall limits for emission of gaseous pollutants as a
be valid and sufficient. function of given reference mass shall be as
provided hereunder:

Table 6
Exhaust Emission Limits of Gaseous Pollutants for Cars and Light Duty
Motor Vehicles (Reference No. ECE Reg. 15-04)
Reference Mass CO HC + NOx

(kg) g/test g/test
Conformity of Conformity of
Type I Test Type Approval Type Approval
Production Production
750 58 70 19.0 23.8

751 – 850 58 70 19.0 23.8
851 – 1020 58 70 19.0 23.8
1021 – 1250 67 80 20.5 25.6
1251 – 1470 76 91 22.0 27.5
1471 – 1700 84 101 23.5 29.4
1701 – 1930 93 112 25.0 31.3
1931 – 2150 101 121 26.5 33.1
2150 110 132 28.0 35.0
All Motor Vehicles
Maximum Concentration of CO at end of last urban cycle = 3.5%
Type II Test
All Motor Vehicles Type
No Crankcase Emissions Permitted
III Test
For medium and heavy duty motor vehicles with compression-ignition engine, the limit for the emission
of gaseous pollutants and smoke shall be as provided in Table 7 and Table 8.
Table 7
Exhaust Limits of Gaseous Pollutants for Medium and Heavy Duty Motor Vehicles Equipped with
Compression-Ignition Engines (Reference No. ECE Reg. 49-01)
CO HC NOx
(g/kWh) (g/kWh) (g/kWh)
11.2 2.4 14.4


Table 8
Smoke Emission Limits Under Steady State Conditions for Heavy Duty Motor Vehicles Equipped with
Compression-Ignition Engines (Reference No. ECE Reg. 24-03)
Nominal Flow Absorption Coefficient

(liters/second) (m-1)
42 2.26
100 1.495
200 1.065

Opacity under free acceleration should not exceed the approved level by more than 0.5 m-1.
Fuel evaporative emissions for spark ignition engines shall not exceed 2.0 grams per test.
For motorcycles, CO emissions at idle shall not exceed 6% for all types.

Section 3. Test Procedures to Determine Exhaust Emissions Under Transitory Standards

The test procedures for the determination of gaseous exhaust emissions under the transitory
standards shall be as follows:

ECE Regulation 15-04 “Uniform provision concerning the approval
of motor vehicle equipped with positive-ignition engine or with
For cars and light duty motor vehicles
compression-ignition engine with regard to emission of gaseous
pollutant by the engine”
ECE Regulation 49-01 “Uniform provision concerning the approval
For medium and heavy duty motor vehicles with
of compression ignition (C.I.) engines and motor vehicles with C.I.
compression-ignition engines
engines with regards to the emission of pollutant by the engine”
Test procedure for the determination of CO emission shall be at
For the determination of CO emission
idling speed.
Section 4. Emission Standards Effective Year 2003

As a condition for issuance of a COC, exhaust emission limits for motor vehicle types to be
introduced into the market beginning 01 January 2003 shall refer to the provisions of Sec. 21 of
the Act, which is equivalent to Euro 1, as follows:

Table 9
Emission Limits for Passenger Car/Light Duty Vehicle Type Approval
(Directive 91/441/EEC)
CO HC + NOx PM1
(g/km) (g/km) (g/km)
Type Type Type Conformity of
Conformity of Production Conformity of Production
Approval Approval Approval Production
2.72 3.16 0.97 1.13 0.14 0.18
1
For compression-ignition engines only.

Table 10
Emission Limits for Passenger/Light Commercial Vehicles as a Function
of the Given Reference Mass Type Approval
CO HC+NOX PM1
(g/km) (g/km) (g/km)
Type Conformity of Type Conformity of Type Conformity of
Class of Vehicle
Approval Production Approval Production Approval Production
Class 1
2.72 3.16 0.97 1.13 0.14 0.18
(<1250 Kg)
Class 2
(1251< 5.17 6.0 1.40 1.6 0.19 0.22
>1700)
Class 3
6.9 8.0 1.7 2.0 0.25 0.29
(>1700 Kg)
1
For Compression ignition vehicles only.
Table 11
Emission Limits for Heavy Duty Vehicle Type Approval
CO HC NOx PM1,2
(g/kWh) (g/kWh) (g/kWh) (g/kWh)
Type Conformity of Type Conformity of Type Conformity of Type Conformity of
Approval Production Approval Production Approval Production Approval Production
4.5 4.9 1.10 1.23 8.0 9.0 0.36 0.4
1
2
For engines of 85 kW or less, the limit value for particulate emissions is increased by multiplying
the quoted limit by a coefficient of 1.7.
Table 12
Smoke Emission Limits Under Steady State Conditions (Reference No. ECE Reg. 24-03)
Nominal Flow Light Absorption Coefficient1
(liters/second) (m-1)
42 2.26
100 1.495
200 1.065
1
Opacity under free acceleration should not exceed the approved level by more than 0.5 m-1.

Table 13
Emission Limits for Motorcycle Type Approval with 4-stroke Engines
ECE Regulation 40.01

CO (g/km) HC (g/km)
Reference Weight R(1)
(kg) Conformity of Conformity of
Type Approval Type Approval
Production Production
<100 17.5 21 4.2 8
100-300 (17.5+17.5(R-00))/200 21+21(R-100))/200 4.2+1.8(R-100) (6+2.4(R-100))/200
>300 35 42 8 9.4
Notes: 1) Reference weight (R) = Motorcycle weight + 75 kg.

Table 14
Emission Limits for Motorcycle Type Approval with 2-stroke Engines
ECE Regulation 40.01
CO (g/km) HC (g/km)
Reference Weight Type Conformity of Type Conformity of
R (1) (kg) Approval Production Approval Production
<100 12.8 16 8 10.4
(12.8+19.2(R- 16+24(R- (10.4+6.4(R-
100-300 8+4(R-100)
100))/200 100))/200 100))/200
>300 32 40 12 18.8
Notes: 1) Reference weight (R) = Motorcycle weight + 75 kg.
Table 15
Emission Limits for Mopeds Type Approval
ECE Regulation 47

Vehicle Type 2-Wheeled 3-Wheeled
CO HC CO HC
Pollutant
g/km g/km g/km g/km
Licensing 8.0 5.0 15.0 10.0
Production 9.6 6.5 18.0 13.0

(Mopeds are vehicles of less than 400 kg equipped with an engine having a cylinder capacity of less
than 50 cubic centimeters.)

For mopeds, CO emissions at idle shall not The standards set forth in the above paragraphs
exceed 6% for all types. of this section refer to the exhaust emitted
over a driving schedule or engine speed,
Fuel evaporative emission for spark- evaporative emission, crankcase ventilation
ignition engines shall not exceed 2.0 grams emission and durability of pollution control
hydrocarbons per test. Likewise, it shall not equipment as set forth in the test procedures
allow any emission of gases from crankcase indicated in the succeeding section.
ventilation system into the atmosphere.
Section 5. Test Procedures to Determine
Durability of pollution control equipment Exhaust Emissions and Other Standards
for spark-ignition and compression-engines Effective in Year 2003
shall conform to the deterioration factor
prescribed in the test procedure. The test procedures for the determination
of emissions and other standards effective in
2003 shall be as follows:


For exhaust emissions, fuel evaporative ECE Regulation 83-01/02, series of amendment approval B and
emission, emission of crankcase gases and C: “Uniform provision concerning the approval of vehicles with
durability of pollution control equipment for regards to the emission of gaseous pollutants by the engine
cars and light duty motor vehicles according to engine fuel standards”
Approval B – Limitation of emission of gaseous pollutant by the
engine, evaporative emission, crankcase emission and durability
of motor vehicle fueled with unleaded petrol.
Approval C – Limitation of emission of gaseous and particulate
pollutants, crankcase emission and durability of pollution control
devices of motor vehicles fueled with diesel fuel.
For Medium and Heavy Duty Motor Vehicles ECE Regulation 49-01/02, series of amendment (49/02) “Uniform
with compression-ignition engines provision concerning the approval of compression-ignition (C.I)
engines and motor vehicles equipped with C.I. engine with
regards to the emission of pollutants by the engine”
For the determination of CO emission The test procedure for the determination of CO emission shall
be at idling speed as provided in the Emission Test Procedure
for Vehicles Equipped with Spark-Ignition Engines and the
Free Acceleration Test Procedure for Vehicles Equipped with
Compression-Ignition Engines

Other equivalent test procedures as approved by the Department may be utilized.
Section 6. General Requirements triplicate copies:

Every motor vehicle manufacturer, (a) Complete and detailed descriptions of
assembler or importer shall provide all motor vehicle and the engine;
new motor vehicles with a service manual
or written instructions for the proper use (b) Description of the emission control
and maintenance of the motor vehicle, system installed in the motor vehicle;
including all relevant service information or
specifications to ensure proper functioning of (c) Details of the fuel feed system;
the emission control system and compliance
with emission standards. (d) Vehicle Type Approval System test result
by DOTC/LTO (while the DOTC/LTO is
All newly-manufactured or imported gasoline- developing inspection capability of the
fuelled motor vehicles, including motorcycles motor vehicle type approval system
and mopeds, to be introduced into the test, the previous emission test results
market or imported into the Philippines shall of pre-production engine vehicle type
be designed to operate on unleaded gasoline duly authenticated by the Philippine
upon the effectivity of these Implementing Embassy/Consulate of the country of
Rules and Regulations. origin or manufacture of subject motor
vehicle shall be valid and sufficient); and
Section 7. Application for Certificate of
Conformity (e) Other particulars which may be required
by the Department.
The application for a COC shall be submitted
to the Bureau by the motor vehicle Section 8. Filing Fees for Application for COC
manufacturer, assembler, importer or their
duly authorized representatives. It shall be A fee to be determined by the Department
accompanied by the following particulars in through the Bureau shall be paid upon the

filing of the COC application. Filing fees for To ensure that new motor vehicles
applications that have been denied shall not manufactured, assembled, or imported
be refundable, nor applicable to subsequent conform in all material respects to the design
applications. specifications described in the COC, it shall be
a condition of the COC that the manufacturer,
Section 9. Approval of Application assembler or importer shall consent to all
the inspections by the Department through
Upon a determination that the vehicle type the Bureau of the vehicle engine, emission
meets the general requirements of this Rule control system, among others, of the new
and upon payment of the corresponding motor vehicles covered by the COC.
application fees, the Bureau shall issue a COC
within a reasonable time. Section 13. Ground for Revocation of COC.

Section 10. COC as Requisite for Registration Failure to comply with any of the requirements
of this Rule shall justify the revocation or
New motor vehicles shall be registered with suspension of the COC.
the LTO of the DOTC only upon presentation
of a copy of a valid COC issued by the Bureau. Section 14. Emission Control Labeling

For purposes of registration, the COC shall The manufacturer, assembler or importer of
cover only: any motor vehicle or motor vehicle engine,
subject to the applicable emission standards
(a) new vehicle types described in the COC, prescribed by the Department, shall affix
or a permanent legible label, and the vehicle
identification number (VIN) plate of the type
(b) new vehicle types which conform in and in a manner described below.
all material respects to the design
specifications applicable to the The label, of durable material, shall be
particular vehicle type as described affixed by the manufacturer, assembler or
in the application for COC and which importer in such a manner that it cannot be
are produced in accordance with the removed without defacing such label. It shall
particulars of a valid COC. be affixed in a readily visible position in the
engine compartment or any conspicuous area
Section 11. Validity of COC under the hood, or under the seat in case of
a motorcycle.
For purposes of vehicle registration, the COC
shall be valid for six (6) years from the date The label shall contain the following
of issue unless sooner revoked or suspended. information lettered in the English language
In case of suspension, the 6-year validity in block letters and numerals with a legible
period shall not be extended by the period of print size, and of a color that contrasts with
suspension. the background of the label:
Modifications of the brake system, steering, (a) The label heading: Vehicle Emission
air conditioning, suspension and interior and Control Information;
exterior trimmings shall not be construed as
a change in vehicle type and there will be no (b) Full corporate name and trademark;
need to apply for a new COC.
(c) Engine type displacement in metric units;
Section 12. Consent to Inspection as
Condition of COC.
(d) International emission regulation code The DOTC/LTO shall conduct the vehicle test
and/or this Act; and utilizing the Motor Vehicle Inspection Station
(MVIS) or its duly authorized and accredited
(e) Engine tune-up specification and inspection centers consistent with the R.A.
adjustment as recommended by the 7394 otherwise known as the Consumer Act
manufacturer including but not limited to of the Philippines within sixty (60) days prior
idle speed(s), ignition timing, the idle air- to date of registration.
fuel mixture setting procedure and value
(e.g. idle CO, idle air-fuel ratio, idle speed Emission test procedures as given in Annex
drop), high idle speed, initial injection B and Annex C for registered or in-use motor
timing and valve lash (as applicable) vehicles equipped with spark-ignition or
as well as other parameters deemed compression-ignition engines, respectively,
necessary by the manufacturer. should be strictly followed.

Section 15. Submission of Vehicle For vehicles with spark-ignition engines
Identification Number. except motorcycles, the following emission
standards shall apply:
The manufacturer, assembler or importer of
any motor vehicle covered by a COC under Table 16
these Implementing Rules and Regulations Emission Standards for Vehicles with Spark-
shall submit to the Bureau, not later than Ignition Engines (Gasoline) Except Motorcycles
sixty (60) days after its manufacture or entry
into the country, the vehicle engine number, HC
CO
Vehicle Category (ppm as
chassis number, engine type, vehicle type and (% by volume)
hexane)
color. Registered prior to
January 1, 1997 At 4.5 800
Idle 4.5 800
Likewise, a sticker with the Department logo,
COC number and date of issue and a brief Registered on or
after
statement that the vehicle complies with the January 1, 1997
3.5 600
provisions of the Act and its Implementing but before
January 1, 2003
Rules and Regulations shall be conspicuously At Idle
displayed on the front windshield of the
Registered on or
motor vehicle. after 0.5
January 1, 2003
100
At Low Idle 0.3 (π= 1+/-
RULE XXXII At High Idle (rpm > 0.03)*
EMISSION CONTROL FOR IN-USE VEHICLES 2,500)

* or in accordance with manufacturer’s
Section 1. Emission Standards for In-Use
specification
Vehicles

For vehicles with compression-ignition
All in-use motor vehicles, and vehicles with
engines, the following emission standards
updated/enhanced engine whose chassis
shall apply:
are preregistered with DOTC/LTO will only

be allowed renewal of registration upon
proof of compliance of the emission standard
described below.


Table 17 In the case of locally rebuilt vehicles, a
Emission Standards for Vehicles with CCES issued by the DOTC on the basis of an
Compression-Ignition Engines (light inspection by the DOTC Vehicle Type Approval
absorption coefficient, m-1)* System, if available, or initially by LTO MVIS,
is required.
1,000 m

Naturally Turbo
increase in
Aspirated Charged
elevation The DTI through the Bureau of Import
Registered Services (BIS) shall formulate regulations
for the first
time prior to 2.5 3.5 4.5
and guidelines that will ensure rebuilt and
December 31, imported second hand motor vehicles and
2002 engines will satisfy the emission standards
Registered for for rebuilt and imported second hand motor
the first time
on or after 1.2 2.2 3.2 vehicles as provided in these Implementing
January 1, Rules and Regulations.
2003

Table 18
* Using the free acceleration test.
Emission Standards for Rebuilt Vehicles and
Imported Second Hand Vehicles*
For motorcycles registered for the first

time on or before December 31, 2002, CO COa HCa
Smokeb
[turbocharged]
emissions at idle shall not exceed 6.0%. For
Registered for
motorcycles registered for the first time after the first time
December 31, 2002 CO emissions at idle shall prior to 500
December 31, 3.5% 2.5[3.5]m-1
not exceed 4.5%. 2002
ppm
At Idle
Section 2. Emission Standards for Rebuilt Registered for
the first time
Vehicles and Imported Second Hand Vehicles on or after 100
January 1, 0.5%
ppm
2.5[3.5]m-1
No rebuilt or second hand-CBU imported 2003
At Idle
into the country or pre-registered vehicles
retrofitted with second hand engines shall be
a – For spark-ignition (gasoline-fueled) motor
allowed registration or renewal of registration
vehicles
without valid Certificate of Compliance to
b – For compression-ignition (diesel-fueled)
Emission Standard (CCES) issued by the DOTC.
motor vehicles; figure in brackets relate

to turbocharged vehicles.
As a condition for the issuance of a CCES,
exhaust emission standards of vehicles
enumerated previously shall not exceed the * If the in-use emission standard of the
standards described below. country of origin is more stringent than these
maximum limits, it will supersede them.
As a requirement for the issuance of a CCES
by DOTC for imported second hand vehicles, Section 3. Test Procedures for Measurement
a Certificate of Emission Compliance duly of Exhaust Emission
authenticated by the Philippine Embassy/
Consulate from the country of origin shall be The Department shall prescribe the type
valid and sufficient. The DOTC may however of smoke opacity meter to be used in the
seek verification through actual testing in the emission testing of vehicles with diesel
MVIS. engines.

The test procedures for measurement of
exhaust emissions for in-use motor vehicles
with spark-ignition engines and compression- For considerations of public health and
ignition engines are described in Annexes B welfare, the Department, DTI, DOTC/LTO,
and C. NEDA and DOF may develop and implement
a program to ensure for-hire vehicles to
Section 4. Control of Emissions from In-use continue to meet emission standards hereto
Vehicles described.

Pursuant to Section 21 (d) of the Act, the DTI, RULE XXXIII
DOTC/LTO, and the Department shall develop REVIEW AND REVISION OF STANDARDS
and implement the National Motor Vehicle
Inspection and Maintenance Program that Section 1. Review and Revision of Standards
will ensure the reduction of emissions from
motor vehicles and promote the efficient To further improve the emission standards,
and safe operation of motor vehicles. The the Department through the Bureau, in
inspection and maintenance program shall coordination with the DOTC/LTO, shall review
require all vehicles, as a requisite for renewal the standards every two (2) years or as the
of registration, to undergo mandatory need arises. Where necessary to achieve
inspection to determine compliance with the substantial improvement in air quality for
in-use emission standards. The DOTC through the health, safety and welfare of the general
LTO and/or DOTC designated enforcement public, the Department through the Bureau
units shall also establish a roadside inspection shall revise the exhaust emission standards
system to ensure that vehicles comply with for new and in-use motor vehicles. The
the in-use emission standards. revised standards must be published in a
newspaper of general circulation or be filed
The National Motor Vehicle Inspection and in triplicate copies with the University of
Maintenance Program is described in detail the Philippines (UP) Law Center pursuant to
in Rule XXXIV and the Roadside Inspection Presidential Memorandum Circular No. 11
System is described in Rule XXXV. dated 09 October 1992.

Section 5. Use of tamper-resistant odometers Section 2. Participation of Stakeholders
and fuel management systems
The Department shall provide the
Pursuant to Section 21 of the Act, the DTI shall motoring public, automotive industry, non-
prescribe regulations requiring the disclosure government organizations (NGOs) and other
of odometer readings and the use of tamper- stakeholders the opportunity to participate
resistant odometers for all motor vehicles in the formulation and revision of standards,
including tamper-resistant fuel management determination of the technical feasibility of
systems for the effective implementation of the revised standards, setting the schedule of
the inspection and maintenance program. implementation of the revised standards, and
other related concerns.
Section 6. Useful Life of For-Hire Vehicles
Section 3. Harmonization with International
Pursuant to Section 22 of the Act, the DTI Standards
shall promulgate the necessary regulations
prescribing the useful life of vehicles and In the review and revision of emission
engines including devices in order to standards, the Department shall endeavor
ensure that such vehicles will conform to to achieve the harmonization of national
the emission they were certified to meet. emission standards with internationally-
These regulations shall include provisions for accepted standards.
ensuring the durability of emission devices.
The Department, in coordination with the test and may be presented to the LTO motor
DOTC and DTI, may adopt or formulate vehicle registration offices as a prerequisite
the functional equivalence of the emission to renewal of registration.
limits and test procedures. “Functional
equivalence” means exhaust emission limits Section 2. Phased Implementation
and test procedures whose numerical values
are almost the same or identical with other The DOTC/LTO shall ensure that the Motor
types of emission limits and test procedures. Vehicle Inspection System shall be fully
operational in Metro Manila by January
The Department, in coordination with DOTC 2003. Nationwide implementation shall
and DTI, and in consultation with the motor follow in twelve (12) to eighteen (18) months
vehicle manufacturers and other stakeholders, thereafter.
shall study the feasibility of adopting EURO II
or III standards or other appropriate standards The vehicle inspection will be initially
in the Philippines to further reduce emissions conducted in the LTO-operated MVIS or LTO
from motor vehicles. Motor Vehicle Registration Centers. Priority
shall be given to the immediate testing of
RULE XXXIV diesel-powered vehicles.
NATIONAL MOTOR VEHICLE INSPECTION
AND MAINTENANCE PROGRAM Section 3. DOTC Authorization and DTI
Accreditation of Private Emission Testing
Section 1. National Motor Vehicle Inspection Centers
and Maintenance Program.
Emission testing of vehicles as a consequence
All private in-use motor vehicles and of roadside inspection, for voluntary
vehicles with updated/enhanced engine inspection after vehicle maintenance, or for
whose chassis are pre-registered with the rebuilt and imported second hand vehicles
Land Transportation Office (LTO) will only and engines, may be done in a private
be allowed renewal of annual registration emission testing center. Private emission
when, upon inspection by the LTO or other testing centers shall be commissioned by the
authorized private Motor Vehicle Inspection Government through accreditation by DTI and
Station (MVIS), such vehicles meet the in- authorization by DOTC. The DTI and DOTC
use emission standards set forth in Section shall accredit and authorize emission testing
1 of Rule XXXII hereof. The LTO or other centers in accordance with the procedural
authorized MVIS shall conduct the vehicle guidelines thereon.
tests for emissions. Public Utility Vehicles
submitted to DOTC/LTO for renewal of In order to accommodate all vehicles for
registration shall only be allowed upon emission testing, the DOTC may authorize
presentation of a valid Vehicle Inspection private emission testing centers previously
Report issued on the basis of the inspection accredited with the DTI. Such testing centers
following the standard described hereto from shall be authorized to conduct emission tests
the MVIS or its authorized testing center. The on vehicles apprehended for non-compliance
Vehicle Inspection Report shall be valid for a with the in-use emission standards. The
maximum of six (6) months. DOTC shall issue the procedural guidelines
on the authorization process. Pursuant to its
Emission tests may be conducted within sixty standard-setting functions, the Department is
(60) days prior to the renewal of registration. responsible for regulating the specifications
of the emission testing equipment to be used
The results of such test shall be presented by private emission testing centers. The DTI
within sixty (60) days from the date of the shall ensure that these specifications are met
by the accredited private emission testing process of accreditation and authorization,
centers. (2) the imposition of one fee, (3) the use of a
single application form for both accreditation
In seeking authorization from DOTC, qualified and authorization, and (4) the issuance
persons may file an application with the of a single certificate of accreditation and
DOTC through LTO or its designated agency, authorization signed by both DOTC and DTI
to be authorized as an emission testing representatives.
center. The applicant must comply with the
requirements of area, trained personnel, Section 4. Certification of Institutions and
adequate equipment and facilities, and Instructors; Licensing of Service Centers and
submit the documentary requirements as Technicians
may be required by the DOTC in subsequent
regulations. The facilities shall be inspected The DTI shall also develop and implement
prior to the issuance of the authorization to standards and procedures for the certification
determine compliance with the authorization of training institutions, instructors, and
requirements. facilities and for the licensing of qualified
service centers and their technicians as
To obtain accreditation from the DTI, an prerequisite for performing the testing,
application form shall be submitted by the servicing, repair and the required adjustment
applicant to the DTI Provincial Office located to the vehicle emission system. Vehicles
in the province where the applicant operates that fail the emission test may be sent to
or resides. The applicant shall comply with accredited repair shops for repair of motor
the accreditation requirements and submit vehicle engines, exhaust system and pollution
its organizational manual to the DTI. The control devices.
facilities of the applicant shall then be
inspected. Upon a favorable recommendation These facilities shall be equipped with
of the DTI Evaluation Panel/Committee, the standard automotive repair tools, standard
Director of DTI Provincial Office shall approve spare parts and pollution test equipment
the application and issue a certification to the conforming to applicable ECE, ISO or SAE
applicant. standards. It is also required that these repair
shops or service stations shall have highly
The accredited testing center shall make skilled mechanics and/or technicians who
available to DTI or its appointed assessors have on-the-job training certificates from
all documents and shall allow the latter to TESDA, local assemblers and manufacturers
inspect its facilities. of motor vehicles.

The accredited emission testing center RULE XXXV
must secure the authorization of the DOTC ROADSIDE INSPECTION OF
to conduct emission tests on vehicles MOTOR VEHICLES
apprehended for non-compliance with the in-
use standards. Section 1. Roadside Inspection

To facilitate the process of accreditation and Vehicles found emitting excessive smoke
authorization, the DOTC and DTI shall enter while operating in any public highway shall
into an inter-agency agreement to develop be subjected to an emission test by properly-
and implement a uniform procedure for equipped DOTC through LTO and/or DOTC-
accreditation and authorization of emission designated enforcement unit(s) and/or its
testing centers. The DOTC and DTI shall study, deputized agents. The procedure for the
among others, (1) the creation of a “one-stop apprehension of non-compliant vehicles and
shop” where an applicant may complete the the deputation of agents to perform roadside
inspection are set forth in Section 4 of this Section 4. Apprehension and Impounding of
Rule. Vehicles Exceeding Emission Limits

Section 2. Agency Responsible for Pursuant to Section 46 of the Act, the
Enforcement procedure for apprehension and impounding
of motor vehicles which emit pollutants
Pursuant to Section 46 of the Act, the DOTC, beyond the allowable limits shall be as
through LTO or DOTC-designated enforcement follows:
unit(s) shall establish a roadside inspection
system to ensure that vehicles comply with a) A vehicle suspected of violation of
the in-use emission standards set forth in emission standards through visual
these Implementing Rules and Regulations. signs shall be flagged down by the
apprehending officer.
The DOTC shall establish and chair an
oversight committee for the purpose of b) The apprehending officer shall conduct
monitoring smoke belching violations. an emission test of the vehicle using
Representatives from concerned government portable emission testing equipment
agencies, relevant sector organizations and and using test procedures given in Annex
civil society shall compose the membership of B and Annex C, to determine whether
the oversight committee headed by the LTO. the vehicle complies with the emission
standards. Should the results show
Section 3. Deputation an exceedance of the emission limits,
the computerized print-out, or other
The DOTC through LTO or DOTC- designated test result generated by the portable
enforcement unit(s) may deputize qualified emission testing equipment shall serve as
government employees, LGUs, government prima facie evidence of violation of the
agencies and private entities to conduct emission standards.
roadside inspection and to apprehend
vehicles which do not comply with the in-use c) Should the test result show that there is
standards set forth in these Implementing an exceedance of the standards, a ticket
Rules and Regulations. will be issued to the driver and a warrant
of constructive or actual distraint to any
The deputized agents shall undergo a owner of the motor vehicle as provided
mandatory training on emission standards for in Republic Act 4136 shall commence
and regulations. For this purpose, the unless the vehicle has been previously
Department, together with the DOTC through found violating the standards three (3)
LTO or DOTC-designated enforcement or more times within the last 365-day
unit(s), DTI, DOST, the Philippine National period. In the latter case, the motor
Police (PNP) and other concerned agencies vehicle registration shall be suspended
and private entities shall design a training for a period of one (1) year.
program. The DOTC through LTO or its
designated enforcement unit(s), together d) Upon payment of the fine at the DOTC
with the Department shall oversee the through LTO or DOTC-designated
training program. enforcement unit(s) or deputized agency
or private entity, the vehicle plate(s) will
This program shall include training in the be surrendered to the apprehending
correct use, maintenance and calibration officer and the driver will be issued a
of smoke testing equipment. No individual temporary pass allowing him to take
shall be deputized without satisfactorily possession of the vehicle for the purpose
completing the training. of undertaking the needed repairs within
a period not later than seven (7) days Section 5. Appellate Procedure
from the date the vehicle is temporarily
released. In the event the driver of the apprehended
vehicle contests the fine imposed and/or
e) Motor vehicles released for purposes the violation of emission standards, he may
of repairs shall not be operated or used appeal the same with the DOTC-designated
in public roads except for the purpose Traffic Adjudication Service where he will be
of transporting the same to the service given the opportunity to be heard.
center for repairs and to the authorized
emission testing center for emission Section 6. Self-Regulation
testing.
The DOTC shall encourage self-regulation
f) When the repairs are made, the vehicle among transport stakeholders. The DOTC shall
must undergo an emission test at a encourage private sector initiated projects
DOTC/LTO testing center or its authorized which integrate preventive maintenance,
and accredited emission testing center to driver training, sealing of injections pumps,
ascertain if it already meets the emission pre-registration testing, and modified
standards. apprehension procedures to reduce smoke
belching.
g) Once the vehicle meets the standards,
the DOTC/LTO testing center or its Section 7. Data Collection and Management
authorized and accredited emission
testing center shall issue a Certificate The DOTC/LTO shall improve its system
of Emission Compliance to the driver of of managing and collecting data from the
the vehicle. The CEC will have no validity Motor Vehicle Inspection Stations and from
period, its sole purpose is to secure the roadside inspection / apprehensions for
release of the impounded vehicle or violation of emission standards. The ongoing
the vehicle license plates, whichever is computerization of LTO vehicle registration
applicable and which were confiscated as shall be linked to the MVIS and roadside
a consequence of that specific violation. inspection data base to be established.

h) Upon presentation of the Certificate of Section 8. Certification of Emission Test
Emission Compliance, the driver shall Equipment.
recover his vehicle or his vehicle plates,
whichever is applicable, from the DOTC To ensure proper and effective enforcement
through LTO and/or DOTC- designated of the vehicle emission standard, the
enforcement unit(s) which has custody Department,through the Bureau, shall certify
over the vehicle or vehicle plates. the conformity to standards of emission
test equipment before it can be used for
Further refinement of the apprehension mandatory emission tests.
procedure stated in the Act shall be
developed and/or approved by the DOTC. All PART X
apprehensions shall be made strictly adopting FUELS, ADDITIVES, SUBSTANCES AND
the above procedure. POLLUTANTS

Failure of enforcers to observe said procedure RULE XXXVI
shall merit review of the apprehension by the STANDARDS FOR FUELS AND ADDITIVES
adjudication service and/or waiver of fines
and penalties.

Section 1. Mechanism for Setting Fuel Table 19
Specifications Fuel Specifications

Pursuant to Section 26 of the Act, the Fuel Property Limit Effectivity
Department of Energy (DOE), co-chaired by Aromatics 45% Jan. 1, 2000
the Department, in consultation with the max
Bureau of Product Standards (BPS) of the 35% Jan. 1, 2000
DTI, the DOST, the representatives of the fuel max

and automotive industries, academe and the Benzene 4% max Jan. 1, 2000
Unleaded
consumers shall, within six (6) months from Gasoline 2% max Jan. 1, 2003
the effectivity of these Implementing Rules
Anti-Knock 87.5 min Jan. 1, 2001
and Regulations, set the specifications for Index
all types of fuel and fuel-related products,
Reid Vapor 9 psi Jan. 1, 2001
to improve fuel composition for increased Pressure max
efficiency and reduced emissions: Provided,
however, That the specifications for all types Sulfur 0.20% Jan. 1, 2001
max Jan. 1, 2004
of fuel and fuel-related products set-forth 0.05%
Automotive
pursuant to this section shall be adopted Diesel Fuel max
by the BPS as Philippine National Standards Cetane 48 min Jan. 1, 2001
(PNS). No./Index
Industrial Sulfur 0.30% Jan. 1, 2001

Section 2. Specification of Allowable Diesel Fuel max
Additive Content

The DOE shall specify the allowable content
The fuels characterized above shall be
of additives in all types of fuels and fuel-
commercially available. Likewise, the same
related products. Such standards shall be
shall be the reference fuels for emission
based primarily on threshold levels of health
and testing procedures to be established in
and research studies.
accordance with the provisions of the Act.

On the basis of such specifications, the DOE
Section 4. Review and Revision of Fuel
shall limit the content or begin the phase-
Specifications
out of additives in all types of fuels and fuel-

related products as it may deem necessary.
Every two (2) years thereafter or as the need
Other agencies involved in the performance
arises and subject to public consultations, the
of this function shall be required to coordinate
specifications of unleaded gasoline and of
with the DOE and transfer all documents and
automotive and industrial diesel fuels shall be
information necessary for the implementation
reviewed and revised for further improvement
of this provision.
in formulation and in accordance with the

provisions of the Act.
Section 3. Fuel Specifications

Section 5. Monitoring Compliance through
The fuel formulations shall meet, among Fuel Sampling
others, the following specifications set in
Table 19 on or before the deadline set forth
Compliance with the fuel specifications set
in the Act:
in the Act shall be monitored through fuel
sampling. Guidelines and procedures for the
conduct of fuel sampling shall be developed
by the DOE within six (6) months from the
effectivity of these Implementing Rules and Prior to registration, the manufacturer,
Regulations. Such guidelines and procedures processor or trader shall provide the DOE
shall, among others, consider the following: with the following relevant information:
(a) Fuel samples collected must be truly (a) Product identity and composition to
representative of the fuel sampled. determine the potential health effects of
such fuels and additives;
(b) The chosen sampling procedure must be
suitable for sampling fuel under definite (b) Description of the analytical technique
storage, transportation, and container that can be used to detect and measure
conditions. the additive in any fuel;
(c) Samples must be obtained in such a (c) Recommended range of concentration;

manner and from such locations in the and
tank or other container that the sample
will be truly representative of the (d) Purpose in the use of the fuel and
gasoline. additive.
(d) It must be ensured that the samples The DOE shall issue a separate regulation or
represent the general character and circular detailing registration procedures,
average condition of the fuel. including but not limited to report formats
and submission deadlines, within (6) months
(e) Care should be taken in collecting and from the adoption and publication of these
storing samples in containers that Implementing Rules and Regulations.
will protect them from changes in
content such as loss of volatile fractions Section 3. Information Database
by evaporation or leaching into the
container. The DOE shall develop an information
database of registered fuels and additives and
Monitoring results shall be made available other related data which shall be accessible
to the public through an annual report to be to the public provided that information
published by the DOE. which are in the nature of trade secrets
shall be subject to the non-disclosure and
RULE XXXVII confidentiality agreement in Section 4 of this
REGULATION OF FUELS AND ADDITIVES Rule.

Section 1. Agencies Responsible for Section 4. Non-disclosure and Confidentiality
Regulating Fuels and Additives Agreement

The DOE, in coordination with the Department Information on fuels and fuel additives
and the BPS, shall regulate the use of any fuel registered with the Department of Energy
or fuel additive. which are considered trade secrets shall
be covered by a non-disclosure and
Section 2. Registration of Fuels and Additives confidentiality agreement between the
company and the Department of Energy for a
No manufacturer, processor or trader of any period of fifteen (15) years.
fuel or additive may import, sell, offer for
sale, or introduce into commerce such fuel or
additive unless the same has been registered
with the DOE.
RULE XXXVIII to which the Philippines is a signatory, the
PROHIBITED ACTS Department through the Bureau shall enforce
the Philippine Ozone Depleting Substances
Section 1. Misfuelling (ODS) Phase Out Schedule as published in
the June 27, 2000 editions of the Manila
In order to prevent the disabling of Times, BusinessWorld, Philippine Star, Manila
any emission control device by lead Bulletin, People’s Balita, and Abante.
contamination, no person shall introduce
or cause or allow the introduction of leaded Section 2. Revision of the List of Ozone
gasoline into any motor vehicle equipped Depleting Substances
with a gasoline tank filler inlet and labeled
“unleaded gasoline only”. This prohibition When necessary, the Bureau shall revise the
shall also apply to any person who knows or list of substances which are known to cause
should know that such vehicle is designed harmful effects on the stratospheric ozone
solely for the use of unleaded gasoline. layer which was initially published pursuant
to Section 30 of the Act.
Section 2. Manufacture, Import, and Sale
of Leaded Gasoline and of Engines and/or RULE XL
Components, Requiring Leaded Gasoline GREENHOUSE GASES

Effective December 23, 2000 no person Section 1. National Plan for Reduction of
shall manufacture, import, sell, offer for Greenhouse Gas Emissions
sale, introduce into commerce, convey or
otherwise dispose of, in any manner leaded The Department through the Bureau,
gasoline and engines and components together with concerned agencies and local
requiring the use of leaded gasoline. government units, shall, within one (1) year
from the effectivity of these Implementing
Section 3. Manufacture, Import and Sale of Rules and Regulations, prepare and
Fuels Not According to Legally Prescribed implement a national plan consistent with
Specifications the United Nations Framework Convention
on Climate Change and other international
The manufacture, importation and sale of agreements, conventions and protocols on
fuels which do not meet the specifications the reduction of greenhouse gas emissions.
prescribed in these Rules and Regulations or
which may be prescribed by the DOE in the RULE XLI
future is prohibited, except where the fuel is PERSISTENT ORGANIC POLLUTANTS
intended for export to a country which allows
fuel specifications lower than are prescribed Section 1. National Action Plan
in the Philippines.
The Department, through the Bureau,
RULE XXXIX together with concerned agencies and local
OZONE-DEPLETING SUBSTANCES government units, shall, within one (1) year
from the effectivity of these Implementing
Section 1. Enforcement of Philippine Ozone Rules and Regulations establish an inventory
Depleting Substances Phase Out Schedule list of all sources of Persistent Organic
Pollutants (POPs) in the country.
Consistent with the terms and conditions
of the Montreal Protocol on Substances Section 2. National Programs on Reduction
that Deplete the Ozone Layer and other and Elimination of POPs
international agreements and protocols
Pursuant to Section 32 of the Act, the Section 1. The Department
Bureau shall, within one (1) year after the
establishment of the inventory list referred The Department is the primary government
to in the preceding section, design and agency responsible for the implementation
implement a national government program and enforcement of the Act. The Department
on the reduction and elimination of POPs shall have the following authority, among
such as dioxins and furans. others:

RULE XLII (a) To promulgate rules and regulations
RADIOACTIVE EMISSIONS as may be necessary to implement the
intent and provisions of the Act;
Section 1. Regulation on Atomic and/or
Nuclear Energy Use (b) To closely supervise all or parts of the
air quality action plans until such time
The Philippine Nuclear Research Institute that the local government concerned
(PNRI), in coordination with the Bureau and can assume the function to enforce the
other concerned government agencies, shall standards set by the Department;
regulate all projects which will involve the
use of atomic and/or nuclear energy, and will (c) To revise, from time to time, the
entail release and emission of radioactive designation of airshed utilizing eco-
substances into the environment, incident to profiling techniques and undertaking
the establishment or possession of nuclear scientific studies;
energy facilities and radioactive materials,
handling, transport, production, storage, and (d) To designate areas where specific
use of radioactive materials. pollutants have already exceeded
ambient standards as non-attainment
RULE XLIII areas and to revise the designation
HAZARDOUS AIR POLLUTANTS of such areas after consultation with
local government authorities, non-
Section 1. Designation and Management of government organizations (NGOs),
Hazardous Air Pollutants people’s organization (POs) and
concerned sectors;
The Department through the Bureau shall
issue and maintain a list of hazardous air (e) To administer the Air Quality Management
pollutants and required control measures. Fund;
The list and control measures shall be source-
specific by industry and shall be designed (f) To establish a National Research
to protect Filipinos from unnecessary risk and Development Program for the
to health or welfare. Compounds shall prevention and control of air pollution,
be considered for inclusion on the list as in coordination with the Department
reasonable data or information become of Science and Technology (DOST),
available. other agencies, the private sector, the
academe, NGOs and POs;
PART XI
INSTITUTIONAL MECHANISMS (g) To institute administrative proceedings
pursuant to Section 40 of the Act;
RULE XLIV
IMPLEMENTING AGENCIES (h) To impose fines, through the Pollution
Adjudication Board, for violations of
standards for stationary sources;
(i) To exercise such other authority vested (e) To, in coordination with other concerned
by the Act and as provided for in these agencies, review and/or revise and
Implementing Rules and Regulations. publish annually a list of hazardous air
pollutants with corresponding ambient
The Secretary may delegate such authority guideline values and/or standard
and other powers and function to the Director. necessary to protect public health and
safety, and general welfare;
Section 2. The Bureau
(f) To design, impose on and collect regular
The Environmental Management Bureau emission fees from industrial dischargers
shall be a line bureau primarily responsible as part of the emissions permitting system
for the implementation and enforcement of based on environmental techniques;
the Act pursuant to Section 34 thereof. It
shall be comprised of a Central Office and the (g) To issue permit as it may determine
necessary regional, provincial and such other necessary for the prevention and
offices as may be established in pertinent abatement of air pollution;
administrative orders issued by the Secretary.
The Bureau shall establish and operationalize (h) To require program and project
its regional offices within two (2) years from proponents to put up financial guarantee
the effectivity of these Implementing Rules mechanisms to finance the needs
and Regulations. For this purpose, the Bureau for emergency response, clean-up or
shall reorganize and increase the number of rehabilitation of areas that may be
its personnel to effectively implement the Act damaged during the program or project’s
and the Implementing Rules and Regulations. actual implementation;
The proposed line bureau staffing pattern
shall be submitted to the Department of (i) To review, or as the need therefore arises,
Budget ad Management for approval. revise and publish emission standards to
further improve the emission standards
The Bureau shall have the following powers for stationary sources of air pollution
and functions, among others: as well as emission standards for motor
vehicles;
(a) To prepare annual National Quality Status
Report pursuant to Section 6 of the Act; (j) To have the right of entry or access
to any premises including documents
(b) To design and develop, in cooperation and relevant materials; to inspect any
with the National Statistical Coordination pollution or waste source, control devise,
Board (NCSB), an information network monitoring equipment or method
for data storage, retrieval and exchange; required; and to test any emission;
(c) To serve as the central depositary of (k) To require any person who owns or
all data and information related to air operates any emission source or who is
quality; subject to any requirement of the Act to (i)
establish and maintain relevant records;
(d) To issue and, from time to time, revise (ii) make relevant reports; (iii) install,
information on air pollution control use and maintain monitoring equipment
techniques upon consultation with the or methods; (iv) sample emission, in
appropriate committees, government accordance with the methods, locations,
agencies and LGUs; intervals, and manner prescribed by the
Department; and (v) keep records;

(l) To exercise such other powers and (b) Contribute towards the establishment
functions as provided by law, the Act of procedures for inspection of motor
and these Implementing Rules and vehicles, assist in the formulation and
Regulations. implementation of the National Motor
Vehicle Inspection and Maintenance
Section 3. Other Implementing Agencies Program;

The other agencies primarily responsible (c) Accredit private emission testing centers
for the implementation of the Act are (duly authorized by the DOTC);
the Department of Transportation and
Communications, the Department of Energy, (d) Develop and implement standards
and the Department of Trade and Industry. and procedures for the certification of
training institutions, instructors and
The DOTC shall have the authority to, among facilities and licensing of qualified private
others: service centers and their technicians;

Implement the emission standards for motor (e) Prescribe regulations requiring the
vehicles pursuant to and as provided in the disclosure of odometer readings and use
Act; of tamper-resistant odometers, including
tamper resistant fuel management
(a) Participate in the formulation of an Action systems.
Plan for the control and management of
air pollution from motor vehicles; The DOE shall have the authority to, among
others:
(b) Contribute towards the establishment
of procedures for inspection of motor (a) In coordination with other relevant
vehicles, assist in the formulation and agencies, set the specifications for all
implementation of the National Motor types of fuel and fuel-related products;
Vehicle Inspection and Maintenance
Program; (b) Specify allowable content of additives in
all types of fuel and fuel-related products;
(c) Authorize private emission testing centers
(duly accredited by DTI); (c) In coordination with the Department and
BPS, regulate the use of any fuel or fuel
(d) Establish a roadside inspection system; additive.

(e) Contribute towards design of training RULE XLV
program for law enforcement officials ROLE OF LOCAL GOVERNMENT UNITS
and deputized agents on vehicle emission
testing. Subject to Section 36 of the Act and pursuant
to the Local Government Code (R.A. 7160) and
The DTI shall have the authority to, among other pertinent laws, the Local Government
others: Units (LGUs) shall have the following roles
within their respective territorial jurisdiction:
(a) Participate in the formulation of an Action
Plan for the control and management of (a) To share the responsibility in the
air pollution from motor vehicles; management and maintenance of air
quality within their respective territorial
jurisdiction;

(b) To implement air quality standards set RULE XLVI
by the Governing Board, consistent with LINKAGE MECHANISM
Sections 7, 8 and 9 of the Act;
Section 1. Participation of Other
(c) To establish an Environment and Natural Organizations
Resources Office (ENRO) in every
province, city, or municipality which The Department shall consult, participate,
shall be headed by the environment and cooperate and enter into agreement with
natural resources officer appointed by other government agencies, or with affected
the chief executive of every province, city non-governmental (NGOs) or people’s
or municipality in accordance with the organizations (POs), or private enterprises
provisions of Section 484 of R.A. 7160 in the furtherance of the objectives of the
and to exercise powers and duties set Act and these Implementing Rules and
forth in Section 37 of the Act; Regulations.

(d) To prepare and develop, with the Section 2. Linkage with Coordinative
assistance from the Department, Multisectoral Body
an action plan consistent with the
Integrated Air Quality Framework to Pursuant to Section 35 of the Act, the
attain and maintain the ambient of air Bureau shall endeavor to institutionalize
quality standards within their respective consultation with a multisectoral commission
airsheds as provided in Section 9 of the tasked to coordinate the plans and efforts of
Act; government agencies and non-government
organizations in addressing air pollution in an
(e) To prepare and implement a program organized and systematic manner.
and other measures including relocation,
whenever necessary, to protect the The Bureau shall study the creation of a
health and welfare of residents in the multisectoral commission headed by the
area; Secretary of the Department and composed
of representatives from the following sectors:
(f) To develop and submit to the (1) government agencies involved in the task
Department through the Bureau a of air pollution control and management,
procedure for carrying out the action (2) civil society, (3) business, (4) and other
plan for their jurisdiction, provided that concerned sectors. The commission shall
the Department through the Bureau shall serve as an oversight body to ensure the
maintain its authority to independently systematic and effective management of air
inspect the enforcement procedure quality.
adopted;
RULE XLVII
(g) To perform such other powers and RECORD-KEEPING, INSPECTION,
functions as may be provided by MONITORING AND ENTRY
applicable laws, rules and regulations.
Section 1. Required Relevant Reports and
The Department shall provide the LGUs with Records
technical assistance, training and a continuing
capability-building program to prepare them The Department through the Bureau or its
to undertake full administration of the air duly accredited entity shall, after proper
quality management and regulations within consultation and notice, require any person
their territorial jurisdiction. who owns or operates any emissions source

or who is subject to any requirement of this Section 1. Public Education and Information
Act to: (a) establish and maintain relevant Campaign
records; (b) make relevant reports; (c) install,
use and maintain monitoring equipment or A continuing air quality information and
methods; (d) sample emission, in accordance education campaign shall be promoted by the
with the methods, locations, intervals and Department, the Department of Education,
manner prescribed by the Bureau; (e) keep Culture and Sports (DECS), the Department
records on control equipment parameters, of the Interior and Local Government
production variables or other indirect (DILG), the Department of Agriculture (DA)
data when direct monitoring of emissions and the Philippine Information Agency
is impractical; and (f) provide such other (PIA). Consistent with Section 7 of the
information as the Bureau may reasonably Act, such campaign shall encourage the
require. participation of other government agencies
and the private sector including NGOs, POs,
Section 2. Right of Entry, Inspection and the academe, environmental groups and
Testing other private entities in the formulation
and implementation of a multisectoral
Pursuant to the Act, the Bureau, through its information campaign
authorized representatives, shall have the
right of: Section 2. Awareness Campaign for Mobile
Sources
(a) entry of access to any premises including
documents and relevant materials as The enforcement and implementation of
referred to in the herein preceding emission standards requires the active
paragraph; cooperation of the importers, local
assemblers, owners/operators and users
(b) inspect any pollution or waste source, of all motor vehicles. To ensure the
control device, monitoring equipment or cooperation of these groups, there is a need
method required; and for an intensified and sustained awareness
raising campaign. Awareness raising will
(c) test any emission. be focused on the transport sector and
will concentrate in communicating: (i) the
Section 3. Records Available to the Public harmful impact of gas emission on general
public and workers in the transport sector,
Any record, report or information obtained (ii) the technological options available to the
under this Rule shall be made available to the transport sector to prevent smoke belching;
public, except upon a satisfactory showing and (iii) the commitment of the government
to the Bureau by the entity concerned that to fully enforce emission standards through
the record, report or information, or parts strengthening of apprehension activities.
thereof, if made public, would divulge secret
methods or processes entitled to protection The advertising industry, the broadcasting
as intellectual property. Such record, report industry and the print media shall participate
or information shall likewise be incorporated and cooperate in the formulation and
in the Bureau’s industrial rating system. implementation of public awareness raising
campaigns in connection with the emission
RULE XLVIII standards without any profit to claim in
PUBLIC EDUCATION AND connection with their involvement.
INFORMATION CAMPAIGN


PART XII steps in the interest of justice and public
ACTIONS welfare.

RULE XLIX RULE L
ADMINISTRATION AND ENFORCEMENT ADMINISTRATIVE ACTIONS AND
PROCEDURES IN AIR POLLUTION CASES
Section 1. Administration and Enforcement INVOLVING STATIONARY SOURCES

These Implementing Rules and Regulations Section 1. Administrative Action
shall be administered by the Department and/
or its authorized representatives or through Without prejudice to the right of any affected
other government agencies designated or person to file an administrative action, the
deputized by the Department, or by this act, Department shall, on its own instance or
executive orders or memorandum circulars, upon verified complaint by any person,
and others. institute administrative proceedings against
any person who violates:
Section 2. Rules and Regulations of other
Government Agencies (a) Standards of limitation provided under
the Act; or
The rules and regulations issued by other
government agencies and instrumentalities (b) Any order, rule or regulation issued by
for the prevention and/or abatement of the Department with respect to such
pollution not consistent with this Act shall standard or limitation.
supplement the rules and regulations issued
by the Department through the Bureau. Section 2. The Pollution Adjudication Board

Section 3. Authentication with Official Seal The Pollution Adjudication Board (PAB) shall
have sole and exclusive jurisdiction over all
All decisions, orders and appropriate legal cases of air pollution, as defined in these
documents hereinafter promulgated shall Implementing Rules and Regulations, and
be issued and authenticated with the official all other matters related thereto, including
seal of the Department or other government the imposition of administrative sanctions,
agencies designated by the Act. except as may be provided by law.

Section 4. Jurisdiction The PAB shall adopt and promulgate the rules
of practice and procedure in air pollution
The Department through the Bureau shall cases from stationary sources under the Act.
have exclusive and original jurisdiction to Unless otherwise revised or amended, the
control and abate air pollution from stationary existing rules of the PAB, PAB Resolution No.
sources within the territorial jurisdiction of 1-C, Series of 1997, shall apply.
the Philippines.
Section 3. Closure or Suspension of
The abatement of public nuisance as defined Development, Construction or Operations of
under the Civil Code of the Philippines and a Stationary Source
special laws shall not affect or stay the
proceedings before the Department or the In addition to the fines prescribed under
DOTC as the case may be, provided however, the Act and these Implementing Rules and
that the Department or the DOTC as the case Regulations, the PAB shall order the closure
may be, may at its discretion, take appropriate or suspension of development, construction

or operation of the stationary sources in proceedings before the Board except in a
until such time that proper environmental supplementary character and only whenever
safeguards are put in place: Provided, That an applicable.
establishment found liable for a third offense
shall suffer permanent closure immediately. Section 2. Commencement of Action

The Order of Closure or suspension is without Actions for any violation of any of the motor
prejudice to the immediate issuance of an vehicle pollution control laws and/or these
ex parte order by the PAB for such closure, Implementing Rules and Regulations may
suspension or development or construction, or be commenced by any person by filing a
cessation of operations during the pendency written complaint, or by the DOTC on its
of the pollution case before the PAB. Said ex own initiative, or by the filing of a charge by
parte order shall be based upon prima facie any deputized agent of the DOTC before the
evidence that there is imminent threat to life, hearing officer.
public health, safety or general welfare, or
to plant or animal life, or whenever there is Section 3. Caption and Title
an exceedance of the emission standards set
by the Department and/or the Board or the In all cases cognizable by the Traffic
appropriate LGU. Adjudication Service, the full names of all
parties, as far as they are known, shall be
Section 4. Fine Rating System stated in the caption of the original pleadings,
motion, resolution, order or decision and in
The PAB shall prepare a fine rating system to all summons, notices and processes to be
adjust the maximum fine prescribed under served upon them.
Section 45 of the Act based on the violator’s
ability to pay, degree of willfulness, degree of Section 4. Forms and Contents of Complaints
negligence, history of non-compliance and and Charge Sheet
degree of recalcitrance subject to conditions
set forth in the Act. In case of negligence, The complaint or charge sheet shall be
the first-time offender’s ability to pay may in writing and drawn in clear and concise
likewise be considered by the PAB. In the language, either in Filipino or in English. It
absence of any extenuating or aggravating shall recite the ultimate facts constituting
circumstances, the amount of fine for the cause(s) of action and/or the violations
negligence shall be equivalent to one-half of of the motor vehicle pollution control
the fine for willful violation. laws and/or these Implementing Rules
and Regulations, as well as all information
RULE LI pertinent thereto. It may specify the relief
ACTIONS, PLEADINGS AND HEARING and such further remedies as may be deemed
PROCEDURES FOR just and equitable, except that the charge
MOTOR VEHICLES BEFORE THE LTO sheet shall already include a notice requiring
the Respondent to appear and answer the
Section 1. Nature and Procedure charge of the date, time and place indicated
therein which shall not be less than one (1)
Subject to the basic requirements of due day nor more than three (3) days from receipt
process, the proceedings herein provided hereof. In the case of a private complaint, the
shall be summary in nature. The technical hearing officer shall set the case for hearing
rules of evidence obtaining in courts of law and require the Respondent to appear and
shall not bind the Traffic Adjudication Service answer the complaint on the date, time and
of the LTO. The Rules of Court shall not apply place indicated in the notice of hearing which

shall not be later than five (5) days from three (3) days from its submission. Said
receipt thereof. decision shall become final and executory if
no appeal is taken therefrom to the Secretary
Section 5. Filing and Service of Complaint within fifteen (15) days from notice thereof.
and Charge Sheet
Only upon the presentation of the CEC and
The complaint or charge sheet shall be filed the official receipt certifying full payment of
in two (2) copies before the Hearing Officer fines shall the grounded motor vehicle be
whose office covers the territorial jurisdiction released upon a written order duly issued by
where the Respondent was apprehended. the Hearing Officer.
The charge sheet shall be filed immediately,
but not later than twenty-four (24) hours The Hearing Officer shall then issue another
from knowledge of the violation. Service of order allowing the said motor vehicle to
the copy upon the driver of Respondent, shall resume operation.
be deemed service to Respondent.
RULE LII
Section 6. Hearing on Apprehended Motor CITIZEN SUIT
Vehicles
Section 1. Purposes
(a) As soon as the parties enter their
appearances and manifest their readiness The purposes of this section are to:
to proceed with the hearing of the case,
the complainant shall be allowed to (a) promote the participation of the citizens
present evidence in support of the charge in the enforcement of the Act; and
with the testimony of each witness taken
under oath. Thereafter, the Respondent (b) serve as a prod to government officials
shall be allowed to present this evidence. to take the necessary and appropriate
action to abate and/or control pollution.
(b) If the case is commenced by the Secretary
or its deputized agent, the hearing shall Section 2. Scope
proceed directly with the presentation
of results of the smoke meter or CO/ The legal actions contemplated under this
HC tests as the case may be, and other section are for civil and criminal remedies, the
evidence, after which the Respondent administrative action having been extensively
shall present his evidence. treated in the preceding Rules.

In case of doubt, the Hearing Officer shall Section 3. Party Defendants
admit all the evidence presented, subject to
the objections interposed, if there be any. The legal actions shall be against:

Section 7. Order/Decision (a) Any private natural or juridical person,
including government owned and
If the Respondent admits the charge, the controlled corporations, who violates or
Hearing Officer shall on that same day, issue fails to comply with the provisions of the
an order imposing the appropriate fines and Act;
directing the grounding of the apprehended
motor vehicle. (b) Any Government agency which may
issue any order or rules inconsistent with
If the litigation of the case continues, the the Act. For this purpose, unless the
Hearing Officer shall decide the same within inconsistency is so blatant as to manifest
evident bad faith, the action available prohibitory and mandatory injunction, etc).
under this heading shall only be civil in The fees shall however be recorded to enable
nature, such as for declaratory relief and/ the Court to collect the appropriate amount
or injunction. The government official recovered by the plaintiff in the event a
who was made a respondent in said civil monetary judgment is rendered in favor of
action shall be sued in his official capacity the plaintiff in the citizen suit.
and shall not be liable for damages.
Section 7. Bond
(c) Any public officer who willfully or grossly
neglects to perform the duties provided In coordination with the Supreme Court,
for under the Act, or who abuses his where there is a prima facie showing by the
authority or in any manner improperly plaintiff that the defendant establishment’s
performs his duties under the Act and its emission is beyond the standards allowed
Implementing Rules and Regulations. by the law and these Implementing Rules
and Regulations, or where there is a showing
Section 4. Notice that the government official concerned has
grossly neglected to perform his duty or has
The government official as well as the person abused his authority, the Court shall exempt
in violation shall be given notice of thirty (30) the plaintiff from the posting of a bond for the
calendar days to undertake the necessary issuance of a restraining order or preliminary
measures to abate the pollution. This shall injunction.
be a condition precedent to the filing of a civil
or criminal case in court against the polluting Section 8. Malicious Actions
establishment and against the government
official concerned. The Court shall, within thirty (30) days from
receipt of the complaint, make a preliminary
Section 5. Damages determination whether the case is malicious
and/or baseless. The availability of technical
Damages arising from illness, physical injury or data secured through the monitoring
damage to property as a result of air pollution conducted by the Department through the
may be included in the action filed against Bureau, if any, or the presence of a photograph
the government official concerned and the showing a visibly opaque emission shall be
polluting establishment. In addition, failure sufficient evidence to prove that the case is
to take action within the prescribed 30-day neither malicious nor baseless.
period may also be ground for the initiation
of an administrative or criminal action against RULE LIII
the government official concerned before the SUITS AND STRATEGIC LEGAL ACTIONS
Office of the Ombudsman.
Section 1. Duty of the Investigating
Section 6. Filing Fees Prosecutor

In coordination with the Supreme Court, the Where a suit is brought against a person who
citizen suit under this Rule, including actual filed an action under the preceding Rule, or
and moral damages alleged to have resulted against any person, institution or government
from the air pollution, shall be exempt from agency that implements the Act or these
filing fees and other court fees. The Supreme Implementing Rules and Regulations, it shall
Court may also waive the payment of the be the duty of the investigating prosecutor or
nominal filing fee for actions not capable of the court, as the case may be, to immediately
pecuniary estimation (e.g., declaratory relief, make a determination not exceeding thirty

(30) days whether said legal action has been (3) years to compensate for inflation and to
filed to harass, vex, exert undue pressure maintain the deterrent function of the fines.
or stifle such legal resources of the person
complaining or enforcing the provisions of Section 2. Gross Violation Defined
the Act or these Implementing Rules and
Regulations. Gross violations of the Act or these
Implementing Rules and Regulations shall
Section 2. Action of the Court mean:

Upon determination made under the (a) Three (3) or more specific offenses within
preceding section, if evidence warrants the a period of one (1) year;
same, the court shall dismiss the case and
award attorney’s fees and double damages. (b) Three (3) or more specific offenses within
three (3) consecutive years;
Section 3. Scope
(c) Blatant disregard of the orders of the PAB,
This Rule shall apply and benefit persons such as but not limited to the breaking of
who filed an action under the preceding seals, padlocks and other similar devices,
Rule or Section 41 of the Act and any person, or operating despite the existence of
institution or government agency that an order for closure, discontinuance or
implements the Act or these Implementing cessation of operation;
Rules and Regulations. Further, it shall also
apply and benefit public officers who are sued (d) Irreparable or grave damage to the
for acts committed in their official capacity, environment as a consequence of any
there being no grave abuse of authority, and violation or omission of the provisions of
done in the course of enforcing the Act or the Act or these Implementing Rules and
these Implementing Rules and Regulations. Regulations.

PART XIII Section 3. Penalties for Gross Violations
FINES AND PENALTIES
In case of gross violations of the Act or these
RULE LIV Implementing Rules and Regulations, the PAB
FINES AND PENALTIES FOR VIOLATION OF shall recommend to the proper government
STANDARDS FOR STATIONARY SOURCES agencies the filing of appropriate criminal
charges against the violators. The PAB shall
Section 1. Fines to Be Imposed assist the public prosecutor in the litigation of
the case.
For actual exceedance of any pollution or
air quality standards under the Act or these Offenders shall be punished with
Implementing Rules and Regulations, the imprisonment of not less than six (6) years but
PAB shall impose a fine of not more than not more than ten (10) years at the discretion
One Hundred Thousand Pesos (P 100,000.00) of the court. If the offender is a juridical
for every day of violation against the owner person, the president, manager, directors,
or operator of a stationary source until such trustees, the pollution control officer or
time that the standards have been complied officials directly in charge of the operations
with. shall suffer the penalty herein provided.

The fines herein prescribed shall be increased Section 4. Lien Upon Personal and
by at least ten percent (10%) every three Immovable Property

Fines and penalties imposed pursuant to cancellation of license of both the technician
the Act or these Implementing Rules and and the center, or both, as determined by the
Regulations shall be liens upon personal DOTC.
and immovable properties of the violator.
Such lien shall, in case of insolvency of RULE LVI
the respondent violator, enjoy preference FINES AND PENALTIES FOR VIOLATIONS OF
subsequent to laborer’s wages under Article OTHER PROVISIONS OF THE CLEAN AIR ACT
2241 and 2242 of Republic Act No. 386,
otherwise known as the New Civil Code of the Section 1. Fines and Penalties for Violations
Philippines. of Other Provisions in the Act

RULE LV For violations of all other provisions provided
FINES AND PENALTIES FOR VIOLATION OF in the Act and these Implementing Rules
STANDARDS FOR MOTOR VEHICLES and Regulations, fine of not less than Ten
Thousand Pesos (P 10,000.00) but not
Section 1. Fines and Penalties for Violation more than One Hundred Thousand Pesos (P
of Vehicle Emission Standards 100,000.00) or six (6) years imprisonment or
both shall be imposed.
The driver and operator of the apprehended
vehicle found to have exceeded the emission If the offender is a juridical person, the
standards shall suffer the following penalties. president, manager, directors, trustees, the
pollution control officer or officials directly
(a) First offense – a fine in the amount of one in charge of the operations shall suffer the
thousand pesos (P 1,000.00); penalty herein provided.

(b) Second offense – a fine in the amount of Section 2. Burning of Municipal Waste
three thousand pesos (P 3,000.00); and
Any person who burns municipal waste in
(c) Third offense – a fine in the amount of violation of Sections 1 and 3 of Rule XXV shall
five thousand pesos (P 5,000.00) and be punished with two (2) years and one (1)
the offender must undergo a seminar day to four (4) years imprisonment.
on pollution control and management
conducted by the DOTC/LTO. Section 3. Burning of Hazardous Substances
and Wastes
In case the third offense was committed
within a year from the commission of the first Any person who burns hazardous substances
offense, an additional penalty of suspension and wastes in violation of Section 1 of Rule
of the Motor Vehicle Registration (MVR) for a XXV shall be punished with four (4) years and
period of one (1) year shall be imposed. one (1) day to six (6) years imprisonment.

Section 2. Fines for Violation of the Section 4. Burning of Bio-Medical Waste.
Provisions of Section 21(d) of the Act
Any person who burns bio-medical waste in
Any violation of the provisions of Section violation of Section 4 of Rule XXV shall be
21 paragraph (d) with regard to national punished with four (4) years and one (1) to six
inspection and maintenance program, (6) years imprisonment.
including technicians and facility compliance
shall be penalized with a fine of not less Section 5. Smoking in Public Places
than thirty thousand pesos (P 30,000.00) or

Any person who smokes inside a public revised by the DOE shall be punished with
building or an enclosed public place, including three (3) years and one (1) day to five (5) years
public utility vehicles or other means of public imprisonment and liable for the appropriate
transport or in any enclosed area outside of fine as provided in Section 1.
his private residence, private place of work
or any duly designated smoking area shall be Section 9. Manufacture, Importation, Sale,
punished with six (6) months and one (1) day Offer for Sale, Dispensation, Transportation
to one (1) year imprisonment or a fine of ten or Introduction into Commerce of
thousand pesos (P 10,000.00). Automotive Diesel Fuel which do not Meet
the Fuel Specifications.
Section 6. Manufacture, Importation, Sale,
Offer for Sale, Introduction into Commerce, Any person who manufactures, sells, offers
Conveyance or other Disposition of Leaded for sale, dispenses, transports or introduces
Gasoline. into commerce automotive diesel fuel in
violation of Section 3 of Rule XXXI or which
Any person who manufactures, imports, sells, do not meet the fuel specifications as revised
offers for sale, introduces into commerce, by the DOE shall be punished with three
conveys or otherwise disposes of, in any (3) years and one (1) day to five (5) years
manner leaded gasoline shall be punished imprisonment and liable for the appropriate
with three (3) years and one (1) day to five fine as provided in Section 1.
(5) years imprisonment and liable for the
appropriate fine as provided in Section 1. Section 10. Manufacture, Importation, Sale,
Offer for Sale, Dispensation, Transportation
Section 7. Manufacture, Importation, Sale, or Introduction into Commerce of Industrial
Offer for Sale, Introduction into Commerce, Diesel Fuel which do not Meet the Fuel
Conveyance or other Disposition of Engines Specifications.
and/or Engine Components Requiring
Leaded Gasoline. Any person who manufactures, sells, offers for
sale, dispenses, transports or introduces into
Any person who manufactures, imports, sells, commerce industrial diesel fuel in violation of
offers for sale, introduces into commerce, Section 3 of Rule XXXI or which do not meet
conveys or otherwise disposes of, in any the fuel specifications as revised by the DOE
manner engines and/or engine components shall be punished with three (3) years and
which require the use of leaded gasoline shall one (1) day to five (5) years imprisonment
be punished with three (3) years and one (1) and liable for the appropriate fine as provided
day to five (5) years imprisonment and liable in Section 1.
for the appropriate fine as provided in Section
1. Section 11. Manufacture, Processing, Trade
of Fuel or Fuel Additive Without Prior
Section 8. Manufacture, Importation, Sale, Registration of the Fuel or Fuel Additive with
Offer for Sale, Dispensation, Transportation the DOE.
or Introduction into Commerce of Unleaded
Gasoline Fuel which do not Meet the Fuel Any person who manufactures, processes,
Specifications. or engages in the trade of any fuel or fuel
additive without having the fuel or fuel
Any person who manufactures, sells, offers additive registered with the DOE shall be
for sale, dispenses, transports or introduces punished with two (2) years and one (1) day to
into commerce unleaded premium gasoline four (4) years of imprisonment and liable for
fuel in violation of Section 3 of Rule XXXI or the appropriate fine as provided in Section 1.
which do not meet the fuel specifications as
Section 12. Misfuelling. of these Implementing Rules and Regulations
are hereby repealed or modified accordingly.
Misfuelling refers to the act of introducing or
causing or allowing the introduction of leaded RULE LIX
gasoline into any motor vehicle equipped EFFECTIVITY
with a gasoline tank filler inlet and labeled
“unleaded gasoline only.” These Implementing Rules and Regulations
shall take effect fifteen (15) days from the
Any person who misfuels shall be punished date of its publication in the Official Gazzette
with one (1) year and one (1) day to three or in at least two (2) newspapers of general
(3) years imprisonment or a fine of twenty circulation.
thousand pesos (P 20,000.00).
Approved: ________________________
PART XIV
FINAL PROVISIONS
ANTONIO H. CERILLES
RULE LVII Secretary
SEPARABILITY CLAUSE
Prepared and Recommended
Should any provision herein be subsequently for Approval by:
declared unconstitutional, the same shall not
affect the validity or the legality of the other The Environmental Management Bureau
provisions. and
The Inter-Agency Technical Committee for
RULE LVIII the IRR of the Clean Air Act of 1999
REPEALING AND AMENDING CLAUSE

Department Administrative Order No. 2000- PETER ANTHONY A. ABAYA
03 and all orders, rules and regulations Director, EMB
inconsistent with or contrary to the provisions Chairman, Inter-Agency Technical Committee


ANNEX A
AIR QUALITY INDICES

Air Quality Indices. – The following shall (c) Ozone (ppm) [8-hour]
describe the six (6) levels of air quality for
suspended particulates, sulfur dioxide, Good 0.000 – 0.064
photochemical oxidants or ozone, carbon Fair 0.065 – 0.084
monoxide, and nitrogen dioxide anywhere in Unhealthy for sensitive groups 0.085 –
the Philippines. Levels above those indicated, 0.104
with the exception of TSP, shall be considered Very Unhealthy 0.105 – 0.124
Emergency: Acutely unhealthy 0.125 – 0.374
Emergency (1)
(a) Particulate Matter (μg/m3)
1
When 8-hour O3 concentrations exceed
(1) Total Suspended Particulates – (24- 0.374 ppm, AQI values of 301 or higher must
Hour Average) be calculated with 1-hour O3 concentrations.

Good 0 – 80 [1-hour]2
Fair 81 – 230
Unhealthy for sensitive groups 231 – Good –
349 Fair –
Very Unhealthy 350 – 599 Unhealthy for sensitive groups 0.125 –
Acutely unhealthy 600 – 899 0.164
Emergency 900 – and above Very Unhealthy 0.165 – 0.204
Acutely unhealthy 0.205 – 0.404
(2) PM10 [24-hour] Emergency 0.405 – 0.504

Good 0 – 54 2
Areas are generally required to report the
Fair 55 – 154 AQI based on 8-hour ozone values. However,
Unhealthy for sensitive groups 155 – there are a smaller number of areas where an
254 AQI based on 1-hour ozone values would be
Very Unhealthy 255 – 354 more precautionary.
Acutely unhealthy 355 – 424
Emergency 425 – 504 In these cases, in addition to calculating the
8-hour ozone index value, the 1-hour index
(b) Sulfur Dioxide (ppm) [24-hour] value may be calculated and the maximum of
the two values is reported.
Good 0.000 – 0.034
Fair 0.035 – 0.144 (d) Carbon Monoxide (ppm) [8-hour]
Unhealthy for sensitive groups 0.145 –
0.224 Good 0.0 – 4.4
Very Unhealthy 0.225 – 0.304 Fair 4.5 – 9.4
Acutely unhealthy 0.305 – 0.604 Unhealthy for sensitive groups 9.5 – 12.4
Emergency 0.605 – 0.804 Very Unhealthy 12.5 – 15.4
Acutely unhealthy 15.5 – 30.4
Emergency 30.5 – 40.4

(e) Nitrogen Dioxide (ppm) [1-hour] (b) Sulfur Dioxide (ppm) [24-hour]
Good None
Good (3)
Fair None
Fair (3)
People with respiratory
Unhealthy for sensitive groups (3) Unhealthy for sensitive disease, such as asthma,
Very Unhealthy (3) groups should limit outdoor
Acutely unhealthy 0.65 – 1.24 exertion.
Emergency 1.25 – 1.64 Pedestrians should avoid

heavy traffic areas. People
with heart or respiratory
3
NO2 has no 1-hour term NAAQG. disease, such as asthma,
should stay indoors and
Very unhealthy rest as much as possible.
Pollutant-Specific Cautionary Statements for Unnecessary trips should be
the General Public. postponed.
People should voluntarily
(a) Particulate Matter (μg/m3) restrict the use of vehicles.
People, should limit outdoor
TSP and PM10 [24-hour] exertion. People with heart
or respiratory disease, such
Good None as asthma, should stay
indoors and rest as much as
Fair None Acutely unhealthy possible. Unnecessary trips
should be postponed.
People with respiratory
Unhealthy for sensitive disease, such as asthma,
groups should limit outdoor Motor vehicle use may
exertion. be restricted. Industrial
activities may be curtailed.
Pedestrians should avoid
Everyone should remain
indoors, (keeping windows
with heart or respiratory
and doors closed unless
disease, such as asthma,
heat stress is possible).
should stay indoors and
Motor vehicle use should
Very unhealthy rest as much as possible.
Emergency be prohibited except for
Unnecessary trips should be
emergency situations.
postponed.
Industrial activities, except
that which is vital for public
People should voluntarily safety and health, should be
restrict the use of vehicles. curtailed.
exertion. People with heart
or respiratory disease, such (c) Ozone (ppm)
as asthma, should stay
indoors and rest as much as
Acutely unhealthy possible. Unnecessary trips Good None
should be postponed. Fair None
Motor vehicle use may People with respiratory

be restricted. Industrial Unhealthy for sensitive disease, such as asthma,
activities may be curtailed. groups should limit outdoor
exertion.
Everyone should remain
indoors, (keeping windows Pedestrians should avoid
and doors closed unless heavy traffic areas. People
heat stress is possible). with heart or respiratory
Motor vehicle use should disease, such as asthma,
Emergency be prohibited except for should stay indoors and
emergency situations. Very unhealthy rest as much as possible.
Industrial activities, except Unnecessary trips should be
that which is vital for public postponed.
safety and health, should be
curtailed. People should voluntarily
restrict the use of vehicles.


(e) Nitrogen Dioxide (ppm)
exertion. People with heart
Good None
indoors and rest as much as Fair None
Acutely unhealthy possible. Unnecessary trips
should be postponed. People with respiratory
Unhealthy for sensitive disease, such as asthma,
groups should limit outdoor
Motor vehicle use may
exertion.
be restricted. Industrial
activities may be curtailed. Pedestrians should avoid
Everyone should remain with heart or respiratory
indoors, (keeping windows disease, such as asthma,
and doors closed unless should stay indoors and
heat stress is possible). Very unhealthy
rest as much as possible.
Motor vehicle use should Unnecessary trips should be
Emergency be prohibited except for postponed. People should
emergency situations. voluntarily restrict the use of
Industrial activities, except vehicles.
that which is vital for public
safety and health, should be People should limit outdoor
curtailed. exertion. People with heart
(d) Carbon Monoxide (ppm) Acutely unhealthy
indoors and rest as much
as possible. Unnecessary
trips should be postponed.
Good None Motor vehicle use may
be restricted. Industrial
Fair None activities may be curtailed.
People should stay indoors Everyone should remain

and rest as much as possible. indoors, (keeping windows
Unnecessary trips should be and doors closed unless
postponed. People should heat stress is possible).
Unhealthy for
voluntarily restrict the use of Motor vehicle use should
sensitive groups
vehicles and avoid sources Emergency be prohibited except for
of CO, such as heavy traffic. emergency situations.
Smokers should refrain from Industrial activities, except
smoking. that which is vital for public
safety and health, should be
People with cardiovascular curtailed.
disease, such as angina,
should avoid exertion and
sources of CO, such as heavy
traffic, and should stay
Acutely unhealthy indoors and rest as much as
possible. Unnecessary trips
should be postponed. Motor
vehicle use may be restricted.
Industrial activities may be
curtailed.
Everyone should avoid
exertion and sources of CO,
Emergency such as heavy traffic; and
should stay indoors and rest
as much as possible.


ANNEX B
Emission Test Procedure for In-Use Motor Vehicles Equipped
with Spark-Ignition Engines

1. Scope e. Ensure that the vehicle exhaust

system is reasonably leak-proof
The test procedure is for the and will allow the insertion of
determination of the concentration the sampling probe by at least 30
of exhaust carbon monoxide (CO) and cm. from the tailpipe outlet. If
hydrocarbon (HC) emissions from in- this is not possible due to tailpipe
use motor vehicles equipped with spark configuration, use the appropriate
ignition engines running at idle speed. correction factor.

2. Test Equipment (Reference: ISO – 3930) 4. Measurement

a. Carbon monoxide analyzer – a NDIR a. Immediately preceding the
(Non-dispersive Infrared) CO exhaust measurement, adjust the instrument
gas analyzer. to zero and accelerate the engine
to about 2,500 rpm, using the
b. Hydrocarbon analyzer – a NDIR HC tachometer, if available. Maintain
exhaust gas analyzer, HC as hexane this speed from ten (10) to fifteen
(C6H14). (15) seconds, then release the pedal
to return the engine at idle speed.
c. Tachometer – An easily installed and
operated tachometer to measure b. While the engine idles, insert the
engine speed (RPM). sampling probe into the exhaust pipe
as deeply as possible which shall not
3. Vehicle Preparation be less than thirty (30) cm. Wait for
twenty (20) seconds and take the
a. Set the vehicle transmission at neutral CO/HC reading.
with the hand-brake engaged.
c. If the vehicle has multiple exhaust
b. Ensure that the idling speed or the outlets the arithmetic average of
engine rpm with the accelerator the CO/HC readings in each exhaust
in the rest position, conforms outlet is taken as the final result.
with the vehicle manufacturer’s
recommendation. 5. Instrument Calibration, Adjustments
(Reference: ISO 3929)
c. All accessories like rear window
heating, air conditioning system, air a. Prepare, use and maintain
fan and other equipment necessary the analyzer following the
for the vehicle operation at idle directions given in the instrument
should be switched-off. manufacturer’s operation manual
and service the instrument at such
d. Check that the temperature of the intervals as to ensure accuracy.
engine is at least 70oC; otherwise, run
the vehicle for at least 15 minutes on b. Carry out a span and zero calibration
a normal road before testing. within a period of four (4) hours
before the instrument is moved c. If the sample handling system is not
or transferred to a new location. integral with the analyzer, make
The calibration shall be performed certain that the effectiveness of the
well away from the exhaust of gas sampling system are leak-proof.
motor vehicles whose engines are Check that filters are clean, that
running. If the instrument is not filter holders are fitted with their
self-compensated for non-standard gaskets and that these are all in good
conditions of altitude and ambient condition.
temperature or not equipped with
a manually controlled system of d. Ensure that the sample handling
compensation, the scale calibration line and probe are free from
shall be performed using calibration contaminants.
gas.
ANNEX C
FREE ACCELERATION TEST FOR IN-USE COMPRESSION-IGNITION MOTOR VEHICLES

1. Scope 3. Test Equipment

The test is a smoke opacity measurement The light-absorption coefficient of the
for in-use motor vehicles equipped with exhaust gases shall be measured with an
compression-ignition (diesel) engines, opacimeter satisfying the conditions laid
using the free acceleration from low idle down in ECE Regulation No. 24, Revision
speed method. 2E/ECE/TRANS 505. Rev Add 23 Rev 2,
Annex 8: Characteristics of Opacimeter.
2. Motor Vehicle Test Condition
4. Test Procedures and Smoke Opacity
a. The test shall be carried out on a Measurement
stationary vehicle and the engine
shall be first brought to normal a. Follow the opacimeter
operating conditions during a road manufacturer’s instruction for on
run or dynamic test. In particular, the proper installation, operation/
cooling water and oil should be at use and checking the accuracy and
normal temperature. calibration before and after each
test.
b. The combustion chamber should not
have been cooled or fouled due to a b. Set the vehicle gear-change control
prolonged period of idling preceding in the neutral position and the hand-
the test. brake effectively engaged.
c. The exhaust system shall not have c. Start the engine and warm it up to its
any orifice or leaks wherein the normal operating temperature.
gases emitted by the engine might
be diluted. d. Accelerate the engine two to three
times (2-3) prior to smoke sampling
in order to remove deposits of soot
and other carbon particles in the tail the four stabilized values shall be the
pipe. test result for the concerned vehicle.
e. With the engine idling, depress the g. For motor vehicles designed with
accelerator quickly, but not violently, several exhaust outlets that are
to obtain maximum delivery from individually connected from paired
the injection pump. Maintain this exhaust ports, the free acceleration
position until maximum engine speed test shall be carried out on each
is reached for about two (2) to four outlet. In this case, the values used
(4) seconds and the governor comes for calculating the correction to
into action. As soon as this speed is the absorption coefficient shall be
reached, release the accelerator until arithmetical mean values recorded at
the engine resumes its idling speed. each outlet and the test shall be valid
Record the maximum reading of the only if the extreme values measured
smokemeter. do not differ by more than 0.15m-1
f. The operation described in paragraph For motor vehicles designed with

(4)(e) shall be repeated not less several exhaust outlets connected
than six (6) times in order to clear from one exhaust pipe coming
the exhaust system and to allow for from the engine’s exhaust manifold
any necessary adjustment of the collector, the free acceleration test
apparatus. The maximum opacity shall be carried out only on one
values read in each successive exhaust outlet, the other outlets
acceleration shall be noted until effectively blocked to prevent leaks.
stabilized values are obtained. The
values read shall be regarded as h. Seal the full load screw of the
stabilized when four (4) consecutive injection pump/delivery system of
readings are within a hand width of the motor vehicle after a pass-test to
0.25m-1 and do not form a decreasing prevent tampering.
sequence. The arithmetic mean of

IMPLEMENTING THE CLEAN AIR ACT GASOLINE SPECIFICATION FOR 2003

(1) Pursuant to the provisions of Republic (5) The DOE shall monitor all activities
Act No. 8749, otherwise known as the being undertaken and the quality of
Philippine Clean Air Act (CAA) of 1999, gasoline being sold by all persons at their
particularly the mandated reformulation refineries, bulk plants, terminals, depots,
of gasoline under Section 26 (a) thereof tank trucks and gasoline stations/retail
which requires that beginning January outlets nationwide to ensure the effective
1, 2003 the aromatics and benzene implementation of the new gasoline
content in gasoline should be reduced specifications required under the CAA.
to 35% and 2% (by volume), respectively, To monitor aromatics and benzene, the
the Department of Energy (DOE) DOE shall, among others, conduct the
hereby adopts the following guidelines random sampling and testing of gasoline
implementing the same: secured from these oil facilities.
(2) These guidelines shall apply to all persons, (6) All persons covered by this Memorandum
whether natural or juridical, engaged in Circular are required to provide the
the manufacture, importation, storage, prescribed sampling bottles (Annex) at
distribution, supply, marketing and/or the aforesaid facilities for use in retaining
selling of gasoline including, without duplicate gasoline samples taken in the
limitation, oil companies, refineries, course of inspection made by the DOE.
importers, blenders, bulk marketers,
suppliers and retailers. (7) Failure to comply with the provisions
of this Memorandum Circular shall
(3) Beginning January 1, 2003, only gasoline subject the violator to the corresponding
fuel containing a maximum aromatics sanctions imposed by appropriate laws,
and benzene content of 35% and 2% DOE rules and regulations and the CAA.
(by volume), respectively, may be
manufactured, imported, sold, supplied, This Memorandum Circular shall take effect
offered for sale, dispensed, transported upon publication in any newspaper of general
or introduced into commerce in the circulation.
Philippines.
Fort Bonifacio, Taguig City, Metro Manila, 13
(4) Upon the effectivity of this Memorandum December 2002.
Circular, all persons engaged in the
VICENTE S. PÉREZ, JR.
importation of gasoline and/or gasoline
Secretary
blending components shall submit

to the DOE, as part of the reportorial
Annex
requirements under Section 7 (b) of Prescribed Sampling Bottle/Container
DOE Department Circular No. 98-03-004

implementing Republic Act No. 8479,
DESCRIPTION SPECIFICATION
a Certificate of Quality (COQ) showing
COLOR Amber Bottle/Tin Can
aromatics and benzene content, along VOLUME 0.5 liters (min.)
with all the other properties listed in the COVER Air-Tight
Philippine National Standard for gasoline, ORIFICE OPENING (dia) 1.0 (min.)
with the corresponding values resulting
from the prescribed test methods.

IMPLEMENTING THE PHILIPPINE NATIONAL STANDARD SPECIFICATIONS FOR UNLEADED MOTOR
GASOLINE (PNS/DOE QS 001:2009)
WHEREAS, Republic Act (R.A.) No. 8479, WHEREAS, R.A. No. 9367, or the “The
otherwise known as the “Downstream Oil Biofuels Law of 2006”, mandated the use of
Industry Deregulation Act of 1998”, provides biofuel-blended gasoline and diesel and to
for the deregulation of the downstream implement the initial mandate for E-gasoline,
oil industry to foster a truly competitive DOE Circular No. 2009-02-0002 was issued
market which can better achieve the social requiring, among others, a minimum of 5%
policy objectives of fair prices, adequate and bioethanol in the annual total volume of
continuous supply of environmentally-clean gasoline fuel actually sold and distributed
and high quality petroleum products e.g. by an oil company pursuant to specifications
gasoline, diesel, LPG and bunker; prescribed in the PNS for conventional
gasoline and E-10. Subsequently, to guide
WHEREAS, Section 26 of R.A. No. 8749, both the oil companies and the motorists,
otherwise known as the “Philippine Clean Air PNS/DOE QS 008:2009 was issued, allowing
Act of 1999”, provides that the DOE, together 10% ethanol blends for higher gasoline
with the Department of Environment and grades;
Natural Resources (DENR), Bureau of Product
Standards (BPS) and the Department of WHEREAS, to address the concern on the
Science and Technology (DOST) and other compatibility of E-10 gasolines on in-use
stakeholders, shall set specifications for vehicles, particularly on the engine and fuel
all types of fuel and fuel-related products system, and to primarily establish a distinction
and improve fuel composition and also the between conventional gasoline (without
allowable content of additives in all types ethanol) and Ethanol-blended gasoline or
of fuels and fuel-related products. For E-Gasoline, PNS/DOE QS 001:2009 was
this purpose, the Technical Committee on promulgated by the BPS;
Petroleum Products and Additives (TCPPA)
was established to develop the standards, WHEREAS, Department Circulars were issued
which will be submitted to the BPS for to implement each and every PNS, along with
promulgation into a Philippine National other applicable rules and guidelines for its
Standard (PNS); effective implementation.
WHEREAS, pursuant to the mandated removal NOW, THEREFORE, the following guidelines
of lead in gasoline under the Clean Air Act, are hereby adopted to effectively implement
PNS/DOE QS 001:2005 was promulgated PNS/DOE QS 001:2009:
for Unleaded Motor Gasoline, providing for
various octane boosters as lead substitute (1) Starting November 16, 2009, only
such as ethanol, among other oxygenates, at conventional gasoline complying with
10% maximum to promote the DOE’s ethanol PNS/DOE QS 001:2009 shall be sold,
program. PNS/DOE 05 008:2006 specifically offered for sale, dispensed, or introduced
for E-gasoline was subsequently issued to into commerce in the Philippines.
pave the way for the commercial introduction
of gasoline with 10% ethanol blend (E-10), (2) Any person engaged in the importation of
initially for the 93 octane gasoline; unleaded motor gasoline and for gasoline

blending components shall submit to the (5) Oil companies shall conduct regular
DOE not later than twenty (20) days after monitoring of all activities being
the unloading of the import shipment, and undertaken at their refineries, bulk
as part of the reportorial requirements plants, terminals, depots, tank trucks
under Section 7 (b) of DOE Department and gasoline stations/retail outlets to
Circular No. 98-03-004 implementing R. ensure that the quality of all gasoline
A. No. 8479, a Certificate of Quality (COO) being sold meets the requisite gasoline
showing all the properties listed in PNS/ specifications. The DOE shall, among
DOE QS 001:2009 with the corresponding others, conduct random quality and
values resulting from the prescribed test quantity sampling and testing of gasoline
methods. obtained from these oil facilities.

(3) All oil company dealers/operators of (6) Any person who fails to comply with the
gasoline stations shall comply with the provisions of this Department Circular
following labeling requirements: shall be subject to appropriate sanctions
imposed under applicable laws, rules and
(a) All pumps dispensing regular regulations.
gasoline shall contain the advisory
“NOT RECOMMENDED FOR VEHICLES (7) Department Circular No. 2006-04-0005 is
WITH FOUR (4) OR MORE WHEELS”. hereby repealed.

(b) All gasoline dispensing pumps with This Department Circular shall take effect
the prescribed octane sticker as immediately upon publication in any
provided under Department Circular newspaper of general circulation.
No. 2001-09-003 shall indicate in the
sticker the word “MINIMUM” below Fort Bonifacio, Taguig City, Metro Manila,
the octane number. December 28, 2009.

(4) Oil companies or any entity shall register
with the DOE any new fuel additive (sgd)
introduced in their fuel products, as well ANGELO T. REYES
as any organo-metallic compound used Secretary
or added in their gasoline.


Chapter 8

December 19, 2008
Repealed PD 1185
AN ACT ESTABLISHING A COMPREHENSIVE FIRE CODE OF THE PHILIPPINES, REPEALING

PRESIDENTIAL DECREE NO. 1185 AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::
Section 1.This Act shall be known as the Cellulose Nitrate Or Nitro Cellulose - A
“Revised Fire Code of the Philippines of highly combustible and explosive compound
2008”. produced by the reaction of nitric acid with a
cellulose material.
Section 2. It is the policy of the State to
ensure public safety and promote economic Cellulose Nitrate Plastic (Pyroxylin) - Any
development through the prevention and plastic substance, materials or compound
suppression of all kinds of destructive fires having cellulose nitrate (nitro cellulose) as
and promote the professionalization of the base.
fire service as a profession. Towards this end,
the State shall enforce all laws, rules and Combustible, Flammable or Inflammable -
regulations to ensure adherence to standard Descriptive of materials that are easily set on
fire prevention and safety measures, and fire.
promote accountability for fire safety in the
fire protection service and prevention service. Combustible Fiber - Any readily ignitable and
free burning fiber such as cotton, oakum, rags,
Section 3. Definition of Terms. - As used in this waste cloth, waste paper, kapok, hay, straw,
Fire Code, the following words and phrases Spanish moss, excelsior and other similar
shall mean and be construed as indicated: materials commonly used in commerce.
Abatement - Any act that would remove or Combustible Liquid - Any liquid having a flash
neutralize a fire hazard. point at or above 37.8_C (100_F).
Administrator - Any person who acts as Corrosive Liquid - Any liquid which causes fire
agent of the owner and manages the use of a when in contact with organic matter or with
building for him. certain chemicals.
Blasting Agent - Any material or mixture Curtain Board - A vertical panel of non-
consisting of a fuel and oxidizer used to set combustible or fire resistive materials attached
off explosives. to and extending below the bottom chord of
the roof trusses, to divide the underside of Fire Alarm - Any visual or audible signal
the roof into separate compartments so that produced by a device or system to warm
heat and smoke will be directed upwards to the occupants of the building or fire fighting
a roof vent. elements of the presence or danger of fire to
enable them to undertake immediate action
Cryogenic - Descriptive of any material which to save life and property and to suppress the
by its nature or as a result of its reaction with fire.
other elements produces a rapid drop in
temperature of the immediate surroundings. Fire Door - A fire resistive door prescribed for
openings in fire separation walls or partitions.
Damper - A normally open device installed
inside an air duct system which automatically Fire Hazard - Any condition or act which
closes to restrict the passage of smoke or fire. increases or may cause an increase in the
probability of the occurrence of fire, or which
Distillation - The process of first raising the may obstruct, delay, hinder or interfere with
temperature in separate the more volatile fire fighting operations and the safeguarding
from the less volatile parts and then cooling of life and property.
and condensing the resulting vapor so as to
produce a nearly purified substance. Fire Lane - The portion of a roadway or
publicway that should be kept opened and
Duct System - A continuous passageway for unobstructed at all times for the expedient
the transmission of air. operation of fire fighting units.
Dust - A finely powdered substance which, Fire Protective And Fire Safety Device - Any
when mixed with air in the proper proportion device intended for the protection of buildings
and ignited will cause an explosion. or persons to include but not limited to built-in
protection system such as sprinklers and other
Electrical Arc - An extremely hot luminous automatic extinguishing system, detectors for
bridge formed by passage of an electric current heat, smoke and combustion products and
across a space between two conductors or other warning system components, personal
terminals due to the incandescence of the protective equipment such as fire blankets,
conducting vapor. helmets, fire suits, gloves and other garments
that may be put on or worn by persons to
Ember - A hot piece or lump that remains protect themselves during fire.
after a material has partially burned, and is
still oxidizing without the manifestation of Fire Safety Constructions - Refers to design and
flames. installation of walls, barriers, doors, windows,
vents, means of egress, etc. integral to and
Finishes - Materials used as final coating incorporated into a building or structure in
of a surface for ornamental or protective order to minimize danger to life from fire,
purposes. smoke, fumes or panic before the building is
evacuated. These features are also designed
Fire - The active principle of burning, to achieve, among others, safe and rapid
characterized by the heat and light of evacuation of people through means of egress
combustion. sealed from smoke or fire, the confinement of
fire or smoke in the room or floor of origin
Fire Trap - A building unsafe in case of fire and delay their spread to other parts of the
because it will burn easily or because it lacks building by means of smoke sealed and fire
adequate exits or fire escapes. resistant doors, walls and floors. It shall also

mean to include the treatment of buildings Occupancy - The purpose for which a building
components or contents with flame retardant or portion thereof is used or intended to be
chemicals. used.
Flash Point - The minimum temperature at Occupant - Any person actually occupying
which any material gives off vapor in sufficient and using a building or portions thereof by
concentration to form an ignitable mixture virtue of a lease contract with the owner or
with air. administrator or by permission or sufferance
of the latter.
Forcing -A process where a piece of metal
is heated prior to changing its shape or Organic Peroxide - A strong oxidizing organic
dimensions. compound which releases oxygen readily. It
causes fire when in contact with combustible
Fulminate - A kind of stable explosive materials especially under conditions of high
compound which explodes by percussion. temperature.
Hazardous Operation/Process - Any act of Overloading - The use of one or more

manufacturing, fabrication, conversion, etc., electrical appliances or devices which draw
that uses or produces materials which are or consume electrical current beyond the
likely to cause fires or explosions. designed capacity of the existing electrical
system.
Horizontal Exit - Passageway from one
building to another or through or around a Owner - The person who holds the legal right
wall in approximately the same floor level. of possession or title to a building or real
property.
Hose Box - A box or cabinet where fire hoses,
valves and other equipment are stored and Oxidizing Material - A material that readily
arranged for fire fighting. yields oxygen in quantities sufficient to
stimulate or support combustion.
Hose Reel - A cylindrical device turning on an
axis around which a fire hose is wound and Pressurized Or Forced Draft Burning Equipment
connected. - Type or burner where the fuel is subjected
to pressure prior to discharge into the
Hypergolic Fuel - A rocket or liquid propellant combustion chamber and/or which includes
which consist of combinations of fuels and fans or other provisions for the introduction
oxidizers which ignite spontaneously on of air at above normal atmosphere pressure
contact with each other. into the same combustion chamber.
Industrial Baking And Drying - The industrial Public Assembly Building - Any building or
process of subjecting materials to heat for structure where fifty (50) or more people
the purpose of removing solvents or moisture congregate, gather, or assemble for any
from the same, and/or to fuse certain purpose.
chemical salts to form a uniform glazing the
surface of materials being treated. Public Way - Any street, alley or other strip of
land unobstructed from the ground to the sky,
Jumper - A piece of metal or an electrical deeded, dedicated or otherwise permanently
conductor used to bypass a safety device in appropriated for public use.
an electrical system.
Pyrophoric - Descriptive of any substance that
ignites spontaneously when exposed to air.
Refining - A process where impurities and/ provided for in Chapter VI of Republic Act
or deleterious materials are removed from a No. 6975. with the approval of the Secretary
mixture in order to produce a pure element of the Department of the Interior and Local
of compound. It shall also refer to partial Government (DILG), the BFP, is hereby
distillation and electrolysis. authorized to:
Self-Closing Doors - Automatic closing doors a. Issue implementing rules and

that are designed to confine smoke and heat regulations, and prescribe standards,
and delay the spread of fire. schedules of fees/fire service charges
and administrative penalties therefore
Smelting - Melting or fusing of metallic ores as provided in the pertinent provisions of
or compounds so as to separate impurities this Code;
from pure metals.
b. Reorganize the BFP as may be necessary
Sprinkler System - An integrated network and appropriate;
of hydraulically designed piping installed
in a building, structure or area with outlets c. Support and assist fire volunteers,
arranged in a systematic pattern which practitioners and fire volunteer
automatically discharges water when organizations in the country who shall
activated by heat or combustion products undergo mandatory fire suppression,
from a fire. inspection, rescue, emergency medical
services and related emergency response
Standpipe System - A system of vertical trainings and competency evaluations to
pipes in a building to which fire hoses can be be conducted by the BFP. In the case of
attached on each floor, including a system by the Fire practitiones, they shall undergo
which water is made available to the outlets mandatory continuous professional
as needed. education and competency evaluation of
their expertise, knowledge and skills in
Vestibule - A passage hall or antechamber the area of fire science, engineering and
between the outer doors and the interior technology to be conducted by the BFP;
parts of a house or building.
The BFP may enter into external
Vertical Shaft - An enclosed vertical space party agreements for the conduct of
of passage that extends from floor to floor, training, education and evaluation of
as well as from the base to the top of the fire volunteers, practitioners and fire
building. volunteer organizations, which shall be
under the full control and supervision of
Section 4. Applicability of The Code. - The the BFP: Provided, however, That during
provisions of the Fire Code shall apply to all firefighting operations, fire volunteer
persons and all private and public buildings, organizations shall be under the direct
facilities or structures erected or constructed operational control of the fire ground
before and after its effectivity. commanders of the BFP;
Section 5. Responsibility for the Enforcement d. Enter into long term agreement, either
of this Code. - This Code shall be administered through public biddings or negotiations
and enforced by the Bureau of Fire Protection in accordance with the provisions
(BFP), under the direct supervision and control of Republic Act No. 9184, otherwise
of the Chief of the Bureau of Fire Protection, known as the Government Procurement
through the hierarchy of organization as Reform Act of 2003, for the acquisition

of fire prevention, fire protection and and/or stop hazardous operation/process
fire fighting investigation, rescue, in accordance with the standards set by
paramedics, hazardous material handling this Code or its implementing rules or
equipment, supplies, materials and regulations or other pertinent laws;
related technical services necessary for
the fire services; i. Where conditions exist and are deemed
hazardous to life and property, to order
e. Enter into Memoranda of Agreement the owner/occupant of any building
with other departments, bureaus, or structure to summarily abate such
agencies, offices and corporations of hazardous conditions;
the government, as well as private
institutions, in order to define areas j. Require the building owner/occupant to
of cooperation and coordination and submit plans and specifications, and other
delineate responsibility on fire prevention pertinent documents of said building to
education, fire safety, fire prevention, ensure compliance with applicable codes
fire suppression and other matters of and standards; and
common concern;
k. Issue a written notice to the owner and/
f. Call on the police, other law enforcement or contractor to stop work on portion of
agencies, and local government any work due to absence, or in violation
assistance to render necessary assistance of approved plans and specifications,
in the enforcement of this Code; permit and/or clearance or certification
as approved by the Chief, BFP or his/
g. Designate a fire safety inspector through her duly authorized representative.
his/her duly authorized representative, The notice shall state the nature of the
who shall conduct an inspection of every violation and no work shall be continued
building or structure within his area of on that portion until the violation has
responsibility at least once a year and been corrected.
every time the owner, administrator or
occupant shall renew his/her business Section 6. Technical Staff. - The Chief, BFP
permit or permit to operate; shall constitute a technical staff of highly
qualified persons who are knowledgeable
No occupancy permit, business or on fire prevention, fire safety, and fire
permit to operate shall be issued suppression. They may be drawn not only
without securing a Fire Safety Inspection from the organic members of the BFP and
Certification (FSIC) from the Chief, BFP, or other government offices and agencies, but
his/her duly authorized representative; also from other sources. In the latter case,
they will either be appointed into the service
h. Inspect at reasonable time, any building, or hired as consultants in accordance with
structure, installation or premises for law. The technical staff shall study, review and
dangerous or hazardous conditions evaluate latest developments and standards
or materials as set forth in this Code, on fire technology; prepare plans/programs
provided that in case of single family on fire safety, prevention and suppression and
dwelling, an inspection must be upon evaluate implementation thereof; develop
the consent of the occupant or upon programs on the professionalization of the
lawful order from the proper court. The fire service; coordinate with appropriate
Chief, BFP or his/her duly authorized government and private institutions for the
representative shall order the owner/ offering of college courses on fire technology
occupant to remove hazardous materials and fire protection engineering; propose

amendments to the Fire Code; advise the (4) flammable and combustible liquids
Chief, BFP on any matter brought to his or gases of any classification;
attention; and perform such other functions
as directed on any matter brought to his (5) flammable paints, varnishes, stains
attention and perform such other functions and organic coatings;
as directed by higher authorities.
(6) high-piled or widely spread
Section 7. Inspections, Safety Measures, Fire combustible stock;
Safety, Constructions, and Protective and/
or Warning Systems. - As may be defined (7) metallic magnesium in any form;
and provided in the Rules and Regulations,
owners, administrators or occupants of (8) corrosive liquids, oxidizing materials,
buildings, structures and their premises or organic peroxide, nitromethane,
facilities and other responsible persons shall ammonium nitrate, or any amount of
be required to comply with the following, as highly toxic, pyrophoric, hypergolic,
may be appropriate: or cryogenic materials or poisonous
gases as well as material compounds
a. Inspection Requirement - A fire safety which when exposed to heat or flame
inspection shall be conducted by the Chief, become a fire conductor, or generate
BFP or his duly authorized representative excessive smoke or toxic gases;
as prerequisite to the grants of permits
and/or licenses by local governments and (9) blasting agents, explosives and
other government agencies concerned, special industrial explosive materials,
for the: blasting caps, black powder, liquid
nitro-glycerine, dynamite, nitro
(1) Use or occupancy of buildings, cellulose, fulminates of any kind,
structures, facilities or their premises and plastic explosives containing
including the installation or fire ammonium salt or chlorate;
protection and fire safety equipment,
and electrical system in any building (10) fireworks materials of any kind or
structure or facility; and form;
(2) Storage, handling and/or use of (11) matches in commercial quantities;

explosives or of combustible,
flammable, toxic and other (12) hot ashes, live coals and embers;
hazardous materials;
(13) mineral, vegetable or animal oils and
b. Safety Measures for Hazardous Materials other derivatives/by products;
- Fire safety measures shall be required
for the manufacture, storage, handling (14) combustible waste materials for
and/or use of hazardous materials recycling or resale;
involving:
(15) explosive dusts and vapors; and
(1) cellulose nitrate plastic of any kind;
(16) agriculture, forest, marine or mineral
(2) combustible fibers; products which may undergo
spontaneous combustion.
(3) cellular materials such as foam,
rubber, sponge rubber and plastic (17) any other substance with potential
foam; to cause harm to persons, property
or the environment because of (3) Fire walls to separate adjoining
one or more of the following: a) buildings, or warehouses and storage
The chemical properties of the areas from other occupancies in the
substance; b) The physical properties same building;
of the substance; c) The biological
properties of the substance. Without (4) Provisions for confining the fire at
limiting the definition of hazardous its source such as fire resistive floors
material, all dangerous goods, and walls extending up to the next
combustible liquids and chemicals floor slab or roof, curtain boards
are hazardous materials. and other fire containing or stopping
components;
c. Safety Measures for Hazardous Operation/
Processes - Fire Safety measures shall (5) Termination of all exits in an area
be required for the following hazardous affording safe passage to a public
operation/processes: way or safe dispersal area;
(1) welding or soldering; (6) Stairway, vertical shafts, horizontal

(2) industrial baking and drying; exits and other means of egress
(3) waste disposal; sealed from smoke and heat;
(4) pressurized/forced-draft burning
equipment; (7) A fire exit plan for each floor of the
(5) smelting and forging; building showing the routes from
(6) motion picture projection using each other room to appropriate
electrical arc lamps; exits, displayed prominently on the
(7) refining, distillation and solvent door of such room;
extraction; and
(8) such other operations or processes (8) Self-closing fire resistive doors
as may hereafter be prescribed in the leading to corridors;
Rules and Regulations.
(9) Fire dampers in centralized
d. Provision on Fire Safety Construction, airconditioning ducts;
Protective and Warning System - Owners,
occupants or administrator or buildings, (10) Roof vents for use by fire fighters;
structures and their premises or facilities, and
except such other buildings or structures
as may be exempted in the rules and (11) Properly marked and lighted exits
regulations to be promulgated under with provision for emergency lights
Section 5 hereof, shall incorporate and to adequately illuminate exit ways in
provide therein fire safety construction, case of power failure.
protective and warning system, and
shall develop and implement fire safety Section 8. Prohibited Acts. - The following are
programs, to wit: declared as prohibited act and omission.
(1) Fire protection features such as (a) Obstructing or blocking the exit ways or
sprinkler systems, hose boxes, hose across to buildings clearly marked for fire
reels or standpipe systems and other safety purposes, such as but not limited
fire fighting equipment; to aisles in interior rooms, any part of
stairways, hallways, corridors, vestibules,
(2) Fire Alarm systems; balconies or bridges leading to a stairway

or exit of any kind, or tolerating or sign or tag posted or required by the
allowing said violations; fire service for fire safety in any building,
structure or processing equipment; and
(b) Constructing gates, entrances and
walkways to buildings components and (m) Use of jumpers or tampering with
yards which obstruct the orderly and electrical wiring or overloading the
easy passage of fire fighting vehicles and electrical system beyond its designated
equipment; capacity or such other practices that
would tend to undermine the fire safety
(c) Prevention, interference or obstruction features of the electrical system.
of any operation of the Fire Service, or
of duly organized and authorized fire Section 9. Violation, Penalties and
brigades; Abatement of Fire Hazard. - Fire hazards shall
be abated immediately. The Chief, BFP or his/
(d) Obstructing designated fire lanes or her duly authorized representative, upon
access to fire hydrants; the report that a violation of this Code or
other pertinent laws, rules and regulations is
(e) Overcrowding or admission of persons being committed, shall issue notice/order to
beyond the authorized capacity in movie comply to the owner, administrator, occupant
houses, theaters, coliseums, auditoriums or other person responsible for the condition
or other public assembly buildings, of the building or structure, indicating
except in other assembly areas on the among other things, the period within which
ground floor with open sides or open compliance shall be effected, which shall be
doors sufficient to provide safe exits; within ten (10) to fifteen (15) days after the
receipt of the notice/order, depending on the
(f) Locking fire exits during period when reasonableness to adequately comply with
people are inside the building; the same.
(g) Prevention or obstruction of the If, after the lapse of the aforesaid period,
automatic closure of fire doors or smoke the owner, administrator, occupant or other
partitions or dampers; responsible person failed to comply, the Chief,
BFP or his/her authorized representative
(h) Use of fire protective of fire fighting shall put up a sign in front of the building or
equipment of the fire service other structure that it is fire hazard. Specifically, the
than for fire fighting except in other notice shall bear the words “WARNING: THIS
emergencies where their use are justified; BUILDING/STRUCTURE IS A FIRE HAZARD”,
which shall remain posted until such time
(i) Giving false or malicious fire alarms; that the owner, administrator, occupant or
other person responsible for the condition
(j) Smoking in prohibited areas as may be of the building, structure and their premises
determined by fire service, or throwing or facilities abate the same, but such period
of cigars, cigarettes, burning objects in shall not exceed fifteen (15) days from the
places which may start or cause fire; lapse of the initial period given in the notice/
order to comply.
(k) Abandoning or leaving a building or
structure by the occupant or owner Finally, with the failure of the owner,
without appropriate safety measures; administrator, occupant or other person
responsible for the condition of the building,
(l) Removing. destroying, tampering or structure and their premises or facilities to
obliterating any authorized mark, seal,
comply within the period specified above, period.
the Chief, BFP may issue order for such
abatement. If the owner, administrator or Summary abatement as used herein shall
occupant of buildings, structure and their mean all corrective measures undertaken
premises or facilities does not abate the to abate hazards which shall include,
same within the period fixed in said order, but not limited to remodeling, repairing,
the building, structure, premises or facilities strengthening, reconstructing, removal and
shall be ordered closed by the Chief, BFP demolition, either partial or total, of the
or his/her duly authorized representative building or structure. The expenses incurred
notwithstanding any permit clearance by the government for such summary
or certificate earlier issued by the local abatement shall be borne by the owner,
authorities. administrator or occupant. These expenses
shall constitute a prior lien upon such
Any building or structure assessed and property.
declared by the chief, BFP or his/her duly
authorized representative as a firetrap Section 10.Enforcement of The Lien. - If the
on account of the gravity or palpability owner, administrator or occupant fails to
of the violation or is causing clear and reimburse the government of the expenses
present imminent fire danger to adjoining incurred in the summary abatement within
establishments and habitations shall be ninety (90) days from the completion of such
declared a public nuisance, as defined in the abatement, the building or structure shall
Civil Code of the Philippines in a notice to be be sold at public auction in accordance with
issued to the owner, administrator, occupant existing laws and rules. No property subject
or other person responsible for the condition of lien under Section 9 hereof, may be sold at
of the building, structure and their premises a price lower than the abatement expenses
or facilities. If the assessed value of the incurred by the government. The property
nuisance or the amount to be spent in abating shall be forfeited in favor of the government
the same is not more than One hundred if the highest bid is not at least equal to the
thousand pesos (P100,000.00), the owner, abatement expenses.
administrator or occupant thereof shall abate
the hazard within fifteen (15) days, or if the Section 11. Penalties. -
assessed value is more than One hundred
thousand pesos (P100,000.00), within thirty 1. Against the private individual:
(30) days from receipt of the order declaring
said building or structure a public nuisance; a) Administrative fine - Any person who
otherwise, the Chief, BFP or his/her duly violates any provision of the Fire Code
authorized representative shall forthwith or any of the rules and regulations
cause its summary abatement. failure to promulgated under this Act shall
comply within five (5) days from the receipt be penalized by an administrative
of the notice shall cause the Chief, BFP or his/ fine of not exceeding Fifty thousand
her duly authorized representative to put up (P50,000.00) pesos or in the proper
a sign in front of the building or structure, case, by stoppage of operations or by
at or near the entrance of such premises, closure of such buildings, structures
notifying the public that such building or and their premises or facilities which
structure is a “FIRETRAP”, which shall remain do not comply with the requirements
until the owner, administrator, occupant or or by both such administrative fine
other person responsible for the condition of and closure/stoppage of operation
the building, structure and their premises or to be imposed by the Chief, BFP.
facilities abate the same within the specified Provided, That the payment of the

fine, stoppage of operations and/or imprisonment for thirty (30) days or
closure of such buildings, structures, a fine not exceeding One hundred
and their premises or facilities thousand pesos (P100,000.00) or
shall not absolve the violator from both in the discretion of the court.
correcting the deficiency or abating
the fire hazard. The decision of the Any person, who disobeys the lawful
Chief, BFP, under this subsection, order of the fire ground commander
may be appealed to the Secretary of during a firefighting operation shall
the Interior and Local Government. be penalized with imprisonment
Unless ordered by the Secretary of of one (1) day to thirty (30) days
the Interior and Local Government and a fine of five thousand pesos
the appeal shall not stay the (P5,000.00).
execution of the order of the Chief,
BFP. The decision of the Secretary of 2. Against the public officer/employee
the Interior and Local Government
shall be final and executory. a) Administrative - The following
acts or omissions shall render
(b) Punitive - In case of willful failure the public officer/employee in
to correct the deficiency or abate charge of the enforcement of this
the fire hazard as provided in Code, its implementing rules and
the preceding subsection, the regulation and other pertinent laws,
violator shall, upon conviction, administratively liable, and shall be
be punished by imprisonment of punished by reprimand, suspension
not less than six (6) months nor or removal in the discretion of the
more than six (6) years, or by a fine disciplining authority, depending
of not more than One hundred on the gravity of the offense and
thousand (P100,000.00) pesos or without prejudice to the provisions
both such fine and imprisonment; of other applicable laws:
Provided, however, that in case of
a corporation, firm, partnership (1) Unjustified failure of the public
or association, the fine and/or officer/employee to conduct
imprisonment shall be imposed inspection of buildings or
upon its officials responsible for structures at least once a year;
such violation, and in case the guilty
party is an alien, in addition to the (2) Deliberate failure to put up a
penalties herein prescribed, he shall sign in front of the building
immediately be deported; Provided, or structure within his/her
finally, that were the violation is area of responsibility found
attended by injury, loss of life and/ to be violating this Code,
or damage to property, the violator its implementing rules and
shall be proceeded against under the regulations and other pertinent
applicable provisions of the Revised laws, that the same is a “FIRE
Penal Code. HAZARD” or a “FIRETRAP”;
Any person who, without authority, (3) Endorsing to the Chief, BFP
maliciously removes the sign that a or his/her duly authorized
building or structure is a fire hazard/ representative for the
firetrap placed by the authorized certification, or submitting
person in this Code shall be liable for a report that the building or
structure complies with the
standards set by this Code, public officer/employees shall,
its implementing rules or upon conviction, be punished by
regulations or other pertinent imprisonment of not less than six (6)
laws when the same is contrary months nor more than six (6) years
to fact; or by a fine of not more than One
hundred thousand (P100,000.00) or
(4) Issuance or renewal of both such fine and imprisonment:
occupancy or business permit Provided, That where the violation
without the fire safety inspection is attended by injury, loss of life
certificate issued by the Chief, and/or property, the violator shall
BFP or his/her duly authorized be proceeded against under the
representative; applicable provisions of the Revised
Penal Code.
(5) Failure to cancel the occupancy
or business permit after the Section 12.Appropriation and Sources of
owner, administrator, occupant Income. -
or other person responsible for
the condition of the building, (a) To support the manpower, infrastructure
structure and other premises and equipment needs of the fire service
failed to comply with the notice/ of the BFP, such amount as may be
order for compliance with the necessary to attain the objectives of
standards set by this Code, the Fire Code shall be appropriated and
its implementing rules and included in the annual appropriation of
regulations and other pertinent the BFP.
laws, within the specified period;
(b) To partially provide for the funding of the
(6) Failure to abate a public fire service the following taxes and fees
nuisance within fifteen (15) days which shall accrue to the General Fund
after the owner, administrator, of the National Government, are hereby
occupant or other responsible imposed:
person failed to abate the same
within the period contained in (1) Fees to be charged for the issuance of
the notice to abate; certificates, permits and licenses as
provided for in Section 7 (a) hereof;
(7) Abusing his/her authority in the
performance of his/her duty (2) One-tenth of one per centum (0.1%)
through acts of corruption and of the verified estimated value of
other unethical practices; or buildings or structures to be erected,
from the owner thereof, but not to
(8) Other willful impropriety or gross exceed fifty thousand (P50,000.00)
negligence in the performance pesos, one half to be paid prior to the
of his/her duty as provided in issuance of the building permit, and
this act or its implementing rules the balance, after final inspection
and regulations. and prior to the issuance of the use
and occupancy permit;
b) Punitive - In the case of willful violation
involving the abovementioned acts (3) One-hundredth of one per centum
or omissions enumerated under (0.10%) of the assessed value of
Section 11 subparagraph 2(A) the buildings or structures annually

payable upon payment of the real and assessment of taxes, fees and fines as
estate tax, except on structures used prescribed in the Local Government Code,
as single family dwellings; except those contained in this Code, shall be
function of the concerned local government
(4) Two per centum (2%) of all premiums, units.
excluding re-insurance premiums
for the sale of fire, earthquake and Sec. 13-C. Use of Income Generated from the
explosion hazard insurance collected Enforcement of the Fire Code. - The Chief,
by companies, persons or agents BFP is authorized, subject to the approval
licensed to sell such insurances in the of the Secretary of the Interior and Local
Philippines; Government, to use the income generated
under the Fire Code for procurement of fire
(5) Two per centum (2%) of gross sales of protection and fire fighting investigation,
companies, persons or agents selling rescue, paramedics, supplies and materials,
fire fighting equipment, appliances or and related technical services necessary
devices, including hazard detection for the fire service and the improvement of
and warning systems; and facilites of the Bureau of Fire Protection and
abatement of fire hazards.
(6) Two per centum (2%) of the service
fees received from fire, earthquake, The BFP shall determine the optimal number
and explosion hazard reinsurance of equipment, including, but not limited to,
surveys and post loss service of fire trucks and fire hydrants, required by every
insurance adjustment companies local government unit for the proper delivery
doing business in the Philippines of fire protection services in its jurisdiction.
directly through agents.
In the procurement of fire fighting and
Section 13.Collection of Taxes, Fees and investigation supplies and materials,
Fines. - All taxes, fees and fines provided the Bureau of Product Standards of the
in this Code, shall be collected by the BFP. Department of Trade and Industry shall
Provided, That twenty percent (20%) of such evaluate, determine and certify if the
collection shall be set aside and retained supply to procured conforms to the product
for use by the city or municipal government standards fixed by the BFP. For this purpose,
concerned, which shall appropriate the the BFP shall submit to the Bureau of
same exclusive for the use of the operation Product Standards a detailed set of product
and maintenance of its local fire station, standards that must be complied with in the
including the construction and repair of fire procurement of fire fighting and investigation
station: Provided, further, That the remaining supplies and materials within six (6) months
eighty (80%) shall be remitted to the National from the effectivity of this act.
Treasury under a trust fund assigned for the
modernization of the BFP. Sec. 13-D. Monitoring the Implementation
of the Fire Code and the Amount of the Fees
“Sec. 13-A. Assessment of Fire Code Taxes, Collected. - The Chief, BFP shall, within six
Fees and Fines. - The assessment of fire code (6) month from the effectivity of this Code,
taxes, fees and fines is vested upon the BFP. submit to the Secretary of the Interior and
The BFP shall, subject to the approval of the Local Government for his/her approval,
DILG, prescribe the procedural rules for such a management tool or mechanism that
purpose. would ensure effective monitoring of the
enforcement of the Fire Code to include the
Sec. 13-B. Collection and Assessment of amount of Fire Code fees collected.
Local Taxes, Fees and Fines. - The collection
Section 14. Within sixty (60) days from the Approved
effectivity of this Act, the Secretary of the
Interior and Local Government shall issue
the rules and regulations for its effective (Sgd.) PROSPERO C. NOGRALES
implementation. Speaker of the House of Representative
Section 15. Presidential Decree No 1185

is hereby repealed. All laws, presidential (Sgd.) MANNY VILLAR
decrees, letters of instructions, executive President of the Senate
orders, rules and regulations insofar as they
are inconsistent with this Act, are hereby
repealed or amended as the case may be. (Sgd.)MARILYN B. BARUA-YAP
Secretary General
Section 16. In case any provision of this House of Representative
Act or any portion thereof is declared
unconstitutional by a competent court, other
provisions shall not be affected thereby. (Sgd.) EMMA LIRIO-REYES
Secretary of the Senate
Section 17. This Act shall take effect fifteen
(15) days after its publication in the Official This Act which is a consolidation of Senate
Gazette or in two (2) national newspapers of Bill No. 2553 and House Bill No. 4115 was
general circulation. finally passed by the Senate and the House
of Representative on October 6, 2008 and
October 8, 2008, respectively.
Approved: DEC 19, 2008

(Sgd.)GLORIA MACAPAGAL-ARROYO
President of the Philippines

Chapter 9
AMENDING PRESIDENTIAL DECREE NO. 8 ISSUED ON OCTOBER 2, 1972, AND PROMULGATING AN

AMENDED ACT TO PROMOTE THE DISCOVERY AND PRODUCTION OF INDIGENOUS PETROLEUM
AND APPROPRIATE FUNDS THEREFOR
WHEREAS, Presidential Decree No. 8 dated “SECTION 1. Short Title. – This Act shall
October 2, 1972 was issued to promote the be known and may be cited as ‘The Oil
discovery and development of the country’s Exploration and Development Act of 1972.’
indigenous petroleum resources and
adopting therefore as part of the law of the “SEC. 2. Declaration of Policy. – It is hereby
land the provisions of Senate Bill No. 531 (An declared to be the policy of the State to
Act to Promote the Discovery, Production of hasten the discovery and production of
Indigenous Petroleum and Appropriate Funds indigenous petroleum through the utilization
Therefor); of government and/or private resources,
local and foreign, under the arrangements
WHEREAS, it was found necessary for the embodied in this Act which are calculated
national interest to amend Senate Bill No. to yield the maximum benefit to the Filipino
531 among others things to provide more people and the revenues to the Philippine
meaningful incentives to prospective service Government for use in furtherance of national
contractors. economic development, and to assure just
returns to participating private enterprises,
NOW, THEREFORE, I, FERDINAND E. MARCOS, particularly those that will provide the
President of the Philippines, by virtue of the necessary services, financing and technology
powers vested in me by the Constitution and fully assume all exploration risks.
as Commander-in-Chief of all the Armed
Forces of the Philippines, and pursuant to “SEC. 3. Definition of Terms. – As used in this
Proclamation No. 1081, dated September Act, the following shall have the following
21, 1972, and General Order No. 1, dated respective meanings:
September 22, 1972, as amended, do hereby
amend Presidential Decree No. 8 as follows: “(a) ‘Petroleum’ shall include any mineral
oil hydrocarbon gas, bitumen,
“AN ACT asphalt, mineral gas and all other
TO PROMOTE THE DISCOVERY AND similar or naturally associated
PRODUCTION OF INDIGENOUS PETROLEUM, substances with the exception of
AND APPROPRIATING FUNDS THEREFOR” coal, peat, bituminous shale and/or
other stratified mineral fuel deposits.

“(b) ‘Crude oil’ or ‘crude’ means oil in its particular point of export, which price
natural state before the same has shall be based upon geographical
been refined or otherwise treated. location, and the fair market export
It does not include oil produced values for crude oil of comparable
through destructive distillation of grade, gravity and quality.
coal, bituminous shales or other
stratified deposits, either in its “(g) ‘Market Price’ shall mean the
national state or after the extraction price which would be realized for
of water, and sand or other foreign petroleum produced under a contract
substances therefrom. as hereinafter defined if sold in a
transaction between independent
“(c) ‘Natural gas’ means gas obtained persons dealing at arm’s length in a
from boreholes and wells and free market.
consisting primarily of hydrocarbons.
“(h) ‘Barrel’ means 42 U.S. gallons or
“(d) ‘Petroleum operations’ means 9702 cubic inches at temperature of
searching for and obtaining 60º Fahrenheit.
petroleum within the Philippines
through drilling and pressure or “Any reference in this Act to the value
suction or the like, and all other of any crude oil at the posted price or
operations incidental thereto. It market price shall be construed as a
includes the transportation, storage, reference to the amount obtained by
handling and sale (whether for multiplying the number of barrels of
export or for domestic consumption) that crude oil by the posted price or
of petroleum so obtained but does market price per barrel applicable to
not include any: (1) transportation that crude oil.
of petroleum outside the Philippines;
(2) processing or refining at a “(i) ‘Crude oil exported’ shall include not
refinery; or (3) any transactions in only crude oil exported as such but
the products so refined. also indigenous crude oil refined in
the Philippines for export.
“(e) ‘Petroleum in commercial
quantity’ means petroleum in “(j) ‘Government’ means the Government
such quantities which will permit of the Republic of the Philippines.
its being economically developed
as determined by the contractor “(k) ‘Contractor’ means the contractor
after taking into consideration the in a service contract whether acting
location of the reserves, the depths alone or in consortium with others.
and number of wells required to
be drilled and the transport and “(l) ‘Contract’ refers to a service contract.
terminal facilities needed to exploit
the reserves which have been “(m)‘Filipino participation incentive’
discovered. means the allowance which may be
given the Contractor with Filipino
“(f) ‘Posted price’ refers to the FOB participation as provided in Section
price established by the Contractor 28 hereof.
in consultation with the Petroleum
Board for each grade, gravity and “(n) ‘Philippine corporation’ means
quality of crude oil offered for sale a corporation organized under
to buyers generally for export at the Philippine laws at least sixty per cent
of the capital of which is owned and Philippines as provided in a service
held by citizens of the Philippines. contract.
“(o) ‘Affiliate’ means (a) a company in “SEC. 4. Government May Undertake

which a contractor holds directly or Petroleum Exploration and Production. –
indirectly at least fifty per cent of its Subject to the existing private rights, the
outstanding shares entitled to vote; Government may directly explore for and
(b) a company which holds directly produce indigenous petroleum. It may also
or indirectly at least fifty per cent of indirectly undertake the same under service
the contractor’s outstanding shares contracts as hereinafter provided. These
entitled to vote; or (c) a company contracts may cover free areas, national
in which at least fifty per cent of reserve areas and/or petroleum reservations,
its share outstanding and entitled as provided for in the Petroleum Act of
to vote are owned by a company 1949, whether on-shore or off-shore. In
which owns directly or indirectly every case, however, the contractor must be
at least fifty per cent of the shares technically competent and financially capable
outstanding and entitled to vote of as determined by the Board to undertake the
the contractor. operations required in the contract.
“(p) ‘Gross income’ means the gross “SEC. 5. Execution of Contract Authorized in
proceeds from the sale of crude, this Act. – Every contract herein authorized
natural gas or casinghead petroleum shall, subject to the approval of the President,
spirit produced under the contract be executed by the Petroleum Board created
and sold during the taxable year at in this Act, after due public notice pre-
posted or market price, as the case qualification and public bidding or concluded
may be, and such other income which through negotiations. In case bids are
are incidental to and arising from requested or if requested no bid is submitted
any one or more of the petroleum or the bids submitted are rejected by the
operations of the contractor. Petroleum Board for being disadvantageous
to the Government, the contract may be
“(q) ‘Taxable net income’ means the gross concluded through negotiation.
income less the deductions allowed
in this Act. “In opening contract areas and in selecting
the best offer for petroleum operations,
“(r) ‘Taxable year’ means the calendar or any of the following alternative procedures
fiscal year of the contractor. may be resorted to by the Petroleum Board,
subject to prior approval of the President:
“(s) ‘Casinghead petroleum spirit’ means
any liquid hydrocarbon obtained “(a) The Petroleum Board may select
from natural gas by separation or by an area or areas and offer it for
any chemical or physical process. bid, specifying the minimum
requirements and conditions; or
“(t) ‘Petroleum Board’ refers to the
Petroleum Board created in Section “(b) Petroleum Board may open for
seventeen of this Act. bidding a large area wherein bidders
may select integral areas not larger
“(u) ‘Operating Expenses’ means the than the maximum provided in this
total expenditures for petroleum Act. Only the best offer shall be
operations made by the Contractor accepted and the selection thereon
both within and without the shall be made by a weighted system
of evaluating the different aspects of “(b) Provide the requisite financing;
each bid; or
“(c) Perform the exploration work
“(c) area may be selected by an interested obligations and program prescribed
party who shall negotiate with the in the agreement between the
Petroleum Board for a contract under Government and the Contractor,
the terms and conditions provided in which may be more but shall not be
this Act. less than the obligations prescribed
in this Act;
“SEC. 6. Nature of Service Contract. – In a
service contract, service and technology “(d) Once petroleum in commercial
are furnished by the service contractor for quantity is discovered, operate the
which it shall be entitled to the stipulated field on behalf of the Government
service fee while financing is provided by the in accordance with accepted good
Government to which all petroleum produced oil field practices using modern
shall belong. and scientific methods to enable
maximum economic production
“SEC. 7. Special Stipulation in Service of petroleum; avoiding hazards to
Contract. – Where the Government is unable life, health and property; avoiding
to finance petroleum exploration operations pollution of air, land and waters;
or in order to induce the contractor to and pursuant to an efficient and
exert the maximum efforts to discover and economic program of operation;
produce petroleum as soon as possible, the
service contract shall stipulate that if the “(e) Assume all exploration risks such
contractor shall furnish services, technology that if no petroleum in commercial
and financing, the proceeds of sale of the quantity is discovered and
petroleum produced under the contract shall produced, it will not be entitled to
be the source of funds for payment of the reimbursement;
service fee and the operating expenses due
the contractor. “(f) Furnish the Petroleum Board
promptly with geological and other
“SEC. 8. Obligation of Contractor in Service information, data and reports which
Contract. – The arrangement pursuant to the it may require;
preceding section seven shall be such that the
contractor, which may be a consortium, shall “(g) Maintain detailed technical records
undertake, manage and execute petroleum and accounts of its operations;
operations. The contract may authorize the
contractor to take and dispose of and market “(h) Conform to regulations regarding,
either domestically or for export all petroleum among others, safety, demarcation
produced under the contract subject to of agreement acreage and work
supplying the domestic requirements of the areas, non-interference with the
Republic of the Philippines on a pro-rata rights of other petroleum, mineral
basis. The Government shall oversee the and natural resources operators;
management of the operations contemplated
in the contract and in this connection shall “(i) Maintain all meters and measuring
require the contractor to – equipment in good order and allow
access to these as well as to the
“(a) Provide all necessary services and exploration and production sites and
technology; operations to inspectors authorized
by the Petroleum Board;
“(j) Allow examiners of the Bureau provided for in the contract between
of Internal Revenue and other the Government and the contractor
representatives authorized by the and these amounts shall not be
Petroleum Board full access to their less than the total obtained by
accounts, books and records, for tax multiplying the number of hectares
and other fiscal purposes; and covered by the contract by the
following amounts for hectare:
“(k) Be subject to Philippine income tax.
Period On-shore Of-shore
“On the other hand, the Petroleum Year 1 P 3.00 P 3.00
Board shall – Year 2 3.00 3.00
Year 3 3.00 6.00
“(1) On behalf of the Government,
Year 4 3.00 6.00
reimburse the Contractor for all
Year 5 3.00 6.00
operating expenses not exceeding
Year 6 9.00 18.00
seventy per cent of the gross
proceeds from production in any Year 7 9.00 18.00
year: Provided, That if in any year the Year 8 9.00 18.00

operating expenses exceeds seventy Year 9 9.00 18.00
per cent of gross proceeds from Year 10 9.00 18.00
production, then the unrecorded
expenses shall be recovered from
the operations of succeeding years. “Provided, That if during any contract
year the Contractor shall spend more
“(2) Pay the Contractor a service fee than the amount of money required to
the net amount of which shall not be spent, the excess may be credited
exceed forty per cent of the balance against the money required to be
of the gross income after deducting spent by the Contractor during the
the Filipino participation incentive, succeeding contract years: Provided,
if any, and all operating expenses further, That in case the same
recovered pursuant to Section 8 (1) Contractor holds two or more areas
above. under different contracts of service,
the total amount of work obligations
“(3) Reimbursement of operating for exploration required for the initial
expenses and payment of the service term of all contracts may be spent
fee shall be in such form and manner within any one or more of them as if
as provided for in the contract. they are covered by a single contract
of service: Provided, further, That
“SEC. 9. Minimum Terms and Conditions. – In should the Contractor fail to comply
addition to those elsewhere provided in this with the work obligations provided
Act, every contract executed in pursuance for in the contract, it shall pay to the
hereof shall contain the following minimum Government the amount it should
terms and conditions: have spent but did not in direct
prosecution of its work obligations:
“(a) Every contractor shall be obliged Provided, finally, That the Contractor
to spend in direct prosecution of shall drill a minimum footage of
exploration work and in delineation test wells before the end of periods
and development following the of time as may be specified in the
discovery of oil in commercial contract with the Petroleum Board in
quantity not less than the amounts order to be entitled to the extension
of the exploration period for 3 years in its exploration work obligations
as provided for in paragraph (e) and other obligations after which the
herein. contract shall lapse unless Petroleum
has been discovered by the end of
“(b) In case the contractor renounces or the tenth year and the contractor
abandons wholly or partly the area for requests a further extension of
covered by his contract within two one year to determine whether it
years from its effective date, it shall is in commercial quantity, in which
in respect of the abandoned area event, another extension of one year
pay the Government the amount it for exploration may be granted. If
should have spent, but did not, for Petroleum in commercial quantity
exploration work during said two has been discovered, the Contractor
years, for which payment, among may retain after the exploration
other obligations, the performance period and during the effectivity of
guarantee posted by the contractor the Contract twelve and one-half per
shall be answerable. cent of the initial area in addition
to the delineated production
“(c) Every contract shall provide for the area: Provided, however, That the
compulsory relinquishment of at contractor shall pay annual rentals
least twenty-five per cent of the on such retained area which shall not
initial area at the end of five years be less than ten pesos per hectare or
from its effective date and in the fraction thereof for on-shore areas
event of an extension of the contract and not less than twenty pesos as
from seven to ten years, an additional determined by the Petroleum Board
relinquishment of at least twenty-five per hectare or fraction thereof for
per cent of the initial area at the end off-shore areas: Provided, further,
of seven years from its effective date. That such rentals can be offset
But the portion already delineated against exploration expenditures
as production area pursuant to the actually spent on such area.
succeeding paragraph shall not be
taken into account in ascertaining the “(f) Where petroleum in commercial
extent of relinquishment required. quantity is discovered during the
Any area renounced or abandoned exploration period in any area
under Section 9 (b) above shall covered by the contract, the
be credited against the portion of contract with respect to said area
the area subject to the contract shall remain in force for production
which is required to be surrendered purposes during the balance of the
hereunder. ten year exploration period and for
an additional period of twenty-five
“(d)
The Contractor shall, from the years, thereafter renewable for a
discovery of petroleum in commercial period not exceeding fifteen years
quantity, delineate the production under such terms and conditions as
area within the period agreed upon may be agreed upon by the parties at
in the contract. the time of renewal.
“(e) The exploration period under “(g) All materials, equipment, plants and
every contract shall be seven years, other installations erected or placed
extendible for three years if the on the exploration and/or production
contractor has not been in default area of a movable nature by the

contractor shall remain properties of of the Petroleum Board: Provided, That
the contractor unless not removed with respect to the transfer or assignment
therefrom within one year after the of contractual rights and obligations under
termination of the contract. this Act to an affiliate of the transferor, the
approval thereof by the Petroleum Board shall
“(h) The contractor shall be subject to be automatic, if the transferee is as qualified
the provisions of laws of general as the transferor to enter into such contract
application relating to labor, health, with the Government: Provided, further, That
safety, and ecology insofar as they the affiliate relationships between the original
are not in conflict with the provisions transferor or a company which holds at least
otherwise contained in this Act. fifty per cent of the contractor’s outstanding
shares entitled to vote and each transferee
“(i) Every contract executed in pursuance shall be maintained during the existence of
of this Act shall contain provisions the contract.
regarding the discovery, production,
sale and disposal of natural gas and “SEC. 12. Privileges of Contractor. – The
casinghead petroleum spirit that provisions of any law to the contrary
shall be in line with the rules herein notwithstanding, a contract executed under
prescribed for crude oil except that: this Act may provide that the contractor shall
have the following privileges:
“(1) The market price shall be the
basis for tax and all other (a) Exemption from all taxes except
purposes; income tax.
“(2) After meeting requirements in “(b) Exemption from payment of tariff

secondary recovery operations duties and compensating tax on
priority shall be given to the importation of machinery and
supplying prospective demand equipment, and spare parts and all
in the Philippines. materials required for petroleum
operations subject to the conditions
“SEC. 10. Contract areas. – Subject to that said machinery, equipment,
Section eighteen hereof, a contractor or its spare parts and materials of
affiliate may enter into one or more contracts comparable price and quality are
with the Government. Contracts for off-shore not manufactured domestically; and
areas may cover any portion beneath the directly and actually needed and will
Philippine territorial waters or its continental be used exclusively by the contractor
shelf, or portion of the continental slope, in its operations or in operations for
terrace or areas which are or may be subject it by a subcontractor are covered
to Philippine jurisdiction: Provided, That for by shipping documents in the name
off-shore areas beyond water depths of 200 of the contractor to whom the
meters, the Petroleum Board may provide shipment will be delivered direct by
for more liberal terms than that provided the customs authorities; and prior
for herein with respect to contract areas, approval of the Petroleum Board was
exploration period and relinquishment. obtained by the contractor before
the importation of such machinery,
“SEC. 11. Transfer and Assignment. – The equipment, spare parts and
rights and obligations under a contract materials which approval shall not
executed under this Act shall not be assigned be unreasonably withheld: Provided,
or transferred without the prior approval however, That the contractor or its

subcontractor may not sell, transfer “(e) Exportation of petroleum subject to
or dispose of these machinery, the prior filing pro-rata of domestic
equipment, spare parts and needs as elsewhere provided in this
materials without the prior approval Act;
of the Petroleum Board and payment
of taxes due the Government: “(f) Entry, upon the sole approval of the
Provided, further, That should the Petroleum Board which shall not
contractor or its subcontractor be unreasonably withheld, of alien
sell, transfer or dispose of these technical and specialized personnel
machinery equipment, spare parts (including the immediate members of
or materials without the prior their families), who may exercise their
consent of the Petroleum Board, it professions solely for the operations
shall pay twice the amount of the of the contractor as prescribed in
tax exemption granted: Provided, its contract with the Government
finally, That the Petroleum Board under this Act: Provided, That if the
shall allow and approve the sale, employment or connection of any
transfer, or disposition of the said such alien with contractor ceases,
items without tax if made (1) to the applicable laws and regulations
another contractor; (2) for reasons on immigration shall apply to him
of technical obsolescence; or (3) for and his immediate family: Provided,
purposes of replacement to improve further, That Filipinos shall be given
and/or expand the operations of the preference to positions for which
contract; they have adequate training: And
Provided, finally, That the contractor
“(c) Exemption upon approval by shall adopt and implement a training
the Petroleum Board from laws, program for Filipinos along technical
regulations and/or ordinances or specialized lines, which program
restricting the (1) construction, shall be reported to the Petroleum
installation, and operation of power Board;
plant for the exclusive use of the
contractor if no local enterprise “(g) Rights and obligations in any
can supply within a reasonable contract concluded pursuant to this
period and at reasonable cost the Act shall be deemed as essential
power needed by the contractor considerations for the conclusion
in its petroleum operations, (2) thereof and shall not be unilaterally
exportation of machinery and changed or impaired; and
equipment which were imported
solely for its petroleum operation “(h) The privileges and benefits granted
when no longer needed therefor; to a contractor under the provisions
of this Act together with any
“(d) Exemption from publication applicable obligations shall likewise
requirements under Republic Act be made available to concessionaires
Numbered Five thousand four under the Petroleum Act of 1949 and
hundred fifty-five; and the provisions their authorized contractors and/or
of Republic Act Numbered Sixty- service operators, whether local or
one hundred and seventy-three foreign, if they so elect.
with respect to the exploration,
production, exportation or sale or “SEC. 13. Repatriation of Capital and
disposition of crude oil discovered Retention of Profits Abroad. – The contractor
and produced in the Philippines; shall be entitled to (1) repatriate over a
reasonable period the capital investment this Act, the contractor shall post a bond
actually brought into the country in foreign or other guarantee of sufficient amount in
exchange or other assets and registered with favor of the Government and with surety or
the Central Bank; (2) retain abroad all foreign sureties satisfactory to the Petroleum Board,
exchange representing proceeds arising conditioned upon the faithful performance by
from exports accruing to the contractor over the contractor of any or all of the obligations
and above (a) the foreign exchange to be under and pursuant to said contracts.
converted into pesos in an amount sufficient
to cover, or equivalent to, the local costs for “IMPLEMENTING AGENCY
administration and operations of the exported
crude and (b) Revenues due the Government
on such crude: Provided, however, That “SEC. 17. There is hereby created a
the Government and the contractor shall Petroleum Board composed of the Secretary
stipulate in the contract the currency in which of Agriculture and Natural Resources, as
the Government revenues arising under (b) Chairman, and the Secretary of Finance,
above are to be paid; (3) convert into foreign the Secretary of Justice, the Chairman of
exchange and remit abroad at prevailing rates the Board of Investments, the Governor of
no less favorable to Contractor than those the Central Bank, the Secretary of Trade
available to Contractor than those available and Tourism and the Director of Mines as
to any other purchaser of foreign currencies, members. The Director of Mines shall be its
any excess balances of their peso earnings Executive Officer. The Board shall be attached
from petroleum production and sale over to the National Economic Development
and above the current working balances they Authority.
require, and (4) convert foreign exchange
into Philippine currency for all purposes in “SEC. 18. Functions of Petroleum Board. – In
connection with its petroleum operations at accordance with the provisions and objectives
prevailing rates no less favorable to contractor of this Act, the Petroleum Board shall:
than those available to any other purchaser
of such currency. “(a) Define and give public notice when
applicable of the areas available for
“SEC. 14. Full Disclosure of Interest in service contract;
Contractor. – Interest held in the contractor
by domestic mining and petroleum companies “(b) Enter into contracts herein authorized
and/or the latter’s stockholders may be with such terms and conditions as may
allowed to any extent after full disclosure be appropriate under the circumstances
thereof to, and approved by the Petroleum including the grant of special allowance:
Board. Provided, however, That no depletion
allowance shall be granted: Provided,
“SEC. 15. Arbitration. The Petroleum Board further, That except as provided in
may stipulate in a contract executed under Sections twenty-six and twenty-seven
this Act that disputes in the implementation hereof, no contract in favor of one
thereof between the Government and the contractor and its affiliates shall cover less
contractor may be settled in accordance with than fifty thousand nor more than seven
generally accepted international arbitration hundred and fifty thousand hectares
practice. for on-sphere areas, or less than eighty
thousand nor more than one million five
“SEC. 16. Performance Guarantee. – In order hundred thousand hectares for off-shore
to guarantee compliance with the obligations areas: Provided, finally, That in no case
of the contractor in contracts executed under shall the annual net revenue or share
of the Government, including all taxes
paid by or on behalf of the contractor, be “TAX PROVISIONS
less than sixty per cent of the difference
“SEC. 19. Imposition of Tax. – The contractor
between the gross income and the
shall be liable each taxable year for Philippine
sum of operating expenses and Filipino
income tax on income derived from its
participation incentive;
petroleum operations under its contract of
service, computed as provided in Section 20,
“(c) Provide for the manner and form of the
through 25.
income tax payment, the reimbursement
of operating expenses, the payment
“SEC. 20. Determination of Gross Income. –
of service fee, and payment of Filipino
The gross income shall consist of:
participation incentive allowance, if any,
in the service contract;
“(a) In respect of crude oil exported, the gross
proceeds from the sale of crude oil at the
“(d) Make specific proposals to Congress for
posted price;
the grant of subsidy to contractors and
petroleum companies at least sixty per
“(b) In respect of crude oil sold for
cent of the capital of which is owned by
consumption in the Philippines, the
Philippine citizens, to be derived from the
gross income shall consist of the gross
revenue or share that will accrue to the
proceeds from the sale thereof at market
Government in pursuance of this Act;
price per barrel;
“(e) Undertake intensive studies and
“(c) In respect of natural gas and/or
researches on oil field practices,
casinghead petroleum exported or sold
procedures, and policies;
for consumption in the Philippines the
gross income shall consist of the total
“(f) Promulgate such rules and regulations
quantity sold at the prevailing market
as may be necessary and assess charges
price thereof; and
for services rendered, to implement the
intent and provisions of this Act;
“(d) Such other income which are incidental
to and/or arising from any petroleum
“(g) Appoint, discipline and remove, and
operation.
determine the compensation of, its
technical staff and other personnel:
“SEC. 21. Deductions from Gross Income. –
Provided, That positions which are highly
In computing the taxable net income, there
technical or primarily confidential shall
shall be allowed as deductions:
not be subject to the Civil Service Laws
and Rules, and of the Wage and Position
“(1) Filipino participation incentive; and
Classification Office;
“(2) Operating expenses reimbursed
“(h) Within four months after the close
pursuant to Section 8 (1) which
of every fiscal year, submit to the
includes amortization and
President and Legislature an annual
depreciation as provided in Section
report on its activities, with appropriate
22.
recommendation; and
“SEC. 22. Amortization and Depreciation. –
“(i) Generally, exercise all powers necessary
Intangible exploration costs may be deductible
or incidental to attain the objectives of
in full; all tangible exploration costs such as
this Act.
capital expenditures and other recoverable
capital assets are to be depreciated for a

period of ten years. into a service contract as provided in this Act
through negotiations, with all the rights and
“SEC. 23. Deductions not Allowed. – In privileges herein authorized: Provided, That
ascertaining the taxable net income, no the contract which may be concluded after
deduction from gross income shall be said negotiation shall contain at least the
allowed in respect of any interest or other minimum terms and conditions provided in
consideration paid or suffered in respect of this Act and shall take into account terms and
the financing of its petroleum operations. conditions more favorable to the Government
contained in contracts involving exploration
“SEC. 24. Return and Payment of Tax. – Every pursuant to this Act: Provided, further, That
party to a service contract shall render to the the exploration period shall commence to
Petroleum Board a return for each taxable run from the effective date of the original
year in duplicate in such form and manner concession, except when the concession has
as provided by law setting forth its gross been effective for a period of seven years or
income and the deductions herein allowed. more, in which case the contractor shall be
The return shall be filed by the Petroleum required to commence exploratory drilling
Board with the Commissioner of Internal operations within a period of not exceeding
Revenue or his deputies or other persons eighteen months from the date of effectivity
authorized by him to receive such return of the service contract. If the contractor
within the period specified in the National is not in default in the drilling operations
Internal Revenue Code and the rules and as hereunder required, an extension of
regulations promulgated thereunder. Every the exploration period may be granted as
party to a service contract shall be subject to provided in Section nine, paragraph (e) of this
tax separately on its share of taxable income Act.
arising from such contract.
“SEC. 27. Alternative Option of Exploration
“SEC. 25. Applicability of the provisions of Concessionaire. – The concessionaire
the National Revenue Code. – All provisions referred to in the preceding section may
of the National Internal Revenue Code and form a consortium with another company
rules and regulations promulgated in relation or companies and jointly enter into a service
therewith which are not inconsistent with the contract with the Government under this Act,
provisions of this Act shall be applicable to with the right to assign to the consortium,
the Contractor. subject to the approval of the Petroleum
Board, the area covered by his concession
“SPECIAL PROVISIONS which shall thereupon be governed by the
provisions of this Act: Provided, That the
voluntary relinquishment of the concession
“SEC. 26. Option of Exploration and its assignment, as well as all technical
Concessionaires. – A holder of a valid and data on the area resulting from studies
subsisting petroleum exploration concession conducted by the concessionaire subsisting
under the Petroleum Act of 1949 may, at improvement introduced by him thereon,
his option enter into a contract of service shall be evaluated and given a fair value
under the rules of the Petroleum Act of which may constitute his contribution, wholly
1949, subject to constitutional restrictions, or in part, to the consortium: Provided,
with any local or foreign oil company under however, That the exploration period under
such terms and conditions as may be the new contract shall commence to run from
agreed upon by the concessionaire and the the date of the effectivity of the contract if it
service contractor. As an alternative the covers areas in addition to the assigned areas;
concessionaire may convert his concession otherwise the provisions of the preceding

section shall apply: Provided, further, That “(b) Article 17, providing that petroleum
duly published applications, for exploration operations are subject to existing mining
concessions or bids therefor already awarded rights, permits, leases and concessions
by the Secretary of Agriculture and Natural in respect of substances other than
Resources under the provisions of the petroleum and to existing petroleum
Petroleum Act of 1949 shall be recognized rights;
and the corresponding deeds of concessions
issued accordingly: Provided, finally, That “(c) Article 18, referring to the right of the
exploration concessions on which the holder Government to establish reservations
thereof failed to perform the three consecutive or grant mining rights on petroleum
years the exploration work required under concessions;
the provisions of the Petroleum Act of 1949,
as amended by Republic Act Numbered Five “(d) Article 20, granting exploration and
Thousand Eighty-Six shall be considered exploitation concessionaires the right
automatically cancelled. to enter private lands covered by their
concessions;
“SEC. 28. Filipino Participation Incentive. –
The contractor under a service contract in “(e) Article 21, referring to easement and the
which Philippine citizens or corporations exercise of the right of eminent domain
have a minimum participating interest of over private lands for the purpose
fifteen per cent in the contract area may be of carrying out any work essential to
subject to reasonable conditions imposed petroleum operations;
by the Petroleum Board be granted by a
government subsidy, commensurate with “(f) Article 22, providing for easements over
the scope of Filipino participation, i.e., a public land for the purpose of carrying
Filipino participation incentive, not exceeding out any work essential to petroleum
seven and one-half per cent, which shall be operations; and
computed by deducting the said allowance
from the posted or market price, whichever, “(g) Article 23, which grants concessionaires
is the higher, of crude oil exports produced in the right to utilize for any of the work
the contract area, and from the market price to which the concession relates, timber,
of crude oil produced in the contract area, water, and clay from any public lands
sold or disposed of for consumption in the within their concessions.
Philippines.
“SEC. 31. Preference to Local Labor. – The
“SEC. 29. Publicity. – Negotiation with the Contractor shall give priority in employment
Government for the conclusion of a contract to qualified personnel in the municipality
under this Act and every contract concluded or municipalities or province where the
hereunder shall be given publicity consistent exploration or production operations are
with the best interest of the Government. located.
“SEC. 30. Provisions of Petroleum Act “SEC. 32. Foreign Assistance. – Nothing in
Applicable. – The provisions of the Petroleum this Act or of any other law shall preclude
Act of 1949, as amended, shall not be the Government of the Republic of the
applicable to the service contract provided in Philippines, through the Petroleum Board
this Act, except the following Articles: or any other proper office or agency, from
negotiating or entering into any agreement
“(a) Article 16, referring to public easements with any foreign country or government for
on lands covered by concessions; assistance in terms of equipment, technical

know-how and financing for the exploration “SEC. 34. Repealing Clause. – All laws,
and production of indigenous crude oil and its executive orders and regulations inconsistent
by-products. with the provisions of this Act are hereby
repealed, provided that no existing rights
“SEC. 33. Funds. – To carry out the purpose shall be prejudiced thereby.
of this Act, there is hereby appropriated,
out of any funds in the National Treasury “SEC. 35. Effectivity Date. – This Act shall
not otherwise appropriated, the sum of five take effect upon its approval.”
hundred thousand pesos for the fiscal year
nineteen hundred seventy-three. Hereafter, Done in the City of Manila, this thirty first
the necessary appropriations shall be included day of December, in the year of Our Lord,
in subsequent General Appropriations Act. nineteen hundred and seventy-two.

DESIGNATING THE DEPARTMENT OF ENERGY AS THE LEAD AGENCY IN DEVELOPING THE PHILIPPINE
NATURAL GAS INDUSTRY

WHEREAS, the Malampaya Gas-to-Power WHEREAS, Sections 4, 5(a) and 5(b) of R.A.
Project, the largest and most important 7638 provide that the Department of Energy
investment of its kind in the Philippine history, (DOE) is mandated to formulate policies
represents the beginning of the Natural Gas for the planning and implementation of a
Industry in the Philippines; comprehensive program for the efficient
supply and economical use of energy
WHEREAS, the development of the Natural consistent with the approved national
Gas Industry shall signal the much awaited economic plan, and to provide a mechanism
boost to the economy by opening up vast for the integration, rationalization and
opportunities both for the government and coordination of the various energy programs
the private sector; of the Government with a preferential bias
for environment-friendly, indigenous and
WHEREAS, Section 2 of R.A. 7638 otherwise low-cost sources of energy;
known as the “Department of Energy Act of
1992,” declares, among others, that it is the WHEREAS, Section 5 (c) of R.A. 7638 mandates
policy of the State to ensure a continuous, the DOE to establish and administer programs
adequate and economic supply of energy with for the exploration, transportation, marketing,
the end in view of ultimately achieving self- distribution, utilization, conservation,
reliance in the country’s energy requirements stockpiling and storage of energy resources
through the integrated and intensive of all forms, whether conventional or non-
exploration, production, management and conventional;
development of the country’s indigenous
energy resources, without sacrificing WHEREAS, Section 5 (e) of R.A. 7638
ecological concerns; authorizes the DOE to regulate private sector
activities relative to energy projects provided
it shall provide for an environment conducive

to free and active private sector participation participation in the natural gas industry;
and investment in all energy activities;
SEC. 3. The Department of Energy may
WHEREAS, natural gas has been recognized as call upon any department, agency or
an environment-friendly, indigenous and low- instrumentality of the Government for
cost source of energy among the indigenous assistance to ensure the development of
energy resources; the Natural Gas Industry and shall have the
authority to retain the services of technical
WHEREAS, the critical nature of developing consultants of proven and internationally
the Natural Gas Industry necessitates recognized expertise in natural gas technology
the involvement and support of various as may be deemed necessary;
government agencies to ensure a unified
and coordinated effort towards establishing SEC. 4. All other government agencies shall
a successful and robust Natural Gas Industry; assist and cooperate with the Department of
Energy as may be necessary to develop and
NOW, THEREFORE, I, GLORIA MACAPAGAL- implement the programs for the natural gas
ARROYO, President of the Philippines, by industry.
virtue of the powers vested in me by law, do
hereby order: SEC. 5. Funds. – The funding requirements
to carry out these tasks shall be chargeable
SECTION 1. The Department of Energy is against the savings from the appropriations
hereby designated as the lead government of the Department for the first year of
agency in ensuring a unified and coordinated implementation of this Order. Funds for
effort towards establishing a successful and succeeding years shall be chargeable against
robust Natural Gas Industry; the regular appropriations of the Department;

SEC. 2. Pursuant to its mandate, the SEC. 6. Effectivity. – This Order shall take
Department of Energy shall recommend effect immediately.
and/or issue appropriate policy statements,
industry rules and guidelines and other Done in the city of Manila this 18th day of
issuances in order to facilitate and encourage January, in the year of Our Lord, two thousand
private sector activities, investments and and one.

POLICY GUIDELINES ON THE OVERALL DEVELOPMENT AND UTILIZATION OF NATURAL GAS IN THE
PHILIPPINES

WHEREAS, Section 2 of R.A. 7638, otherwise the integrated and intensive exploration,
known as the “Department of Energy Act of production, management, and development
1992,” declares, among others, the policy of of the country’s indigenous energy resources,
the State to ensure a continuous, adequate, without sacrificing ecological concerns;
and economic supply of energy with the end
in view of ultimately achieving self-reliance in WHEREAS, Sections 4, 5 (a) and 5 (b) of
the country’s energy requirements through R.A. 7638 provide that the Department

of Energy (Department) is mandated to to primarily supply efficient gas-fired power
formulate policies for the planning and plants starting year 2001.
implementation of a comprehensive program
for the efficient supply and economical use of SEC. 3. The Philippine Gas Industry shall
energy consistent with the approved national be consistent with the government’s
economic plan, and to provide a mechanism overall policy of encouraging private
for the integration, rationalization and sector participation and reducing the
coordination of the various energy programs direct involvement of government in the
of the Government with a preferential bias ownership of assets and facilities. The role of
for environment-friendly, indigenous, and government will be confined to that of policy
low-cost sources of energy; direction and regulation, unless government
involvement is demonstrated to provide
WHEREAS, among the indigenous energy substantial reduction in the cost of natural
resources which include fossil fuels such gas and economic benefit to the people.
as petroleum, natural gas and gas liquids,
geothermal resources, and other less SEC. 4. Government regulation of the
conventional existing and potential forms development and operation of the Philippine
of indigenous resources, natural gas Gas Industry facilities shall be structured
been recognized as environment-friendly, to facilitate the safe operation and growth
indigenous, and low-cost source of energy; of the industry while ensuring equitable
non-discriminatory access to all industry
WHEREAS, Section 5 (e) of R.A. 7638 participants.
authorizes the Department to regulate private
sector activities relative to energy projects SEC. 5. The facilities of the Philippine Gas
provided it shall endeavor to provide for an Industry shall be constructed and operated
environment conducive to free and active in compliance with all existing Philippine
private sector participation and investment in environmental regulations and with
all energy activities; international safety standards.

SEC. 6. The development of the Philippine Gas
NOW, THEREFORE, the Department hereby Industry shall primarily promote the policy
declares the following policy guidelines on of utilizing indigenous energy resources to
natural gas development and utilization: stabilize energy prices.

SECTION 1. The government shall promote SEC. 7. This Department Circular shall take
the role of natural gas into the energy supply effect immediately a day after its complete
mix of the country by creating the conditions publication in a national newspaper of
for a Philippine Gas Industry that economically general circulation.
serves a broader variety of users, including
efficient gas-fired power plants, industrial, Merritt Road, Fort Bonifacio, Metro Manila,
commercial and residential customers. June 15, 1995.

SEC. 2. The Malampaya/Camago gas field
shall serve as the foundation for the Philippine FRANCISCO L. VIRAY
Gas Industry by planning and developing it Secretary


INTERIM RULES AND REGULATIONS GOVERNING THE TRANSMISSION, DISTRIBUTION AND
SUPPLY OF NATURAL GAS

Pursuant to Section 5 (a), (c) and (e) of Republic Section 1. Title

Act (RA) No. 7638, otherwise known as the
“Department of Energy Act of 1992”, creating This Circular shall be known and cited as the
the Department of Energy (DOE); Executive “Interim Rules and Regulations Governing
Order (EO) No. 66 designating the DOE as the Transmission, Distribution and Supply of
the lead agency in developing the Philippine Natural Gas.” It shall be hereinafter referred
Natural Gas Industry; RA No. 9136, otherwise to as the Circular.
known as the “Electric Power Industry Reform
Act of 2001”; Sec. 3 of Executive Order No. Section 2. Scope
172 creating the Energy Regulatory Board
(ERB), as amended by RA No. 9136; Section This Circular applies to:
20 of RA No. 8479, otherwise known as the
“Downstream Oil Industry Deregulation Act (a) The transmission and distribution of
of 1998”; Section 18f of Presidential Decree Natural Gas, whether indigenous or
(PD) No. 87, otherwise known as “The Oil imported, for own use, by virtue of a
Exploration and Development Act of 1972”, as Franchise or as a Pipeline Concession;
amended; Commonwealth Act 146, otherwise
known as “The Public Service Law”; RA No. (b) The Supply of Natural Gas, whether
387, otherwise known as “The Petroleum indigenous or imported, to Customers;
Act of 1949”; and in accordance with Book and
IV, Chapter 2, Section 7 of the Revised
Administrative Code of 1987, and Department (c) The responsibilities of the DOE and its
Circular No. 95-06-006, entitled “Policy relation with other government agencies,
Guidelines on the Overall Development and and the role and responsibilities of
Utilization of Natural Gas in the Philippines” such private participants in the Natural
dated June 15, 1995, the DOE, in consultation Gas industry such as Gas Transmission
with appropriate government agencies, Utilities, Gas Distribution Utilities,
hereby issues, adopts and promulgates the operators of Transmission-and/or
following rules and regulations. Distribution-related Facilities, Suppliers,
Customers or any Person that may be
PART I granted a Permit by the DOE to engage in
GENERAL PROVISIONS the Transmission, Distribution or Supply
of Natural Gas.
The succeeding rules and regulations comprise
the general provisions to be followed in RULE 2
respect of the Transmission, Distribution and DECLARATION OF POLICY
Supply of Natural Gas.
Pursuant to the general provisions of RA 7638,
RULE 1 it is hereby declared the policy of the State to:
TITLE AND SCOPE
(a) Promote Natural Gas as an environment-
friendly and economically efficient source
of energy for the country by creating (b) All other measures allowed under existing
conditions for the establishment of a laws.
Natural Gas industry that will enable the
country to achieve greater energy self- RULE 4
sufficiency and at the same time serve the MEASUREMENT OF NATURAL GAS
interests of the broad variety of industry
participants including Customers, Gas Section 1. Measurement of Natural Gas
Distribution Utilities, Gas Transmission
Utilities, operators of Transmission- and/ Unless otherwise approved by the DOE
or Distribution related Facilities and and for the purpose of this Circular, the
Suppliers. volume and energy value of Natural Gas
will be measured according to the relevant
(b) Facilitate the participation of the private standards as developed and maintained by
sector in the Natural Gas industry. The the Organization for Standardization (ISO)
State will primarily confine itself to policy and in particular:
direction and regulation, but may engage
in strategic activities that will catalyze the (a) The volume of Natural Gas will be
development of the Natural Gas industry measured in cubic meters under
and enhance economic benefit to the standard conditions specified in Section 2
people. below and all reporting will be in units of
standard cubic meter (SCM);
(c) Promote competition by liberalizing
entry into the industry and by adopting (b) The energy value of Natural Gas will be
pro-competition and fair trade measures measured in Joules and all reporting will
with due regard to the financial viability be in joules (J) with a quantity prefix,
of industry participants. such as megajoules (MJ), terajoules (TJ),
petajoules (PJ), etc., as appropriate.
(d) Ensure compliance with international
safety standards and with Philippine Section 2. Standard Conditions
environmental and other laws and
regulations. Standard conditions for the purpose of this
Circular shall mean the conditions of Natural
RULE 3 Gas at a temperature of 15.5 degrees Celsius
RESPONSIBILITIES OF THE DOE (oC) (288.15o Kelvin) and an absolute pressure
of 0.101325 megapascals (Mpa) or 1013.25
Consistent with RA 7638, the DOE shall millibars.
continue to exercise its powers and functions
as the policy-making body for the energy Section 3. Application to the Gas Price
sector. In addition, the DOE shall have the
overall responsibility of supervising and The approved price for any sale of Natural
regulating the development and operation of Gas should be tied to the volume and energy
the Natural Gas industry, through: value determined on the basis of the standard
conditions described in Section 2 above. In
(a) The granting of Permits for the particular,
construction, expansion, operation
and maintenance and modification (a) pricing for domestic and commercial
of Pipelines and Transmission- and sales may be on volume basis unless
Distribution-related Facilities and for the otherwise agreed to by the contracting
Supply of Natural Gas to Customers, and parties and

(b) pricing for industrial and power (h) “Distribution” refers to the transport
Customers shall be based on the energy of Natural Gas through Low-pressure
value of Natural Gas. Pipelines excluding transport of Natural
Gas for own use;
RULE 5
DEFINITION OF TERMS (i) “Energy Regulatory Commission” or
“ERC” refers to the regulatory agency
As used in this Circular, the following terms created by RA 9136;
shall mean as follows:
(j) “Franchise” refers to the right, privilege
(a) “Affiliate” refers to any Person which, and authority issued by Congress in
alone or together with any other Person, favor of any Person to engage in the
directly or indirectly, through one or Transmission or Distribution of Natural
more intermediaries, controls, or is Gas;
controlled by another Person. As used
herein, “control” shall mean the power (k) “Gas Distribution System” refers
to direct or cause the direction of the generally to Pipeline and related facilities
management policies of a Person by belonging to a Gas Distribution Utility
contract, agency or otherwise; extending between the delivery points
from the Transmission System to the
(b) “Anti-Competitive Conduct” refers point of connection to the premises of
to: price fixing, output fixing and any the Customer;
concerted practices, agreements by
Persons or association of Persons or (l) “Gas Distribution Utility” refers to a
any conduct by a dominant Person Person that has been issued a Franchise
that restricts, prevents or distorts and authorized by the DOE to engage
competition; primarily in the Distribution of Natural
Gas to Customers in a specific geographic
(c) “Bar” refers to a unit of pressure that is area;
equal to one million dynes per square
centimeter; (m) “Gas Infrastructure Project” is a project
which the Secretary of Energy may
(d) “Customers” refers to Persons who determine to be necessary to achieve
purchase Natural Gas for resale or final the government’s objectives for the
use; development of the Natural Gas industry.
Such projects shall remain subject to the
(e) “Department of Energy” or “DOE” refers permitting procedure in Rule 12 of this
to the government agency created Circular;
pursuant to RA 7638 with additional
functions provided for in RA 9136 and (n) “Gas Sales and Purchase Contract”
E.O. 66; or “GSPC” refers to a contract for the
delivery and sale of indigenous or
(f) “Department of Environment and imported Natural Gas by and between a
Natural Resources” or “DENR” refers to seller and a buyer;
the government agency created pursuant
to EO No. 192; (o) “Gas Transmission System” refers
generally to the Pipeline and related
(g) “Deregulation” refers to the removal of facilities used to transport Natural Gas
price controls; from the interconnection with gathering

facilities or other Gas Transmission a dedicated point-to-point Pipeline or
Systems to the interconnections with Gas Storage Facility that is constructed and
Distribution Systems, or Customers; operated exclusively to transport or store
gas for the final use of the Permit holder;
(p) “Gas Transmission Utility” refers to a
Person that has been issued a Franchise (x) “Permit” refers to an authorization
and authorized by the DOE to engage issued by the DOE for the construction,
primarily in the Transmission of Natural operation and maintenance, expansion
Gas to Gas Distribution Utilities and/or and modification of a Pipeline for
Customers; the Transmission or Distribution of
Natural Gas and for the construction,
(q) “High-pressure Pipeline” refers to operation and maintenance, expansion
a Pipeline that operates at internal and modification of a Transmission- or
pressures higher than 40 Bars; Distribution-related Facility.

(r) “Indicative Transport Tariff” refers to (y) “Person” refers to a natural or juridical
the nominal charge for the cost of person, as the case may be;
transporting Natural Gas via Pipeline
either as a component of the price in a (z) “Petroleum Operations” as defined in PD
Gas Sale and Purchase Contract or as the 87, refers to searching for and obtaining
Tariff charged for providing Transmission petroleum within the Philippines through
or Distribution services to a third party; drilling and pressure or suction or the
like, and all other operations incidental
(s) “Liquefied Natural Gas” or “LNG” refers to thereto. It includes the transportation,
Natural Gas which has been liquefied by storage, handling and sale (whether for
compression and cooling to an extremely export or for domestic consumption)
low temperature; of petroleum so obtained but does
not include any: (1) transportation of
(t) “Low Pressure Pipeline” refers to a petroleum outside the Philippines; (2)
Pipeline that operates at internal processing or refining at a refinery; or
pressures of 40 Bars or less; (3) any transactions in the products so
refined;
(u) “Market” refers to a product and
geographic area within the Philippines (aa) “Pipeline” refers to pipes and other
where gas and ancillary products/services interconnected facilities operated as an
are produced or traded; integrated system (including pumping
stations, metering stations, valve
(v) “Natural Gas” refers to gas obtained from stations, SCADA systems, storage tanks,
boreholes and wells consisting primarily pig launching and receiving stations) for
of hydrocarbons, which at atmospheric transporting Natural Gas from receipt
conditions of temperature and pressure, points below the point of interconnection
are in a gaseous phase and which have with field and platform-mounted
been identified under either a Service processing plants to delivery points for
Contract or Gas Sales and Purchase either Natural Gas processing within the
Contract as being primarily Methane with country or export, but does not include
smaller quantities of heavier fractions pipes and facilities for:
also being entrained;
1) returning Natural Gas to a reservoir
(w) “Own-use Permit” refers to an for pressure maintenance;
authorization granted by the DOE for
2) transporting Natural Gas that is to be Gas Distribution Systems under the
flared or vented; or conditions prescribed in Annex 2;

3) gathering Natural Gas for (jj) “Transmission” refers to the transport
transportation to initial processing of Natural Gas through High-pressure
facilities within a Service Contract Pipelines excluding transport of Natural
area; Gas for own use;

(bb) “Pipeline Concession” refers to the right, (kk) “Transmission- and/or Distribution-
privilege and authority issued under the related Facilities” refers to any facility
Petroleum Act of 1949 (RA 387); for processing, storing, regassification,
interconnection, measurement or
(cc) “Pipeline Network” refers to Pipelines metering that is necessary for the
that are physically interconnected Transmission and Distribution of Natural
regardless of whether they are under Gas and operated independently of
common ownership or operation; Pipelines;

(dd) “Pricing” refers to the manner of setting (ll) “Unbundled Prices” refers to the
the charges for the energy value, pricing of products and/or services that
transmission, distribution and retail separates the Tariff according to distinct
supply of Natural Gas; products and/or service elements insofar
as they can be reasonably separated from
(ee) “Service Contract” refers to the contract each other;
entered into between the Government
and a service contractor pursuant to PD (mm) “Unbundled Service” refers to the
87, as amended; requirement to provide only those
elements that are required by the
(ff) “Storage Facility” refers to any facility Customer insofar as they can be
designed or adopted for the storage of reasonably separated from other
Natural Gas in bulk (whether in liquid elements of the products and/or services
state or not) not being a pipe or other offered by service providers.
conduit for the transport of gas;
PART II
(gg) “Supplier” refers to any Person STRUCTURE AND OPERATION OF THE
authorized by the DOE to sell, broker or NATURAL GAS INDUSTRY
market gas transported through Pipelines
to Customers or Persons who intend to For the purposes of this Circular, the
resell Natural Gas to other Customers; downstream Natural Gas industry shall
be divided into three (3) sectors, namely:
(hh) “ Tariff” refers to the charge for the Transmission, Distribution and Supply of
Transmission, Distribution and supply Natural Gas.
of Natural Gas, including Indicative
Transport Tariff, together with the RULE 6
terms and conditions of contracts for TRANSMISSION SECTOR
transmission service and gas delivery
procedures; The Transmission of Natural Gas by Gas
Transmission Utilities is subject to the
(ii) “Third Party Access” refers to the system permitting authority of the DOE. The DOE
of allowing any qualified Person access may determine additional functional and
to the Gas Transmission Systems and
physical standards that shall distinguish (ii) the Customer cannot contribute to the
Transmission from Distribution. cost of installation; or

RULE 7 (iii) the Gas Distribution Utility cannot
DISTRIBUTION SECTOR recover the cost of installation and the
incremental variable costs of operation
Section 1. Guiding Principle through a surcharge to the approved
Price Schedule for the Customer.
The Distribution of Natural Gas by Gas
Distribution Utilities to Customers is subject RULE 8
to the permitting authority of the DOE and TRANSMISSION AND/OR DISTRIBUTION-
the rate-making powers of the ERC. RELATED FACILITIES

Section 2. Pipeline Networks Section 1. Guiding Principle

Interconnected systems of Pipelines may be Transmission - and/or Distribution-related
utilized for Distribution and will be authorized Facilities that are operated independently of
for as long as they are authorized as a the Pipeline and are used to serve Customers
condition of a Pipeline Permit. are subject only to the permitting authority of
the DOE. Such facilities include, but are not
Section 3. Universal Service Obligations of limited to the following:
Gas Distribution Utilities
(a) Natural Gas processing plants,
Gas Distribution Utilities shall have the (b) Facilities for interconnecting Pipelines,
obligation to develop and maintain an (c) Pipeline metering stations,
efficient system to supply Natural Gas at the (d) LNG terminals and regassification
reasonable request of Customers within a facilities,
specific geographic area including: (e) Storage Facilities and
(f) CNG refilling stations.
(a) The installation of pipes where the
connection to the Customer is within Section 2. Authorization to Operate
twenty-five (25) meters of the Distribution Transmission and/or Distribution-related
Pipeline; or Facilities

(b) Increasing the capacity of existing Any Person that has demonstrated its
Distribution Pipelines. technical and financial capability to operate
Transmission- and/or Distribution-related
Provided, however, That in circumstances Facilities shall be authorized by the DOE to
where the Gas Distribution Utilities can undertake such function. No applicant that
demonstrate to the satisfaction of the DOE is an Affiliate of a service contractor, a Gas
that it is not economical or financially feasible Transmission Utility, Gas Distribution Utility
to make such a connection, this provision will or Natural Gas Supplier may be authorized
not apply. The DOE shall make a determination to operate Transmission- and/or Distribution-
that it is not economical or financially feasible related Facilities independently of Pipelines
to make a connection when: until it demonstrates to the satisfaction of
the DOE that it has sufficient procedures to
(i) there is no sufficient market demand for operate independently.
Natural Gas to justify the installation of a
Pipeline;

RULE 9 (d) Books of accounts and records of the
SUPPLY SECTOR Affiliated Supplier shall be maintained
separately.
Section 1. Guiding Principle
RULE 10
For the purpose of this Circular, the Supply REGULATION OF TRANSMISSION,
of Natural Gas to Customers is subject to the DISTRIBUTION, AND SUPPLY OF NATURAL
permitting authority of the DOE for a specific GAS
geographic area and the rate-making powers
of the ERC. The Transmission, Distribution and supply
of Natural Gas are businesses affected with
Section 2. Authorization to Supply Natural public interest and the regulation of said
Gas to Customers businesses as provided in this Circular is
hereby deemed necessary in the public
Any Person that has demonstrated its technical interest.
and financial ability to supply Natural Gas to
Customers shall be authorized by the DOE to Section 1. Franchising Requirement in the
undertake such function. No applicant that Transmission and Distribution of Natural Gas
is an Affiliate of a service contractor, a Gas
Transmission Utility or Gas Distribution Utility The operation of Gas Transmission and
may be authorized to supply Natural Gas until Distribution Systems as provided for in this
it demonstrates to the satisfaction of the DOE Circular is recognized to be public utility
that it has sufficient procedures to operate operations requiring a Franchise or similar
independently. legislative authorization.

Section 3. Affiliated Suppliers However, this provision will not be applicable
to operation of facilities for Transmission and
In order to prevent Anti-Competitive Conduct, Distribution of Natural Gas that have been
service contractors, Gas Transmission Utilities granted an Own-use Permit under Rule 12,
and Gas Distribution Utilities that own or Section 6.
control Affiliates that are Suppliers shall
conduct their business as follows: Section 2. Pipelines and Related Facilities
Under Service Contracts
(a) No preference will be given to the
Affiliated Supplier over other Persons Any Person that is party to a Service Contract
through contracting for available capacity, which authorizes the construction and/or
scheduling, balancing, curtailment operation of Pipelines and related facilities
priority or Tariffs; for transporting Natural Gas shall be required
to obtain a Franchise to the extent that such
(b) Marketing information provided to the Pipelines are operated as a public utility.
Affiliated Supplier will be provided to
any non-Affiliated Supplier that is a Section 3. Philippine Ownership Requirement
competitor or potential competitor;
As required under Article XII, Section 11 of the
(c) Employees of the Affiliated Supplier Constitution of the Republic of the Philippines,
shall, to the maximum extent possible, no Franchise, certificate or any other form
function independently in making of authorization of a public utility shall be
business decisions; and granted except to citizens of the Philippines
or to corporations or associations organized

under the laws of the Philippines. The DOE capacity of the Gas Transmission Systems
shall encourage equity participation in Gas and Gas Distribution Systems .
Transmission Utilities and Gas Distribution
Utilities by the general public. Section 3. Deferment of Third Party Access
Obligation
Section 4. Cross-ownership
As a condition imposed by a Permit, the DOE
Subject to the provisions of this Circular and may determine that implementation of Third
Philippine laws concerning the ownership Party Access to Gas Transmission Systems and
and operation of businesses affected with Gas Distribution Systems may be deferred
public interest and prohibition of monopolies where:
and combinations in restraint of trade, there
will be no limitations on parties to a Service a. It can be demonstrated that such
Contract, Gas Transmission Utilities, Gas deferment is necessary to enable the
Distribution Utilities, Suppliers and Customers efficient planning of the infrastructure
or their Affiliates holding any interest, directly and aggregation of the initial demand
or indirectly, in other business segments of necessary to justify investments in the
the gas industry chain. Gas Transmission Systems and Gas
Distribution Systems ; or
RULE 11
THIRD PARTY ACCESS b. It is in the interest of the Customers
served by the Gas Transmission System
Section 1. Third Party Access Obligation and Gas Distribution System to ensure
stability of supply.
Gas Transmission Systems and Gas
Distribution Systems excluding those In either case, the DOE shall not defer
constructed and operated for own use shall implementation of Third Party Access for
be available for non-discriminatory access by a period longer than three (3) years after
third party users which may include parties to completion of construction in the case of Gas
a Service Contract, Suppliers and Customers, Transmission Systems and five (5) years after
with due regard to the economic viability completion or construction in the case of Gas
of the operation of such facilities. Such Distribution Systems. Provided, however,
operators shall negotiate in good faith with That the deferment period can be extended
third-party users the provision and terms of on reasonable grounds.
access in accordance with Annex 2.
Section 4. Approved Access Conditions
Section 2. Available Capacity for Gas Transmission Utilities and Gas
Distribution Utilities
Third Party Access obligations shall apply
only to the available capacity of the Gas Prior to conducting negotiations with third
Transmission Systems and Gas Distribution parties, a Gas Transmission Utility and a Gas
Systems as determined by subtracting the Distribution Utility shall request the DOE
volume of capacity that is: to approve its access conditions. The DOE
shall approve access conditions after it has
(a) Used by the owner or operator to serve determined that they are consistent with the
his own customer; and/or provisions contained in Annex 2.

(b) Allocated to third parties under
transportation contracts from the design

RULE 12 Section 4. Conditions of the Permit
PERMITS
It shall be a condition of each Permit that:
Section 1. Requirement for a Permit
(a) Where the DOE has determined that the
No Person shall undertake the construction, demand for Natural Gas exists and that
operation and maintenance, expansion, the Permit holder can earn reasonable
extension or modification of a Gas return from its additional investment, the
Transmission System and Gas Distribution Permit holder may be required to provide
System or a Transmission– and/or additional capacity by:
Distribution-related Facility unless a Permit
has been issued by the DOE. (1) making an interconnection with
another Pipeline; or
Section 2. Gas Infrastructure Projects
(2) increasing the capacity by installing
In order to meet the objectives of the compression in the case of a
Natural Gas industry development, the DOE Transmission Pipeline.
may recommend the bidding out of a Gas
Infrastructure Project subject to existing laws (b) The Permit holder shall comply with other
and regulations. The winning bidder shall conditions on which the Pipeline Permit is
comply with the permitting requirements issued in order to achieve the Declaration
and all other pertinent rules and regulations of Policy under Rule 2 including:
under this Circular.
(1) standards for quality, odorization,
Section 3. Pipeline Route energy value and pressure; and
All Pipelines shall be constructed following a (2) testing of equipment for accuracy
route that will provide the greatest benefit and safety.
to Customers that can be identified at the
time the application is submitted. Before Section 5. Petroleum Operations
issuing a Pipeline Permit, the DOE may
require an applicant to submit the results of Permits shall be required for Pipelines
studies undertaken on alternative routes and that are constructed as part of Petroleum
options for expansion along these proposed Operations to the extent that they are located
routes for the supply or transport of Natural outside the Service Contract area and are
Gas from holders of a Service Contract, used to transport and supply the Natural Gas
Gas Transmission or Distribution Utilities, produced under the Service Contract to the
Suppliers and Customers. buyer or Customer except as may be provided
under Section 6 herein.
In order to minimize easement costs,
whenever possible, Pipelines shall be located Section 6. Own-Use Permits
in road reservations. Developers of Pipelines
and Transmission- and/or Distribution- The DOE may grant an Own-Use Permit for
related Facilities shall coordinate with dedicated point-to-point Pipelines that are
relevant government agencies in order to constructed and operated exclusively for the
avoid conflicting projects and to ensure the final use of the applicant. Own-use Permits
integrity of such combined road and Pipeline for Pipelines shall be granted for a specific
infrastructure. capacity and defined route. Own-Use Permits
for Storage Facilities shall be granted for a

specific location and capacity. Where the The Permit will be revoked if the Permit holder
application relates to an own-use pipeline fails to commence operation within five (5)
or related facility which has a capacity in years from the date Permit is issued unless
excess of the requirements of the applicant, a longer period is provided in the Franchise.
as determined at the time of filing the This provision will not apply if the cause for
application, the applicant shall be required non-commencement of operation is beyond
to submit supporting documents proving its the control of the Permit holder.
expansion assumptions or other justification
for the Pipelines or other related facility’s RULE 13
excess capacity. APPLICATION FOR PERMITS
Own-use facilities are exempted from the Section 1. Application Required

requirement of a Franchise and all other
regulations as stated in this Circular except Unless otherwise disqualified by law, any
those that relate to safety and environmental Person seeking a Permit to construct, operate
standards under Rule 14. Except where they and maintain, expand or modify a Pipeline or
are transferred to a Franchise-holder with a Transmission- and/or Distribution-related
a Permit prior to their operation as public Facility and/or Supply of Natural Gas shall
utilities, holders of Own-use Permits shall file an application in accordance with the
secure a Franchise and a permit prior to procedure set forth in “Rules of Practice and
operating own-use facilities as public utilities. Procedure Before the DOE” (Department
Circular 2002-07-004).
Section 7. Fees
Section 2. Contents of the Application
The DOE shall prescribe and collect fees
relevant to the regulation and supervision All applications shall be made in writing,
of every Pipeline and Transmission- and/or verified and must contain the information
Distribution-related Facilities that have been described in Annex 1 to this Circular and
granted a Permit. those set forth in Department Circular 2002-
07-004.
Section 8. Abandonment of Pipelines and
Transmission- and Distribution-related Section 3. Application Fee
Facilities
The applicant shall pay the DOE a non-
No Pipeline or Transmission- and/or refundable fee for the processing and hearing
Distribution-related Facilities for which a of its application as provided in Department
Permit has been issued shall be abandoned Circular 2002-07-004.
or withdrawn from service by the grantee of
the Permit without obtaining prior written Section 4. Confidential Information
authorization from the DOE.
The DOE will limit the disclosure of and
Section 9. Duration of Permit protect confidential or commercially sensitive
information in accordance with existing laws.
A Permit shall be valid for twenty five (25)
years extendible for up to an additional twenty Section 5. Decision to Issue a Permit
five (25) years or the remaining period of the
Franchise or primary authorization for the The DOE shall issue a Permit only after it has
Pipeline or Transmission- and/or Distribution- made the following determination that:
related Facility, whichever is less.

(a) The construction of the Pipeline or agencies responsible for any bridges,
Transmission- and/or Distribution- roads, harbors, streams, rivers and coastal
related Facility is consistent with the waterways that will be crossed within sixty
policy declaration contained in Rule 2; (60) days before construction commences.
(b) The applicant will have the technical Section 3. Pipeline Design Standard
capability and financial resources to
comply with the conditions under which The design standard for Pipelines shall
the Permit is issued; and comply with the requirements of ISO 13623
(Petroleum and Natural Gas Industries –
(c) The manner in which the Pipeline is Pipeline Transportation System) or other
owned and operated will not lead to Anti- internationally-accepted standards as the
Competitive Conduct in the Transmission, DOE may approve. Engineering drawings
Distribution or supply of Natural Gas. and profiles of the as-built Pipeline shall be
submitted to the DOE within sixty (60) days
RULE 14 from commissioning of the Pipeline.
STANDARDS FOR CONSTRUCTION,
OPERATION AND SAFETY Section 4. Pipeline Testing
Section 1. Conduct of Operations Where a test is required to be carried out

under this Circular or as a condition of the
The construction and operation of Pipelines Pipeline Permit, it shall be conducted by
and Transmission- and/or Distribution-related the DOE, its authorized representative or
Facilities (including design, manufacture, any accredited agency. Where such test is
testing, maintenance, repairs, alterations conducted by an accredited agency, the result
and extensions) shall be in accordance with of the test shall be recorded and certified to
relevant standards promulgated by the the satisfaction of the DOE and will be carried
International Standards Organization (ISO), as out as follows:
amended, or other internationally-accepted
standards as the DOE may approve. Before (a) Where practicable at least seven (7) days
construction is commenced, the Permit notice shall be given to the DOE of any
holder shall submit to the DOE the names of proposed hydrostatic or flow efficiency
all testing authorities and other inspection tests; and
services or contractors to be employed
in quality surveillance of materials and (b) All test certificates for hydrostatic
fabrication and shall confirm that such testing tests referred to in this section and all
authorities and inspection services meet radiographs or ultrasonic testing results
the requirements of the ISO or such other of pipeline welds shall at all times be
requirements as the DOE may approve in the readily available to a DOE inspector or
Permit. its authorized representative and shall
not be destroyed or otherwise disposed
Section 2. Impact on Public Infrastructure of except with the permission in writing
from the DOE.
The DOE shall require the applicant to submit
construction plans showing the location Section 5. Signs
of all Pipelines and Transmission- and/
or Distribution-related Facilities and their In the interest of public safety and welfare,
operating pressures and/or other relevant signs or markers, in accordance with the
technical specifications to the governmental standards designated in Section 3 above,

shall be erected and maintained in strategic shall, as soon as possible, report the
locations in accordance with the standards escape to the DOE.
designated in Section 3.
After discharge of any Natural Gas or
Permit holders shall advise concerned local hazardous materials or substances from
government units (LGUs) and appropriate a Pipeline and/or Transmission- and/or
government agencies about the existence Distribution-related Facility has been stopped
of the Pipelines related facilities within their and any necessary repairs completed, the
respective jurisdiction and shall provide such Permit holder shall promptly submit a written
LGUs and appropriate government agencies preliminary report within forty eight (48)
detailed maps of their Pipeline routes. hours, with appropriate documentation, to
the DOE, with a copy to the DENR, containing
Section 6. Discontinuation of Operations the following information:
If the DOE determines that a condition exists (a) the time and place of the discharge;
in any segment of the Pipeline or part of
Transmission and/or Distribution-related (b) the approximate quantity of Natural Gas
Facility which may endanger life or property discharged;
such as but not limited to:
(c) an initial assessment of the damage to
the Pipeline and/or the environment
(a) Escape of gas due to pipe burst or damage
that resulted from the discharge and/or
from an external force;
ignition of Natural Gas;
(b) Damage to pipe that could lead to escape (d) an initial assessment of the conditions
of gas; or that caused or contributed to the
discharge or ignition;
(c) Other similar conditions
(e) the methods adopted or proposed to be
It may direct in writing that the segment or adopted to carry out repairs;
facility be taken out of operation or that such
other precautions be taken as are approved (f) an initial assessment of the circumstances
to ensure safety. generally relating to the discharge and its
control; and
Section 7. Discharge of Substances from
Pipelines (g) steps taken or to be taken to minimize the
chances of such circumstances recurring.
Where any hazardous material or substance
is discharged from the Pipeline and/or Within five (5) days from the submission of
Transmission- and/or Distribution-related the preliminary report, the Permit holder
Facility, the holder of the Permit shall take shall submit a final and detailed report to the
such steps as are necessary to: DOE, with a copy to the DENR, containing its
final findings on the damage to the pipeline
(a) Safeguard human life; and/or the environment resulting from the
discharge and/or ignition, the conditions
(b) Minimize the loss of the substance from that caused or contributed thereto, the
the Pipeline; and methods adopted to carry out repairs, the
circumstances relating to the discharge and
(c) Minimize the pollution of the surrounding its control and the steps taken to minimize a
environment by such substance; and recurrence of such discharge and/or ignition.

Section 8. Onshore Pipeline Abandonment plugged; and
The abandonment of a pipeline shall comply (c) Where a pipeline comes to shore, the
with the following requirements: pipeline will be cut off at a distance from
the shore or at a depth below sea level as
(a) The line shall be depressurized and recommended by the DENR.
purged of all flammable gases and fluids
pigged twice and flushed with corrosion Section 10. Compliance with Environmental
inhibitor; and Other Laws and Regulations
(b) The line shall be filled with light weight All Permit holders shall conduct their
cement; activities and operations consistent with
all environmental and other laws of the
(c) All risers shall be cut off at the line burial Philippines, including the provisions of
level; rules and regulations and compliance plans
developed to implement such laws.
(d) All open access into the line shall be
covered with a material that will prevent RULE 15
internal access to the pipeline; and NATURAL GAS PRICING
(e) The right of way shall be cleaned of Section 1. Determination of Rates and Price
debris and returned to as close to original Schedules
condition as possible.
All matters related to fixing and regulating
The abandonment of Transmission- and/or the rate or schedule of prices of piped
Distribution-related Facilities consented to gas (to be charged by duly franchised gas
by the DOE, on the other hand, shall comply companies that distribute gas by means of an
with the following requirements: underground pipe system) shall remain the
responsibility of ERC consistent with the ERB
(i) The Facilities shall be completely Charter as amended by RA 9136 and Section
dismantled; and 20 of RA 8479 which amended Section 3 of
the ERB Charter.
(ii) The site will be cleaned of debris and
remediated to as close to original Section 2. Guiding Principles for Pricing
condition as possible.
The following guiding principles are hereby
Section 9. Submarine Pipeline Abandonment adopted for pricing:
A submarine pipeline may be abandoned (a) Prices of Transmission, Distribution and

in place if, in the opinion of the DENR the supply of Natural Gas to Customers will
pipeline will not present a hazard to the be regulated until such time that the
environment, marine navigation, fishing and Secretary of Energy determines that
other marine uses; and the markets for such products and/or
services are effectively competitive.
(a) The pipeline shall be depressurized,
flushed and filled with seawater; (b) The energy value of Natural Gas sold to
consumers shall likewise be regulated.
(b) Any riser shall be cut off at the sea floor
and the ends of the line shall be properly

(c) Prices of products and/or services in (i) price and/or output fixing; or
competitive markets shall be deregulated.
(ii) that other practices/conduct that are
Section 3. Just and Reasonable Standard the subject of investigation restrict
and/or prevent and/or distort
The rates and prices in respect of the competition.
Transmission, Distribution or supply of Natural
Gas shall be just and reasonable taking into Section 2. Take-or-Pay Obligations
account the classifications and terms for
service under the Tariff or provisions of a Gas (a) For the purpose of determining their
Sales and Purchase Contract. eligibility for a passthrough to Customers,
take-or-pay provisions in Gas Sales and
Section 4. Unbundled Service Purchase Contract may:
Any provision of Gas Sale and Purchase (i) Index the contract price to the price
Contracts to the contrary notwithstanding, of competing alternative fuels such
the indicative Tariff for Transmission or as heavy fuel oil (HFO) and/or gas oil
Distribution of Natural Gas submitted to based on internationally accepted
the DOE shall be calculated on the basis of reference standards;
Unbundled Service.
(ii) Include re-opener mechanism(s) to
RULE 16 allow for the adjustment of the price
PROMOTION OF COMPETITION and/or volume commitments under
extraordinary circumstances causing
Section 1. Promotion of Competition severe economic hardship to either
party such as price movements in
(a) Agreements, decisions and concerted competing alternative fuel market or
practices of Persons or associations of changes in the gas purchaser’s market
Persons to fix prices and/or fix output such as substantial contraction in
shall be prohibited. forecast demand levels; and
(b) Other practices and/or conduct by a (iii) Provide for a reasonable period for
Person or groups of Persons that restrict, recovery of take-or-pay payments.
prevent or distort competition such as
but not limited to predatory pricing and (b) Potential parties to a Gas Sales and
practices, excessive pricing, bundling Purchase Contract may, at their option,
and other vertical restraints, denial of and prior to the execution of such
access to essential facilities on fair terms, contract, request that the DOE review
discriminatory conditions on transactions their take-or-pay provisions for their
that restrict, prevent or distort consistency with a(i) and a(ii) above;
competition shall likewise be prohibited.
No party to a Gas Sales and Purchase Contract
(c) Subject to the provisions of relevant may be compelled to renegotiate any term
laws, the Secretary of Energy will or condition of a duly executed Gas Sales
adopt measures and/or corresponding and Purchase Contract or to incorporate
remedies to restore competition terms or conditions in such contract which
following an investigation of the relevant are not commercially acceptable to it or its
circumstances and a definitive finding of: counterparty, it being sufficient that the
terms and conditions of the contract as a

whole mitigate the potential impact upon RULE 18
Customers of take-or-pay provisions. PENDING APPLICATIONS
PART IV This Circular shall apply to all applications

TRANSITORY PROVISIONS pending before the DOE for construction
of Pipelines and Transmission and/or
RULE 17 Distribution-related Facilities prior to its date
EXISTING SYSTEMS of effectivity.
Section 1. Permits PART V

FINAL PROVISIONS
Pipelines and Transmission- and/or
Distribution-related Facilities that have been RULE 19
constructed prior to the date of effectivity of REPORTORIAL REQUIREMENTS
this Circular shall continue to operate under
their existing authorities but are required To assure compliance with this Circular, all
to obtain a Permit from the DOE. Permits Gas Transmission Utilities, Gas Distribution
for such Pipelines and Transmission- and/ Utilities, owners of Transmission- and/or
or Distribution-related shall be granted as a Distribution-related Facilities and Suppliers
matter of right in accordance with Rule 12. shall comply with the pertinent reportorial
Suppliers who have entered into Gas Sales requirements provided in Annex 3.
and Purchase Contracts with Customers
and have delivered indigenous or imported RULE 20. OFFENSES AND PENALTIES
Natural Gas under said contracts prior to the
date of effectivity of this Circular are required Section 1. Offenses
to obtain a Permit from the DOE. Permits for
such Suppliers shall be granted as a matter of Any Person that violates:
right in accordance with Rule 9.
(a) Any section or rule of this Circular;
Section 2. Application
(b) Any section or rule of this Circular;
Within sixty (60) days from the date of
(c) Any condition of a Permit; or
effectivity of this Circular, the owners of
existing Pipelines and Transmission- and/or (d) Any relevant order of the DOE shall be
Distribution-related Facilities shall submit an deemed to have committed an offense
application for a Permit to the DOE. Only the under this Circular.
provisions of Annex 1 subsection (a) through
(m) shall apply to applications made under Section 2. Enforcement of Rules
this Rule 17. In addition, the application need
only contain a certified copy of the as-built The DOE shall conduct investigations upon its
drawing of the Pipeline. own initiative or upon receiving a complaint
in writing of any allegation of an offense
Within sixty (60) days from the date of under Section 1 of this Rule in accordance
effectivity of this Circular, the Suppliers of with Department Circular 2002-07-004.
existing Gas Sales and Purchase Contracts
who have delivered indigenous or imported Section 3. Penalties
Natural Gas under said contracts shall secure
an authorization from the DOE as a Supplier. Except with respect to violation of rates
set by the ERC which shall be subject to
its jurisdiction, a violation of any of the RULE 22
provisions in this Circular or any condition of AMENDMENT OF RULES
the Permit shall be subject to the imposition
of penalties by the DOE in accordance with Amendments and/or modifications to any
existing laws. Each day of non-compliance provision of this Circular shall be made by
shall be considered a separate violation. the DOE in consultation with the Natural Gas
industry participants.
Section 4. Cancellation of Permit
RULE 23. EFFECTIVITY
In addition to the imposition of penalties, the
DOE may suspend or cancel the Permit where This Circular shall take effect fifteen (15)
there is a violation of a condition under which days after publication in the Official Gazette
the Permit was issued or any provision in this or in at least two (2) newspapers of general
Circular. circulation and submission of a copy to the
University of the Philippines Law Center.
RULE 21
SEPARABILITY CLAUSE Done this twenty seventh day of August 2002
in Fort Bonifacio, Taguig, Metro Manila.
Should any provision herein be subsequently
declared invalid or unconstitutional, the same
shall not affect the validity or the legality of VICENTE S. PÉREZ, JR.
the other provisions not so declared. Secretary
ANNEX 1
DOCUMENTS TO ACCOMPANY APPLICATION FOR PIPELINE PERMIT
All applications for Pipeline Permits shall voting shares of any Person or organized
be accompanied by such documents as group of Persons engaged in production,
are applicable and relevant, in the form of Transmission, Distribution, or pricing
exhibits, including but not limited to the of Natural Gas, or of any Person or
following: organized group of Persons engaged in
the construction or financing of such
(a) A certified true copy of applicant’s enterprises or operations, a detailed
articles of incorporation and by-laws, if explanation of each of the above
the applicant is a corporation; relationships, including the percentage
of voting strength represented by such
(b) A list of the names and business addresses ownership of shares. If any Person or
of applicant’s officers and directors, or organized group of Persons, directly or
similar officials, if the applicant is not a indirectly, owns, controls or holds with
corporation; power to vote, ten (10) percent or more
of the outstanding voting securities of
(c) If the applicant or any of its officers or applicant a detailed explanation of each
directors, directly or indirectly, owns, such relationship;
controls, or holds with power to vote, ten
(10) percent or more of the outstanding
(d) A certified true copy of the application discharge pressures and compression
for Environmental Compliance Certificate ratio;
with the DENR including its Environmental
Impact Statement; 3) Pressures and volumes of Natural
Gas at the main line inlet and outlet
(e) A certified true copy of applicant’s Pipeline connections at each compressor
Concession or Franchise or charter where station;
the applicant is a government-owned or
controlled corporation; 4) Pressures and volumes of Natural
Gas at each entry and exit point at
(f) A certified true copy of the applicant’s the beginning and terminus of the
Service Contract where the Pipeline is to proposed pipeline;
be constructed and operated as part of
Petroleum Operations; 5) Maximum deliveries which
applicant’s proposed Pipeline would
(g) A geographical map of suitable scale and be capable of achieving under most
detail showing: favorable operating conditions with
utilization of all facilities with and
1) Location, length and capacity of the without compression.
Pipeline;
(i) A description of engineering design
2) Location and size (rated horsepower) data to support the diagrams above-
of compressor stations; mentioned and the proposed project,
which explain:
3) Location and designation of each
point of connection of proposed 1) Assumptions, bases, formulae and
facilities with Customers and methods used in the development
Franchises showing communities and preparation of such diagrams
and Customers taking delivery of and accompanying data;
more than 10,000 MCF or 283 MCM
of gas in any calendar month; and 2) A description of the pipe and fittings
to be installed, specifying the
4) Whether the locations designated in diameter, wall thickness, yield point,
3) are to be served at wholesale or ultimate tensile strength, method of
retail, and gas fields, or other sources fabrication and methods of testing
of gas supply. proposed;
(h) A flow diagram showing daily design 3) When a pipeline is to be looped by

capacity reflecting conditions with construction of a parallel pipeline,
proposed facilities in operation, including: the length and size of the pipe in
each loop;
1) Diameter, wall thickness and length
of pipe proposed to be installed; 4) If the daily design capacity shown
in subsection (j) is predicated upon
2) Size, type and number of proposed an ability to meet each Customer’s
compressor units, horsepower maximum contract quantity on the
required, horsepower proposed same day, explain the reason for
to be installed, quantity of Natural such coincidental peak-day design.
Gas to be used as fuel, suction and If the design day capacity shown in

subsection (j) is predicated upon an and locations of each firm and
assumed utilization factor, state that interruptible Customer whose
factor and explain its derivation. estimated consumption totals 283
MCM or more in any calendar month
(j) A statement by applicant describing: or 2,830 MCM or more per calendar
year together with an explanation of
1) The Service Contract areas accessible the end use to which each of these
to the Pipeline that contain sufficient industrial Customers will put the gas;
existing or potential Natural
Gas supplies for the initial and 2) Where applicable, applicant’s total
subsequent stages of a proposed annual and peak day or hourly gas
development project associated with requirements by classification of
the construction or extension, and of service in subsection (1) above,
the Pipeline; and divided as follows:
2) How the Service Contract areas are (i) for each Gas Distribution Utility
to be connected to the Pipeline; where Natural Gas is sold by
applicant at retail;
(k) The proposed route of the Pipeline
together with: (ii) for each buyer under a Gas Sales
and Purchase Contract;
1) A map showing surface land-use and
occupation; (iii) For all main line direct industrial
gas Customers; and
2) A list of the names of the landowners;
and (iv) Pipeline use and unaccounted
for Natural Gas, for both the
3) A copy of the proposed access applicant and each buyer under a
agreement or easements to be Gas Sales and Purchase Contact;
entered into with landowners.
3) Explanation and derivation of
Provided, That the submission of requirements basic factors used in estimating
2 and 3 herein may be deferred to anytime future requirements, and full
before the Permit is issued by the DOE. details concerning all other sources
of Natural Gas supply available
(l) A system-wide estimate of the quantity to applicant and to each of its
of Natural Gas and rate of delivery Customers;
during each of year of the Pipeline’s full
operation as well as the period when (m) If it is assumed that proposed Customers
the Pipeline and Transmission- and/or in new areas or firm and interruptible
Distribution-related Facilities are used for direct industrial Customers whose
commissioning and build up of delivery, estimated consumption totals 283 MCM
together with: or more in any calendar month or 2,830
MCM or more in any calendar year, will
1) Names and locations of Customers, convert from other fuels to Natural Gas,
showing the number of residential, to the extent possible, state the basis
commercial, firm industrial for such assumption and include a study
interruptible industrial, and other showing estimated cost of converting
types of Customers and the names Customers’ facilities to Natural Gas.

The study should indicate the number 2) A statement of anticipated cash flow,
of Customers of each of the other fuels including provision during the period
which the applicant anticipates will of construction and the first three
convert to Natural Gas and the current (3) full years of the Pipeline’s capital
cost of fuel to be displaced compared to requirements including interest and
the cost of Natural Gas on an equivalent dividends;
Joule basis;
3) A balance sheet and income
(n) A detailed estimate of total capital cost statement for three (3) years) from
of the Pipeline and Transmission- and/ the most recent date available;
or Distribution-related Facilities for
which application is made, showing 4) Certified true copies of all
cost of construction by operating units applications and supporting exhibits,
such as compressor stations main registration statements or other
Pipelines, laterals, measuring and similar submissions, if any, to the
regulating stations and separately stating Securities and Exchange Commission,
the compensation for right-of-way, including all supplements, changes
landowner damages, surveys, materials, or modifications of the above;
labor, engineering and inspection,
administrative overhead, fees for legal 5) Any additional data and information
and other services, allowance for funds upon which the applicant proposes
used during, construction and other to rely in showing the adequacy
contingencies. Include a brief statement and availability to it of resources
indicating the source of information used for financing the Pipeline and
as the basis for the above estimate. If Transmission- and/or Distribution-
not otherwise stated, submit data on related facilities.
preliminary bids, if any, for the proposed
facilities and recent experience cost data (p) A concise statement setting forth
for facilities of similar character; arrangements for supervision,
management, engineering, accounting,
(o) Plans for financing the proposed facilities legal or other similar services that will
for which the application is filed, not be performed by employees of the
supported by documents describing. applicant, including references to any
existing or contemplated agreement to
1) the ratio of equity and debt to total be entered into in connection with the
financing; construction or operation of the Pipeline
together with a statement showing
(a) For equity financing, names and any affiliation between the applicant
addresses of stockholders, the and any parties to such agreements or
respective equity contribution arrangements referred to in paragraph
by value (paid-up and not paid- (d) above;
up) and type;
(q) Provide reference tariff, indicative Tariff
(b) For debt financing, type of debt as well as any Tariff for which approval
instruments, their maturities, will be sought from the ERC, and
respective share to total debts, depreciation rates calculated according
source of debt financing, i.e., to the prescribed methodology and rate
whether domestic or foreign; setting procedures of the ERC.


(r) Pro-forma copies of contracts to be
entered into with third parties for the
Transmission or Distribution of Natural
Gas, including any code of operations or
transmission policy.
ANNEX 2
ACCESS CONDITIONS FOR PIPELINES
Gas Transmission and Distribution Utilities 1) Describes the type of service

will provide the DOE with the following (transmission, gathering, processing,
information in respect of conditions for third treatment, line-pack, balancing,
party access: etc.) that is to be provided to third
parties. The service provided must
(a) The technical and economic feasibility be unbundled and include those that
of transporting Natural Gas for third- are likely to be sought by a significant
parties by using spare capacity, if any, part of the market.
or expanding the rated capacity of the
Pipeline and taking into consideration: 2) Determines the priority for allocating
spare capacity and developable
1) The extent, production profiles and capacity (auction, first-come-first-
composition of proved, probable and served, foundation user and etc.)
potential Natural Gas reserves within among users where the rated
adjacent Service Contract areas that capacity is not adequate to transport
are technically and economically the Natural Gas. The queuing policy
feasible for connection to the must be economically efficient,
Pipeline during the remaining term reasonably accommodate the
of the Pipeline Permit. legitimate business interests of
providers, users and prospective
2) The potential to establish users and does not discriminate
interconnections with other Pipelines between Affiliates and non-Affiliates
and Pipeline Networks along the with respect to the supply of the
route. capacity. If capacity allocation
is proposed to be undertaken by
3) The location of delivery points to be auction, the auction rules must be
installed for Customers along the submitted for prior approval to the
Pipeline’s route. DOE to ensure that the process is
competitive.
4) The Pipelines that are to be included
within the scope of the access 3) Provides information (maps,
conditions. calculations, etc.) about the location
and capacity of the Pipeline.
(b) The requirement for third parties to
enter into agreements that include a 4) Places reasonable conditions such as
procedure for good faith negotiation and the reservation of capacity, minimum
consultation between the parties prior to volumes, location and construction
the DOE issuing the Permit that: of receipt points and delivery points,
direction of transmission, quality 9) Protects the disclosure and use
specifications and schedules for commercially sensitive information
nomination. exchanged by the parties.
5) Describes the relationship, if any, 10) Furnishes regular reports to users

between transmission agreement on Pipeline efficiency and reliability
with users and other contracts (such as well as spare capacity and
as sale and purchase, lifting, unit developable capacity of the Pipeline.
development, etc.) which have been
or will be entered into by the Pipeline (c) Provide reference tariff calculated
Permit holder. according to the prescribed methodology
and rate setting procedures of the ERC.
6) Informs a third party whether the
Pipeline will be operated by Affiliates (d) Identifies interconnected facilities that
of the Permit holder or other persons are integral to the Pipeline.
under a management or technical
assistance contract. (e) Provides a procedure for the resolution of
disputes between the Pipeline and users
7) Describes the procedure for users that may arise either during negotiation
to convince the owner of the or performance of transportation services
Pipeline to analyze the technical and agreements by referring the matter for
commercial feasibility for expansion hearing before the DOE including any
of rated capacity for Natural Gas preliminary procedures for conciliation
producers, or for the installation of or mediation irrespective of whether the
new entry points or delivery points disputants are in privity of contract.
including the method for financing
such expansion and the manner (f) Contains the terms and conditions of all
in which spare capacity would be agreements to be entered into between
allocated between the users and the the users and the Pipeline including:
Permit holder.
1) Pro forma transportation services
8) Responds to the user’s request for contracts;
access within thirty (30) days from 2) Security bonds or letters of credit;
receipt of the access application. and
If a definitive response cannot be 3) Pipeline operating and nomination
provided within thirty (30) days procedures.
due to the requirement to conduct
more investigations, the provider (g) A Pipeline may not impose any minimum
must describe the nature of the volume requirements for transportation
investigations to be undertaken, the service without first filing an application
schedule for its completion and any with, and obtaining an approval from,
related, reasonable costs which the the DOE authorizing the imposition
prospective user may have to pay. of reasonable minimum volume
requirements.

ANNEX 3
REPORTING AND DOCUMENTATION
Section 1. Gas Transmission and (iv) The Tariff approved by the ERC.
Distribution Utilities and/or Operators of
Transmission- and/or Distribution-related 3) If transportation is provided to a
Facilities Customer that is located in the
service area of a Gas Transmission
To assure compliance with this Circular, every Utility or Gas Distribution Utility a
Gas Transmission Utility, Gas Distribution statement that the transporter has
Utility or operator of a Transmission- and/or notified the holder of the Franchise
Distribution-related Facility shall comply with in writing prior to commencing the
the following reporting requirements: transportation.
(a) Initial report. – Within thirty (30) days (b) Subsequent Reports. – A Gas Transmission
from commencement of its operation, Utility or Gas Distribution Utility shall
a Gas Transmission Utility, or Gas amend its initial report to reflect
Distribution Utility shall submit to the any material change with pertinent
DOE a written report signed under transportation arrangement. Any change
oath by a senior official of the company in the initial report shall be submitted
containing the following information: in writing to the DOE, within thirty (30)
days of the material change, and shall
1) The name of the Person and location be signed under oath by a senior official
of the facility to which gas was of the Gas Transmission Utility or Gas
transported or of the third party for Distribution Utility.
whom transportation service was
provided by the Gas Transmission (c) Record Maintenance. Each Gas
Utility or Gas Distribution Utility ; Transmission Utility and Gas Distribution
Utility shall maintain records for each
2) A description of the transportation category of transportation service
service, including: provided during the preceding calendar
year, but not limited to, the following
i. The dates of commencement information:
and projected termination of the
transportation service; (1) The docket number assigned to the
transaction by the DOE;
(ii) The estimated total and
maximum daily quantities of (2) List of Customers connected to the
Natural Gas to be transported; Pipeline;
(iii) The points between which the (3) Total volumes sold to Customers and
Natural Gas is to be transported transported for third parties;
(i.e., barangay, town and
province) from the original (4) Interruption of service by date; and
source and the location (i.e.,
barangay, town and province) (5) Total revenues received for the
to the ultimate delivery point of services provided.
the gas; and
Such records shall be made available to and (ii) The estimated total and daily
submitted as required by the DOE. quantities (in Joules) of Natural
Gas; and
(d) Notification of Termination. Not later
than thirty (30) days following the (iii) The Unbundled Price.
termination of any transportation
arrangement (except storage) authorized (3) A statement whether the Supply is
under this Circular, the Gas Transmission subject to interruption to the extent
Utility or Gas Distribution Utility, shall that the Natural Gas is required to
submit to the DOE a statement in writing enable the seller involved to provide
containing the following information: adequate service to other Customers
at the time of shortages.
(1) The docket number assigned to
the transaction by the DOE with (b) Subsequent Report: If any significant
the date when the transaction was change occurs with respect to the
terminated; information given in Section 1 above,
the seller shall submit to the DOE, under
(2) A statement certifying that the oath, appropriate amendments to its
service was provided under the initial report signed by a senior official of
terms and conditions previously the company.
prescribed in that docket.
(c) Extension Report: Not less than ninety
Operators of Transmission- and/or (90) days prior to the expiration of a Gas
Distribution-related Facilities shall be subject Sales and Purchase Contract, a seller or
to similar reporting and documentation buyer seeking an extension of the period
requirements with respect to the service that set forth in the contract shall submit to
they provide. the DOE an extension report under oath
signed by a senior official, stating:
Section 2. Gas Suppliers
(1) Current information concerning any
(a) Initial Report: Within sixty (60) days matters required to be reported
after commencing deliveries of Natural under Paragraph (a) above; and
Gas under a sale effected pursuant to
this Circular, the Supplier engaging in the (2) The proposed terms of the extension.
sale of Natural Gas shall submit an initial
written report to the DOE. The report (d) Record Maintenance. Each Supplier that
shall be signed under oath by a senior engages in the supply of Natural Gas
official of the company and will contain shall maintain a record of the following
the following information: information for the preceding calendar
year:
(1) The name of the seller and Customer
to whom the Natural Gas has been (1) Total volumes sold to Customers and
supplied third parties who intend to on-sell to
Customers; and
(2) A description of the Supply, including:
(2) Total revenues received for the sales.
(i) The dates of the commencement
and anticipated termination of (e) Notification of Termination: Not later
the Supply; than thirty (30) days following the

termination of any arrangement for and shall submit such report within one (1)
the Supply of Natural Gas authorized month after the end of the period to which
by the DOE, the enterprise shall submit the report relates. A report shall contain:
a statement in writing, containing the
following information: (a) Such information on the construction
and operation of the Pipeline as the DOE
(1) The docket number assigned to may require;
the transaction by the DOE with
the date when the transaction was (b) During the construction of the Pipeline
terminated; and/or Transmission- and Distribution-
related Facility, the Permit holder shall
(2) A statement certifying that the sales submit a monthly progress report to the
were made provided at the rate and DOE. The Permit holder shall report to
conditions previously prescribed in the DOE any emergency situations and
that docket. action taken or to be undertaken within
twenty four (24) hours from the time the
Section 3. Construction and Operational emergency situation occurred.
Reporting
Section 4. Corrosion Records
The Permit holder shall submit to the
DOE a written report on the construction The Permit holder shall keep full and
and operation of the Pipeline and the complete records of the control of corrosion
Transmission- and/or Distribution-related of the Pipeline or the Transmission and/or
Facility during each six (6) month period Distribution-related Facility, and shall submit
ending on the thirtieth day of June or the such records when required by the DOE.
thirty first day of December in each year
IMPLEMENTING THE NATURAL GAS VEHICLE PROGRAM FOR PUBLIC TRANSPORT

WHEREAS, Republic Act No. (RA) 7638, sources;

otherwise known as the “Department of
Energy Act of 1992”, declares that it is the WHEREAS, the Malampaya Gas-to-Power
policy of the State to ensure continuous, Project represents the beginning of the
adequate and economic supply of energy natural gas industry in the Philippines with
through the integrated and intensive three gas-fired power plants with a total
exploration, production, management and installed capacity of 2,760 MW as initial
development of the country’s indigenous customers;
energy resources, with due regard to
ecological concerns; WHEREAS, apart from its application in the
power sector, natural gas may be used as
WHEREAS, RA No. 8749, also known as the fuel for vehicles in the transport sector and
“Philippine Clean Air Act of 1999”, declares as as a source of energy in the industrial and
a policy the promotion and protection of the commercial sectors;
environment against pollution from mobile

WHEREAS, the launching on October 16, 2002 (LNG) from gas producers around the
of the Natural Gas Vehicle Program for Public world to supplement existing indigenous
Transport saw the unveiling of a portfolio on gas supply.
incentives to encourage active participation
of the private sector to provide the necessary
support, logistics and infrastructure; 2.2 Infrastructure development

WHEREAS, the NGVPPT is envisioned to CNG refueling stations and all related
enhance energy supply security in the facilities shall be established in strategic
transport sector through fuel diversification locations along major thoroughfares in
using indigenous natural gas; Metro Manila and Luzon to serve the
fuel needs of CNG-powered public utility
WHEREAS, natural gas is a clean burning vehicles (PUVs).
alternative fuel for vehicles which has the
potential to produce substantially lower The CNG refueling stations may involve
pollutant emissions and can provide a solution a combination of a “mother-daughter”
to the pressing environmental problems in system and/or an on-line station where
urban areas. the required gas pipeline is already
available.
NOW, THEREFORE, I GLORIA MACAPAGAL-
ARROYO, President of the Republic of the In the absence of a pipeline at the initial
Philippines, by virtue of the powers vested in phase of the NGVPPT, the refueling set
me by law, do hereby order: up shall be a “mother-daughter” scheme
where a high pressure mother station
SECTION 1. Program Objective. – The Natural shall be built inside the Malampaya
Gas Vehicle Program for Public Transport Onshore Gas Plant (MOGP) and the
(NGVPPT) shall have the following objectives: daughter stations shall be established in
identified strategic locations.
1.1 To enhance energy supply security
in the transport sector through fuel 2.3 Market development
diversification using indigenous natural
gas; and The public transport sector, which
includes public utility buses (PUBs),
1.2 To use compressed natural gas (CNG) as a public utility jeepneys (PUJs), taxis and
clean alternative fuel for transport. other PUVs, shall be encouraged to use
natural gas as fuel.
SEC. 2. Coverage. – The NGVPPT, as an integral
part of the Philippine Natural Gas Industry, 2.4 Technology
shall cover the following key components;
Existing NGV technology in the world for
2.1 Gas Supply refueling systems and transport vehicles
shall be adopted locally in compliance
Natural gas shall be supplied as CNG with applicable local and international
in the transport sector through: I) the standards.
use of indigenous gas resource, i.e., the
Malampaya gas from Palawan, for the For transport vehicles, available NGV
NGVPPT and other local gas that will be technology shall include Original
explored for additional demand; and ii) Equipment Manufactured (OEM)-NGVS,
the importation of liquefied natural gas retrofit system and conversion options.

The use of OEM-NGVs shall be strongly the DOE shall:
recommended as the technology to
be adopted during the initial phase of (i) Take the lead in implementing the
the NGVPPT followed by the retrofit NGVPPT, including pilot projects to spur
system and conversion option when the accelerated development, to encourage
same shall have become technically and the use of CNG-powered PUVs and
commercially feasible. establishment of the necessary refueling
infrastructure;
2.5 Incentives and Financial Assistance
(ii) Develop an implementation plan
The NGVPPT shall develop and offer to ensure the success, synergy and
incentive package for all NGV industry continuity of all activities related to the
stakeholders. NGVPPT;

2.6 Manpower development (iii) Develop and implement the necessary
guidelines for the accomplishment of the
Local technical capability and expertise on objectives of this Executive Order;
NGV retrofitting; conversion; fabrication
of conversion systems; NGV and refueling (iv) Develop a CNG Masterplan in
station operation and maintenance; and coordination/cooperation with
other related activities as well as the concerned government agencies/
capability to locally produce NGV chassis, institutions and in consultation with all
bodies and engines shall be pursued stakeholders; and
through technology transfer and training.
(v) Facilitate program participants’ access to
2.7 Standards and other regulatory concerns privileges and incentives.

The standards, codes of practice and SEC. 4. Co-Implementing Agencies. – The
other regulatory procedures shall be following government agencies/institutions
established by the relevant agencies to shall work with the DOE to implement the
ensure the integrity of the NGVPPT and NGVPPT:
public safety.
4.1 The Department of Environment and
2.8 Information Education Communication Natural Resources (DENR), through its
(IEC) Environmental Management Bureau
(EMB), shall fast track the issuance of
An IEC program shall inform and educate Environmental Compliance Certificates
stakeholders and the general public (ECC) for NGV facilities and refueling
on the benefits of using natural gas stations and shall formulate emission
particularly in the transport sector. standards for CNG.

SEC. 3. Lead Implementing Agency. – 4.2 The Department of Finance (DOF) shall
Consistent with Executive Order No. 66, create a pricing environment conducive
Series of 2002 designating the DOE as the to the use of CNG vis-à-vis diesel and
lead agency in developing the Philippine shall formulate tax policies relative to the
natural gas industry, the DOE shall be the NGVPPT, and through
lead implementing agency for the NGVPPT.
In coordination with different government (i) The Bureau of Internal Revenue (BIR),
agencies, institutions and the private sector, develop revenue regulations for the

implementation of time-bound tax utilization in PUVs and promote NGVs
incentives for CNG, NGVs and related in Metro Manila and Luzon through the
facilities and infrastructure; and issuance of directives/orders providing
preferential franchises in present day
(ii) The Bureau of Customs (BOC), major routes and exclusive franchises
implement guidelines on reduced to NGVs in newly opened routes,
tariffs on NGVs, NGV engines compliance with emission standards and
and other NGV industry related other preferential incentives though
equipment, facilities parts and
components duly certified by the (i) The Land Transportation Office
DOE. (LTO), which shall issue Certificates
of Compliance (COC) with emission
4.3 The Department of Science and standards to NGVs;
Technology (DOST) shall develop and
promote locally manufactured NGV (ii) The Land Transportation Franchising
conversion kits, parts and components; and Regulatory Board (LTFRB), which
develop training modules on NGV shall grant preferential and exclusive
conversion, operation and maintenance Certificates of Public Convenience
and refueling station operation and (CPC) or franchises to operators of
maintenance; and establish testing NGVs based on the results of the
centers for NGV systems, components DOTC surveys.
and related equipment and facilities
together with the DOE. 4.6 The Department of Interior and Local
Government (DILG) shall formulate
4.4 The Department of Trade and Industry safety measures relative to NGV industry
(DTI), through practices and apprehend violators
of standards and safety rules and
(i) The Bureau of Product Standards regulations.
(BPS), shall establish Philippine
National Standards for Natural Gas 4.7 Metro Manila Development Authority
Utilization in the Transport Sector (MMDA) shall provide regulatory and
and certify the safety of CNG fuel, administrative support and introduce
NGVs, NGV systems and components traffic schemes favoring NGVs to enhance
and related equipment and facilities; the use of such NGVs in Metro Manila,
and and shall integrate the location of CNG
refueling stations within the overall plan/
(ii) The Board of Investments (BOI), shall rationalization of its intermodal terminal
enhance existing incentive package program.
for land transportation using CNG,
conversion shops, terminals with 4.8 The Tariff Commission (TC) shall reduce
CNG refueling stations and the tariffs on NGVs, NGV engines, conversion
manufacture/assembly of NGVs and kits/systems, refueling equipment and
provide incentives to other NGV other NGV industry related equipment,
industry related activities. facilities, parts and components.

4.5 The Department of Transportation and 4.9 The Technical Education and Skills
Communications (DOTC) shall work with Development Authority (TESDA) shall
the DOE to develop an implementation develop training modules and conduct
plan for a gradual shift to CNG fuel training for NGV conversion/retrofit/

maintenance engineers, mechanics and 5.6 Affordable and commercially tenable
technicians and certify the same after the financial packages from GFIs;
training.
5.7 Manpower development and capability
4.10 Government financing institutions building through training and technology
(GFIs) such as, but not limited to, the transfer programs;
Development Bank of the Philippines
(DBP), Land Bank of the Philippines (LBP), 5.8 Attractive CNG prices which translate to a
Trade and Investment Development discount to diesel price;
Corp. of the Philippines (TIDCORP) and
the Small Business Guarantee Fund
Corporation (SBGFC) shall develop 5.9 Other privileges and incentives that may
separate financing windows for the be subsequently provided.
NGV industry which provide affordable
and commercially tenable financing SEC. 6. Pilot Project. – A Pilot Project shall
to NGV, refueling station and related be established to demonstrate and showcase
infrastructure operators. the initial operation of natural gas buses for
public transport in the Batangas-Manila and/
4.11The Philippine National Oil Company or Metro Manila routes using indigenous
(PNOC), together with its subsidiary, natural gas from the MOGP in Batangas.
PNOC-Exploration Corporation, shall
provide the necessary support for The overall objective of the Pilot Project is
infrastructure development such as, to promote the use of CNG as an indigenous
but not limited to, the gas supply for clean alternative fuel to diesel and improve
performance testing of demo NGVs. air quality. The Pilot Project will evaluate the
commercial viability, technical requirements,
SEC. 5. Privileges. – The following privileges market demand, impact of incentives and
and incentives may be availed of by the public acceptance for natural gas in the public
NGVPPT participants: transport sector.

5.1 Income tax holiday for pioneering projects The components of the Pilot Project include
qualifying under the BOI’s Investments (i) launching of 100 OEM natural gas buses; (ii)
Priorities Plan; construction/operation of mother-daughter
CNG refueling stations; (iii) application/
5.2 One percent (1%) rate of duty on imported operationalization of newly designed
NGVs, NGV engines and other NGV incentives and financing packages; and (iv)
industry related equipment, facilities, IEC campaigns.
parts and components as certified by the
DOE; SEC. 7. Creation of the Executive Forum. – A
NGVPPT Executive Forum (Executive Forum)
5.3 Issuance by the LTO of Certificates of is hereby created to function as a regular
Compliance with Emissions Standards to and permanent body to provide effective
NGVs; leadership, coordination and proper direction
in the implementation of the NGVPPT.
5.4 Preferential and exclusive franchises
from the LTFRB for NGVs to newly opened SEC. 8. Composition of the Executive Forum. –
routes;
8.1 The Executive Forum shall be composed
5.5 Accelerated issuance by the DENR of ECC of the lead implementing and co-
for NGV facilities and refueling stations; implementing agencies with the
Undersecretary of the Department of 9.3 The Executive Forum shall develop its
Energy as Chairperson and senior officials own internal rules that shall govern
of the co-implementing agencies as the conduct of its meetings and other
members. deliberations or proceedings;

8.2 Representatives from the private sector 9.4 The Executive Forum shall meet as often
may be invited to serve as members as necessary but in no case less than once
and/or resource participants of the every quarter to discuss or deliberate
Forum to promote an environment on any action, recommendation and/or
conducive to active private sector proposal.
participation in the NGVPPT. Such private
sector representatives may include SEC. 10. Secretariat. – Technical and
representatives from infrastructure secretariat support to the Executive Forum
developers, refueling station operators, shall be provided by the DOE.
the transport sector, non-government
organizations and other similar entities. SEC. 11. Separability Clause. – In the event
that any of the provision of this Executive
8.3 The Chairperson and each of the Order is declared unconstitutional with
members shall designate a permanent finality by a court of competent jurisdiction,
alternate. the validity of the other provisions shall not
be affected by such declaration.
SEC. 9. Powers and Functions. –
SEC. 12. Effectivity. – This Executive Order
9.1 The Executive Forum shall accelerate, shall take effect immediately.
integrate and coordinate interagency
activities that include the implementation IN WITNESS WHEREOF, I have hereunto set
of existing privileges and incentives and my hand and caused the seal of Republic of
formulation of additional fiscal and non- the Philippines to be affixed.
fiscal incentives, financial packages and
standards; Done in the City of Manila, this 24th day
of February, in the year of Our Lord, Two
9.2 The Executive Forum shall develop its Thousand and Four.
own programs, plans and activities in
pursuit of the objectives of this Executive By the President:
Order. Monitor the implementation of
agency actions and recommendations
arising therefrom and recommend the ALBERTO G. ROMULO
necessary measures that will enhance Executive Secretary
competitiveness of the NGV industry;


DEPARTMENT ORDER NO. D0 2004-02-001
CREATING A NATURAL GAS VEHICLE-TECHNICAL WORKING GROUP FOR COMPRESSED

NATURAL GAS (CNG) VEHICLES
Pursuant to Executive Order No. 66 and Members

consistent with the Department’s thrust
of empowering and balancing the various DOE-Alternative Fuels and Energy
interest of the energy related policies Technology Division
particularly in the emerging Natural Gas
Vehicles (NGV) Industry and in order to Permanent Clovis T. Tupas
accelerate, integrate and coordinate various Alternate Vilma F. Co
efforts towards the demonstration of the NGV
technology, implementation of an effective DOE-General Services Division
Information, Education and Communication
program and development of the necessary Permanent Marcos D. Echaves
safety practices relative to the operation of Alternate Benjamin Marante
NGVs, the following directive is hereby issued:
Department of the Interior and Local
SECTON 1. Creation of a Natural Gas Vehicle- Government –Bureau of Fire Protection
Technical Working Group for CNG vehicles.
Permanent Nelson S. Se, Sr.
There is hereby created a Natural Gas- Alternate Felixberto F. Abrinica
Technical Working Group for CNG Vehicles,
hereinafter referred to as the NGV-TWG, that Department of Environment and Natural
shall ensure the safe operation and conduct Resources-Environmental Management
the necessary assessment and evaluation Bureau
of the performance of CNG Vehicles in the
Philippines. Permanent Jean N. Rosete
Alternate Cesar Siador
SECTION 2. Composition of the TWG.
Department of Science and Technology-
The NGV-TWG shall be composed of the Metals Industry Research and
following: Development Center
Chairperson: Permanent Dominic S. Guevarra

Alternate Eduardo M. Deang, Jr
Director Teresita M. Borra
DOE-Energy Utilization Management Department of Science and Technology-
Bureau Philippine Council for Industry and
Energy Research and Development
Vice-chair:
Permanent Gil T. Miranda
Asst. Director Mario C. Marasigan Alternate Albert G. Mariño
DOE-Energy Utilization Management
Bureau

Department of Transportation and The TWG shall meet once every other week
Communications for the three (3) months following its creation
and thereafter once a month to:
Permanent Roberto G. Delfin
Alternate Renato R. David 1. Develop a testing and evaluation
mechanism for the CNG vehicles;
Communications-Land Transportation 2. Undergo training/seminar with engineers
Office and technicians of the companies that
provided the bus;
Permanent Filemon N. Villespin
Alternate Roberto Se 3. Conduct orientation and training for the
bus drivers and mechanics/technicians;
Department of Trade and Industry-
Bureau of Product Standards 4. Participate in the test drivers test and
continuously monitor, gather and record
Permanent Norma C. Hernandez data;
Alternate M. Teresita G. del Rosario/
Myra F. Magabilin 5. Submit monthly report on the status of
the demo vehicles to the DOE and a final
Philippine National Oil Company report at the end of the demonstration
period; and
Permanent Joy O. Gonzales
Alternate Heidi M. Cruz 6. Such other functions that may deemed
necessary to accomplish the foregoing.
Philippine National Oil Company-
Exploration Corporation SECTION 4. Source of Funds
Permanent Eriberto S. Garcia Expenses that may be incurred in connection

Alternate Rolando V. Oliquino with the implementation of this Department
Order including the testing of the demo
Transport Organizations For Clean Air vehicles shall be charged against the budget
allocated for the Natural Gas Vehicle Program
Permanent Alberto H. Suansing for Public Transport budget subject to usual
Alternate Ramon Castillo accounting and auditing rules and regulations.
University of the Philippines-National SECTION 5. Technical, Administrative and

Center for Transportation Studies Secretariat Support.
Permanent Rene Val R. Toedoro For the effective discharged of its

Alternate Karl N. Vergel responsibilities, the TWG may call on the
assistance of any unit of each member’s
Other government agencies and private respective department or other concerned
organizations may be invited as members agencies of the Government. Administrative
and/or resource participants as may be and secretariat support to the TWG shall
determined by the NGV-TWG. be provided by the DOE-Alternative Fuels
and Energy Technology Division which shall
SECTION 3. Powers and Functions of the coordinate TWG activities.
TWG.

SECTION 6. Affectivity. (sgd)
VICENTE S. PEREZ, JR.
This Department Order shall take effect Secretary
immediately.
Fort Bonifacio, Taguig, Metro Manila, 19

January 2004.
DEPARTMENT CIRCULAR NO.

DC2006-04-0004
ADOPTING DEPARTMENT CIRCULAR NO. DC 2004-04-004 ENTITLED “GUIDELINES ON THE

ISSUANCE OF CERTIFICATE OF ACCREDITATION AND CERTIFICATE OF AUTHORITY TO IMPORT
UNDER THE NATURAL GAS VEHICLE PROGRAM FOR PUBLIC TRANSPORT” AS THE IMPLEMENTING
RULES AND REGULATIONS OF EXECUTIVE ORDER NOS. 396 AND 488 DATED DECEMBER 31, 2004
AND JANUARY 12, 2006, RESPECTIVELY, AND DEPARTMENT CIRCULAR DC NO. 2005-07-006 DATED
JULY 5, 2005 AND AMENDING CERTAIN PROVISIONS OF THE SAID D.C. 2004-04-004
WHEREAS, Executive Order (E.O.) No. 66, of duty for NGV industry-related equipment,
series of 2002 entitled “Designating the parts and components to encourage active
Department of Energy (DOE) as the Lead private sector participation;
Agency in Developing the Philippine Natural
Gas Industry”, mandates the DOE to ensure WHEREAS, Executive Order No. 290 entitled
a unified and coordinated effort towards “Implementing the NGVPPT” was approved
establishing a successful and robust natural and signed on February 24, 2004 to ensure
gas industry; effective implementation of the program;
WHEREAS, Her Excellency, President Gloria

Macapagal-Arroyo launched the Natural WHEREAS, to enable the DOE to effectively
Gas Vehicle Program for Public Transport implement E.O. No. 290 and E.O. No. 164 and
(NGVPPT) on October 16, 2002 that aims to successfully pursue the overall execution plan
enhance the energy supply security in the of the NGVPPT, it issued and promulgated
transport sector through fuel diversification Department Circular No. 2004-04-004 which
using indigenous natural gas and to use prescribed the Guidelines on the Issuance of
natural gas as a clean alternative fuel for certificate of accreditation and certificate of
transport, and at the same time unveiled a authority to import under the NGVPPT;
portfolio of incentives to encourage private
sector participation to private the necessary WHEREAS, Executive Order No. 396, series of
support, logistics and infrastructure; 2004 , further reduces the rates of duty from
1% to 0% for NGV industry-related equipment,
WHEREAS, Executive Order No. 164, series of parts and components to encourage active
2003 entitled “Modifying the Nomenclature private sector participation;
and the Rates of Import Duty on Various
Products under Section 104 of the Tariff and WHEREAS, Section 4 of the said Executive
Customs Code of 1978 (Presidential Decree Order mandates the DOE, in coordination with
No. 1464, as amended)”, reduces the rates the Department of Trade and Industry (DTI),

the National Economic and Development NOW, THEREFORE, the DOE in coordination
Authority (NEDA) and the Bureau of Customs with the DTI though BOI, NEDA, BOC and
(BOC) to promulgate the implementing concerned industry players hereby adopts
rules and regulations that will govern the the DOE Circular No. D.C. 2004-04-004 as the
implementation of this Executive Order; IRR of E.O. 396, E.O. 488 and D.C. 2005-07-
006 and likewise promulgates the following
WHEREAS, in a meeting held on March 8, rules and regulations/amendments to certain
2005 and attended by representatives of the provisions of D.C. No. 2004-04-004:
DOE, NEDA, BOC and DTI through the Board
of Investments, it was agreed upon that D.C. SECTION 1. Section 1(b & d), Rule I are hereby
No. 2004-04-004 be adopted as the IRR of amended to read as follows:
E.O. No. 396 and certain provisions thereof
be amended; RULE I
GUIDELINES ON THE ISSUANCE OF
WHEREAS, Department Circular No. DC2005- CERTIFICATE OF ACCREDITATION
07-006, series of 2005, was issued to set
the policy direction to guide all stakeholders “Section 1. Requirements
particularly as regards to securing access
to the supply of indigenous natural gas xxx xxx xxx
and establishment of CNG distribution
infrastructure; b) Any natural or juridical person,
organized under Philippine laws that
WHEREAS, after several meetings of the will engage in any NGV industry-
Technical Working Group established under related businesses including CNG
the D.C. No. 2005-07-006, it was agreed upon refuelling station and transport
that D.C. No. 2004-04-004 be adopted as operation; NGV operation; NGV
the IRR of D.C. No. 2005-07-006 and certain and related parts/components
provisions thereof be amended; manufacture and assembly; NGV re-
power/retrofit/conversion including
WHEREAS, Executive Order No. 488, series repair and maintenance; and related
of 2006, modifies the import duty on activities such as research and
components, parts and accessories for the development (R&D) activities and
assembly of hybrid, electric, flexible fuel and operation of NGVs as shuttle service;
compressed natural gas (CNG) motor vehicles
to provide opportunity for the manufacture d) “Qualified participants may
and assembly of the emerging alternative fuel be categorized under any of the
vehicle technology; following groups:
WHEREAS, in a meeting called by BOI on “Category I – Manufacture/

February 2, 2006 which was attended by Assembly of NGVs
representatives from the DOE and industry
players including car manufacturers for the • “Engaged in the establishment
drafting of the guidelines for E.O. 488, it was of new assembly facilities
agreed upon that registration and issuance or utilization of an existing
of Certificate of Authority to Import for assembly facility for the
Category I: Manufacture and Assembly of assembly/manufacture of brand
CNG motor vehicles under D.C. 2004-04-004 new quality NGVs registered
shall be transferred to BOI’s Motor Vehicle under the BOI’s Motor Vehicle
Development Program; Development Program

“Category II – Operation of NGVs NGV industry-related business. The
minimum investment requirements*
• “Engaged in the operation of are as follows:
NGVs in accordance with relevant
Philippine National Standards “Category I (Manufacture and
(PNS) and procedures including assembly) : (MVDP)
the provision of warranties to
NGV owners/operators “Category II (Operation) : US$0.40
million
“Category III – Re-powering/ “Category III (Re-powering/Retrofit/
Retrofitting/Conversion of NGVs Conversion) : US$0.20 million
• “Engaged in the re-power, “Category IV (Refuelling Station) :

retrofit, conversion, repair US$0.50 million
and maintenance of NGVs
in accordance with relevant “Category V (Others) : (to be
Philippine National Standards determined by the DOE)”
(PNS) and procedures including
the provision of warranties to Note:* The minimum investment
NGV owners/operators requirements shall be recomputed
every five (5) years to validate
“Category IV – CNG Refuelling the viability of the figures to the
Station/Transport Operation prevailing conditions.
• “Engaged in the design, “Proof of investments in the NGV

construction, installation and industry-related businesses shall be
operation of CNG refuelling in accordance with the commitments
station/s and related submitted to the DOE. Such proof
infrastructures and facilities may include an update report on
including hauling/transport of the undertakings from the date of
CNG in accordance with relevant accreditation and accompanied by
PNS standards and procedures. certified photocopies of documents
relative to the undertakings. The
“Category V – Others DOE may automatically cancel the
CA after the Committee finds each
• “Engaged in research and participant to be non-compliant
development (R&D) activities with its commitment, subject to the
and operation of NGVs as shuttle imposition of the following penalties
service by government entities payable to the pertinent government
as approved by the DOE.” agency involved: (a) payment of
duty differential on all importations;
SECTION 2. Section 1(e) is hereby amended and (b) payment of other incentives
to read as follows: provided under the program.”
e) As their commitment under the xxx xxx xxx

NGVPPT, each participant, over a
period of one (1) year from the date SECTION 3. Section 2(b-f), Rule I are hereby
of issuance of their CA, shall invest amended to read as follows:
and/or bring in investments in any

Section 2. Procedures. f) The original CA shall be claimed
from the Office of the Director,
xxx xxx xxx Energy Utilization Management
Bureau (EUMB), Energy Center,
b) The DOE-EUMB shall only receive Merritt Road, Fort Bonifacio, Taguig,
and record duly accomplished Metro Manila.
application forms with complete
requirements as stated in the SECTION 4. A new provision to be known as
checklists (Annexes 2 and 3). A non- Section I is incorporated under Rule 2 which
refundable processing fee of Php reads as follows:
5,000.00 shall be charged to the
proponent/applicant upon filing of RULE II
each application.
GUIDELINES ON THE ISSUANCE OF
c) The DOE-EUMB shall review and CERTIFICATE OF AUTHORITY TO
evaluate the application submitted IMPORT (CAI) NATURAL GAS VEHICLES
by the proponent/applicant and (CBU, CKD AND KD), COMPRESSED
recommend appropriate action on NATURAL GAS (CNG) REFUELING
the application. The evaluation of the SYSTEMS, NGV CONVERSION/
applicant’s business proposal and/or RETROFIT SYSTEMS, RELATED
feasibility study shall be based on, INFRASTRUCTURE AND FACILITIES ,
but not be limited to the following PARTS AND COMPONENTS
criteria:
“Section 1. Coverage.
• Viability of the project;
• Impact on the industry and “The program shall cover the
economy as a whole; and important of NGV-CNG industry
• Impact on the NGVPPT related equipment, parts and
components by qualified participants
d) Upon EUMB recommendation, to the NGVPPT at zero duty within
the DOE NGVPPT Committee created the seven year pilot phase period
under D.C. 2005-07-006 shall in accordance with the schedule
decide on each application. If found provided under Annex A of E.O.
meritorious, the Committee will 396. However, importation of CBU-
recommend to the Undersecretary CNG buses at zero duty is limited to
the approval of the application. the first 200 units for the Pilot CNG
Project.”
e) Applicants with approved
application shall be issued a SECTION 5. Section I, Rule 11 is hereby
Certificate of Accreditation (CA) renumbered as Section 2, Rule 11 and Section
signed by the DOE Undersecretary, 2(c) thereof is hereby amended to read as
with clearance and authority from follows:
the DOE Secretary, and shall comply
with terms and conditions specified “Section 2. Requirements
therein (Annex 1). The CA shall be
valid for two (2) years from the date xxx xxx xxx
of issuance and shall be renewed
every two (2) years subject to regular c) All applicants complying with
procedure. the requirements under Section

1(a) hereof shall submit a duly “iv) The CAI shall be addressed and
accomplished application form released to the NGVPPT participants/
signed by himself or a duly authorized importer by the DOE-EUMB. All
representative, as the case may be, NGVPPT importations shall be
and duly verified together with the processed by the BOC only on the
following documents for proper basis of an original CAI. The BOC shall
evaluation: record all importations processed
against the CAI running balance on
• “Pro forma Invoice; utilization at the back of the said
CAI. The DOE-EUMB shall provide
• “Detailed list of items to be the BOC and the BOI a list of CAIs
imported; issued on a monthly basis for their
reference and information. The BOC
• “Liquidation Report (if applicable, shall provide the DOE-EUMB and BOI
to be submitted within one (1) records of importation processed for
month from end of each quarter reference and monitoring purposes.”
duly signed by the company’s
authorized representative and SECTION 7. The pertinent provisions of
duly verified); Department Circular No. 2004-04-004 not
otherwise affected by the above amendments
• Authenticated Certificate of shall remain in force and in effect.
Compliance with relevant
Philippine National Standards SECTION 8. This department Circular shall
and procedures to be submitted take effect immediately upon its publication
prior to the shipment of units in at least two (2) national newspapers of
from the country of origin.” general circulation and submission of three
(3) certified copies thereof to the University
xxx xxx xxx of the Philippines Law Center.
SECTION 6. Section 2 is hereby Fort Bonifacio, Taguig City, Metro Manila April
renumbered as Section 3, Rule 11 and Section 20, 2006.
3(iv) hereof is hereby amended to read as
follows:
RAPHAEL M. LOTILLA
“Section 3. Procedures. Secretary
“a) issuance of CAI:

ANNEX 1
GENERAL TERMS AND CONDITIONS FOR THE NGVPPT ACCREDITATION
1. Applicants for NGVPPT accreditation 6. The participant’s facilities, products and

shall fully observe and abide by the services related to the Program shall be
provisions of the Natural Gas Vehicle subjected to safety tests in accordance
Program for Public Transport (NGVPPT) with the duly approved standards and/or
and its implementing guidelines as well whenever the DOE so requires.
as the commitments and representations
made in the application for accreditation. 7. The participant shall be responsible for
Applicants shall further take adequate all expenses that may be incurred in the
measures to ensure that its obligations testing and certification of its facilities,
therein are faithfully discharged. products and services for purposes of
meeting the safety and products standard
2. Participants shall fully comply with the of the natural gas vehicle industry. The
directives and instructions issued by the DOE, at its sole option, may require
DOE from time to time in pursuance of that appropriate tests be conducted in
its authority under E.O. 66, E.O. 290, E.O. acceptable laboratories, located in the
396 and D.C. 2005-07-006. country and/or abroad.
3. The CA is non-transferable and 8. The participant shall notify the DOE of

participants to the Program shall not any adjustments or increase in the retail
transfer and/or assign to any person, prices of its products and services two (2)
partnership, corporation or other entity weeks before implementation.
without the written approval of the DOE.
9. The participant shall ensure that the
4. The participant shall allow duly authorized consumers are well informed of the retail
representatives of the DOE to inspect prices of its products and services. It shall
its assembly facilities, manufacturing endeavour to make its authorized dealers
facilities , refuelling stations and other observe sound business practices and
NGV industry related operation/ refrain from any illegal trading activities.
facilities and examine pertinent books
of account, records and documents in 10. The participant shall exert efforts to be
order to ascertain compliance with the properly represented in all meetings
provision of the NGVPPT guidelines, the that shall be called in connection with
Supplemental Guidelines to the Program, the implementation of the NGVPPT
its commitments and representations, as Guidelines.
well as the general and specific terms and
conditions of its accreditation. 11. The participant shall submit the following
reports to the DOE EUMB in accordance
5. The participant shall not make any with the following schedule:
changes or deviate from the business
plan submitted in connection with a. Quarterly reports which must be
its application for accreditation as a submitted one (1) month after the
participant in Program without prior end of each calendar quarter.
written DOE approval.

1. Accomplishment Report; 3. Annual schedule of
2. Monthly Production and Sales manufacturing cost per model (if
Report (if applicable); applicable);
3. Quarterly schedule of 4. Annual export earnings (if

manufacturing cost per model (if applicable);
applicable); 5. Itemized prices.
4. Quarterly export earnings (if
applicable). c. Latest Audited Financial Statements
and Income Tax Return one (1)
b. Annual reports which must be month after submission to BIR
submitted one (1) month after the
end of each calendar year. d. Itemized Prices upon the introduction
of a new model or change in FOB
1. Accomplishment Report; prices.
2. Annual Production and Sales Note: These reports must be submitted using
Report (if applicable); the prescribed forms.
ANNEX 2-A
APPLICATION FOR NGVPPT ACCREDITATION
“Category I – Manufacture & Assembly of II. Check correctness of application

NGVs”
• Check if application is duly signed
Checklisting Guide by authorized representative and
notarized
I. Check completeness of documents (3 • Validate the authenticity of permits
sets) and other documents
• Duly accomplished application form • Validate the authenticity of the

technical licensing agreement with
• MVDP Certificate of Registration the supplier
• Business proposal/feasibility study • Evaluate the business proposal/
• Board Resolution authorizing official feasibility study
representative to sign in behalf of
the applicant enterprise, if applicable
• Other relevant documents required
by the DOE

ANNEX 2-B
“Category II – Operation” • Pictures of terminal/s if applicable

• Bank Certification, if applicable
Checklisting Guide
• Board Resolution authorizing official
I. Check completeness of documents (3 representative to sign in behalf of
sets) the applicant enterprise, if applicable
• Other relevant documents required
• Duly accomplished application form by the DOE
• Duly accomplished project outline
form II. Check correctness of application
• Business name and brand name • Check if application is duly signed

• Business proposal feasibility study by authorized representative and
• Business permits (DTI, SEC notarized
registration, Mayor’s Permit, others) • Validate the authenticity of permits
• Income Tax Return from the last three and other documents
(3) years (or other proof of financial • Validate the authenticity of the
capability, if newly established technical licensing agreement with
company) the supplier
• Technical Licensing Agreement/ • Evaluate the business proposal/
Technical Certification (or other feasibility study
proof of technical capability)
ANNEX 2-C
“Category III – Re-powering/ Retrofit/ • Business proposal feasibility study

Conversion” • Business permits (DTI, SEC
registration, Mayor’s Permit, others)
Checklisting Guide
• Income Tax Return from the last three
I. Check completeness of documents (3 (3) years (or other proof of financial
sets) capability, if newly established
company)
• Duly accomplished application form • Technical Licensing Agreement/
• Duly accomplished project outline Technical Certification
form • Certificate of Accreditation of
• Business name and brand name facilities

• Bank Certification, if applicable • Validate the authenticity of permits
• Board Resolution authorizing official and other documents
representative to sign in behalf of • Validate the authenticity of the
the applicant enterprise, if applicable technical licensing agreement with
• Other relevant documents required the supplier
by the DOE • Evaluate the business proposal/
feasibility study
II. Check correctness of application
• Check if application is duly signed

by authorized representative and
notarized
ANNEX 2-D
“Category IV – Refueling station/transport.” • Bank Certification, if applicable

• Board Resolution authorizing official
Checklisting Guide representative to sign in behalf of
the applicant enterprise, if applicable
I. Check completeness of documents (3
sets) • Other relevant documents required
by the DOE
• Duly accomplished application form
• Duly accomplished project outline
form • Check if application is duly signed
• Business name and brand name by authorized representative and
• Business proposal feasibility study notarized
• Business permits (DTI, SEC • Validate the authenticity of permits

registration, Mayor’s Permit, others) and other documents
• Income Tax Return from the last three • Validate the authenticity of the
(3) years (or other proof of financial technical licensing agreement with
capability, if newly established the supplier
company) • Evaluate the business proposal/
• Technical Licensing Agreement/ feasibility study
Technical Certification

ANNEX 3
APPLICATION FOR AUTHORITY TO IMPORT
Checklisting Guide • Check bank information and name of

equipment/parts suppliers
I. Check completeness of documents (3 • Check correctness of Tariff Heading
sets)
Example:
• Proforma Invoice (original/certified
true copy) Tariff Heading Description
• Detailed list of parts and/or
equipment to be imported 7613.00 00 Aluminum containers
for compressed or
• Liquidation Report (to be submitted
liquified gas
within one (1) month from the end
of each quarter) 8407.34 90 Other
• Authenticated certificate of 8414.90 90 Parts
compliance with relevant Philippine 8702.90 90 Other
National Standards and procedure
(to be submitted before shipment of • Check if application is duly signed by
items) authorized representative and notarized.
• Check description items – those

indicated in the invoice should match
those indicated in the application

Chapter 10
RULES OF PRACTICE ABD PROCEDURE BEFORE THE DEPARTMENT OF ENERGY
Pursuant to the provisions of Section 5 (d) “EPIRA” shall refer to Republic Act No.
(k) of R.A. 7638, otherwise known as the 9136, otherwise known as the “Electric
Department of Energy Act of 1992, in Power Industry Reform Act of 2001.”
compliance with Executive Order No. 26
dated 7 October 1992, and in line with (e) “Energy Act” shall refer to Republic Act
Department Special Order No. 2000-07-016, No. 7638, the Department of Energy Act
dated 13 July 2000, the following Rules of of 1992.
Practice and Procedure are hereby adopted
and promulgated: (f) “OLC” shall mean the Office of the Legal
Counsel of the Department of Energy.
PART I
GENERAL PROVISIONS (g) “Public Service Act” shall refer to C.A. No.
146, as amended.
RULE 1
Title, Definition, Scope and Construction (h) “Rules” shall refer to these Rules.

Section 1. Title of Rules – These Rules shall be (i) “Secretary” shall refer to the Secretary of
known as the Rules of Practice and Procedure Energy.
of the Department of Energy.
Section 3.Scope – These rules shall govern all
Section 2.Definitions – For purposes of these pleadings, practice and procedure before the
Rules, the terms: Department in all matters concerning inquiry,
investigation, hearing, study and/or any other
(a) “Department” shall refer to the proceedings conducted by the Department
Department of Energy. in the hearing, study and/or any other
proceedings conducted by the Department in
(b) “Deregulation Act” shall refer to the the performance of its functions. However,
“Downstream Oil Industry Deregulation in the public interest and consistent with
Act of 1998”. due process, the Department may, in any
particular matter, except itself from these
(c) “Director” shall mean the Director of the rules and apply such fair and reasonable
Office of the Legal Counsel. procedures to assist the parties to obtain
speedy disposition of cases.

These rules shall likewise cover applications Section 3. Complainant – A complainant is
for the issuance of permits or other forms any aggrieved person who files a complaint
of authorization to entities involved in the against another party for legal redress
supply and distribution of energy resources. on matters within the jurisdiction of the
Department.
Section 4. Construction – These rules shall
be liberally construed in order to protect Section 4. Petitioner – A petitioner is any
and promote public interest and attain the person who files an application with the
objectives of the Public Service Act, the Department ex parte, or where there are
Energy Act, the Deregulation Act, the EPIRA no parties in opposition, praying for the
and any other law, statute, executive order exercise of the powers of the Department, for
or decree that is being, or may hereafter authority to do some act which requires the
be, implemented by the Department in the sanction of the Department.
most speedy and inexpensive disposition of
cases. In the broader interest of justice and Section 5. Respondent – A respondent is
to avoid unnecessary delay, the Department any person or party, who may or may not
may resort to summary proceedings in cases be a holder of a permit or other form of
hereinafter provided. authorization to whom an order is issued
by the Department to appear or give his
Section 5. Suppletory Application of the Rules explanation in writing, or who is otherwise
of Court of the Philippines. – In the absence summoned to answer any allegation,
of any applicable provision in, and provided imputation or issue in any case, hearing or
they are not inconsistent with these Rules, proceeding cognizable by the Department,
the pertinent provisions of the Revised or any person who may also hearing or
Rules of Court of the Philippines may, in the proceeding cognizable by the Department, or
interest of expeditious disposition of cases any person who may also be adversely or is
and whenever practicable and convenient, be otherwise affected by a complaint or petition.
applied by analogy or in a suppletory manner.
Section 6.Oppositor – An oppositor is any
RULE 2 person who interposes any objection against
PARTIES the approval of an application or petition.

Section 1. Who may be a Party – Any person or RULE 3
group of persons whether natural or juridical, PLEADINGS
who may be affected by the decision to be
rendered by the Department in a particular Section 1. Pleading – The pleadings allowed
case may be a party and may appeal, and by these Rules are the application, the
participate in the manner hereinafter complaint, the petition, the opposition, the
provided. answer, and such further pleadings as the
Department may allow.
Section 2. Applicant – An applicant is any
person who applies with the Department Section 2. Form of Pleading, Copies – All
for a permit for the operation of services pleadings filed with the Department must
involved in energy resource supply activities be in triplicate and typewritten or printed on
or who seeks any other form of authorization, legal size bond paper and shall be in English.
to undertake any matter or business that is Every pleading shall contain the names and
within the jurisdiction of the Department. addresses of all the parties, the Department
file number and designation of the pleading.

Section 3. Application – By means of an order, complaint or petition, order, complaint
application or petition for permit or other or petition.
forms of authorization, the applicant seeks for
authorization or permission to undertake any Section 8. Verification – All pleadings filed
matter within the power of the Department with the Department must be verified and
under the Public Service Act, the Energy Act, accompanied by such documents as would
the Deregulation Act, the EPIRA or any other reasonably tend to establish prima facie the
law, statute, executive order or decree that is truth of the factual allegations thereof.
being, or may hereafter be, implemented by
the Department, stating the ultimate facts on Section 9. Service – Service may be by personal
which the relief sought is based. delivery or by registered mail, properly
addressed to each party, together with all
The Department will refer to the proper annexes attached thereto. All pleadings
bureau or office the evaluation of the technical and motions submitted to the Department
and financial qualifications of an applicant for for filing must show proof of service thereof
a permit or other forms of authorization. upon all parties to the case.

Section 4. Complaint – A complaint is a Section 10. Service upon Parties Represented
concise statement of the ultimate facts by Counsel – When any party is represented
constituting the acts or matters complained by counsel, service shall be made to his
of, and shall specify the relief sought. The counsel of record.
names and addresses of the complainants
and the respondents must be stated in the Section 11. Contents of Pleadings – All
complaint, and whenever practicable, the pleadings filed with the Department must
date and place of the commission of the state clearly and categorically the ultimate
alleged act or omission complained of. facts upon which the pleader relies. Pleadings
shall contain a prayer for the principal relief
Section 5. Petition – A petition is an application sought and may also add a general prayer
made to the Department ex parte or where for such further or other reliefs as may be
there are no parties in opposition, praying for deemed just and equitable.
the exercise of the powers of the Department
for authority to do some act which requires Section 12. Amendments – Any modification
the sanction of the Department. or supplement to an application, complaint,
petition or other pleadings shall be deemed
Section 6. Opposition – An opposition is a as an amendment and must comply with
pleading filed by an oppositor against the the formal requirements of pleadings as
grant of an application or petition in which mentioned in these rules.
the oppositor states his right or interest
affected by the application or petition and the Section 13. Amendment when Allowed –
ultimate facts constituting all his grounds for Amendments may be made as a matter
opposition. of right at any time before any responsive
pleading is filed and, thereafter, only with
Section 7. Answer – An answer is a pleading in leave of the Department.
which the respondent sets forth the defense
upon which he relies. The respondent to Section 14. Defect of Form – No defect in
whom an order is issued by the Department the form of any pleading allowed to be
to show cause or against whom a complaint filed under these Rules will prejudice the
or petition is filed, shall file an answer within pleader; however, the Department may direct
ten (10) calendar days from receipt of the amendments or require the submission of
additional affidavits or supporting documents.
Section 15 Filing Fees – The Treasury Division Section 1. How Commenced – Any proceeding
of the Administrative Services Unit of the the object of which is to obtain a permit or
Department shall receive, collect or take the any form of authorization under the Public
following fees: Service Act, the Energy Act, the Deregulation
Act, the EPIRA and/or any other law, statute,
a. For filing a complaint – P 10,000.00; executive order or decree that is being, or
b. For filing an appeal – P 10,000.00; may hereinafter be, implemented by the
Department shall be commenced by the filing
c. For certified copies of any paper, record, of the corresponding application.
judgment – P 10.00 per page;
d. For filing an application for the grant of Section 2. Contents – The application shall
permit or other form of authorization contain a concise statement of the service
to construct, install, own, operate and proposed or permit or authorization applied
maintain pipeline system to transport for, and the ultimate facts that would qualify
energy resources – P 10.00 per meter of or entitle the applicant to the grant of the
pipeline. permit or authorization. When the application
is predicated on a permit or other form of
RULE 4 authorization, sale, lease, mortgage or any
MOTIONS IN GENERAL other contract, such permit or authorization
or contract shall be impleaded in the
Section 1. Scope & Contents – Every application application by alleging in substance its salient
for any procedural or interlocutory ruling provisions and appending to the application a
or relief may be made through a motion. copy of the permit or authorization, contract
Motions shall state the relief sought and the or pertinent document.
grounds therefor and, if necessary, shall be
accompanied by supporting affidavits and RULE 6
documents. Motions shall be in writing and NOTICE OF APPLICATION
copies thereof shall be served upon all parties
at least three (3) days before the hearing Section 1. Issuance of the Notice – After the
thereof. All written motions shall specify the filing of the application, it shall be docketed,
date and time for the hearing thereof. and the hearing officer/s duly designated
by the Department shall issue a notice that
Section 2. Provisional Permit or Authorization such application has been filed with the
– Motions praying for the issuance of Department and furnish the list of affected
a provisional permit or other form of parties, if any, to the applicant.
authorization to operate must be in writing
and accompanied by affidavit(s) of merit and Section 2. Publication and Service – The
other supporting documents showing the applicant shall cause the aforesaid notice,
necessity of the relief prayed for, together at his own expense, to be published once in
with proof of service to the other party. Such one (1) newspaper of general circulation in
motions shall be governed by Rule 15 hereof. the Philippines at least ten (10) calendar days
before the date of the proceeding; provided,
PART II that if an application covers only one (1)
PROCEDURE IN APPLICATIONS region, publication in the local newspaper
circulated within that region is sufficient. The
RULE 5 applicant shall also serve copies of the notice,
APPLICATION with copies of the application, to the affected
parties, as furnished by the Department.


RULE 7 the offense, and the date and place of the
OPPOSITION commission of the offense.

Section 1.Contents – Within ten (10) calendar Section 3. Separate Allegations – Whenever
days from receipt by the affected party of the two or more offenses are charged in one (1)
notice referred to in Section 1 Rule 6 hereof, complaint or petition, each offense must be
a written opposition, not a motion to dismiss, separately alleged.
may be filed against an application with copy
served upon the applicant, in which the RULE 9
oppositor shall state concisely his right of MOTU PROPRIO ACTIONS
interest affected by the application and the
ultimate facts constituting all his grounds for Section 1. Institution of Action by the
opposition. Department – The Department may motu
proprio initiate an action or inquiry against
PART III any person or entity when so required by
PROCEDURE IN COMPLAINTS AND law, public or national interest, and/or in its
PETITIONS exercise of any of the powers vested upon
it. In the exercise thereof, the Department
RULE 8 may commence such hearing or inquiry by
COMPLAINTS & PETITIONS an order to show cause, setting forth the
grounds for such order.
Section 1.How Commenced – Any action,
the object of which is to subject a holder Section 2. Other Instances – When the basis
of a permit or authorization or any person of a motu proprio action is a violation of
operating without authority from the Department orders, rules or regulations,
Department to any penalty that may be the order shall allege with definiteness and
imposed, or other measure that may be taken clarity, the violation and also the range or
in the public interest by the Department for extent of the sanction that may be imposed
violation by such holder or any person of should the violation be substantiated.
the provisions of the Public Service Act, the
Energy Act, the Deregulation Act, the EPIRA RULE 10
or any other law, statute, executive order ANSWER
or decree that is being, or may hereinafter
be, implemented by the Department, or Section 1. Answer – Within a period of ten (10)
the terms and conditions of his certificate calendar days from receipt of a motu proprio
or any order, decision or regulations of the order or a copy of the petition or complaint,
Department shall be commenced by the filing the respondent shall file an answer whether
of a complaint or petition. admitting or denying the material allegations
or facts set forth in said motu proprio order,
Section 2. Sufficiency of Complaint or Petition petition or complaint, or setting forth the
– A complaint or a petition is sufficient if it reason why respondent cannot admit or deny
contains the name of the complainant or said allegations. The pleader must state the
offended party, the name of the respondent, facts and law upon which he relies for his
a reference, whenever practicable, to the defense with definiteness and clarity.
provisions of the law, statute, executive
order or decree being implemented by the RULE 11
Department or the permit or authorization, MOTION TO DISMISS
order, decision or regulation violated; the acts
or omissions complained of as constituting Section 1.Grounds – No motion to dismiss
shall be entertained unless such motion is
incorporated in the answer of the respondent an order of default against the absent party,
under any of the following grounds: and, thereafter, the hearing officer/s may
receive evidence ex parte.
(A) The facts alleged in the complaint or
motu proprio order do not constitute Section 3. Amicable Settlement – When an
a violation of the Department’s rules amicable settlement is reached as provided
and regulations or do not entitle the under Section 1 (A), Rule 12 hereof, it shall
complainant or petitioner to the relief be reduced to writing duly signed by the
sought. parties. Such compromise agreement shall
then be the basis of an order or decision of
(B) The Department has no jurisdiction over the Department.
the nature of the case or controversy.
Section 4. Nature of Proceedings – The
(C) The applicant has not complied with proceedings before the Department shall
the jurisdictional requirements of an be non-litigious in nature. Subject to the
application. requirements of due process, the technicalities
of law and procedure and the rules obtaining
PART IV in the courts of law shall not strictly apply
PROCEEDINGS BEFORE THE DEPARTMENT thereto. The Department may avail itself of
all reasonable means to ascertain the facts
RULE 12 of the controversy speedily, including ocular
PRE-HEARING CONFERENCE inspection and examination of well informed
persons.
Section 1.Pre-Hearing Conference – After
the answer or the opposition has been filed, Section 5. Postponement – Postponement
the hearing officer/s duly designated by or continuance of hearing may be granted
the Department shall issue notice to all the only on highly meritorious grounds provided
parties to appear for a pre-hearing conference that no more than two (2) postponements or
to consider: continuances shall be allowed.

(A) The possibility of an amicable settlement RULE 13
in cases that may be compromised; SUMMARY PROCEEDINGS

(B) Simplification of the issues through Section 1. Cases that may be the subject of
stipulation of facts and/or admission, summary proceedings are:
including admissions of documents and
their authenticity; and (A) Non-Contested Cases – When there is no
opposition filed against an application
(C) Such other matters as may aid in the just, or no answer has been filed against
speedy, and inexpensive disposition of a complaint or petition or when the
the case. opposition or the answer filed fails to
tender an issue, the Department may
Section 2. Failure to Appear – All parties and conduct summary proceedings.
their counsels, if any, shall attend the pre-
hearing conference with full authority to enter (B) Contested Cases – When the opposition
into an agreement on any and all matters or the answer does not contest the
necessary to expedite the proceedings. The material allegations of the application or
Department may, in case of failure to appear the complaint for violation of Department
on the part of a party and his counsel, issue rules and regulations, respectively,

although affirmative defenses are stated to the memoranda, position papers or
therein, the Department may conduct last pleading required of them, a draft of
summary proceedings. the decision they seek, stating clearly and
distinctly the facts and the law or rules and
(C) Applications – All applications for permit regulations upon which it is based. Following
or other forms of authority to engage the termination of the hearing and the
in business in the petroleum industry submission by the parties of the required
in whatever capacity, or classification memorandum and draft of the decision they
may be conducted through summary seek, the Department may, after considering
proceedings. and appreciating the applicable laws, rules
and regulations and the evidence submitted,
Section 2. Summary Proceedings, How adopt, in whole or in part, either of the
Conducted – After the time for filing an parties’ draft decision or reject both.
answer has expired and none has been filed
or after the issues have been joined by the RULE 14
filing of the answer or the opposition, and the POWERS AND DUTIES OF HEARING
hearing officer/s shall have determined that OFFICER/S
the case is one which may be the subject of
summary proceedings under Section 1 of this Section 1. Powers and Duties – The hearing
Rule 13, the hearing officer/s shall summon officer/s shall have the following powers and
the proceedings under Section 1 of this duties:
Rule 13, the hearing officer/s shall summon
the parties to appear before him/them and (A) To administer oaths and affirmations;
require the parties to bring all documentary
evidence that they may have in support of (B) To receive evidence and rule on the
their claims or defenses. admissibility of evidence as to relevance,
materiality or competence of such
Section 3. Offer of Exhibit/Documentary evidence.
Evidence – The complainant, the petitioner
or applicant shall submit all documentary Section 2. Period to Decide Case – Should
evidence he may have which shall be the hearing officer/s determine that the case
authenticated before the hearing officer/s cannot be heard by summary proceedings,
and marked as exhibits; then the respondent, he/they shall inform the Secretary who
or the oppositor shall submit counter shall then issue an order setting the case for
documents or affidavits which shall be hearing, which hearing shall be terminated
authenticated before the hearing officer/s within sixty (60) calendar days from initial
as exhibits after which the parties shall hearing.
formally offer their respective exhibits in the
same order, stating the purposes for which Section 3. Role of Hearing Officer/s in
they are offered. After the formal offer of Proceedings – The hearing officer/s shall
evidence, the hearing officer/s may propound personally preside in the conferences/
clarificatory questions on the documents hearings and, except as otherwise provided
presented and may require the submission of by law, he/they shall determine the order
position papers or memoranda. of presentation of evidence by the parties,
subject to the requirements of due process.
Section 4. Submission of Memorandum, He/they shall take full control of the
Position Paper, etc. – In order to expedite proceedings, examine the parties and their
resolution of the case, the hearing officer/s witnesses to satisfy himself/themselves with
may require the parties to submit, in addition respect to the matters at issue, and may allow

the parties or their counsel to ask questions provisional relief, without prejudice to a final
only for the purpose of clarifying points of decision on the matter. However, nothing
law or fact involved in the case. He/they shall shall prohibit the Department, motu proprio,
limit the presentation of evidence to matters from granting any provisional relief to any
relevant to the issue before him/them and party when public interest so requires.
necessary for a just and speedy matters
relevant to the issue before him/them and RULE 16
necessary for a just and speedy disposition of DECISIONS AND MOTIONS FOR
the case. RECONSIDERATION

Section 4. Presentation of Evidence – The Section 1. Contents of Decisions – The
party initiating the case shall be the first to decisions of the Department shall be signed
present his evidence to support his case. by the Secretary and shall be clear, concise
and include a brief statement of the (a) facts
Section 5. Extent of Cross-Examination – In of the case; (b) issue (s) involved; (c) finding of
the cross-examination of witnesses, only facts; (d) applicable law or rules; (e) conclusion
relevant, pertinent and material questions and reasons therefor, and (f) the dispositive
necessary to enlighten the hearing officer/s portion. They shall be filed with the hearing
shall be allowed. officer/s who shall, within three (3) days from
receipt thereof, cause true copies thereof to
Section 6. Records of Proceedings – The be served upon the counsel of the parties, or
proceedings before a hearing officer/s need in the absence of any counsel of record, on
not be recorded by stenographers but the the parties themselves.
hearing officer/s shall prepare a written
summary of the proceedings, including the Section 2. Decisions – The Department
substance of the evidence presented, in shall render a final decision, order, ruling or
consultation with the parties. The written resolution in accordance with the following
summary shall be signed by the parties and rules:
shall form part of the records.
(a) In Summary Proceedings. – When
RULE 15 summary proceedings have been
PROVISIONAL RELIEF conducted, the Department shall, within
ten (10) calendar days after the case has
Section 1. Grounds for Provisional Relief – been submitted for resolution, render
Upon the filing of an application, complaint a decision, order, been submitted for
or petition or at any stage thereafter, a party resolution, render a decision, order,
to a case may, pending hearing of the main ruling or resolution on the matter.
case, file a motion seeking a procedural
remedy, interlocutory order or a provisional (b) In Contested Proceedings. – In contested
authority to operate or undertake any activity proceedings where a formal hearing
within the jurisdiction of the Department, has been conducted, the Department
setting forth the remedy or relief prayed for shall render a decision, order, ruling or
and the grounds relied upon for the grant resolution within thirty (30) calendar
of such provisional relief. The motion must days after the case has been submitted
be accompanied by an affidavit of merit and for decision.
other supporting documents together with
proof of service to the other party. (c) Grant of Other Relief. – In all decisions,
orders, rulings or resolutions, the
Section 2.Grant of Provisional Relief – The
Department may grant or deny a motion for
Department may grant such other relief from the order, ruling or decision has
or impose such terms as it may deem been filed with the Department and the
necessary in order to promote public same has been denied.
interest.
(c) Upon the filing of the notice of appeal, the
Section 3. Motions for Reconsideration – appellant shall pay with the Department
Motions for reconsideration of any order, an appeal fee of One Thousand Pesos (P
resolution or decision of the Department 10,000.00), whereupon, the Department
shall not be entertained except when based shall act on the notice of appeal and shall
on palpable or patent errors, provided that transmit the certificate of payment of the
the motion is under oath and filed within ten appeal fee to the Office of the President.
(10) calendar days from receipt of the order,
resolution or decision, with proof of service (d) Appellant’s position paper shall contain
that a copy of the same has been furnished the following data/matters:
within the reglementary period, the adverse
party and provided further, that only one (1) 1) Exact date of the appealed order,
such motion from the same party shall be ruling, decision;
entertained. No pleading shall be allowed 2) Exact date when the appealed order,
other than the motion for reconsideration and ruling or decision was received by
opposition thereto. The filing of a motion for him;
reconsideration shall interrupt the running of 3) Information regarding compliance
the period for filing an appeal with the Office with the requirements for appeal
of the President. under these rules;

RULE 17 4) Brief statement of the case and the
APPEAL facts;
5) Reasons or grounds for appeal;
Section 1. Appeal. – Any party may appeal the
6) Arguments in support of the appeal;
order, ruling, or decision of the Department
to the Office of the President. However, 7) Relief sought.
interlocutory orders cannot be the subject of
an appeal. The Secretary may require the filing of
additional pleadings to provide additional
Sec. 2. Procedure on Appealed Cases. – information.
In case of an appeal under the preceding
section, the following rules shall apply: (e) Any party filing the required pleading
or documents and other pleadings
(a) An appeal from an order, decision pertinent to the appealed case shall
or ruling of the Department shall be furnish the adverse party/ies, including
perfected by filing with the Department the Department, copies thereof.
a notice of appeal and with the Office of
the President, within a period of fifteen Sec. 3. Effect of Appeal. – An appeal shall
(15) calendar days from notice of such stay the award, order or decision of the
order, ruling or decision; copy of the Department unless otherwise provided by
notice of appeal must be furnished all law, or the appellate agency directs execution
parties to the case; pending appeal, as it may deem just,
considering the nature and circumstances of
(b) Before an appeal will be filed it must be the case.
shown that a motion for reconsideration

Sec. 4. Appeal from the Order of the Secretary. the expiration of the period to appeal, if no
– The order of the Secretary in appealed appeal is taken.
cases shall be appealable within fifteen (15)
calendar days from receipt thereof to the RULE 18
Office of the President of the Philippines. EFFECTIVITY

Sec. 5. Execution of Order, Ruling or Decision These rules shall take effect fifteen (15) days
of the Department. – The order, ruling, after publication in the Official Gazette or
decision, or resolution of the Department in at least two (2) newspapers of general
shall become executory fifteen (15) calendar circulation.
days after the expiration of the period of
appeal if no appeal is taken. Fort Bonifacio, Taguig, Metro Manila, July 31,
2002.
Sec. 6. Entry of Judgment. – The judgment
of the Department shall be entered upon VICENTE S. PÉREZ, JR.
finality, or fifteen (15) calendar days after Secretary

Chapter 11

June 6, 1997
AN ACT PRESCRIBING THE INTELLECTUAL PROPERTY CODE AND ESTABLISHING THE

INTELLECTUAL PROPERTY OFFICE, PROVIDING FOR ITS POWERS AND FUNCTIONS, AND FOR
OTHER PURPOSES
PART I technology, and to enhance the enforcement

THE INTELLECTUAL PROPERTY OFFICE of intellectual property rights in the
Philippines. (n)
Section 1. Title. - This Act shall be known
as the “Intellectual Property Code of the Section 3. International Conventions and
Philippines.” Reciprocity. - Any person who is a national or
who is domiciled or has a real and effective
Section 2. Declaration of State Policy. - The industrial establishment in a country which
State recognizes that an effective intellectual is a party to any convention, treaty or
and industrial property system is vital to agreement relating to intellectual property
the development of domestic and creative rights or the repression of unfair competition,
activity, facilitates transfer of technology, to which the Philippines is also a party, or
attracts foreign investments, and ensures extends reciprocal rights to nationals of
market access for our products. It shall protect the Philippines by law, shall be entitled to
and secure the exclusive rights of scientists, benefits to the extent necessary to give effect
inventors, artists and other gifted citizens to any provision of such convention, treaty
to their intellectual property and creations, or reciprocal law, in addition to the rights to
particularly when beneficial to the people, for which any owner of an intellectual property
such periods as provided in this Act. right is otherwise entitled by this Act. (n)
The use of intellectual property bears a social Section 4. Definitions. -

function. To this end, the State shall promote
the diffusion of knowledge and information 4.1. The term “intellectual property rights”
for the promotion of national development consists of:
and progress and the common good.
a) Copyright and Related Rights;
It is also the policy of the State to streamline b) Trademarks and Service Marks;
administrative procedures of registering c) Geographic Indications;
patents, trademarks and copyright, to
liberalize the registration on the transfer of d) Industrial Designs;
e) Patents;
f) Layout-Designs (Topographies) of d) Promote the use of patent
Integrated Circuits; and information as a tool for technology
g) Protection of Undisclosed development;
Information (n, TRIPS).
e) Publish regularly in its own
4.2 The term “technology transfer publication the patents, marks, utility
arrangements” refers to contracts models and industrial designs, issued
or agreements involving the transfer and approved, and the technology
of systematic knowledge for the transfer arrangements registered;
manufacture of a product, the application
of a process, or rendering of a service f) Administratively adjudicate contested
including management contracts; and proceedings affecting intellectual
the transfer, assignment or licensing of property rights; and
all forms of intellectual property rights,
including licensing of computer software g) Coordinate with other government
except computer software developed for agencies and the private sector
mass market. efforts to formulate and implement
plans and policies to strengthen the
4.3 The term “Office” refers to the Intellectual protection of intellectual property
Property Office created by this Act. rights in the country.
4.4 The term “IPO Gazette” refers to the 5.2 The Office shall have custody of all
gazette published by the Office under this records, books, drawings, specifications,
Act. (n) documents, and other papers and things
relating to intellectual property rights
Section 5. Functions of the Intellectual applications filed with the Office. (n)
Property Office (IPO). - 5.1. To administer and
implement the State policies declared in this Section 6. The Organizational Structure of
Act, there is hereby created the Intellectual the IPO. - 6.1. The Office shall be headed by a
Property Office (IPO) which shall have the Director General who shall be assisted by two
following functions: (2) Deputies Director General.
a) Examine applications for grant of 6.2 The Office shall be divided into six (6)
letters patent for inventions and Bureaus, each of which shall be headed
register utility models and industrial by a Director and assisted by an Assistant
designs; Director. These Bureaus are:
b) Examine applications for the a) The Bureau of Patents;

registration of marks, geographic b) The Bureau of Trademarks;
indication, integrated circuits; c) The Bureau of Legal Affairs;
c) Register technology transfer d) The Documentation, Information

arrangements and settle disputes and Technology Transfer Bureau;
involving technology transfer e) The Management Information
payments covered by the provisions System and EDP Bureau; and
of Part II, Chapter IX on Voluntary f) The Administrative, Financial and
Licensing and develop and implement Personnel Services Bureau.
strategies to promote and facilitate
technology transfer;

6.3 The Director General, Deputies Director Information and Technology Transfer
General, Directors and Assistant Directors Bureau. The decisions of the Director
shall be appointed by the President, and General in the exercise of his
the other officers and employees of the appellate jurisdiction in respect of the
Office by the Secretary of Trade and decisions of the Director of Patents,
Industry, conformably with and under and the Director of Trademarks
the Civil Service Law. (n) shall be appealable to the Court
of Appeals in accordance with the
Section 7. The Director General and Deputies Rules of Court; and those in respect
Director General. - 7.1. Functions. - The of the decisions of the Director of
Director General shall exercise the following Documentation, Information and
powers and functions: Technology Transfer Bureau shall be
appealable to the Secretary of Trade
a) Manage and direct all functions and and Industry; and
activities of the Office, including the
promulgation of rules and regulations c) Exercise original jurisdiction to
to implement the objectives, policies, resolve disputes relating to the terms
plans, programs and projects of the of a license involving the author’s
Office: Provided, That in the exercise right to public performance or other
of the authority to propose policies communication of his work. The
and standards in relation to the decisions of the Director General in
following: (1) the effective, efficient, these cases shall be appealable to
and economical operations of the the Secretary of Trade and Industry.
Office requiring statutory enactment;
(2) coordination with other agencies 7.2 Qualifications. - The Director General
of government in relation to the and the Deputies Director General
enforcement of intellectual property must be natural born citizens of the
rights; (3) the recognition of Philippines, at least thirty-five (35) years
attorneys, agents, or other persons of age on the day of their appointment,
representing applicants or other holders of a college degree, and of
parties before the Office; and (4) the proven competence, integrity, probity
establishment of fees for the filing and independence: Provided, That the
and processing of an application for Director General and at least one (1)
a patent, utility model or industrial Deputy Director General shall be members
design or mark or a collective mark, of the Philippine Bar who have engaged
geographic indication and other in the practice of law for at least ten
marks of ownership, and for all other (10) years: Provided further, That in the
services performed and materials selection of the Director General and the
furnished by the Office, the Director Deputies Director General, consideration
General shall be subject to the shall be given to such qualifications
supervision of the Secretary of Trade as would result, as far as practicable,
and Industry; in the balanced representation in the
Directorate General of the various fields
b) Exercise exclusive appellate of intellectual property.
jurisdiction over all decisions
rendered by the Director of Legal 7.3 Term of Office. - The Director General
Affairs, the Director of Patents, the and the Deputies Director General shall
Director of Trademarks, and the be appointed by the President for a term
Director of the Documentation, of five (5) years and shall be eligible for

reappointment only once: Provided, That 10.1 Hear and decide opposition to the
the first Director General shall have a first application for registration of marks;
term of seven (7) years. Appointment cancellation of trademarks; subject to
to any vacancy shall be only for the the provisions of Section 64, cancellation
unexpired term of the predecessor. of patents, utility models, and industrial
designs; and petitions for compulsory
7.4 The Office of the Director General. - licensing of patents;
The Office of the Director General shall
consist of the Director General and 10.2 (a) Exercise original jurisdiction in
the Deputies Director General, their administrative complaints for violations
immediate staff and such Offices and of laws involving intellectual property
Services that the Director General will set rights: Provided, That its jurisdiction is
up to support directly the Office of the limited to complaints where the total
Director General. (n) damages claimed are not less than Two
hundred thousand pesos (P200,000):
Section 8. The Bureau of Patents. - The Bureau Provided further, That availment of the
of Patents shall have the following functions: provisional remedies may be granted in
accordance with the Rules of Court. The
8.1 Search and examination of patent Director of Legal Affairs shall have the
applications and the grant of patents; power to hold and punish for contempt
all those who disregard orders or writs
8.2 Registration of utility models, industrial issued in the course of the proceedings.
designs, and integrated circuits; and (n)
8.3 Conduct studies and researches in the (b) After formal investigation, the
field of patents in order to assist the Director for Legal Affairs may impose one
Director General in formulating policies (1) or more of the following administrative
on the administration and examination penalties:
of patents. (n)
(i) The issuance of a cease and desist
Section 9. The Bureau of Trademarks. - The order which shall specify the acts
Bureau of Trademarks shall have the following that the respondent shall cease and
functions: desist from and shall require him to
submit a compliance report within a
9.1 Search and examination of the reasonable time which shall be fixed
applications for the registration of marks, in the order;
geographic indications and other marks
of ownership and the issuance of the (ii) The acceptance of a voluntary
certificates of registration; and assurance of compliance or
discontinuance as may be imposed.
9.2 Conduct studies and researches in the Such voluntary assurance may
field of trademarks in order to assist the include one or more of the following:
Director General in formulating policies
on the administration and examination (1) An assurance to comply with the
of trademarks. (n) provisions of the intellectual
property law violated;
Section 10. The Bureau of Legal Affairs. -
The Bureau of Legal Affairs shall have the (2) An assurance to refrain from
following functions: engaging in unlawful and unfair

acts and practices subject of the (vi) The cancellation of any permit,
formal investigation; license, authority, or registration
which may have been granted by
(3) An assurance to recall, replace, the Office, or the suspension of the
repair, or refund the money value validity thereof for such period of
of defective goods distributed in time as the Director of Legal Affairs
commerce; and may deem reasonable which shall
not exceed one (1) year;
(4) An assurance to reimburse the
complainant the expenses and (vii) The withholding of any permit,
costs incurred in prosecuting license, authority, or registration
the case in the Bureau of Legal which is being secured by the
Affairs. respondent from the Office;
The Director of Legal Affairs may (viii) The assessment of damages;

also require the respondent
to submit periodic compliance (ix) Censure; and
reports and file a bond to
guarantee compliance of his (x) Other analogous penalties or
undertaking; sanctions. (Secs. 6, 7, 8, and 9,
Executive Order No. 913 [1983]a)
(iii) The condemnation or seizure of
products which are subject of the 10.3 The Director General may by Regulations
offense. The goods seized hereunder establish the procedure to govern the
shall be disposed of in such manner implementation of this Section. (n)
as may be deemed appropriate by
the Director of Legal Affairs, such as Section 11. The Documentation, Information
by sale, donation to distressed local and Technology Transfer Bureau. - The
governments or to charitable or relief Documentation, Information and Technology
institutions, exportation, recycling Transfer Bureau shall have the following
into other goods, or any combination functions:
thereof, under such guidelines as he
may provide; 11.1 Support the search and examination
activities of the Office through the
(iv) The forfeiture of paraphernalia and following activities:
all real and personal properties which
have been used in the commission of (a) Maintain and upkeep classification
the offense; systems whether they be national
or international such as the
(v) The imposition of administrative International Patent Classification
fines in such amount as deemed (IPC) system;
reasonable by the Director of Legal
Affairs, which shall in no case be less (b) Provide advisory services for the
than Five thousand pesos (P5,000) determination of search patterns;
nor more than One hundred fifty
thousand pesos (P150,000). In (c) Maintain search files and search
addition, an additional fine of not rooms and reference libraries; and
more than One thousand pesos
(P1,000) shall be imposed for each (d) Adapt and package industrial
day of continuing violation; property information.
11.2 Establish networks or intermediaries or (a) Provide services relative to procurement
regional representatives; and allocation of supplies and equipment,
transportation, messengerial work,
11.3 Educate the public and build awareness cashiering, payment of salaries and other
on intellectual property through the Office’s obligations, office maintenance,
conduct of seminars and lectures, and proper safety and security, and other
other similar activities; utility services; and comply with
government regulatory requirements
11.4 Establish working relations with research in the areas of performance appraisal,
and development institutions as well as compensation and benefits, employment
with local and international intellectual records and reports;
property professional groups and the
like; (b) Receive all applications filed with the
Office and collect fees therefor, and
11.5 Perform state-of-the-art searches;
(c) Publish patent applications and grants,
11.6Promote the use of patent information trademark applications, and registration
as an effective tool to facilitate the of marks, industrial designs, utility
development of technology in the models, geographic indication, and
country; lay-out-designs of integrated circuits
registrations.
11.7 Provide technical, advisory, and other
services relating to the licensing and 13.2 The Patent and Trademark Administration
promotion of technology, and carry out Services shall perform the following
an efficient and effective program for functions among others:
technology transfer; and
(a) Maintain registers of assignments,
11.8 Register technology transfer mergings, licenses, and bibliographic
arrangements, and settle disputes on patents and trademarks;
involving technology transfer payments.
(n) (b) Collect maintenance fees, issue
certified copies of documents in its
Section 12. The Management Information custody and perform similar other
Services and EDP Bureau. - The Management activities; and
Information Services and EDP Bureau shall:
(c) Hold in custody all the applications
12.1 Conduct automation planning, research filed with the office, and all patent
and development, testing of systems, grants, certificate of registrations
contracts with firms, contracting, issued by the office, and the like.
purchase and maintenance of equipment,
design and maintenance of systems, user 13.3 The Financial Service shall formulate and
consultation, and the like; and manage a financial program to ensure
availability and proper utilization of
12.2 Provide management information funds; provide for an effective monitoring
support and service to the Office. (n) system of the financial operations of the
Office; and
Section 13. The Administrative, Financial
and Human Resource Development Service 13.4 The Human Resource Development
Bureau. - 13.1. The Administrative Service Service shall design and implement
shall: human resource development plans and
programs for the personnel of the Office; the Office shall collect are enough to
provide for present and future manpower fund its operations. (n)
needs of the organization; maintain high
morale and favorable employee attitudes Section 15. Special Technical and Scientific
towards the organization through the Assistance. - The Director General is
continuing design and implementation of empowered to obtain the assistance of
employee development programs. (n) technical, scientific or other qualified officers
and employees of other departments, bureaus,
Section 14. Use of Intellectual Property Rights offices, agencies and instrumentalities of the
Fees by the IPO. - 14.1. For a more effective Government, including corporations owned,
and expeditious implementation of this Act, controlled or operated by the Government,
the Director General shall be authorized to when deemed necessary in the consideration
retain, without need of a separate approval of any matter submitted to the Office relative
from any government agency, and subject to the enforcement of the provisions of this
only to the existing accounting and auditing Act. (Sec. 3, R.A. No. 165a)
rules and regulations, all the fees, fines,
royalties and other charges, collected by the Section 16. Seal of Office. - The Office shall
Office under this Act and the other laws that have a seal, the form and design of which
the Office will be mandated to administer, shall be approved by the Director General.
for use in its operations, like upgrading of its (Sec. 4, R.A. No. 165a)
facilities, equipment outlay, human resource
development, and the acquisition of the Section 17. Publication of Laws and
appropriate office space, among others, Regulations. - The Director General shall
to improve the delivery of its services to cause to be printed and make available for
the public. This amount, which shall be in distribution, pamphlet copies of this Act,
addition to the Office’s annual budget, shall other pertinent laws, executive orders and
be deposited and maintained in a separate information circulars relating to matters
account or fund, which may be used or within the jurisdiction of the Office. (Sec. 5,
disbursed directly by the Director General. R.A. No. 165a)
14.2 After five (5) years from the coming Section 18. The IPO Gazette. - All matters
into force of this Act, the Director required to be published under this Act shall
General shall, subject to the approval be published in the Office’s own publication
of the Secretary of Trade and Industry, to be known as the IPO Gazette. (n)
determine if the fees and charges
mentioned in Subsection 14.1 hereof Section 19. Disqualification of Officers and
that the Office shall collect are sufficient Employees of the Office. - All officers and
to meet its budgetary requirements. If so, employees of the Office shall not apply or act
it shall retain all the fees and charges it as an attorney or patent agent of an application
shall collect under the same conditions for a grant of patent, for the registration of a
indicated in said Subsection 14.1 but shall utility model, industrial design or mark nor
forthwith, cease to receive any funds acquire, except by hereditary succession, any
from the annual budget of the National patent or utility model, design registration,
Government; if not, the provisions of or mark or any right, title or interest therein
said Subsection 14.1 shall continue to during their employment and for one (1) year
apply until such time when the Director thereafter. (Sec. 77, R.A. No. 165a)
General, subject to the approval of the
Secretary of Trade and Industry, certifies
that the above-stated fees and charges

PART II 22.1 Discoveries, scientific theories and
THE LAW ON PATENTS mathematical methods;
CHAPTER I 22.2 Schemes, rules and methods of

GENERAL PROVISIONS performing mental acts, playing games
or doing business, and programs for
Section 20. Definition of Terms Used in Part computers;
II, The Law on Patents. - As used in Part II,
the following terms shall have the following 22.3 Methods for treatment of the human or
meanings: animal body by surgery or therapy and
diagnostic methods practiced on the
20.1 “Bureau” means the Bureau of Patents; human or animal body. This provision shall
not apply to products and composition
20.2 “Director” means the Director of Patents; for use in any of these methods;
20.3 “Regulations” means the Rules of 22.4 Plant varieties or animal breeds or
Practice in Patent Cases formulated by essentially biological process for the
the Director of Patents and promulgated production of plants or animals. This
by the Director General; provision shall not apply to micro-
organisms and non-biological and
20.4 “Examiner” means the patent examiner; microbiological processes.
20.5 “Patent application” or “application” Provisions under this subsection shall

means an application for a patent for not preclude Congress to consider the
an invention except in Chapters XII and enactment of a law providing sui generis
XIII, where “application” means an protection of plant varieties and animal
application for a utility model and an breeds and a system of community
industrial design, respectively; and intellectual rights protection:
20.6 “Priority date” means the date of filing 22.5 Aesthetic creations; and
of the foreign application for the same
invention referred to in Section 31 of this 22.6 Anything which is contrary to public
Act. (n) order or morality. (Sec. 8, R.A. No. 165a)
CHAPTER II Section 23. Novelty. . - An invention shall not

PATENTABILITY be considered new if it forms part of a prior
art. (Sec. 9, R.A. No. 165a)
Section 21. Patentable Inventions. - Any
technical solution of a problem in any field Section 24. Prior Art. - Prior art shall consist
of human activity which is new, involves an of:
inventive step and is industrially applicable
shall be Patentable. It may be, or may relate 24.1 Everything which has been made
to, a product, or process, or an improvement available to the public anywhere in
of any of the foregoing. (Sec. 7, R.A. No. 165a) the world, before the filing date or the
priority date of the application claiming
Section 22. Non-Patentable Inventions. - the invention; and
The following shall be excluded from patent
protection: 24.2 The whole contents of an application for a
patent, utility model, or industrial design

registration, published in accordance invention. (n)
with this Act, filed or effective in the
Philippines, with a filing or priority date Section 27. Industrial Applicability. - An
that is earlier than the filing or priority invention that can be produced and used in
date of the application: Provided, That any industry shall be industrially applicable.
the application which has validly claimed (n)
the filing date of an earlier application
under Section 31 of this Act, shall be prior CHAPTER III
art with effect as of the filing date of such RIGHT TO A PATENT
earlier application: Provided further, That
the applicant or the inventor identified Section 28. Right to a Patent. - The right to
in both applications are not one and the a patent belongs to the inventor, his heirs,
same. (Sec. 9, R.A. No. 165a) or assigns. When two (2) or more persons
have jointly made an invention, the right to a
Section 25. Non-Prejudicial Disclosure. . - patent shall belong to them jointly. (Sec. 10,
R.A. No. 165a)
25.1 The disclosure of information contained
in the application during the twelve (12) Section 29. First to File Rule. - If two (2) or more
months preceding the filing date or the persons have made the invention separately
priority date of the application shall not and independently of each other, the right
prejudice the applicant on the ground to the patent shall belong to the person who
of lack of novelty if such disclosure was filed an application for such invention, or
made by: where two or more applications are filed for
the same invention, to the applicant who has
(a) The inventor; the earliest filing date or, the earliest priority
date. (3rd sentence, Sec. 10, R.A. No. 165a.)
(b) A patent office and the information
was contained (a) in another Section 30. Inventions Created Pursuant to a
application filed by the inventor and Commission. -
should not have been disclosed by
the office, or (b) in an application filed 30.1 The person who commissions the work
without the knowledge or consent of shall own the patent, unless otherwise
the inventor by a third party which provided in the contract.
obtained the information directly or
indirectly from the inventor; or 30.2 In case the employee made the invention
in the course of his employment contract,
(c) A third party which obtained the the patent shall belong to:
information directly or indirectly
from the inventor. (a) The employee, if the inventive
activity is not a part of his regular
25.2 For the purposes of Subsection 25.1, duties even if the employee uses the
“inventor” also means any person who, time, facilities and materials of the
at the filing date of application, had the employer.
right to the patent. (n)
(b) The employer, if the invention is
Section 26. Inventive Step. - An invention the result of the performance of his
involves an inventive step if, having regard to regularly-assigned duties, unless
prior art, it is not obvious to a person skilled there is an agreement, express or
in the art at the time of the filing date or implied, to the contrary. (n)
priority date of the application claiming the
Section 31. Right of Priority. . - An application Section 34. The Request. - The request shall
for patent filed by any person who has contain a petition for the grant of the patent,
previously applied for the same invention in the name and other data of the applicant, the
another country which by treaty, convention, inventor and the agent and the title of the
or law affords similar privileges to Filipino invention. (n)
citizens, shall be considered as filed as of
the date of filing the foreign application: Section 35. Disclosure and Description of the
Provided, That: (a) the local application Invention. - 35.1. Disclosure. - The application
expressly claims priority; (b) it is filed within shall disclose the invention in a manner
twelve (12) months from the date the sufficiently clear and complete for it to be
earliest foreign application was filed; and (c) carried out by a person skilled in the art. Where
a certified copy of the foreign application the application concerns a microbiological
together with an English translation is filed process or the product thereof and involves
within six (6) months from the date of filing in the use of a micro-organism which cannot
the Philippines. (Sec. 15, R.A. No. 165a) be sufficiently disclosed in the application in
such a way as to enable the invention to be
CHAPTER IV carried out by a person skilled in the art, and
PATENT APPLICATION such material is not available to the public,
the application shall be supplemented by a
Section 32. The Application. - 32.1. The patent deposit of such material with an international
application shall be in Filipino or English and depository institution.
shall contain the following:
35.2 Description. - The Regulations shall
(a) A request for the grant of a patent; prescribe the contents of the description
and the order of presentation. (Sec. 14,
(b) A description of the invention; R.A. No. 165a)
(c) Drawings necessary for the understanding Section 36. The Claims. - 36.1. The application
of the invention; shall contain one (1) or more claims which
(d) One or more claims; and shall define the matter for which protection is
sought. Each claim shall be clear and concise,
(e) An abstract. and shall be supported by the description.
32.2 No patent may be granted unless the 36.2 The Regulations shall prescribe the
application identifies the inventor. If the manner of the presentation of claims. (n)
applicant is not the inventor, the Office
may require him to submit said authority. Section 37. The Abstract. - The abstract
(Sec. 13, R.A. No. 165a) shall consist of a concise summary of the
disclosure of the invention as contained in the
Section 33. Appointment of Agent or description, claims and drawings in preferably
Representative. - An applicant who is not a not more than one hundred fifty (150) words.
resident of the Philippines must appoint and It must be drafted in a way which allows the
maintain a resident agent or representative in clear understanding of the technical problem,
the Philippines upon whom notice or process the gist of the solution of that problem
for judicial or administrative procedure through the invention, and the principal use
relating to the application for patent or the or uses of the invention. The abstract shall
patent may be served. (Sec. 11, R.A. No. 165a) merely serve for technical information. (n)

Section 38. Unity of Invention. - 38.1. The (a) An express or implicit indication that
application shall relate to one invention only a Philippine patent is sought;
or to a group of inventions forming a single
general inventive concept. (b) Information identifying the applicant;
and
38.2 If several independent inventions which
do not form a single general inventive (c) Description of the invention and
concept are claimed in one application, one (1) or more claims in Filipino or
the Director may require that the English.
application be restricted to a single
invention. A later application filed for an 40.2 If any of these elements is not submitted
invention divided out shall be considered within the period set by the Regulations,
as having been filed on the same day as the application shall be considered
the first application: Provided, That the withdrawn. (n)
later application is filed within four (4)
months after the requirement to divide Section 41. According a Filing Date. - The Office
becomes final or within such additional shall examine whether the patent application
time, not exceeding four (4) months, as satisfies the requirements for the grant of
may be granted: Provided further, That date of filing as provided in Section 40 hereof.
each divisional application shall not If the date of filing cannot be accorded, the
go beyond the disclosure in the initial applicant shall be given an opportunity to
application. correct the deficiencies in accordance with the
implementing Regulations. If the application
38.3 The fact that a patent has been granted does not contain all the elements indicated
on an application that did not comply in Section 40, the filing date should be that
with the requirement of unity of date when all the elements are received. If
invention shall not be a ground to cancel the deficiencies are not remedied within the
the patent. (Sec. 17, R.A. No. 165a) prescribed time limit, the application shall be
considered withdrawn. (n)
Section 39. Information Concerning
Corresponding Foreign Application for Section 42. Formality Examination. -
Patents. - The applicant shall, at the request
of the Director, furnish him with the date 42.1 After the patent application has
and number of any application for a patent been accorded a filing date and the
filed by him abroad, hereafter referred to required fees have been paid on time
as the “foreign application,” relating to the in accordance with the Regulations, the
same or essentially the same invention as applicant shall comply with the formal
that claimed in the application filed with the requirements specified by Section 32 and
Office and other documents relating to the the Regulations within the prescribed
foreign application. (n) period, otherwise the application shall
be considered withdrawn.
CHAPTER V
PROCEDURE FOR GRANT OF PATENT 42.2 The Regulations shall determine the
procedure for the re-examination and
Section 40. Filing Date Requirements. - revival of an application as well as the
appeal to the Director of Patents from
40.1 The filing date of a patent application any final action by the examiner. (Sec. 16,
shall be the date of receipt by the Office R.A. No. 165a)
of at least the following elements:

Section 43. Classification and Search. - An 46.2 Received written notice that the
application that has complied with the formal invention that he was using was the
requirements shall be classified and a search subject matter of a published application
conducted to determine the prior art. (n) being identified in the said notice by its
serial number: Provided, That the action
Section 44. Publication of Patent Application. may not be filed until after the grant of a
- patent on the published application and
within four (4) years from the commission
44.1 The patent application shall be published of the acts complained of. (n)
in the IPO Gazette together with a search
document established by or on behalf Section 47. Observation by Third Parties.
of the Office citing any documents that - Following the publication of the patent
reflect prior art, after the expiration of application, any person may present
eighteen ( 18) months from the filing observations in writing concerning the
date or priority date. patentability of the invention. Such
observations shall be communicated to
44.2 After publication of a patent application, the applicant who may comment on them.
any interested party may inspect the The Office shall acknowledge and put such
application documents filed with the observations and comment in the file of the
Office. application to which it relates. (n)
44.3 The Director General subject to the Section 48. Request for Substantive
approval of the Secretary of Trade and Examination. - 48.1. The application shall
Industry, may prohibit or restrict the be deemed withdrawn unless within six (6)
publication of an application, if in his months from the date of publication under
opinion, to do so would be prejudicial to Section 41, a written request to determine
the national security and interests of the whether a patent application meets the
Republic of the Philippines. (n) requirements of Sections 21 to 27 and
Sections 32 to 39 and the fees have been paid
Section 45. Confidentiality Before Publication. on time.
- A patent application, which has not yet been
published, and all related documents, shall 48.2 Withdrawal of the request for
not be made available for inspection without examination shall be irrevocable and
the consent of the applicant. (n) shall not authorize the refund of any fee.
(n)
Section 46. Rights Conferred by a Patent
Application After Publication. - The applicant Section 49. Amendment of Application. - An
shall have all the rights of a patentee under applicant may amend the patent application
Section 76 against any person who, without during examination: Provided, That such
his authorization, exercised any of the amendment shall not include new matter
rights conferred under Section 71 of this outside the scope of the disclosure contained
Act in relation to the invention claimed in in the application as filed. (n)
the published patent application, as if a
patent had been granted for that invention: Section 50. Grant of Patent. - 50.1. If the
Provided, That the said person had: application meets the requirements of
this Act, the Office shall grant the patent:
46.1 Actual knowledge that the invention that Provided, That all the fees are paid on time.
he was using was the subject matter of a
published application; or

50.2 If the required fees for grant and printing (4) years from the date the application was
are not paid in due time, the application published pursuant to Section 44 hereof,
shall be deemed to be withdrawn. and on each subsequent anniversary of such
date. Payment may be made within three (3)
50.3 A patent shall take effect on the date of months before the due date. The obligation
the publication of the grant of the patent to pay the annual fees shall terminate should
in the IPO Gazette. (Sec. 18, R.A. No. the application be withdrawn, refused, or
165a) cancelled.
Section 51. Refusal of the Application. - 55.2 If the annual fee is not paid, the patent
application shall be deemed withdrawn
51.1 The final order of refusal of the examiner or the patent considered as lapsed from
to grant the patent shall be appealable to the day following the expiration of the
the Director in accordance with this Act. period within which the annual fees
were due. A notice that the application
51.2 The Regulations shall provide for the is deemed withdrawn or the lapse of a
procedure by which an appeal from the patent for non-payment of any annual
order of refusal from the Director shall be fee shall be published in the IPO Gazette
undertaken. (n) and the lapse shall be recorded in the
Register of the Office.
Section 52. Publication Upon Grant of Patent.
- 55.3 A grace period of six (6) months shall be
granted for the payment of the annual
52.1 The grant of the patent together with fee, upon payment of the prescribed
other related information shall be surcharge for delayed payment. (Sec. 22,
published in the IPO Gazette within the R.A. No. 165a)
time prescribed by the Regulations.
Section 56. Surrender of Patent. - 56.1. The
52.2 Any interested party may inspect the owner of the patent, with the consent of all
complete description, claims, and persons having grants or licenses or other
drawings of the patent on file with the right, title or interest in and to the patent and
Office. (Sec. 18, R.A. No. 165a) the invention covered thereby, which have
been recorded in the Office, may surrender
Section 53. Contents of Patent. - The patent his patent or any claim or claims forming part
shall be issued in the name of the Republic thereof to the Office for cancellation.
of the Philippines under the seal of the
Office and shall be signed by the Director, 56.2 A person may give notice to the Office of
and registered together with the description, his opposition to the surrender of a patent
claims, and drawings, if any, in books and under this section, and if he does so, the
records of the Office. (Secs. 19 and 20, R.A. Bureau shall notify the proprietor of the
No. 165a) patent and determine the question.
Section 54. Term of Patent. - The term of a 56.3 If the Office is satisfied that the patent
patent shall be twenty (20) years from the may properly be surrendered, he
filing date of the application. (Sec. 21, R.A. may accept the offer and, as from the
No. 165a) day when notice of his acceptance is
published in the IPO Gazette, the patent
Section 55. Annual Fees. - 55.1. To maintain shall cease to have effect, but no action
the patent application or patent, an annual for infringement shall lie and no right
fee shall be paid upon the expiration of four compensation shall accrue for any use of
the patented invention before that day 59.3 If, and to the extent to which the Office
for the services of the government. (Sec. changes the patent according to this
24, R.A. No. 165a) section, it shall publish the same. (n)
Section 57. Correction of Mistakes of the Section 60. Form and Publication of
Office. - The Director shall have the power to Amendment. - An amendment or correction
correct, without fee, any mistake in a patent of a patent shall be accomplished by a
incurred through the fault of the Office when certificate of such amendment or correction,
clearly disclosed in the records thereof, to authenticated by the seal of the Office and
make the patent conform to the records. (Sec. signed by the Director, which certificate shall
25, R.A. No. 165) be attached to the patent. Notice of such
amendment or correction shall be published
Section 58. Correction of Mistake in the in the IPO Gazette and copies of the patent
Application. - On request of any interested kept or furnished by the Office shall include
person and payment of the prescribed fee, a copy of the certificate of amendment or
the Director is authorized to correct any correction. (Sec. 27, R.A. No. 165)
mistake in a patent of a formal and clerical
nature, not incurred through the fault of the CHAPTER VI
Office. (Sec. 26, R.A. No. 165a) CANCELLATION OF PATENTS AND
SUBSTITUTION OF PATENTEE
Section 59. Changes in Patents. - 59.1. The
owner of a patent shall have the right to Section 61. Cancellation of Patents. - 61.1.
request the Bureau to make the changes in Any interested person may, upon payment of
the patent in order to: the required fee, petition to cancel the patent
or any claim thereof, or parts of the claim, on
(a) Limit the extent of the protection any of the following grounds:
conferred by it;
(a) That what is claimed as the invention is
(b) Correct obvious mistakes or to correct not new or Patentable;
clerical errors; and
(b) That the patent does not disclose the
(c) Correct mistakes or errors, other than invention in a manner sufficiently clear
those referred to in letter (b), made in and complete for it to be carried out by
good faith: Provided, That where the any person skilled in the art; or
change would result in a broadening of
the extent of protection conferred by the (c) That the patent is contrary to public order
patent, no request may be made after or morality.
the expiration of two (2) years from the
grant of a patent and the change shall not 61.2 Where the grounds for cancellation
affect the rights of any third party which relate to some of the claims or parts of
has relied on the patent, as published. the claim, cancellation may be effected
to such extent only. (Secs. 28 and 29, R.A.
59.2 No change in the patent shall be No. 165a)
permitted under this section, where the
change would result in the disclosure Section 62. Requirement of the Petition. - The
contained in the patent going beyond the petition for cancellation shall be in writing,
disclosure contained in the application verified by the petitioner or by any person
filed. in his behalf who knows the facts, specify
the grounds upon which it is based, include

a statement of the facts to be relied upon, 65.3 If the fee for the printing of a new patent
and filed with the Office. Copies of printed is not paid in due time, the patent should
publications or of patents of other countries, be revoked.
and other supporting documents mentioned
in the petition shall be attached thereto, 65.4 If the patent is amended under
together with the translation thereof in Subsection 65.2 hereof, the Bureau shall,
English, if not in the English language. (Sec. at the same time as it publishes the
30, R.A. No. 165) mention of the cancellation decision,
publish the abstract, representative
Section 63. Notice of Hearing. - Upon filing claims and drawings indicating clearly
of a petition for cancellation, the Director of what the amendments consist of. (n)
Legal Affairs shall forthwith serve notice of
the filing thereof upon the patentee and all Section 66. Effect of Cancellation of Patent
persons having grants or licenses, or any other or Claim. - The rights conferred by the patent
right, title or interest in and to the patent and or any specified claim or claims cancelled
the invention covered thereby, as appears of shall terminate. Notice of the cancellation
record in the Office, and of notice of the date shall be published in the IPO Gazette. Unless
of hearing thereon on such persons and the restrained by the Director General, the
petitioner. Notice of the filing of the petition decision or order to cancel by Director of
shall be published in the IPO Gazette. (Sec. Legal Affairs shall be immediately executory
31, R.A. No. 165a) even pending appeal. (Sec. 32, R.A. No. 165a)
Section 64. Committee of Three. - In cases CHAPTER VII

involving highly technical issues, on motion REMEDIES OF A PERSON
of any party, the Director of Legal Affairs WITH A RIGHT TO A PATENT
may order that the petition be heard and
decided by a committee composed of the Section 67. Patent Application by Persons
Director of Legal Affairs as chairman and two Not Having the Right to a Patent. . - 67.1. If
(2) members who have the experience or a person referred to in Section 29 other than
expertise in the field of technology to which the applicant, is declared by final court order
the patent sought to be cancelled relates. The or decision as having the right to the patent,
decision of the committee shall be appealable such person may, within three (3) months
to the Director General. (n) after the decision has become final:
Section 65. Cancellation of the Patent. - (a) Prosecute the application as his own
65.1. If the Committee finds that a case for application in place of the applicant;
cancellation has been proved, it shall order
the patent or any specified claim or claims (b) File a new patent application in
thereof cancelled. respect of the same invention;
65.2 If the Committee finds that, taking into (c) Request that the application be
consideration the amendment made refused; or
by the patentee during the cancellation
proceedings, the patent and the invention (d) Seek cancellation of the patent, if
to which it relates meet the requirement one has already been issued.
of this Act, it may decide to maintain the
patent as amended: Provided, That the 67.2 The provisions of Subsection 38.2
fee for printing of a new patent is paid shall apply mutatis mutandis to a new
within the time limit prescribed in the application filed under Subsection 67.
Regulations. 1(b). (n)
Section 68. Remedies of the True and Actual directly or indirectly from such
Inventor. - If a person, who was deprived of the process.
patent without his consent or through fraud
is declared by final court order or decision 71.2 Patent owners shall also have the right
to be the true and actual inventor, the court to assign, or transfer by succession
shall order for his substitution as patentee, or the patent, and to conclude licensing
at the option of the true inventor, cancel the contracts for the same. (Sec. 37, R.A. No.
patent, and award actual and other damages 165a)
in his favor if warranted by the circumstances.
(Sec. 33, R.A. No. 165a) Section 72. Limitations of Patent Rights. - The
owner of a patent has no right to prevent
Section 69. Publication of the Court Order. - third parties from performing, without his
The court shall furnish the Office a copy of authorization, the acts referred to in Section
the order or decision referred to in Sections 71 hereof in the following circumstances:
67 and 68, which shall be published in the
IPO Gazette within three (3) months from 72.1 Using a patented product which has been
the date such order or decision became final put on the market in the Philippines by
and executory, and shall be recorded in the the owner of the product, or with his
register of the Office. (n) express consent, insofar as such use is
performed after that product has been
Section 70. Time to File Action in Court. - The so put on the said market;
actions indicated in Sections 67 and 68 shall
be filed within one (1) year from the date of 72.2 Where the act is done privately and on
publication made in accordance with Sections a non-commercial scale or for a non-
44 and 51, respectively. (n) commercial purpose: Provided, That
it does not significantly prejudice the
CHAPTER VIII economic interests of the owner of the
RIGHTS OF PATENTEES AND patent;
INFRINGEMENT OF PATENTS
72.3 Where the act consists of making or
Section 71. Rights Conferred by Patent. - using exclusively for the purpose of
experiments that relate to the subject
71.1 A patent shall confer on its owner the matter of the patented invention;
following exclusive rights:
72.4 Where the act consists of the preparation
(a) Where the subject matter of a patent for individual cases, in a pharmacy or by
is a product, to restrain, prohibit and a medical professional, of a medicine in
prevent any unauthorized person or accordance with a medical prescription
entity from making, using, offering or acts concerning the medicine so
for sale, selling or importing that prepared;
product;
72.5 Where the invention is used in any ship,
(b) Where the subject matter of a patent vessel, aircraft, or land vehicle of any
is a process, to restrain, prevent or other country entering the territory of the
prohibit any unauthorized person Philippines temporarily or accidentally:
or entity from using the process, Provided, That such invention is used
and from manufacturing, dealing exclusively for the needs of the ship,
in, using, selling or offering for sale, vessel, aircraft, or land vehicle and not
or importing any product obtained used for the manufacturing of anything

to be sold within the Philippines. (Secs. of protection conferred by the patent shall
38 and 39, R.A. No. 165a) be determined by the claims, which are to be
interpreted in the light of the description and
Section 73. Prior User. - 73.1. Notwithstanding drawings.
Section 72 hereof, any prior user, who, in
good faith was using the invention or has 75.2 For the purpose of determining the extent
undertaken serious preparations to use of protection conferred by the patent,
the invention in his enterprise or business, due account shall be taken of elements
before the filing date or priority date of the which are equivalent to the elements
application on which a patent is granted, shall expressed in the claims, so that a claim
have the right to continue the use thereof shall be considered to cover not only all
as envisaged in such preparations within the the elements as expressed therein, but
territory where the patent produces its effect. also equivalents. (n)
73.2 The right of the prior user may only be Section 76. Civil Action for Infringement. -
transferred or assigned together with his
enterprise or business, or with that part 76.1 The making, using, offering for sale,
of his enterprise or business in which the selling, or importing a patented product
use or preparations for use have been or a product obtained directly or
made. (Sec. 40, R.A. No. 165a) indirectly from a patented process, or the
use of a patented process without the
Section 74. Use of Invention by Government. - authorization of the patentee constitutes
patent infringement.
74.1 A Government agency or third person
authorized by the Government may 76.2 Any patentee, or anyone possessing
exploit the invention even without any right, title or interest in and to
agreement of the patent owner where: the patented invention, whose rights
have been infringed, may bring a civil
(a) The public interest, in particular, action before a court of competent
national security, nutrition, health jurisdiction, to recover from the infringer
or the development of other sectors, such damages sustained thereby, plus
as determined by the appropriate attorney’s fees and other expenses of
agency of the government, so litigation, and to secure an injunction for
requires; or the protection of his rights.
(b) A judicial or administrative body 76.3 If the damages are inadequate or cannot
has determined that the manner be readily ascertained with reasonable
of exploitation, by the owner of certainty, the court may award by way of
the patent or his licensee is anti- damages a sum equivalent to reasonable
competitive. royalty.
74.2 The use by the Government, or third 76.4 The court may, according to the
person authorized by the Government circumstances of the case, award
shall be subject, mutatis mutandis, to the damages in a sum above the amount
conditions set forth in Sections 95 to 97 found as actual damages sustained:
and 100 to 102. (Sec. 41, R.A. No. 165a) Provided, That the award does not exceed
three (3) times the amount of such actual
Section 75. Extent of Protection and damages.
Interpretation of Claims. - 75.1. The extent

76.5 The court may, in its discretion, order infringement committed more than four (4)
that the infringing goods, materials and years before the institution of the action for
implements predominantly used in the infringement. (Sec. 43, R.A. No. 165)
infringement be disposed of outside the
channels of commerce or destroyed, Section 80. Damages, Requirement of Notice.
without compensation. - Damages cannot be recovered for acts of
infringement committed before the infringer
76.6 Anyone who actively induces the had known, or had reasonable grounds to
infringement of a patent or provides the know of the patent. It is presumed that the
infringer with a component of a patented infringer had known of the patent if on the
product or of a product produced patented product, or on the container or
because of a patented process knowing package in which the article is supplied to
it to be especially adopted for infringing the public, or on the advertising material
the patented invention and not suitable relating to the patented product or process,
for substantial non-infringing use shall are placed the words “Philippine Patent” with
be liable as a contributory infringer and the number of the patent. (Sec. 44, R.A. No.
shall be jointly and severally liable with 165a)
the infringer. (Sec. 42, R.A. No. 165a)
Section 81. Defenses in Action for
Section 77. Infringement Action by a Foreign Infringement. - In an action for infringement,
National. - Any foreign national or juridical the defendant, in addition to other defenses
entity who meets the requirements of available to him, may show the invalidity of
Section 3 and not engaged in business in the patent, or any claim thereof, on any of the
the Philippines, to which a patent has been grounds on which a petition of cancellation
granted or assigned under this Act, may can be brought under Section 61 hereof. (Sec.
bring an action for infringement of patent, 45, R.A. No. 165)
whether or not it is licensed to do business in
the Philippines under existing law. (Sec. 41-A, Section 82. Patent Found Invalid May be
R.A. No. 165a) Cancelled. - In an action for infringement, if
the court shall find the patent or any claim to
Section 78. Process Patents; Burden of Proof. be invalid, it shall cancel the same, and the
- If the subject matter of a patent is a process Director of Legal Affairs upon receipt of the
for obtaining a product, any identical product final judgment of cancellation by the court,
shall be presumed to have been obtained shall record that fact in the register of the
through the use of the patented process Office and shall publish a notice to that effect
if the product is new or there is substantial in the IPO Gazette. (Sec. 46, R.A. No. 165a)
likelihood that the identical product was
made by the process and the owner of the Section 83. Assessor in Infringement Action. -
patent has been unable despite reasonable
efforts, to determine the process actually 83.1 Two (2) or more assessors may be
used. In ordering the defendant to prove that appointed by the court. The assessors shall
the process to obtain the identical product be possessed of the necessary scientific
is different from the patented process, the and technical knowledge required by the
court shall adopt measures to protect, as subject matter in litigation. Either party
far as practicable, his manufacturing and may challenge the fitness of any assessor
business secrets. (n) proposed for appointment.
Section 79. Limitation of Action for Damages. 83.2 Each assessor shall receive a
- No damages can be recovered for acts of compensation in an amount to be

fixed by the court and advanced by Section 87. Prohibited Clauses. - Except
the complaining party, which shall be in cases under Section 91, the following
awarded as part of his costs should he provisions shall be deemed prima facie to
prevail in the action. (Sec. 47, R.A. No. have an adverse effect on competition and
165a) trade:
Section 84. Criminal Action for Repetition of 87.1 Those which impose upon the licensee
Infringement. - If infringement is repeated the obligation to acquire from a specific
by the infringer or by anyone in connivance source capital goods, intermediate
with him after finality of the judgment of products, raw materials, and other
the court against the infringer, the offenders technologies, or of permanently
shall, without prejudice to the institution employing personnel indicated by the
of a civil action for damages, be criminally licensor;
liable therefor and, upon conviction, shall
suffer imprisonment for the period of not less 87.2 Those pursuant to which the licensor
than six (6) months but not more than three reserves the right to fix the sale or resale
(3) years and/or a fine of not less than One prices of the products manufactured on
hundred thousand pesos (P100,000) but not the basis of the license;
more than Three hundred thousand pesos
(P300,000), at the discretion of the court. 87.3 Those that contain restrictions regarding
The criminal action herein provided shall the volume and structure of production;
prescribe in three (3) years from date of the
commission of the crime. (Sec. 48, R.A. No. 87.4 Those that prohibit the use of competitive
165a) technologies in a non-exclusive
technology transfer agreement;
CHAPTER IX
VOLUNTARY LICENSING 87.5 Those that establish a full or partial
purchase option in favor of the licensor;
Section 85. Voluntary License Contract. - To
encourage the transfer and dissemination 87.6 Those that obligate the licensee to
of technology, prevent or control practices transfer for free to the licensor the
and conditions that may in particular inventions or improvements that may be
cases constitute an abuse of intellectual obtained through the use of the licensed
property rights having an adverse effect technology;
on competition and trade, all technology
transfer arrangements shall comply with the 87.7. Those that require payment of royalties
provisions of this Chapter. (n) to the owners of patents for patents
which are not used;
Section 86. Jurisdiction to Settle Disputes on
Royalties. - The Director of the Documentation, 87.8. Those that prohibit the licensee to export
Information and Technology Transfer Bureau the licensed product unless justified for
shall exercise quasi-judicial jurisdiction in the the protection of the legitimate interest of
settlement of disputes between parties to the licensor such as exports to countries
a technology transfer arrangement arising where exclusive licenses to manufacture
from technology transfer payments, including and/or distribute the licensed product(s)
the fixing of appropriate amount or rate of have already been granted;
royalty. (n)
87.9. Those which restrict the use of the
technology supplied after the expiration

of the technology transfer arrangement, 88.2. Continued access to improvements
except in cases of early termination of in techniques and processes related to
the technology transfer arrangement due the technology shall be made available
to reason(s) attributable to the licensee; during the period of the technology
transfer arrangement;
87.10. Those which require payments for
patents and other industrial property 88.3. In the event the technology transfer
rights after their expiration, termination arrangement shall provide for arbitration,
arrangement; the Procedure of Arbitration of the
Arbitration Law of the Philippines or the
87.11. Those which require that the Arbitration Rules of the United Nations
technology recipient shall not contest Commission on International Trade Law
the validity of any of the patents of the (UNCITRAL) or the Rules of Conciliation
technology supplier; and Arbitration of the International
Chamber of Commerce (ICC) shall apply
87.12. Those which restrict the research and and the venue of arbitration shall be the
development activities of the licensee Philippines or any neutral country; and
designed to absorb and adapt the
transferred technology to local conditions 88.4. The Philippine taxes on all payments
or to initiate research and development relating to the technology transfer
programs in connection with new arrangement shall be borne by the
products, processes or equipment; licensor. (n)
87.13. Those which prevent the licensee from Section 89. Rights of Licensor. - In the absence
adapting the imported technology to local of any provision to the contrary in the
conditions, or introducing innovation to technology transfer arrangement, the grant
it, as long as it does not impair the quality of a license shall not prevent the licensor
standards prescribed by the licensor; from granting further licenses to third person
nor from exploiting the subject matter of the
87.14. Those which exempt the licensor technology transfer arrangement himself.
for liability for non-fulfilment of his (Sec. 33-B, R.A. 165a)
responsibilities under the technology
transfer arrangement and/or liability Section 90. Rights of Licensee. - The licensee
arising from third party suits brought shall be entitled to exploit the subject matter
about by the use of the licensed product of the technology transfer arrangement
or the licensed technology; and during the whole term of the technology
transfer arrangement. (Sec. 33-C (1), R.A.
87.15. Other clauses with equivalent effects. 165a)
(Sec. 33-C (2), R.A 165a)
Section 91. Exceptional Cases. - In exceptional
Section 88. Mandatory Provisions. - The or meritorious cases where substantial
following provisions shall be included in benefits will accrue to the economy, such
voluntary license contracts: as high technology content, increase in
foreign exchange earnings, employment
88.1. That the laws of the Philippines shall generation, regional dispersal of industries
govern the interpretation of the same and/or substitution with or use of local
and in the event of litigation, the venue raw materials, or in the case of Board of
shall be the proper court in the place Investments, registered companies with
where the licensee has its principal office; pioneer status, exemption from any of the
above requirements may be allowed by the
Documentation, Information and Technology 93.5 If the patented invention is not being
Transfer Bureau after evaluation thereof on a worked in the Philippines on a commercial
case by case basis. (n) scale, although capable of being worked,
without satisfactory reason: Provided,
Section 92. Non-Registration with the That the importation of the patented
Documentation, Information and Technology article shall constitute working or using
Transfer Bureau. - Technology transfer the patent. (Secs. 34, 34-A, 34-B, R.A. No.
arrangements that conform with the 165a)
provisions of Sections 86 and 87 need not
be registered with the Documentation, Section 94. Period for Filing a Petition for a
Information and Technology Transfer Bureau. Compulsory License. - 94.1. A compulsory
Non-conformance with any of the provisions license may not be applied for on the ground
of Sections 87 and 88, however, shall stated in Subsection 93.5 before the expiration
automatically render the technology transfer of a period of four (4) years from the date
arrangement unenforceable, unless said of filing of the application or three (3) years
technology transfer arrangement is approved from the date of the patent whichever period
and registered with the Documentation, expires last.
Information and Technology Transfer Bureau
under the provisions of Section 91 on 94.2 A compulsory license which is applied
exceptional cases. (n) for on any of the grounds stated in
Subsections 93.2, 93.3, and 93.4 and
CHAPTER X Section 97 may be applied for at any time
COMPULSORY LICENSING after the grant of the patent. (Sec. 34(1),
R.A. No. 165)
Section 93. Grounds for Compulsory Licensing.
- The Director of Legal Affairs may grant a Section 95. Requirement to Obtain a License
license to exploit a patented invention, even on Reasonable Commercial Terms. -
without the agreement of the patent owner,
in favor of any person who has shown his 95.1 The license will only be granted after the
capability to exploit the invention, under any petitioner has made efforts to obtain
of the following circumstances: authorization from the patent owner
on reasonable commercial terms and
93.1. National emergency or other conditions but such efforts have not been
circumstances of extreme urgency; successful within a reasonable period of
time.
93.2. Where the public interest, in particular, 95.2. The requirement under Subsection 95.1
national security, nutrition, health or the shall not apply in the following cases:
development of other vital sectors of the
national economy as determined by the (a) Where the petition for compulsory
appropriate agency of the Government, license seeks to remedy a practice
so requires; or determined after judicial or
administrative process to be anti-
93.3 Where a judicial or administrative competitive;
body has determined that the manner of
exploitation by the owner of the patent (b) In situations of national emergency
or his licensee is anti-competitive; or or other circumstances of extreme
urgency;
93.4 In case of public non-commercial use
of the patent by the patentee, without (c) In cases of public non-commercial
satisfactory reason; use.
95.3 In situations of national emergency or 97.4 The terms and conditions of Sections 95,
other circumstances of extreme urgency, 96 and 98 to 100 of this Act. (Sec. 34-C,
the right holder shall be notified as soon R.A. No. 165a)
as reasonably practicable.
Section 98. Form and Contents of Petition. -
95.4 In the case of public non-commercial use, The petition for compulsory licensing must
where the government or contractor, be in writing, verified by the petitioner and
without making a patent search, knows accompanied by payment of the required
or has demonstrable grounds to know filing fee. It shall contain the name and
that a valid patent is or will be used by or address of the petitioner as well as those of
for the government, the right holder shall the respondents, the number and date of
be informed promptly. (n) issue of the patent in connection with which
compulsory license is sought, the name of
Section 96. Compulsory Licensing of Patents the patentee, the title of the invention, the
Involving Semi-Conductor Technology. - In statutory grounds upon which compulsory
the case of compulsory licensing of patents license is sought, the ultimate facts
involving semi-conductor technology, the constituting the petitioner’s cause of action,
license may only be granted in case of public and the relief prayed for. (Sec. 34-D, R.A. No.
non-commercial use or to remedy a practice 165)
determined after judicial or administrative
process to be anti-competitive. (n) Section 99. Notice of Hearing. - 99.1. Upon
filing of a petition, the Director of Legal
Section 97. Compulsory License Based on Affairs shall forthwith serve notice of the
Interdependence of Patents. - If the invention filing thereof upon the patent owner and
protected by a patent, hereafter referred to all persons having grants or licenses, or any
as the “second patent,” within the country other right, title or interest in and to the
cannot be worked without infringing another patent and invention covered thereby as
patent, hereafter referred to as the “first appears of record in the Office, and of notice
patent,” granted on a prior application of the date of hearing thereon, on such
or benefiting from an earlier priority, a persons and petitioner. The resident agent or
compulsory license may be granted to the representative appointed in accordance with
owner of the second patent to the extent Section 33 hereof, shall be bound to accept
necessary for the working of his invention, service of notice of the filing of the petition
subject to the following conditions: within the meaning of this Section.
97.1 The invention claimed in the second 99.2 In every case, the notice shall be published
patent involves an important technical by the said Office in a newspaper of
advance of considerable economic general circulation, once a week for three
significance in relation to the first patent; (3) consecutive weeks and once in the
IPO Gazette at applicant’s expense. (Sec.
97.2 The owner of the first patent shall be 34-E, R.A. No. 165)
entitled to a cross-license on reasonable
terms to use the invention claimed in the Section 100. Terms and Conditions of
second patent; Compulsory License. - The basic terms and
conditions including the rate of royalties
97.3 The use authorized in respect of the first of a compulsory license shall be fixed by
patent shall be non-assignable except the Director of Legal Affairs subject to the
with the assignment of the second following conditions:
patent; and

100.1 The scope and duration of such license the compulsory license, upon proper
shall be limited to the purpose for showing of new facts or circumstances
which it was authorized; justifying such amendment.
100.2 The license shall be non-exclusive; 101.2 Upon the request of the patentee,
the said Director may cancel the
100.3 The license shall be non-assignable, compulsory license:
except with that part of the enterprise
or business with which the invention is (a) If the ground for the grant of the
being exploited; compulsory license no longer
exists and is unlikely to recur;
100.4 Use of the subject matter of the license
shall be devoted predominantly for (b) If the licensee has neither begun
the supply of the Philippine market: to supply the domestic market
Provided, That this limitation shall nor made serious preparation
not apply where the grant of the therefor;
license is based on the ground that
the patentee’s manner of exploiting (c) If the licensee has not complied
the patent is determined by judicial with the prescribed terms of the
or administrative process, to be anti- license;
competitive.
101.3 The licensee may surrender the license
100.5 The license may be terminated upon by a written declaration submitted to
proper showing that circumstances the Office.
which led to its grant have ceased
to exist and are unlikely to recur: 101.4 The said Director shall cause the
Provided, That adequate protection amendment, surrender, or cancellation
shall be afforded to the legitimate in the Register, notify the patentee,
interest of the licensee; and and/or the licensee, and cause notice
thereof to be published in the IPO
100.6 The patentee shall be paid adequate Gazette. (Sec. 35-D, R.A. No. 165a)
remuneration taking into account
the economic value of the grant or Section 102. Licensee’s Exemption from
authorization, except that in cases Liability. - Any person who works a patented
where the license was granted to remedy product, substance and/or process under
a practice which was determined after a license granted under this Chapter, shall
judicial or administrative process, to be be free from any liability for infringement:
anti-competitive, the need to correct Provided however, That in the case of
the anti-competitive practice may be voluntary licensing, no collusion with the
taken into account in fixing the amount licensor is proven. This is without prejudice to
of remuneration. (Sec. 35-B, R.A. No. the right of the rightful owner of the patent
165a) to recover from the licensor whatever he may
have received as royalties under the license.
Section 101. Amendment, Cancellation, (Sec. 35-E, R.A. No. 165a)
Surrender of Compulsory License. -
CHAPTER XI
101.1 Upon the request of the patentee or the ASSIGNMENT AND TRANSMISSION
licensee, the Director of Legal Affairs OF RIGHTS
may amend the decision granting

Section 103. Transmission of Rights. - 106.2 Such instruments shall be void as
against any subsequent purchaser or
103.1 Patents or applications for patents and mortgagee for valuable consideration
invention to which they relate, shall be and without notice, unless, it is so
protected in the same way as the rights recorded in the Office, within three
of other property under the Civil Code. (3) months from the date of said
instrument, or prior to the subsequent
103.2 Inventions and any right, title or interest purchase or mortgage. (Sec. 53, R.A.
in and to patents and inventions No. 165a)
covered thereby, may be assigned or
transmitted by inheritance or bequest Section 107. Rights of Joint Owners. - If two
or may be the subject of a license (2) or more persons jointly own a patent
contract. (Sec. 50, R.A. No. 165a) and the invention covered thereby, either
by the issuance of the patent in their joint
Section 104. Assignment of Inventions. - An favor or by reason of the assignment of an
assignment may be of the entire right, title undivided share in the patent and invention
or interest in and to the patent and the or by reason of the succession in title to
invention covered thereby, or of an undivided such share, each of the joint owners shall
share of the entire patent and invention, in be entitled to personally make, use, sell,
which event the parties become joint owners or import the invention for his own profit:
thereof. An assignment may be limited to a Provided, however, That neither of the joint
specified territory. (Sec. 51, R.A. No. 165) owners shall be entitled to grant licenses or
to assign his right, title or interest or part
Section 105. Form of Assignment. - The thereof without the consent of the other
assignment must be in writing, acknowledged owner or owners, or without proportionally
before a notary public or other officer dividing the proceeds with such other owner
authorized to administer oath or perform or owners. (Sec. 54, R.A. No. 165)
notarial acts, and certified under the hand
and official seal of the notary or such other CHAPTER XII
officer. (Sec. 52, R.A. No. 165) REGISTRATION OF UTILITY MODELS
Section 106. Recording. - 106.1. The Office Section 108. Applicability of Provisions
shall record assignments, licenses and other Relating to Patents. - 108.1. Subject to Section
instruments relating to the transmission of 109, the provisions governing patents shall
any right, title or interest in and to inventions, apply, mutatis mutandis, to the registration
and patents or application for patents or of utility models.
inventions to which they relate, which are
presented in due form to the Office for 108.2 Where the right to a patent conflicts
registration, in books and records kept for the with the right to a utility model
purpose. The original documents together registration in the case referred to in
with a signed duplicate thereof shall be filed, Section 29, the said provision shall
and the contents thereof should be kept apply as if the word “patent” were
confidential. If the original is not available, replaced by the words “patent or utility
an authenticated copy thereof in duplicate model registration”. (Sec. 55, R.A. No.
may be filed. Upon recording, the Office shall 165a)
retain the duplicate, return the original or
the authenticated copy to the party who filed Section 109. Special Provisions Relating to
the same and notice of the recording shall be Utility Models. - 109.1.
published in the IPO Gazette.

(a) An invention qualifies for registration may, upon payment of the prescribed
as a utility model if it is new and fee, convert his application into an
industrially applicable. application for registration of a utility
model, which shall be accorded the
(b) Section 21, “Patentable Inventions”, filing date of the initial application.
shall apply except the reference An application may be converted only
to inventive step as a condition of once.
protection.
110.2 At any time before the grant or
109.2 Sections 43 to 49 shall not apply in the refusal of a utility model registration,
case of applications for registration of a an applicant for a utility model
utility model. registration may, upon payment of the
prescribed fee, convert his application
109.3 A utility model registration shall expire, into a patent application, which shall
without any possibility of renewal, at be accorded the filing date of the initial
the end of the seventh year after the application. (Sec. 58, R.A. No. 165a)
date of the filing of the application.
Section 111. Prohibition against Filing of
109.4 In proceedings under Sections 61 to Parallel Applications. - An applicant may
64, the utility model registration shall not file two (2) applications for the same
be canceled on the following grounds: subject, one for utility model registration and
the other for the grant of a patent whether
(a) That the claimed invention does simultaneously or consecutively. (Sec. 59,
not qualify for registration as a R.A. No. 165a)
utility model and does not meet
the requirements of registrability, CHAPTER XIII
in particular having regard to INDUSTRIAL DESIGN
Subsection 109.1 and Sections 22,
23, 24 and 27; Section 112. Definition of Industrial Design.
- An industrial design is any composition
(b) That the description and the claims of lines or colors or any three-dimensional
do not comply with the prescribed form, whether or not associated-with lines
requirements; or colors: Provided, That such composition or
form gives a special appearance to and can
(c) That any drawing which is serve as pattern for an industrial product or
necessary for the understanding handicraft. (Sec. 55, R.A. No. 165a)
of the invention has not been
furnished; Section 113. Substantive Conditions for
Protection. -
(d) That the owner of the utility model
registration is not the inventor or 113.1 Only industrial designs that are new or
his successor in title. (Secs. 55, 56, original shall benefit from protection
and 57, R.A. No. 165a) under this Act.
Section 110. Conversion of Patent Applications 113.2 Industrial designs dictated essentially by
or Applications for Utility Model Registration. technical or functional considerations
- to obtain a technical result or those
110.1 At any time before the grant or refusal that are contrary to public order, health
of a patent, an applicant for a patent or morals shall not be protected. (n)

Section 114. Contents of the Application. - article embodying the industrial design or a
pictorial representation thereof.
114.1 Every application for registration of an
industrial design shall contain: 116.2 If the application does not meet these
requirements the filing date should
(a) A request for registration of the be that date when all the elements
industrial design; specified in Section 105 are filed or the
mistakes corrected. Otherwise if the
(b) Information identifying the requirements are not complied within
applicant; the prescribed period, the application
shall be considered withdrawn.
(c) An indication of the kind of article
of manufacture or handicraft to 116.3 After the application has been
which the design shall be applied; accorded a filing date and the required
fees paid on time, the applicant shall
(d) A representation of the article of comply with the requirements of
manufacture or handicraft by way Section 114 within the prescribed
of drawings, photographs or other period, otherwise the application shall
adequate graphic representation be considered withdrawn.
of the design as applied to
the article of manufacture or 116.4 The Office shall examine whether
handicraft which clearly and fully the industrial design complies with
discloses those features for which requirements of Section 112 and
design protection is claimed; and Subsections 113.2 and 113.3. (n)
(e) The name and address of the Section 117. Registration. - 117.1. Where
creator, or where the applicant the Office finds that the conditions referred
is not the creator, a statement to in Section 113 are fulfilled, it shall order
indicating the origin of the right to that registration be effected in the industrial
the industrial design registration. design register and cause the issuance of an
industrial design certificate of registration,
114.2 The application may be accompanied otherwise, it shall refuse the application.
by a specimen of the article embodying
the industrial design and shall 117.2 The form and contents of an industrial
be subject to the payment of the design certificate shall be established
prescribed fee.(n) by the Regulations: Provided, That the
name and address of the creator shall
Section 115. Several Industrial Designs in One be mentioned in every case.
Application. - Two (2) or more industrial designs
may be the subject of the same application: 117.3 Registration shall be published in the
Provided, That they relate to the same sub- form and within the period fixed by the
class of the International Classification or to Regulations.
the same set or composition of articles. (n)
117.4 The Office shall record in the register
Section 116. Examination. - 116.1. The Office any change in the identity of the
shall accord as the filing date the date of receipt proprietor of the industrial design or
of the application containing indications his representative, if proof thereof is
allowing the identity of the applicant to furnished to it. A fee shall be paid, with
be established and a representation of the the request to record the change in the

identity of the proprietor. If the fee is Section 21 - Novelty:
not paid, the request shall be deemed Section 24 - Prior art: Provided, That the
not to have been filed. In such case, disclosure is contained in printed
documents or in any tangible form;
the former proprietor and the former
Section 25 - Non-prejudicial Disclosure;
representative shall remain subject to
the rights and obligations as provided Section 27 - Inventions Created Pursuant to a
Commission;
in this Act.
Section 28 - Right to a Patent;
Section 29 - First to File Rule;
117.5 Anyone may inspect the Register and
Section 31 - Right of Priority: Provided, That the
the files of registered industrial designs application for industrial design
including the files of cancellation shall be filed within six (6) months
proceedings. (n) from the earliest filing date of the
corresponding foreign application;
Section 33 - Appointment of Agent or
Section 118. The Term of Industrial Design Representative;
Registration. - 118.1 The registration of an Section 51 - Refusal of the Application;
industrial design shall be for a period of five (5) Sections 56 to 60 - Surrender, Correction of and
years from the filing date of the application. Changes in Patent;
CHAPTER VII - Remedies of a Person with a Right
118.2 The registration of an industrial design to Patent;
may be renewed for not more than two CHAPTER VIII - Rights of Patentees and
Infringement of Patents; and
(2) consecutive periods of five (5) years
CHAPTER XI - Assignment and Transmission of
each, by paying the renewal fee. Rights.
118.3 The renewal fee shall be paid within 119.2 If the essential elements of an
twelve (12) months preceding the industrial design which is the subject
expiration of the period of registration. of an application have been obtained
However, a grace period of six (6) from the creation of another person
months shall be granted for payment without his consent, protection under
of the fees after such expiration, upon this Chapter cannot be invoked against
payment of a surcharge the injured party. (n)
118.4 The Regulations shall fix the amount of Section 120. Cancellation of Design
renewal fee, the surcharge and other Registration. -
requirements regarding the recording
of renewals of registration. 120.1 At any time during the term of the
Section 119. Application of Other Sections industrial design registration, any
and Chapters. - person upon payment of the required
fee, may petition the Director of Legal
119.1 The following provisions relating to Affairs to cancel the industrial design
patents shall apply mutatis mutandis on any of the following grounds:
to an industrial design registration:
(a) If the subject matter of the
industrial design is not registrable
within the terms of Sections 112
and 113;
(b) If the subject matter is not new; or
(c) If the subject matter of the

industrial design extends beyond
the content of the application as Marks formulated by the Director
originally filed. of Trademarks and approved by the
Director General; and
120.2 Where the grounds for cancellation
relate to a part of the industrial design, 121.7 “Examiner” means the trademark
cancellation may be effected to such examiner. (Sec. 38, R.A. No. 166a)
extent only. The restriction may be
effected in the form of an alteration of Section 122. How Marks are Acquired. - The
the effected features of the design. (n) rights in a mark shall be acquired through
registration made validly in accordance with
PART III the provisions of this law. (Sec. 2-A, R A. No.
THE LAW ON TRADEMARKS, SERVICE 166a)
MARKS AND TRADE NAMES
Section 123. Registrability. -
Section 121. Definitions. - As used in Part
123.1 A mark cannot be registered if it:
III, the following terms have the following
meanings:
(a) Consists of immoral, deceptive
or scandalous matter, or matter
121.1 “Mark” means any visible sign capable
which may disparage or falsely
of distinguishing the goods (trademark)
suggest a connection with persons,
or services (service mark) of an
living or dead, institutions, beliefs,
enterprise and shall include a stamped
or national symbols, or bring them
or marked container of goods; (Sec. 38,
into contempt or disrepute;
R.A. No. 166a)
(b) Consists of the flag or coat of arms
121.2 “Collective mark” means any visible
or other insignia of the Philippines
sign designated as such in the
or any of its political subdivisions,
application for registration and capable
or of any foreign nation, or any
of distinguishing the origin or any other
simulation thereof;
common characteristic, including the
quality of goods or services of different
(c) Consists of a name, portrait or
enterprises which use the sign under
signature identifying a particular
the control of the registered owner of
living individual except by his
the collective mark; (Sec. 40, R.A. No.
written consent, or the name,
166a)
signature, or portrait of a deceased
President of the Philippines, during
121.3 “Trade name” means the name
the life of his widow, if any, except
or designation identifying or
by written consent of the widow;
distinguishing an enterprise; (Sec. 38,
R.A. No. 166a)
(d) Is identical with a registered mark
belonging to a different proprietor
121.4 “Bureau” means the Bureau of
or a mark with an earlier filing or
Trademarks;
priority date, in respect of:
121.5 “Director” means the Director of
(i) The same goods or services, or
Trademarks;
(ii) Closely related goods or
121.6 “Regulations” means the Rules of services, or
Practice in Trademarks and Service

(iii) If it nearly resembles such a (h) Consists exclusively of signs that
mark as to be likely to deceive are generic for the goods or
or cause confusion; services that they seek to identify;
(e) Is identical with, or confusingly (i) Consists exclusively of signs or

similar to, or constitutes a of indications that have become
translation of a mark which is customary or usual to designate
considered by the competent the goods or services in everyday
authority of the Philippines to be language or in bona fide and
well-known internationally and established trade practice;
in the Philippines, whether or
not it is registered here, as being (j) Consists exclusively of signs or of
already the mark of a person other indications that may serve in trade
than the applicant for registration, to designate the kind, quality,
and used for identical or similar quantity, intended purpose,
goods or services: Provided, That value, geographical origin, time
in determining whether a mark is or production of the goods or
well-known, account shall be taken rendering of the services, or other
of the knowledge of the relevant characteristics of the goods or
sector of the public, rather than services;
of the public at large, including
knowledge in the Philippines which (k) Consists of shapes that may be
has been obtained as a result of necessitated by technical factors
the promotion of the mark; or by the nature of the goods
themselves or factors that affect
(f) Is identical with, or confusingly their intrinsic value;
similar to, or constitutes a
translation of a mark considered (l) Consists of color alone, unless
well-known in accordance with defined by a given form; or
the preceding paragraph, which
is registered in the Philippines (m) Is contrary to public order or
with respect to goods or services morality.
which are not similar to those
with respect to which registration 123.2 As regards signs or devices mentioned
is applied for: Provided, That use in paragraphs (j), (k), and (l), nothing
of the mark in relation to those shall prevent the registration of any
goods or services would indicate a such sign or device which has become
connection between those goods distinctive in relation to the goods for
or services, and the owner of the which registration is requested as a
registered mark: Provided further, result of the use that have been made
That the interests of the owner of of it in commerce in the Philippines.
the registered mark are likely to be The Office may accept as prima facie
damaged by such use; evidence that the mark has become
distinctive, as used in connection
(g) Is likely to mislead the public, with the applicant’s goods or services
particularly as to the nature, in commerce, proof of substantially
quality, characteristics or exclusive and continuous use thereof
geographical origin of the goods or by the applicant in commerce in the
services; Philippines for five (5) years before

the date on which the claim of (g) Where the applicant claims color
distinctiveness is made. as a distinctive feature of the
mark, a statement to that effect
123.3 The nature of the goods to which the as well as the name or names of
mark is applied will not constitute an the color or colors claimed and an
obstacle to registration. (Sec. 4, R.A. indication, in respect of each color,
No. 166a) of the principal parts of the mark
which are in that color;
Section 124. Requirements of Application. -
(h) Where the mark is a three-
124.1 The application for the registration dimensional mark, a statement to
of the mark shall be in Filipino or in that effect;
English and shall contain the following:
(i) One or more reproductions of
(a) A request for registration; the mark, as prescribed in the
Regulations;
(b) The name and address of the
applicant; (j) A transliteration or translation
of the mark or of some parts of
(c) The name of a State of which the the mark, as prescribed in the
applicant is a national or where Regulations;
he has domicile; and the name of
a State in which the applicant has (k) The names of the goods or services
a real and effective industrial or for which the registration is sought,
commercial establishment, if any; grouped according to the classes
of the Nice Classification, together
(d) Where the applicant is a juridical with the number of the class of
entity, the law under which it is the said Classification to which
organized and existing; each group of goods or services
belongs; and
(e) The appointment of an agent or
representative, if the applicant is (l) A signature by, or other self-
not domiciled in the Philippines; identification of, the applicant or
his representative.
(f) Where the applicant claims the
priority of an earlier application, 124.2 The applicant or the registrant shall
an indication of: file a declaration of actual use of the
mark with evidence to that effect, as
i) The name of the State with prescribed by the Regulations within
whose national office the three (3) years from the filing date
earlier application was filed of the application. Otherwise, the
or if filed with an office other application shall be refused or the mark
than a national office, the shall be removed from the Register by
name of that office, the Director.
ii) The date on which the earlier
application was filed, and 124.3 One (1) application may relate to
several goods and/or services, whether
iii) Where available, the they belong to one (1) class or to several
application number of the classes of the Nice Classification.
earlier application;
124.4 If during the examination of the (c) Indications sufficient to contact the
application, the Office finds factual applicant or his representative, if
basis to reasonably doubt the veracity any;
of any indication or element in
the application, it may require the (d) A reproduction of the mark whose
applicant to submit sufficient evidence registration is sought; and
to remove the doubt. (Sec. 5, R.A. No.
166a) (e) The list of the goods or services for
which the registration is sought.
Section 125. Representation; Address for
Service. - If the applicant is not domiciled 127.2 No filing date shall be accorded until
or has no real and effective commercial the required fee is paid. (n)
establishment in the Philippines, he shall
designate by a written document filed in the Section 128. Single Registration for Goods
Office, the name and address of a Philippine and/or Services. - Where goods and/or
resident who may be served notices or services belonging to several classes of the
process in proceedings affecting the mark. Nice Classification have been included in
Such notices or services may be served upon one (1) application, such an application shall
the person so designated by leaving a copy result in one registration. (n)
thereof at the address specified in the last
designation filed. If the person so designated Section 129. Division of Application. - Any
cannot be found at the address given in the application referring to several goods or
last designation, such notice or process may services, hereafter referred to as the “initial
be served upon the Director. (Sec. 3, R.A. No. application,” may be divided by the applicant
166a) into two (2) or more applications, hereafter
referred to as the “divisional applications,”
Section 126. Disclaimers. - The Office may by distributing among the latter the goods or
allow or require the applicant to disclaim an services referred to in the initial application.
unregistrable component of an otherwise The divisional applications shall preserve the
registrable mark but such disclaimer shall not filing date of the initial application or the
prejudice or affect the applicant’s or owner’s benefit of the right of priority. (n)
rights then existing or thereafter arising in the
disclaimed matter, nor such shall disclaimer Section 130. Signature and Other Means of
prejudice or affect the applicant’s or owner’s Self-Identification. - 130.1. Where a signature
right on another application of later date if is required, the Office shall accept:
the disclaimed matter became distinctive of
the applicant’s or owner’s goods, business or (a) A hand-written signature; or
services. (Sec. 13, R.A. No. 166a)
(b) The use of other forms of signature,
Section 127. Filing Date. - 127.1. such as a printed or stamped
Requirements. - The filing date of an signature, or the use of a seal
application shall be the date on which the instead of a hand-written signature:
Office received the following indications and Provided, That where a seal is used,
elements in English or Filipino: it should be accompanied by an
indication in letters of the name of
(a) An express or implicit indication that the signatory.
the registration of a mark is sought;
130.2 The Office shall accept communications
(b) The identity of the applicant; to it by telecopier, or by electronic

means subject to the conditions in the Philippines, may, against an
or requirements that will be identical or confusingly similar mark,
prescribed by the Regulations. oppose its registration, or petition the
When communications are made by cancellation of its registration or sue for
telefacsimile, the reproduction of the unfair competition, without prejudice
signature, or the reproduction of the to availing himself of other remedies
seal together with, where required, provided for under the law.
the indication in letters of the name of
the natural person whose seal is used, 131.4 In like manner and subject to the
appears. The original communications same conditions and requirements,
must be received by the Office within the right provided in this section
thirty (30) days from date of receipt of may be based upon a subsequent
the telefacsimile. regularly filed application in the same
foreign country: Provided, That any
130.3 No attestation, notarization, foreign application filed prior to such
authentication, legalization or other subsequent application has been
certification of any signature or other withdrawn, abandoned, or otherwise
means of self-identification referred disposed of, without having been laid
to in the preceding paragraphs, open to public inspection and without
will be required, except, where the leaving any rights outstanding, and has
signature concerns the surrender of a not served, nor thereafter shall serve,
registration. (n) as a basis for claiming a right of priority.
(Sec. 37, R.A. No. 166a)
Section 131. Priority Right. -
Section 132. Application Number and Filing
131.1 An application for registration of a mark Date. -
filed in the Philippines by a person
referred to in Section 3, and who 132.1 The Office shall examine whether the
previously duly filed an application for application satisfies the requirements
registration of the same mark in one of for the grant of a filing date as provided
those countries, shall be considered as in Section 127 and Regulations relating
filed as of the day the application was thereto. If the application does not
first filed in the foreign country. satisfy the filing requirements, the
Office shall notify the applicant who
131.2 No registration of a mark in the shall within a period fixed by the
Philippines by a person described Regulations complete or correct the
in this section shall be granted until application as required, otherwise,
such mark has been registered in the the application shall be considered
country of origin of the applicant. withdrawn.
131.3 Nothing in this section shall entitle 132.2 Once an application meets the filing
the owner of a registration granted requirements of Section 127, it shall be
under this section to sue for acts numbered in the sequential order, and
committed prior to the date on which the applicant shall be informed of the
his mark was registered in this country: application number and the filing date
Provided, That, notwithstanding the of the application will be deemed to
foregoing, the owner of a well-known have been abandoned. (n)
mark as defined in Section 123.1(e)
of this Act, that is not registered Section 133. Examination and Publication. -

133.1 Once the application meets the filing writing and verified by the oppositor or by any
requirements of Section 127, the Office person on his behalf who knows the facts, and
shall examine whether the application shall specify the grounds on which it is based
meets the requirements of Section 124 and include a statement of the facts relied
and the mark as defined in Section 121 upon. Copies of certificates of registration of
is registrable under Section 123. marks registered in other countries or other
supporting documents mentioned in the
133.2 Where the Office finds that the opposition shall be filed therewith, together
conditions referred to in Subsection with the translation in English, if not in the
133.1 are fulfilled, it shall upon English language. For good cause shown and
payment of the prescribed fee, upon payment of the required surcharge, the
forthwith cause the application, as time for filing an opposition may be extended
filed, to be published in the prescribed by the Director of Legal Affairs, who shall
manner. notify the applicant of such extension. The
Regulations shall fix the maximum period of
133.3 If after the examination, the applicant time within which to file the opposition. (Sec.
is not entitled to registration for any 8, R.A. No. 165a)
reason, the Office shall advise the
applicant thereof and the reasons Section 135. Notice and Hearing. - Upon the
therefor. The applicant shall have a filing of an opposition, the Office shall serve
period of four (4) months in which notice of the filing on the applicant, and of
to reply or amend his application, the date of the hearing thereof upon the
which shall then be re-examined. applicant and the oppositor and all other
The Regulations shall determine the persons having any right, title or interest
procedure for the re-examination or in the mark covered by the application, as
revival of an application as well as the appear of record in the Office. (Sec. 9, R.A.
appeal to the Director of Trademarks No. 165)
from any final action by the Examiner.
Section 136. Issuance and Publication of
133.4 An abandoned application may be Certificate. - When the period for filing
revived as a pending application within the opposition has expired, or when the
three (3) months from the date of Director of Legal Affairs shall have denied
abandonment, upon good cause shown the opposition, the Office upon payment of
and the payment of the required fee. the required fee, shall issue the certificate of
registration. Upon issuance of a certificate of
133.5 The final decision of refusal of the registration, notice thereof making reference
Director of Trademarks shall be to the publication of the application shall be
appealable to the Director General in published in the IPO Gazette. (Sec. 10, R.A.
accordance with the procedure fixed No. 165)
by the Regulations. (Sec. 7, R.A. No.
166a) Section 137. Registration of Mark and
Issuance of a Certificate to the Owner or his
Section 134. Opposition. - Any person who Assignee. -
believes that he would be damaged by the
registration of a mark may, upon payment of 137.1 The Office shall maintain a Register
the required fee and within thirty (30) days in which shall be registered marks,
after the publication referred to in Subsection numbered in the order of their
133.2, file with the Office an opposition to registration, and all transactions in
the application. Such opposition shall be in respect of each mark, required to be
recorded by virtue of this law.
137.2 The registration of a mark shall include registration, the registrant’s ownership of the
a reproduction of the mark and shall mark, and of the registrant’s exclusive right to
mention: its number; the name and use the same in connection with the goods
address of the registered owner and, or services and those that are related thereto
if the registered owner’s address is specified in the certificate. (Sec. 20, R.A. No.
outside the country, his address for 165)
service within the country; the dates of
application and registration; if priority Section 139. Publication of Registered Marks;
is claimed, an indication of this fact, Inspection of Register. - 139.1. The Office
and the number, date and country of shall publish, in the form and within the
the application, basis of the priority period fixed by the Regulations, the marks
claims; the list of goods or services in registered, in the order of their registration,
respect of which registration has been reproducing all the particulars referred to in
granted, with the indication of the Subsection 137.2.
corresponding class or classes; and
such other data as the Regulations may 139.2 Marks registered at the Office may
prescribe from time to time. be inspected free of charge and any
person may obtain copies thereof at his
137.3 A certificate of registration of a mark own expense. This provision shall also
may be issued to the assignee of be applicable to transactions recorded
the applicant: Provided, That the in respect of any registered mark. (n)
assignment is recorded in the Office.
In case of a change of ownership, the Section 140. Cancellation upon Application
Office shall at the written request signed by Registrant; Amendment or Disclaimer
by the owner, or his representative, or of Registration. - Upon application of
by the new owner, or his representative the registrant, the Office may permit any
and upon a proper showing and the registration to be surrendered for cancellation,
payment of the prescribed fee, issue and upon cancellation the appropriate entry
to such assignee a new certificate of shall be made in the records of the Office.
registration of the said mark in the Upon application of the registrant and
name of such assignee, and for the payment of the prescribed fee, the Office
unexpired part of the original period. for good cause may permit any registration
to be amended or to be disclaimed in part:
137.4 The Office shall record any change of Provided, That the amendment or disclaimer
address, or address for service, which does not alter materially the character of the
shall be notified to it by the registered mark. Appropriate entry shall be made in
owner. the records of the Office upon the certificate
of registration or, if said certificate is lost or
137.5 In the absence of any provision to the destroyed, upon a certified copy thereof (Sec.
contrary in this Act, communications 14, R.A. No. 166)
to be made to the registered owner by
virtue of this Act shall be sent to him Section 141. Sealed and Certified Copies
at his last recorded address and, at the as Evidence. - Copies of any records,
same, at his last recorded address for books, papers, or drawings belonging to
service. (Sec. 19, R.A. No. 166a) the Office relating to marks, and copies of
registrations, when authenticated by the seal
Section 138. Certificates of Registration. - A of the Office and certified by the Director
certificate of registration of a mark shall be of the Administrative, Financial and Human
prima facie evidence of the validity of the Resource Development Service Bureau or in

his name by an employee of the Office duly 144.2 Goods or services may not be
authorized by said Director, shall be evidence considered as being similar or dissimilar
in all cases wherein the originals would be to each other on the ground that, in
evidence; and any person who applies and any registration or publication by the
pays the prescribed fee shall secure such Office, they appear in different classes
copies. (n) of the Nice Classification. (Sec. 6, R.A.
No. 166a)
Section 142. Correction of Mistakes Made by
the Office. - Whenever a material mistake in Section 145. Duration. - A certificate of
a registration incurred through the fault of registration shall remain in force for ten (10)
the Office is clearly disclosed by the records years: Provided, That the registrant shall file
of the Office, a certificate stating the fact and a declaration of actual use and evidence to
nature of such mistake shall be issued without that effect, or shall show valid reasons based
charge, recorded and a printed copy thereof on the existence of obstacles to such use, as
shall be attached to each printed copy of prescribed by the Regulations, within one (1)
the registration. Such corrected registration year from the fifth anniversary of the date of
shall thereafter have the same effect as the the registration of the mark. Otherwise, the
original certificate; or in the discretion of mark shall be removed from the Register by
the Director of the Administrative, Financial the Office. (Sec. 12, R.A. No. 166a)
and Human Resource Development Service
Bureau a new certificate of registration may Section 146. Renewal. -
be issued without charge. All certificates of
correction heretofore issued in accordance 146.1 A certificate of registration may be
with the Regulations and the registration to renewed for periods of ten (10) years
which they are attached shall have the same at its expiration upon payment of the
force and effect as if such certificates and prescribed fee and upon filing of a
their issuance had been authorized by this request. The request shall contain the
Act. (n) following indications:
Section 143. Correction of Mistakes Made by (a) An indication that renewal is

Applicant. - Whenever a mistake is made in sought;
a registration and such mistake occurred in
good faith through the fault of the applicant, (b) The name and address of the
the Office may issue a certificate upon the registrant or his successor-in-
payment of the prescribed fee: Provided, That interest, hereafter referred to as
the correction does not involve any change in the “right holder”;
the registration that requires republication of
the mark. (n) (c) The registration number of the
registration concerned;
Section 144. Classification of Goods and
Services. - 144.1. Each registration, and any (d) The filing date of the application
publication of the Office which concerns an which resulted in the registration
application or registration effected by the concerned to be renewed;
Office shall indicate the goods or services by
their names, grouped according to the classes (e) Where the right holder has a
of the Nice Classification, and each group representative, the name and
shall be preceded by the number of the class address of that representative;
of that Classification to which that group of
goods or services belongs, presented in the (f) The names of the recorded goods
order of the classes of the said Classification. or services for which the renewal
is requested or the names of the 123.1(e) which is registered in the
recorded goods or services for Philippines, shall extend to goods and
which the renewal is not requested, services which are not similar to
grouped according to the classes those in respect of which the mark is
of the Nice Classification to which registered: Provided, That use of that
that group of goods or services mark in relation to those goods or
belongs and presented in the services would indicate a connection
order of the classes of the said between those goods or services and
Classification; and the owner of the registered mark:
Provided further, That the interests of
(g) A signature by the right holder or the owner of the registered mark are
his representative. likely to be damaged by such use. (n)
146.2 Such request shall be in Filipino or Section 148. Use of Indications by Third Parties
English and may be made at any for Purposes Other than those for which the
time within six (6) months before the Mark is Used. - Registration of the mark shall
expiration of the period for which the not confer on the registered owner the right
registration was issued or renewed, or to preclude third parties from using bona
it may be made within six (6) months fide their names, addresses, pseudonyms,
after such expiration on payment of a geographical name, or exact indications
the additional fee herein prescribed. concerning the kind, quality, quantity,
destination, value, place of origin, or time
146.3 If the Office refuses to renew the of production or of supply, of their goods or
registration, it shall notify the registrant services: Provided, That such use is confined
of his refusal and the reasons therefor. to the purposes of mere identification or
information and cannot mislead the public as
146.4 An applicant for renewal not domiciled to the source of the goods or services. (n)
in the Philippines shall be subject to
and comply with the requirements of Section 149. Assignment and Transfer of
this Act. (Sec. 15, R.A. No. 166a) Application and Registration. - 149.1. An
application for registration of a mark, or its
Section 147. Rights Conferred. - registration, may be assigned or transferred
with or without the transfer of the business
147.1 The owner of a registered mark shall using the mark. (n)
have the exclusive right to prevent all
third parties not having the owner’s 149.2 Such assignment or transfer shall,
consent from using in the course however, be null and void if it is liable
of trade identical or similar signs to mislead the public, particularly
or containers for goods or services as regards the nature, source,
which are identical or similar to those manufacturing process, characteristics,
in respect of which the trademark or suitability for their purpose, of the
is registered where such use would goods or services to which the mark is
result in a likelihood of confusion. In applied.
case of the use of an identical sign for
identical goods or services, a likelihood 149.3 The assignment of the application
of confusion shall be presumed. for registration of a mark, or of its
registration, shall be in writing and
147.2 The exclusive right of the owner of a require the signatures of the contracting
well-known mark defined in Subsection parties. Transfers by mergers or other

forms of succession may be made (a) Within five (5) years from the date
by any document supporting such of the registration of the mark
transfer. under this Act.
149.4 Assignments and transfers of (b) At any time, if the registered mark
registrations of marks shall be becomes the generic name for the
recorded at the Office on payment of goods or services, or a portion
the prescribed fee; assignment and thereof, for which it is registered,
transfers of applications for registration or has been abandoned, or
shall, on payment of the same fee, be its registration was obtained
provisionally recorded, and the mark, fraudulently or contrary to the
when registered, shall be in the name provisions of this Act, or if the
of the assignee or transferee. registered mark is being used by,
or with the permission of, the
149.5 Assignments and transfers shall have registrant so as to misrepresent
no effect against third parties until they the source of the goods or services
are recorded at the Office. (Sec. 31, on or in connection with which the
R.A. No. 166a) mark is used. If the registered mark
becomes the generic name for less
Section 150. License Contracts. - 150.1. Any than all of the goods or services
license contract concerning the registration for which it is registered, a petition
of a mark, or an application therefor, shall to cancel the registration for only
provide for effective control by the licensor those goods or services may be
of the quality of the goods or services of the filed. A registered mark shall not
licensee in connection with which the mark is be deemed to be the generic
used. If the license contract does not provide name of goods or services solely
for such quality control, or if such quality because such mark is also used as
control is not effectively carried out, the a name of or to identify a unique
license contract shall not be valid. product or service. The primary
significance of the registered mark
150.2 A license contract shall be submitted to to the relevant public rather than
the Office which shall keep its contents purchaser motivation shall be the
confidential but shall record it and test for determining whether the
publish a reference thereto. A license registered mark has become the
contract shall have no effect against generic name of goods or services
third parties until such recording is on or in connection with which it
effected. The Regulations shall fix the has been used. (n)
procedure for the recording of the
license contract. (n) (c) At any time, if the registered owner
of the mark without legitimate
Section 151. Cancellation. - reason fails to use the mark within
the Philippines, or to cause it to be
151.1 A petition to cancel a registration of used in the Philippines by virtue of
a mark under this Act may be filed a license during an uninterrupted
with the Bureau of Legal Affairs by any period of three (3) years or longer.
person who believes that he is or will
be damaged by the registration of a 151.2 Notwithstanding the foregoing
mark under this Act as follows: provisions, the court or the
administrative agency vested with

jurisdiction to hear and adjudicate mark or of its registration: Provided,
any action to enforce the rights to a That such mark is not used in such
registered mark shall likewise exercise manner as to deceive the public. If use
jurisdiction to determine whether of a mark by a person is controlled by
the registration of said mark may be the registrant or applicant with respect
cancelled in accordance with this to the nature and quality of the goods
Act. The filing of a suit to enforce the or services, such use shall inure to the
registered mark with the proper court benefit of the registrant or applicant.
or agency shall exclude any other court (n)
or agency from assuming jurisdiction
over a subsequently filed petition to Section 153. Requirements of Petition; Notice
cancel the same mark. On the other and Hearing. - Insofar as applicable, the
hand, the earlier filing of petition petition for cancellation shall be in the same
to cancel the mark with the Bureau form as that provided in Section 134 hereof,
of Legal Affairs shall not constitute and notice and hearing shall be as provided in
a prejudicial question that must be Section 135 hereof.
resolved before an action to enforce
the rights to same registered mark may Section 154. Cancellation of Registration. - If
be decided. (Sec. 17, R.A. No. 166a) the Bureau of Legal Affairs finds that a case
for cancellation has been made out, it shall
Section 152. Non-use of a Mark When order the cancellation of the registration.
Excused. - When the order or judgment becomes final,
any right conferred by such registration upon
152.1 Non-use of a mark may be excused the registrant or any person in interest of
if caused by circumstances arising record shall terminate. Notice of cancellation
independently of the will of the shall be published in the IPO Gazette. (Sec.
trademark owner. Lack of funds shall 19, R.A. No. 166a)
not excuse non-use of a mark.
Section 155. Remedies; Infringement. - Any
152.2 The use of the mark in a form different person who shall, without the consent of the
from the form in which it is registered, owner of the registered mark:
which does not alter its distinctive
character, shall not be ground for 155.1 Use in commerce any reproduction,
cancellation or removal of the mark counterfeit, copy, or colorable imitation
and shall not diminish the protection of a registered mark or the same
granted to the mark. container or a dominant feature thereof
in connection with the sale, offering
152.3 The use of a mark in connection with for sale, distribution, advertising of
one or more of the goods or services any goods or services including other
belonging to the class in respect of preparatory steps necessary to carry
which the mark is registered shall out the sale of any goods or services on
prevent its cancellation or removal in or in connection with which such use
respect of all other goods or services of is likely to cause confusion, or to cause
the same class. mistake, or to deceive; or
152.4 The use of a mark by a company related 155.2 Reproduce, counterfeit, copy or
with the registrant or applicant shall colorably imitate a registered mark or
inure to the latter’s benefit, and such a dominant feature thereof and apply
use shall not affect the validity of such such reproduction, counterfeit, copy

or colorable imitation to labels, signs, 156.3 In cases where actual intent to
prints, packages, wrappers, receptacles mislead the public or to defraud the
or advertisements intended to be used complainant is shown, in the discretion
in commerce upon or in connection of the court, the damages may be
with the sale, offering for sale, doubled. (Sec. 23, first par., R.A. No.
distribution, or advertising of goods or 166)
services on or in connection with which
such use is likely to cause confusion, or 156.4 The complainant, upon proper showing,
to cause mistake, or to deceive, shall be may also be granted injunction. (Sec.
liable in a civil action for infringement 23, second par., R.A. No. 166a)
by the registrant for the remedies
hereinafter set forth: Provided, That Section 157. Power of Court to Order
the infringement takes place at the Infringing Material Destroyed. -
moment any of the acts stated in
Subsection 155.1 or this subsection are 157.1 In any action arising under this Act,
committed regardless of whether there in which a violation of any right of
is actual sale of goods or services using the owner of the registered mark
the infringing material. (Sec. 22, R.A. is established, the court may order
No 166a) that goods found to be infringing be,
without compensation of any sort,
Section 156. Actions, and Damages and disposed of outside the channels of
Injunction for Infringement. - commerce in such a manner as to avoid
any harm caused to the right holder, or
156.1 The owner of a registered mark may destroyed; and all labels, signs, prints,
recover damages from any person packages, wrappers, receptacles and
who infringes his rights, and the advertisements in the possession of the
measure of the damages suffered defendant, bearing the registered mark
shall be either the reasonable profit or trade name or any reproduction,
which the complaining party would counterfeit, copy or colorable imitation
have made, had the defendant not thereof, all plates, molds, matrices and
infringed his rights, or the profit which other means of making the same, shall
the defendant actually made out be delivered up and destroyed.
of the infringement, or in the event
such measure of damages cannot be 157.2 In regard to counterfeit goods, the
readily ascertained with reasonable simple removal of the trademark
certainty, then the court may award affixed shall not be sufficient other
as damages a reasonable percentage than in exceptional cases which shall
based upon the amount of gross sales be determined by the Regulations, to
of the defendant or the value of the permit the release of the goods into
services in connection with which the channels of commerce. (Sec. 24,
the mark or trade name was used in R.A. No. 166a)
the infringement of the rights of the
complaining party. (Sec. 23, first par., Section 158. Damages; Requirement of Notice.
R.A. No. 166a) - In any suit for infringement, the owner of
the registered mark shall not be entitled to
156.2 On application of the complainant, the recover profits or damages unless the acts
court may impound during the pendency have been committed with knowledge that
of the action, sales invoices and other such imitation is likely to cause confusion, or to
documents evidencing sales. (n) cause mistake, or to deceive. Such knowledge

is presumed if the registrant gives notice that limitations of this subparagraph shall
his mark is registered by displaying with the apply only to innocent infringers:
mark the words ‘”Registered Mark” or the Provided, That such injunctive relief
letter R within a circle or if the defendant had shall not be available to the owner
otherwise actual notice of the registration. of the right infringed with respect to
(Sec. 21, R.A. No. 166a) an issue of a newspaper, magazine,
or other similar periodical or an
Section 159. Limitations to Actions for electronic communication containing
Infringement. - Notwithstanding any other infringing matter where restraining
provision of this Act, the remedies given to the dissemination of such infringing
the owner of a right infringed under this Act matter in any particular issue of
shall be limited as follows: such periodical or in an electronic
communication would delay the
159.1 Notwithstanding the provisions of delivery of such issue or transmission
Section 155 hereof, a registered mark of such electronic communication is
shall have no effect against any person customarily conducted in accordance
who, in good faith, before the filing with the sound business practice,
date or the priority date, was using the and not due to any method or device
mark for the purposes of his business adopted to evade this section or to
or enterprise: Provided, That his right prevent or delay the issuance of an
may only be transferred or assigned injunction or restraining order with
together with his enterprise or business respect to such infringing matter. (n)
or with that part of his enterprise or
business in which the mark is used. Section 160. Right of Foreign Corporation
to Sue in Trademark or Service Mark
159.2 Where an infringer who is engaged Enforcement Action. - Any foreign national or
solely in the business of printing the juridical person who meets the requirements
mark or other infringing materials for of Section 3 of this Act and does not engage
others is an innocent infringer, the in business in the Philippines may bring
owner of the right infringed shall be a civil or administrative action hereunder
entitled as against such infringer only for opposition, cancellation, infringement,
to an injunction against future printing. unfair competition, or false designation of
origin and false description, whether or not
159.3 Where the infringement complained it is licensed to do business in the Philippines
of is contained in or is part of paid under existing laws. (Sec. 21-A, R.A. No. 166a)
advertisement in a newspaper,
magazine, or other similar periodical Section 161. Authority to Determine Right
or in an electronic communication, to Registration. - In any action involving a
the remedies of the owner of the registered mark, the court may determine the
right infringed as against the publisher right to registration, order the cancellation
or distributor of such newspaper, of a registration, in whole or in part, and
magazine, or other similar periodical otherwise rectify the register with respect
or electronic communication shall be to the registration of any party to the action
limited to an injunction against the in the exercise of this. Judgment and orders
presentation of such advertising matter shall be certified by the court to the Director,
in future issues of such newspapers, who shall make appropriate entry upon the
magazines, or other similar periodicals records of the Bureau, and shall be controlled
or in future transmissions of such thereby. (Sec. 25, R.A. No. 166a)
electronic communications. The

Section 162. Action for False or Fraudulent unlawful act committed by third
Declaration. - Any person who shall procure parties.
registration in the Office of a mark by a false
or fraudulent declaration or representation, (b) In particular, any subsequent use
whether oral or in writing, or by any false of the trade name by a third party,
means, shall be liable in a civil action by any whether as a trade name or a mark
person injured thereby for any damages or collective mark, or any such use of
sustained in consequence thereof (Sec. 26, a similar trade name or mark, likely to
R.A. No. 166) mislead the public, shall be deemed
unlawful.
Section 163. Jurisdiction of Court. - All actions
under Sections 150, 155, 164, and 166 to 169 165.3 The remedies provided for in Sections
shall be brought before the proper courts 153 to 156 and Sections 166 and 167
with appropriate jurisdiction under existing shall apply mutatis mutandis.
laws. (Sec. 27, R.A. No. 166)
165.4 Any change in the ownership of a trade
Section 164. Notice of Filing Suit Given to the name shall be made with the transfer
Director. - It shall be the duty of the clerks of the enterprise or part thereof
of such courts within one (1) month after identified by that name. The provisions
the filing of any action, suit, or proceeding of Subsections 149.2 to 149.4 shall
involving a mark registered under the apply mutatis mutandis.
provisions of this Act, to notify the Director
in writing setting forth: the names and Section 166. Goods Bearing Infringing Marks
addresses of the litigants and designating the or Trade Names. - No article of imported
number of the registration or registrations merchandise which shall copy or simulate
and within one (1) month after the judgment the name of any domestic product, or
is entered or an appeal is taken, the clerk of manufacturer, or dealer, or which shall copy or
court shall give notice thereof to the Office, simulate a mark registered in accordance with
and the latter shall endorse the same upon the provisions of this Act, or shall bear a mark
the filewrapper of the said registration or or trade name calculated to induce the public
registrations and incorporate the same as a to believe that the article is manufactured
part of the contents of said filewrapper. (n) in the Philippines, or that it is manufactured
in any foreign country or locality other than
Section 165. Trade Names or Business Names. the country or locality where it is in fact
- manufactured, shall be admitted to entry at
165.1. A name or designation may not be any customhouse of the Philippines. In order
used as a trade name if by its nature to aid the officers of the customs service in
or the use to which such name or enforcing this prohibition, any person who
designation may be put, it is contrary is entitled to the benefits of this Act, may
to public order or morals and if, in require that his name and residence, and
particular, it is liable to deceive trade the name of the locality in which his goods
circles or the public as to the nature of are manufactured, a copy of the certificate
the enterprise identified by that name. of registration of his mark or trade name,
to be recorded in books which shall be kept
165.2 (a) Notwithstanding any laws or for this purpose in the Bureau of Customs,
regulations providing for any obligation under such regulations as the Collector of
to register trade names, such names Customs with the approval of the Secretary
shall be protected, even prior to or of Finance shall prescribe, and may furnish
without registration, against any to the said Bureau facsimiles of his name,

the name of the locality in which his goods 168.1 A person who has identified in the
are manufactured, or his registered mark or mind of the public the goods he
trade name, and thereupon the Collector of manufactures or deals in, his business
Customs shall cause one (1) or more copies of or services from those of others,
the same to be transmitted to each collector whether or not a registered mark is
or to other proper officer of the Bureau of employed, has a property right in the
Customs. (Sec. 35, R.A. No. 166) goodwill of the said goods, business
or services so identified, which will be
Section 167. Collective Marks. - protected in the same manner as other
property rights.
167.1 Subject to Subsections 167.2 and
167.3, Sections 122 to 164 and 166 168.2 Any person who shall employ
shall apply to collective marks, except deception or any other means contrary
that references therein to “mark” shall to good faith by which he shall pass
be read as “collective mark”. off the goods manufactured by him or
in which he deals, or his business, or
167.2 (a) An application for registration of services for those of the one having
a collective mark shall designate the established such goodwill, or who shall
mark as a collective mark and shall commit any acts calculated to produce
be accompanied by a copy of the said result, shall be guilty of unfair
agreement, if any, governing the use of competition, and shall be subject to an
the collective mark. action therefor.

(b) The registered owner of a collective 168.3 In particular, and without in any way
mark shall notify the Director of limiting the scope of protection against
any changes made in respect of the unfair competition, the following shall
agreement referred to in paragraph (a). be deemed guilty of unfair competition:
167.3 In addition to the grounds provided (a) Any person, who is selling his
in Section 149, the Court shall cancel goods and gives them the general
the registration of a collective mark if appearance of goods of another
the person requesting the cancellation manufacturer or dealer, either
proves that only the registered owner as to the goods themselves or
uses the mark, or that he uses or in the wrapping of the packages
permits its use in contravention of the in which they are contained, or
agreements referred to in Subsection the devices or words thereon,
166.2 or that he uses or permits its or in any other feature of their
use in a manner liable to deceive trade appearance, which would be likely
circles or the public as to the origin or to influence purchasers to believe
any other common characteristics of that the goods offered are those
the goods or services concerned. of a manufacturer or dealer, other
than the actual manufacturer or
167.4 The registration of a collective mark, or dealer, or who otherwise clothes
an application therefor shall not be the the goods with such appearance
subject of a license contract. (Sec. 40, as shall deceive the public and
R.A. No. 166a) defraud another of his legitimate
trade, or any subsequent vendor
Section 168. Unfair Competition, Rights, of such goods or any agent of any
Regulation and Remedies. - vendor engaged in selling such
goods with a like purpose;
(b) Any person who by any artifice, or by any person who believes that he
device, or who employs any other or she is or is likely to be damaged
means calculated to induce the false by such act.
belief that such person is offering
the services of another who has 169.2 Any goods marked or labelled in
identified such services in the mind contravention of the provisions of this
of the public; or Section shall not be imported into the
Philippines or admitted entry at any
(c) Any person who shall make any false customhouse of the Philippines. The
statement in the course of trade owner, importer, or consignee of goods
or who shall commit any other act refused entry at any customhouse
contrary to good faith of a nature under this section may have any
calculated to discredit the goods, recourse under the customs revenue
business or services of another. laws or may have the remedy given
by this Act in cases involving goods
168.4 The remedies provided by Sections refused entry or seized. (Sec. 30, R.A.
156, 157 and 161 shall apply mutatis No. 166a)
mutandis. (Sec. 29, R.A. No. 166a)
Section 170. Penalties. - Independent of the
Section 169. False Designations of Origin; civil and administrative sanctions imposed
False Description or Representation. - by law, a criminal penalty of imprisonment
from two (2) years to five (5) years and a fine
169.1 Any person who, on or in connection ranging from Fifty thousand pesos (P50,000)
with any goods or services, or any to Two hundred thousand pesos(P200,000),
container for goods, uses in commerce shall be imposed on any person who is
any word, term, name, symbol, or found guilty of committing any of the acts
device, or any combination thereof, or mentioned in Section 155, Section 168 and
any false designation of origin, false or Subsection 169.1. (Arts. 188 and 189, Revised
misleading description of fact, or false Penal Code)
or misleading representation of fact,
which: PART IV
THE LAW ON COPYRIGHT
(a) Is likely to cause confusion, or to
cause mistake, or to deceive as CHAPTER I
to the affiliation, connection, or PRELIMINARY PROVISIONS
association of such person with
another person, or as to the origin, Section 171. Definitions. - For the purpose
sponsorship, or approval of his or of this Act, the following terms have the
her goods, services, or commercial following meaning:
activities by another person; or
171.1 “Author” is the natural person who has
(b) In commercial advertising or created the work;
promotion, misrepresents the
nature, characteristics, qualities, 171.2 A “collective work” is a work which
or geographic origin of his or has been created by two (2) or more
her or another person’s goods, natural persons at the initiative and
services, or commercial activities, under the direction of another with the
shall be liable to a civil action for understanding that it will be disclosed
damages and injunction provided by the latter under his own name and
in Sections 156 and 157 of this Act
that contributing natural persons will the need for communication within the
not be identified; meaning of Subsection 171.3;
171.3 “Communication to the public” or 171.7 “Published works” means works,

“communicate to the public” means which, with the consent of the authors,
the making of a work available to the are made available to the public by
public by wire or wireless means in wire or wireless means in such a way
such a way that members of the public that members of the public may access
may access these works from a place these works from a place and time
and time individually chosen by them; individually chosen by them: Provided,
That availability of such copies has
171.4 A “computer” is an electronic or similar been such, as to satisfy the reasonable
device having information-processing requirements of the public, having
capabilities, and a “computer program” regard to the nature of the work;
is a set of instructions expressed
in words, codes, schemes or in any 171.8 “Rental” is the transfer of the possession
other form, which is capable when of the original or a copy of a work or a
incorporated in a medium that the sound recording for a limited period of
computer can read, of causing the time, for profit-making purposes;
computer to perform or achieve a
particular task or result; 171.9 “Reproduction” is the making of one
(1) or more copies of a work or a sound
171.5 “Public lending” is the transfer of recording in any manner or form (Sec.
possession of the original or a copy of 41 (E), P.D. No. 49 a);
a work or sound recording for a limited
period, for non-profit purposes, by an 171.10 A “work of applied art” is an artistic
institution the services of which are creation with utilitarian functions
available to the public, such as public or incorporated in a useful article,
library or archive; whether made by hand or produced
on an industrial scale;
171.6 “Public performance”, in the case of a
work other than an audiovisual work, 171.11 A “work of the Government of the
is the recitation, playing, dancing, Philippines” is a work created by an
acting or otherwise performing the officer or employee of the Philippine
work, either directly or by means of Government or any of its subdivisions
any device or process; in the case and instrumentalities, including
of an audiovisual work, the showing government-owned or controlled
of its images in sequence and the corporations as a part of his regularly
making of the sounds accompanying prescribed official duties.
it audible; and, in the case of a sound
recording, making the recorded sounds CHAPTER II
audible at a place or at places where ORIGINAL WORKS
persons outside the normal circle of a
family and that family’s closest social Section 172. Literary and Artistic Works. -
acquaintances are or can be present,
irrespective of whether they are or can 172.1 Literary and artistic works, hereinafter
be present at the same place and at the referred to as “works”, are original
same time, or at different places and/ intellectual creations in the literary
or at different times, and where the and artistic domain protected from
performance can be perceived without the moment of their creation and shall
include in particular: to cinematography or any process
for making audio-visual recordings;
(a) Books, pamphlets, articles and
other writings; (m) Pictorial illustrations and
advertisements;
(b) Periodicals and newspapers;
(n) Computer programs; and
(c) Lectures, sermons, addresses,
dissertations prepared for oral (o) Other literary, scholarly, scientific
delivery, whether or not reduced and artistic works.
in writing or other material form;
172.2 Works are protected by the sole fact
(d) Letters; of their creation, irrespective of their
mode or form of expression, as well as
(e) Dramatic or dramatico-musical of their content, quality and purpose.
compositions; choreographic (Sec. 2, P.D. No. 49a)
works or entertainment in dumb
shows; CHAPTER III
DERIVATIVE WORKS
(f) Musical compositions, with or
without words; Section 173. Derivative Works. -
(g) Works of drawing, painting, 173.1 The following derivative works shall
architecture, sculpture, engraving, also be protected by copyright:
lithography or other works of art;
models or designs for works of art; (a) Dramatizations, translations,
adaptations, abridgments,
(h) Original ornamental designs or arrangements, and other
models for articles of manufacture, alterations of literary or artistic
whether or not registrable as an works; and
industrial design, and other works
of applied art; (b) Collections of literary, scholarly or
artistic works, and compilations of
(i) Illustrations, maps, plans, sketches, data and other materials which are
charts and three-dimensional original by reason of the selection
works relative to geography, or coordination or arrangement of
topography, architecture or their contents. (Sec. 2, [P] and [Q],
science; P.D. No. 49)
(j) Drawings or plastic works of a 173.2 The works referred to in paragraphs

scientific or technical character; (a) and (b) of Subsection 173.1 shall
be protected as new works: Provided
(k) Photographic works including however, That such new work shall
works produced by a process not affect the force of any subsisting
analogous to photography; lantern copyright upon the original works
slides; employed or any part thereof, or be
construed to imply any right to such
(l) Audiovisual works and use of the original works, or to secure
cinematographic works and works or extend copyright in such original
produced by a process analogous works. (Sec. 8, P.D. 49; Art. 10, TRIPS)
Section 174. Published Edition of Work. - In shall have the exclusive right of making
addition to the right to publish granted by a collection of his works. (n)
the author, his heirs, or assigns, the publisher
shall have a copyright consisting merely of 176.3 Notwithstanding the foregoing
the right of reproduction of the typographical provisions, the Government is
arrangement of the published edition of the not precluded from receiving and
work. (n) holding copyrights transferred to it by
assignment, bequest or otherwise; nor
CHAPTER IV shall publication or republication by
WORKS NOT PROTECTED the Government in a public document
of any work in which copyright is
Section 175. Unprotected Subject Matter. - subsisting be taken to cause any
Notwithstanding the provisions of Sections abridgment or annulment of the
172 and 173, no protection shall extend, copyright or to authorize any use or
under this law, to any idea, procedure, system, appropriation of such work without the
method or operation, concept, principle, consent of the copyright owner. (Sec. 9,
discovery or mere data as such, even if third par., P.D. No. 49)
they are expressed, explained, illustrated or
embodied in a work; news of the day and other CHAPTER V
miscellaneous facts having the character COPYRIGHT OR ECONOMIC RIGHTS
of mere items of press information; or any
official text of a legislative, administrative or Section 177. Copyright or Economic Rights.
legal nature, as well as any official translation - Subject to the provisions of Chapter VIII,
thereof (n) copyright or economic rights shall consist of
the exclusive right to carry out, authorize or
Section 176. Works of the Government. - prevent the following acts:
176.1 No copyright shall subsist in any work 177.1 Reproduction of the work or substantial
of the Government of the Philippines. portion of the work;
However, prior approval of the
government agency or office wherein 177.2 Dramatization, translation, adaptation,
the work is created shall be necessary abridgment, arrangement or other
for exploitation of such work for profit. transformation of the work;
Such agency or office may, among
other things, impose as a condition the 177.3 The first public distribution of the
payment of royalties. No prior approval original and each copy of the work
or conditions shall be required for by sale or other forms of transfer of
the use of any purpose of statutes, ownership;
rules and regulations, and speeches,
lectures, sermons, addresses, and 177.4 Rental of the original or a copy of an
dissertations, pronounced, read or audiovisual or cinematographic work,
rendered in courts of justice, before a work embodied in a sound recording,
administrative agencies, in deliberative a computer program, a compilation of
assemblies and in meetings of public data and other materials or a musical
character. (Sec. 9, first par., P.D. No. 49) work in graphic form, irrespective of
the ownership of the original or the
176.2 The author of speeches, lectures, copy which is the subject of the rental;
sermons, addresses, and dissertations (n)
mentioned in the preceding paragraphs

177.5 Public display of the original or a copy 178.4 In the case of a work commissioned
of the work; by a person other than an employer
of the author and who pays for it
177.6 Public performance of the work; and and the work is made in pursuance
of the commission, the person who
177.7 Other communication to the public of so commissioned the work shall
the work. (Sec. 5, P. D. No. 49a) have ownership of the work, but the
copyright thereto shall remain with
CHAPTER VI the creator, unless there is a written
OWNERSHIP OF COPYRIGHT stipulation to the contrary;
Section 178. Rules on Copyright Ownership. - 178.5 In the case of audiovisual work, the
Copyright ownership shall be governed by the copyright shall belong to the producer,
following rules: the author of the scenario, the
composer of the music, the film director,
178.1 Subject to the provisions of this section, and the author of the work so adapted.
in the case of original literary and However, subject to contrary or other
artistic works, copyright shall belong to stipulations among the creators, the
the author of the work; producer shall exercise the copyright
to an extent required for the exhibition
178.2 In the case of works of joint authorship, of the work in any manner, except for
the co-authors shall be the original the right to collect performing license
owners of the copyright and in the fees for the performance of musical
absence of agreement, their rights compositions, with or without words,
shall be governed by the rules on co- which are incorporated into the work;
ownership. If, however, a work of joint and
authorship consists of parts that can
be used separately and the author of 178.6 In respect of letters, the copyright shall
each part can be identified, the author belong to the writer subject to the
of each part shall be the original owner provisions of Article 723 of the Civil
of the copyright in the part that he has Code. (Sec. 6, P.D. No. 49a)
created;
Section 179. Anonymous and Pseudonymous
178.3 In the case of work created by an Works. - For purposes of this Act, the
author during and in the course of publishers shall be deemed to represent
his employment, the copyright shall the authors of articles and other writings
belong to: published without the names of the authors
or under pseudonyms, unless the contrary
(a) The employee, if the creation of the appears, or the pseudonyms or adopted
object of copyright is not a part of his name leaves no doubt as to the author’s
regular duties even if the employee identity, or if the author of the anonymous
uses the time, facilities and materials works discloses his identity. (Sec. 7, P.D. 49)
of the employer.
CHAPTER VII
(b) The employer, if the work is the result TRANSFER OR ASSIGNMENT OF COPYRIGHT
of the performance of his regularly-
assigned duties, unless there is an Section 180. Rights of Assignee. -
agreement, express or implied, to
the contrary. 180.1 The copyright may be assigned in
whole or in part. Within the scope of
the assignment, the assignee is entitled enforce their economic rights and moral
to all the rights and remedies which rights on their behalf. (Sec. 32, P.D. No. 49a)
the assignor had with respect to the
copyright. CHAPTER VIII
LIMITATIONS ON COPYRIGHT
180.2 The copyright is not deemed assigned
inter vivos in whole or in part unless Section 184. Limitations on Copyright. -
there is a written indication of such
intention. 184.1 Notwithstanding the provisions of
Chapter V, the following acts shall not
180.3 The submission of a literary, constitute infringement of copyright:
photographic or artistic work to a
newspaper, magazine or periodical (a) The recitation or performance of
for publication shall constitute only a work, once it has been lawfully
a license to make a single publication made accessible to the public, if
unless a greater right is expressly done privately and free of charge
granted. If two (2) or more persons or if made strictly for a charitable
jointly own a copyright or any part or religious institution or society;
thereof, neither of the owners shall (Sec. 10(1), P.D. No. 49)
be entitled to grant licenses without
the prior written consent of the other (b) The making of quotations from
owner or owners. (Sec. 15, P.D. No. a published work if they are
49a) compatible with fair use and only
to the extent justified for the
Section 181. Copyright and Material purpose, including quotations from
Object. - The copyright is distinct from the newspaper articles and periodicals
property in the material object subject to in the form of press summaries:
it. Consequently, the transfer or assignment Provided, That the source and the
of the copyright shall not itself constitute a name of the author, if appearing
transfer of the material object. Nor shall a on the work, are mentioned; (Sec.
transfer or assignment of the sole copy or 11, third par., P.D. No. 49)
of one or several copies of the work imply
transfer or assignment of the copyright. (Sec. (c) The reproduction or
16, P.D. No. 49) communication to the public
by mass media of articles on
Section 182. Filing of Assignment or License. current political, social, economic,
- An assignment or exclusive license may be scientific or religious topic,
filed in duplicate with the National Library lectures, addresses and other
upon payment of the prescribed fee for works of the same nature, which
registration in books and records kept for are delivered in public if such use
the purpose. Upon recording, a copy of the is for information purposes and
instrument shall be returned to the sender has not been expressly reserved:
with a notation of the fact of record. Notice Provided, That the source is clearly
of the record shall be published in the IPO indicated; (Sec. 11, P.D. No. 49)
Gazette. (Sec. 19, P.D. No. 49a)
(d) The reproduction and
Section 183. Designation of Society. - The communication to the public of
copyright owners or their heirs may designate literary, scientific or artistic works
a society of artists, writers or composers to as part of reports of current

events by means of photography, admission fee is charged in respect
cinematography or broadcasting of such public performance
to the extent necessary for the or communication, by a club
purpose; (Sec. 12, P.D. No. 49) or institution for charitable or
educational purpose only, whose
(e) The inclusion of a work in a aim is not profit making, subject
publication, broadcast, or other to such other limitations as may be
communication to the public, provided in the Regulations; (n)
sound recording or film, if such
inclusion is made by way of (j) Public display of the original or a
illustration for teaching purposes copy of the work not made by means
and is compatible with fair use: of a film, slide, television image or
Provided, That the source and of otherwise on screen or by means
the name of the author, if appearing of any other device or process:
in the work, are mentioned; Provided, That either the work has
been published, or, that the original
(f) The recording made in schools, or the copy displayed has been sold,
universities, or educational given away or otherwise transferred
institutions of a work included in to another person by the author or
a broadcast for the use of such his successor in title; and
schools, universities or educational
institutions: Provided, That such (k) Any use made of a work for the
recording must be deleted within a purpose of any judicial proceedings
reasonable period after they were or for the giving of professional
first broadcast: Provided, further, advice by a legal practitioner.
That such recording may not be
made from audiovisual works 184.2 The provisions of this section shall be
which are part of the general interpreted in such a way as to allow
cinema repertoire of feature films the work to be used in a manner which
except for brief excerpts of the does not conflict with the normal
work; exploitation of the work and does
not unreasonably prejudice the right
(g) The making of ephemeral holder’s legitimate interests.
recordings by a broadcasting
organization by means of its own Section 185. Fair Use of a Copyrighted Work. -
facilities and for use in its own
broadcast; 185.1 The fair use of a copyrighted work for
criticism, comment, news reporting,
(h) The use made of a work by or teaching including multiple copies
under the direction or control of for classroom use, scholarship,
the Government, by the National research, and similar purposes is
Library or by educational, scientific not an infringement of copyright.
or professional institutions where Decompilation, which is understood
such use is in the public interest here to be the reproduction of the
and is compatible with fair use; code and translation of the forms of
the computer program to achieve the
(i) The public performance or the inter-operability of an independently
communication to the public created computer program with other
of a work, in a place where no programs may also constitute fair use.

In determining whether the use made 187.2 The permission granted under
of a work in any particular case is fair Subsection 187.1 shall not extend to
use, the factors to be considered shall the reproduction of:
include:
(a) A work of architecture in the form
(a) The purpose and character of the of building or other construction;
use, including whether such use
is of a commercial nature or is for (b) An entire book, or a substantial
non-profit educational purposes; part thereof, or of a musical work
in graphic form by reprographic
(b) The nature of the copyrighted means;
work;
(c) A compilation of data and other
(c) The amount and substantiality of materials;
the portion used in relation to the
copyrighted work as a whole; and (d) A computer program except as
provided in Section 189; and
(d) The effect of the use upon the
potential market for or value of the (e) Any work in cases where
copyrighted work. reproduction would unreasonably
conflict with a normal exploitation
185.2 The fact that a work is unpublished of the work or would otherwise
shall made upon consideration of all unreasonably prejudice the
the above factors. legitimate interests of the author.
(n)
Section 186. Work of Architecture. - Copyright
in a work of architecture shall include the Section 188. Reprographic Reproduction by
right to control the erection of any building Libraries. -
which reproduces the whole or a substantial
part of the work either in its original form 188.1 Notwithstanding the provisions of
or in any form recognizably derived from Subsection 177.6, any library or archive
the original: Provided, That the copyright in whose activities are not for profit
any such work shall not include the right to may, without the authorization of the
control the reconstruction or rehabilitation in author of copyright owner, make a
the same style as the original of a building to single copy of the work by reprographic
which that copyright relates. (n) reproduction:
Section 187. Reproduction of Published Work. (a) Where the work by reason of its
- fragile character or rarity cannot
187.1 Notwithstanding the provision of be lent to user in its original form;
Section 177, and subject to the
provisions of Subsection 187.2, the (b) Where the works are isolated
private reproduction of a published articles contained in composite
work in a single copy, where the works or brief portions of
reproduction is made by a natural other published works and the
person exclusively for research and reproduction is necessary to supply
private study, shall be permitted, them, when this is considered
without the authorization of the owner expedient, to persons requesting
of copyright in the work. their loan for purposes of research
or study instead of lending the
volumes or booklets which contain which the computer program has
them; and been obtained; and
(c) Where the making of such a copy (b) Archival purposes, and, for the
is in order to preserve and, if replacement of the lawfully owned
necessary in the event that it is lost, copy of the computer program
destroyed or rendered unusable, in the event that the lawfully
replace a copy, or to replace, in the obtained copy of the computer
permanent collection of another program is lost, destroyed or
similar library or archive, a copy rendered unusable.
which has been lost, destroyed or
rendered unusable and copies are 189.2 No copy or adaptation mentioned in this
not available with the publisher. Section shall be used for any purpose
other than the ones determined in
185.2 The fact that a work is unpublished shall this Section, and any such copy or
not by itself bar a finding of fair use if adaptation shall be destroyed in the
such finding is 188.2. Notwithstanding event that continued possession of the
the above provisions, it shall not be copy of the computer program ceases
permissible to produce a volume of a to be lawful.
work published in several volumes or
to produce missing tomes or pages of 189.3 This provision shall be without
magazines or similar works, unless the prejudice to the application of Section
volume, tome or part is out of stock: 185 whenever appropriate. (n)
Provided, That every library which,
by law, is entitled to receive copies Section 190. Importation for Personal
of a printed work, shall be entitled, Purposes. -
when special reasons so require, to
reproduce a copy of a published work 190.1 Notwithstanding the provision of
which is considered necessary for the Subsection 177.6, but subject to
collection of the library but which is the limitation under the Subsection
out of stock. (Sec. 13, P.D. 49a) 185.2, the importation of a copy of a
work by an individual for his personal
Section 189. Reproduction of Computer purposes shall be permitted without
Program. - the authorization of the author of, or
other owner of copyright in, the work
189.1 Notwithstanding the provisions of under the following circumstances:
Section 177, the reproduction in one
(1) back-up copy or adaptation of a (a) When copies of the work are not
computer program shall be permitted, available in the Philippines and:
without the authorization of the
author of, or other owner of copyright (i) Not more than one (1) copy
in, a computer program, by the lawful at one time is imported for
owner of that computer program: strictly individual use only; or
Provided, That the copy or adaptation
is necessary for: (ii) The importation is by authority
of and for the use of the
(a) The use of the computer program Philippine Government; or
in conjunction with a computer for
the purpose, and to the extent, for

(iii) The importation, consisting of Library. - After the first public dissemination
not more than three (3) such of performance by authority of the copyright
copies or likenesses in any one owner of a work falling under Subsections
invoice, is not for sale but for 172.1, 172.2 and 172.3 of this Act, there shall,
the use only of any religious, for the purpose of completing the records of
charitable, or educational the National Library and the Supreme Court
society or institution duly Library, within three (3) weeks, be registered
incorporated or registered, or and deposited with it, by personal delivery or
is for the encouragement of by registered mail two (2) complete copies
the fine arts, or for any state or reproductions of the work in such form as
school, college, university, the directors of said libraries may prescribe. A
or free public library in the certificate of deposit shall be issued for which
Philippines. the prescribed fee shall be collected and
the copyright owner shall be exempt from
(b) When such copies form parts of making additional deposit of the works with
libraries and personal baggage the National Library and the Supreme Court
belonging to persons or families Library under other laws. If, within three (3)
arriving from foreign countries weeks after receipt by the copyright owner of
and are not intended for sale: a written demand from the directors for such
Provided, That such copies do not deposit, the required copies or reproductions
exceed three (3). are not delivered and the fee is not paid, the
copyright owner shall be liable to pay a fine
190.2 Copies imported as allowed by this equivalent to the required fee per month of
Section may not lawfully be used in delay and to pay to the National Library and
any way to violate the rights of owner the Supreme Court Library the amount of the
the copyright or annul or limit the retail price of the best edition of the work.
protection secured by this Act, and Only the above mentioned classes of work
such unlawful use shall be deemed an shall be accepted for deposit by the National
infringement and shall be punishable Library and the Supreme Court Library. (Sec.
as such without prejudice to the 26, P.D. No. 49a)
proprietor’s right of action.
Section 192. Notice of Copyright. - Each
190.3 Subject to the approval of the Secretary copy of a work published or offered for sale
of Finance, the Commissioner of may contain a notice bearing the name of
Customs is hereby empowered to make the copyright owner, and the year of its first
rules and regulations for preventing the publication, and, in copies produced after the
importation of articles the importation creator’s death, the year of such death. (Sec.
of which is prohibited under this Section 27, P.D. No. 49a)
and under treaties and conventions to
which the Philippines may be a party CHAPTER X
and for seizing and condemning and MORAL RIGHTS
disposing of the same in case they
are discovered after they have been Section 193. Scope of Moral Rights. - The
imported. (Sec. 30, P.D. No. 49) author of a work shall, independently of the
economic rights in Section 177 or the grant of
CHAPTER IX an assignment or license with respect to such
DEPOSIT AND NOTICE right, have the right:
Section 191. Registration and Deposit with 193.1 To require that the authorship of
National Library and the Supreme Court the works be attributed to him, in
particular, the right that his name, as attributed to him is deemed waived unless he
far as practicable, be indicated in a expressly reserves it. (Sec. 37, P.D. No. 49)
prominent way on the copies, and in
connection with the public use of his Section 197. Editing, Arranging and
work; Adaptation of Work. - In the absence of a
contrary stipulation at the time an author
193.2 To make any alterations of his work prior licenses or permits another to use his work, the
to, or to withhold it from publication; necessary editing, arranging or adaptation of
such work, for publication, broadcast, use in a
193.3 To object to any distortion, mutilation motion picture, dramatization, or mechanical
or other modification of, or other or electrical reproduction in accordance with
derogatory action in relation to, his the reasonable and customary standards or
work which would be prejudicial to his requirements of the medium in which the
honor or reputation; and work is to be used, shall not be deemed to
contravene the author’s rights secured by
193.4 To restrain the use of his name with this chapter. Nor shall complete destruction
respect to any work not of his own of a work unconditionally transferred by the
creation or in a distorted version of his author be deemed to violate such rights. (Sec.
work. (Sec. 34, P.D. No. 49) 38, P.D. No. 49)
Section 194. Breach of Contract. - An author Section 198. Term of Moral Rights. -
cannot be compelled to perform his contract
to create a work or for the publication of his 198.1 The rights of an author under this
work already in existence. However, he may chapter shall last during the lifetime
be held liable for damages for breach of such of the author and for fifty (50) years
contract. (Sec. 35, P.D. No. 49) after his death and shall not be
assignable or subject to license. The
Section 195. Waiver of Moral Rights. - An person or persons to be charged with
author may waive his rights mentioned in the posthumous enforcement of these
Section 193 by a written instrument, but no rights shall be named in writing to
such waiver shall be valid where its effects is be filed with the National Library. In
to permit another: default of such person or persons, such
enforcement shall devolve upon either
195.1 To use the name of the author, or the the author’s heirs, and in default of
title of his work, or otherwise to make the heirs, the Director of the National
use of his reputation with respect to Library.
any version or adaptation of his work
which, because of alterations therein, 198.2 For purposes of this Section, “Person”
would substantially tend to injure the shall mean any individual, partnership,
literary or artistic reputation of another corporation, association, or society.
author; or The Director of the National Library
may prescribe reasonable fees to
195.2 To use the name of the author with be charged for his services in the
respect to a work he did not create. application of provisions of this Section.
(Sec. 36, P.D. No. 49) (Sec. 39, P.D. No. 49)
Section 196. Contribution to Collective Work. Section 199. Enforcement Remedies. -

- When an author contributes to a collective
work, his right to have his contribution Violation of any of the rights conferred by this
Chapter shall entitle those charged with their
enforcement to the same rights and remedies of other sounds, or representation
available to a copyright owner. In addition, of sound, other than in the form
damages which may be availed of under of a fixation incorporated in a
the Civil Code may also be recovered. Any cinematographic or other audiovisual
damage recovered after the creator’s death work;
shall be held in trust for and remitted to his
heirs, and in default of the heirs, shall belong 202.3 An “audiovisual work or fixation” is a
to the government. (Sec. 40, P D No. 49) work that consists of a series of related
images which impart the impression of
CHAPTER XI motion, with or without accompanying
RIGHTS TO PROCEEDS IN SUBSEQUENT sounds, susceptible of being made
TRANSFERS visible and, where accompanied by
sounds, susceptible of being made
Section 200. Sale or Lease of Work. - In every audible;
sale or lease of an original work of painting
or sculpture or of the original manuscript of 202.4 “Fixation” means the embodiment
a writer or composer, subsequent to the first of sounds, or of the representations
disposition thereof by the author, the author thereof, from which they can
or his heirs shall have an inalienable right to be perceived, reproduced or
participate in the gross proceeds of the sale communicated through a device;
or lease to the extent of five percent (5%).
This right shall exist during the lifetime of the 202.5 “Producer of a sound recording” means
author and for fifty (50) years after his death. the person, or the legal entity, who
(Sec. 31, P.D. No. 49) or which takes the initiative and has
the responsibility for the first fixation
Section 201. Works Not Covered. - The of the sounds of a performance or
provisions of this Chapter shall not apply other sounds, or the representation of
to prints, etchings, engravings, works of sounds;
applied art, or works of similar kind wherein
the author primarily derives gain from the 202.6 “Publication of a fixed performance or a
proceeds of reproductions. (Sec. 33, P.D. No. sound recording” means the offering of
49) copies of the fixed performance or the
sound recording to the public, with the
CHAPTER XII consent of the right holder: Provided,
RIGHTS OF PERFORMERS, PRODUCERS OF That copies are offered to the public in
SOUNDS RECORDINGS AND BROADCASTING reasonable quality;
ORGANIZATIONS
202.7 “Broadcasting” means the
Section 202. Definitions. - For the purpose of transmission by wireless means for
this Act, the following terms shall have the the public reception of sounds or of
following meanings: images or of representations thereof;
such transmission by satellite is also
202.1 “Performers” are actors, singers, “broadcasting” where the means for
musicians, dancers, and other persons decrypting are provided to the public
who act, sing, declaim, play in, by the broadcasting organization or
interpret, or otherwise perform literary with its consent;
and artistic work;
202.8 “Broadcasting organization” shall
202.2 “Sound recording” means the fixation include a natural person or a juridical
of the sounds of a performance or entity duly authorized to engage in
broadcasting; and 203.5 The right of authorizing the
making available to the public of
202.9 “Communication to the public of a their performances fixed in sound
performance or a sound recording” recordings, by wire or wireless means,
means the transmission to the in such a way that members of the
public, by any medium, otherwise public may access them from a place
than by broadcasting, of sounds of a and time individually chosen by them.
performance or the representations (Sec. 42, P.D. No. 49a)
of sounds fixed in a sound recording.
For purposes of Section 209, Section 204. Moral Rights of Performers. -
“communication to the public” includes
making the sounds or representations 204.1 Independently of a performer’s
of sounds fixed in a sound recording economic rights, the performer, shall,
audible to the public. as regards his live aural performances
or performances fixed in sound
Section 203. Scope of Performers’ Rights. recordings, have the right to claim
- Subject to the provisions of Section 212, to be identified as the performer of
performers shall enjoy the following exclusive his performances, except where the
rights: omission is dictated by the manner of
the use of the performance, and to
203.1 As regards their performances, the object to any distortion, mutilation or
right of authorizing: other modification of his performances
that would be prejudicial to his
(a) The broadcasting and other reputation.
communication to the public of
their performance; and 204.2 The rights granted to a performer in
accordance with Subsection 203.1 shall
(b) The fixation of their unfixed be maintained and exercised fifty (50)
performance. years after his death, by his heirs, and
in default of heirs, the government,
203.2 The right of authorizing the direct where protection is claimed. (Sec. 43,
or indirect reproduction of their P.D. No. 49)
performances fixed in sound
recordings, in any manner or form; Section 205. Limitation on Right. -
203.3 Subject to the provisions of Section 205.1 Subject to the provisions of Section
206, the right of authorizing the first 206, once the performer has
public distribution of the original and authorized the broadcasting or fixation
copies of their performance fixed in of his performance, the provisions
the sound recording through sale or of Sections 203 shall have no further
rental or other forms of transfer of application.
ownership;
205.2 The provisions of Section 184 and
203.4 The right of authorizing the commercial Section 185 shall apply mutatis
rental to the public of the original mutandis to performers. (n)
and copies of their performances
fixed in sound recordings, even after Section 206. Additional Remuneration for
distribution of them by, or pursuant Subsequent Communications or Broadcasts.
to the authorization by the performer; - Unless otherwise provided in the contract,
and in every communication to the public or
broadcast of a performance subsequent or is publicly performed with the intention
to the first communication or broadcast of making and enhancing profit, a single
thereof by the broadcasting organization, the equitable remuneration for the performer or
performer shall be entitled to an additional performers, and the producer of the sound
remuneration equivalent to at least five recording shall be paid by the user to both
percent (5%) of the original compensation he the performers and the producer, who, in the
or she received for the first communication or absence of any agreement shall share equally.
broadcast. (n) (Sec. 47, P.D. No. 49a)
Section 207. Contract Terms. - Nothing in Section 210. Limitation of Right. - Sections
this Chapter shall be construed to deprive 184 and 185 shall apply mutatis mutandis to
performers of the right to agree by contracts the producer of sound recordings. (Sec. 48,
on terms and conditions more favorable P.D. No. 49a)
for them in respect of any use of their
performance. (n) CHAPTER XIV
BROADCASTING ORGANIZATIONS
CHAPTER XIII
PRODUCERS OF SOUND RECORDINGS Section 211. Scope of Right. - Subject to
the provisions of Section 212, broadcasting
Section 208. Scope of Right. - Subject to the organizations shall enjoy the exclusive right
provisions of Section 212, producers of sound to carry out, authorize or prevent any of the
recordings shall enjoy the following exclusive following acts:
rights:
211.1 The rebroadcasting of their broadcasts;
208.1 The right to authorize the direct or
indirect reproduction of their sound 211.2 The recording in any manner, including
recordings, in any manner or form; the making of films or the use of
the placing of these reproductions in video tape, of their broadcasts for
the market and the right of rental or the purpose of communication to the
lending; public of television broadcasts of the
same; and
208.2 The right to authorize the first public
distribution of the original and copies 211.3 The use of such records for fresh
of their sound recordings through sale transmissions or for fresh recording.
or rental or other forms of transferring (Sec. 52, P.D. No. 49)
ownership; and
CHAPTER XV
208.3 The right to authorize the commercial LIMITATIONS ON PROTECTION
rental to the public of the original
and copies of their sound recordings, Section 212. Limitations on Rights. - Sections
even after distribution by them by 203, 208 and 209 shall not apply where the
or pursuant to authorization by the acts referred to in those Sections are related
producer. (Sec. 46, P.D. No. 49a) to:
Section 209. Communication to the Public. - If 212.1 The use by a natural person exclusively
a sound recording published for commercial for his own personal purposes;
purposes, or a reproduction of such sound
recording, is used directly for broadcasting 212.2 Using short excerpts for reporting
or for other communication to the public, current events;

212.3 Use solely for the purpose of teaching 213.5 In case of photographic works, the
or for scientific research; and protection shall be for fifty (50) years
from publication of the work and, if
212.4 Fair use of the broadcast subject to the unpublished, fifty (50) years from the
conditions under Section 185. (Sec. 44, making. (Sec. 24(C), P.D. 49a)
P.D. No. 49a)
213.6 In case of audio-visual works including
CHAPTER XVI those produced by process analogous
TERM OF PROTECTION to photography or any process for
making audio-visual recordings, the
Section 213. Term of Protection. - term shall be fifty (50) years from date
of publication and, if unpublished, from
213.1 Subject to the provisions of Subsections the date of making. (Sec. 24(C), P.D. No.
213.2 to 213.5, the copyright in works 49a)
under Sections 172 and 173 shall be
protected during the life of the author Section 214. Calculation of Term. - The term
and for fifty (50) years after his death. of protection subsequent to the death of the
This rule also applies to posthumous author provided in the preceding Section
works. (Sec. 21, first sentence, P.D. No. shall run from the date of his death or of
49a) publication, but such terms shall always be
deemed to begin on the first day of January of
213.2 In case of works of joint authorship, the year following the event which gave rise
the economic rights shall be protected to them. (Sec. 25, P.D. No. 49)
during the life of the last surviving
author and for fifty (50) years after his Section 215. Term of Protection for Performers,
death. (Sec. 21, second sentence, P.D. Producers and Broadcasting Organizations. -
No. 49)
215.1 The rights granted to performers and
213.3 In case of anonymous or producers of sound recordings under
pseudonymous works, the copyright this law shall expire:
shall be protected for fifty (50) years
from the date on which the work was (a) For performances not incorporated
first lawfully published: Provided, That in recordings, fifty (50) years from
where, before the expiration of the the end of the year in which the
said period, the author’s identity is performance took place; and
revealed or is no longer in doubt, the
provisions of Subsections 213.1. and (b) For sound or image and sound
213.2 shall apply, as the case may be: recordings and for performances
Provided, further, That such works if incorporated therein, fifty (50)
not published before shall be protected years from the end of the year in
for fifty (50) years counted from the which the recording took place.
making of the work. (Sec. 23, P.D. No.
49) 215.2 In case of broadcasts, the term shall
be twenty (20) years from the date the
213.4 In case of works of applied art the broadcast took place. The extended
protection shall be for a period of term shall be applied only to old works
twenty-five (25) years from the date of with subsisting protection under the
making. (Sec. 24(B), P.D. No. 49a) prior law. (Sec. 55, P.D. No. 49a)

CHAPTER XVII means for making such infringing
INFRINGEMENT copies as the court may order.
Section 216. Remedies for Infringement. - (e) Such other terms and conditions,
including the payment of moral
216.1 Any person infringing a right protected and exemplary damages, which
under this law shall be liable: the court may deem proper, wise
and equitable and the destruction
(a) To an injunction restraining such of infringing copies of the work
infringement. The court may also even in the event of acquittal in a
order the defendant to desist criminal case.
from an infringement, among
others, to prevent the entry into 216.2 In an infringement action, the court
the channels of commerce of shall also have the power to order the
imported goods that involve an seizure and impounding of any article
infringement, immediately after which may serve as evidence in the
customs clearance of such goods. court proceedings. (Sec. 28, P.D. No.
49a)
(b) Pay to the copyright proprietor or
his assigns or heirs such actual Section 217. Criminal Penalties. -
damages, including legal costs and
other expenses, as he may have 217.1 Any person infringing any right secured
incurred due to the infringement by provisions of Part IV of this Act or
as well as the profits the infringer aiding or abetting such infringement
may have made due to such shall be guilty of a crime punishable by:
infringement, and in proving profits
the plaintiff shall be required to (a) Imprisonment of one (1) year
prove sales only and the defendant to three (3) years plus a fine
shall be required to prove every ranging from Fifty thousand pesos
element of cost which he claims, (P50,000) to One hundred fifty
or, in lieu of actual damages and thousand pesos (P150,000) for the
profits, such damages which to the first offense.
court shall appear to be just and
shall not be regarded as penalty. (b) Imprisonment of three (3) years
and one (1) day to six (6) years plus
(c) Deliver under oath, for impounding a fine ranging from One hundred
during the pendency of the action, fifty thousand pesos (P150,000)
upon such terms and conditions to Five hundred thousand pesos
as the court may prescribe, sales (P500,000) for the second offense.
invoices and other documents
evidencing sales, all articles and (c) Imprisonment of six (6) years and
their packaging alleged to infringe one (1) day to nine (9) years plus
a copyright and implements for a fine ranging from five hundred
making them. thousand pesos (P500,000) to One
million five hundred thousand
(d) Deliver under oath for destruction pesos (P1,500,000) for the third
without any compensation all and subsequent offenses.
infringing copies or devices, as
well as all plates, molds, or other

(d) In all cases, subsidiary (c) The copy of the work or other
imprisonment in cases of subject matter annexed thereto
insolvency. is a true copy thereof, shall be
admitted in evidence in any
217.2 In determining the number of years of proceedings for an offense under
imprisonment and the amount of fine, this Chapter and shall be prima
the court shall consider the value of the facie proof of the matters therein
infringing materials that the defendant stated until the contrary is proved,
has produced or manufactured and the and the court before which such
damage that the copyright owner has affidavit is produced shall assume
suffered by reason of the infringement. that the affidavit was made by
or on behalf of the owner of the
217.3 Any person who at the time when copyright.
copyright subsists in a work has in his
possession an article which he knows, 218.2 In an action under this Chapter:
or ought to know, to be an infringing
copy of the work for the purpose of: (a) Copyright shall be presumed
to subsist in the work or other
(a) Selling, letting for hire, or by way of subject matter to which the action
trade offering or exposing for sale, relates if the defendant does not
or hire, the article; put in issue the question whether
copyright subsists in the work or
(b) Distributing the article for purpose other subject matter; and
of trade, or for any other purpose
to an extent that will prejudice the (b) Where the subsistence of the
rights of the copyright owner in copyright is established, the
the work; or plaintiff shall be presumed to
be the owner of the copyright if
(c) Trade exhibit of the article in he claims to be the owner of the
public, shall be guilty of an offense copyright and the defendant does
and shall be liable on conviction to not put in issue the question of his
imprisonment and fine as above ownership.
mentioned. (Sec. 29, P.D. No. 49a)
(c) Where the defendant, without
Section 218. Affidavit Evidence. - good faith, puts in issue the
questions of whether copyright
218.1 In an action under this Chapter, an subsists in a work or other subject
affidavit made before a notary public matter to which the action relates,
by or on behalf of the owner of the or the ownership of copyright
copyright in any work or other subject in such work or subject matter,
matter and stating that: thereby occasioning unnecessary
costs or delay in the proceedings,
(a) At the time specified therein, the court may direct that any costs
copyright subsisted in the work or to the defendant in respect of the
other subject matter; action shall not be allowed by him
and that any costs occasioned by
(b) He or the person named therein is the defendant to other parties
the owner of the copyright; and shall be paid by him to such other
parties. (n)

Section 219. Presumption of Authorship. - (b) Audio-visual works the producer
of which has his headquarters
219.1 The natural person whose name or habitual residence in the
is indicated on a work in the usual Philippines;
manner as the author shall, in the
absence of proof to the contrary, be (c) Works of architecture erected in
presumed to be the author of the work. the Philippines or other artistic
This provision shall be applicable even works incorporated in a building
if the name is a pseudonym, where the or other structure located in the
pseudonym leaves no doubt as to the Philippines;
identity of the author.
(d) Works first published in the
219.2 The person or body corporate whose Philippines; and
name appears on a audio-visual work in
the usual manner shall, in the absence (e) Works first published in another
of proof to the contrary, be presumed country but also published in the
to be the maker of said work. (n) Philippines within thirty days,
irrespective of the nationality or
Section 220. International Registration of residence of the authors.
Works. - A statement concerning a work,
recorded in an international register in 221.2 The provisions of this Act shall also
accordance with an international treaty to apply to works that are to be protected
which the Philippines is or may become a by virtue of and in accordance with
party, shall be construed as true until the any international convention or other
contrary is proved except: international agreement to which the
Philippines is a party. (n)
220.1 Where the statement cannot be
valid under this Act or any other law Section 222. Points of Attachment for
concerning intellectual property. Performers. - The provisions of this Act on the
protection of performers shall apply to:
220.2 Where the statement is contradicted
by another statement recorded in the 222.1 Performers who are nationals of the
international register. (n) Philippines;
CHAPTER XVIII 222.2 Performers who are not nationals of the

SCOPE OF APPLICATION Philippines but whose performances:
Section 221. Points of Attachment for Works (a) Take place in the Philippines; or
under Sections 172 and 173. -
(b) Are incorporated in sound recordings
221.1 The protection afforded by this Act to that are protected under this Act; or
copyrightable works under Sections
172 and 173 shall apply to: (c) Which has not been fixed in sound
recording but are carried by
(a) Works of authors who are nationals broadcast qualifying for protection
of, or have their habitual residence under this Act. (n)
in, the Philippines;
Section 223. Points of Attachment for Sound
Recordings. - The provisions of this Act on the

protection of sound recordings shall apply to: CHAPTER XX
MISCELLANEOUS PROVISIONS
223.1 Sound recordings the producers of
which are nationals of the Philippines; Section 227. Ownership of Deposit and
and Instruments. - All copies deposited and
instruments in writing filed with the National
223.2 Sound recordings that were first Library and the Supreme Court Library in
published in the Philippines. (n) accordance with the provisions of this Act
shall become the property of the Government.
Section 224. Points of Attachment for (Sec. 60, P.D. No. 49)
Broadcasts. -
Section 228. Public Records. - The section
224.1 The provisions of this Act on the or division of the National Library and the
protection of broadcasts shall apply to: Supreme Court Library charged with receiving
copies and instruments deposited and with
(a) Broadcasts of broadcasting keeping records required under this Act and
organizations the headquarters everything in it shall be opened to public
of which are situated in the inspection. The Director of the National
Philippines; and Library is empowered to issue such safeguards
and regulations as may be necessary to
(b) Broadcasts transmitted from implement this Section and other provisions
transmitters situated in the of this Act. (Sec. 61, P.D. No. 49)
Philippines.
Section 229. Copyright Division; Fees. - The
224.2 The provisions of this Act shall also Copyright Section of the National Library shall
apply to performers who, and to be classified as a Division upon the effectivity
producers of sound recordings and of this Act. The National Library shall have
broadcasting organizations which, the power to collect, for the discharge of its
are to be protected by virtue of and services under this Act, such fees as may be
in accordance with any international promulgated by it from time to time subject
convention or other international to the approval of the Department Head.
agreement to which the Philippines is (Sec. 62, P.D. 49a)
a party. (n)
PART V
CHAPTER XIX FINAL PROVISIONS
INSTITUTION OF ACTIONS
Section 230. Equitable Principles to
Section 225. Jurisdiction. - Without prejudice Govern Proceedings. - In all inter partes
to the provisions of Subsection 7.1(c), actions proceedings in the Office under this Act,
under this Act shall be cognizable by the the equitable principles of laches, estoppel,
courts with appropriate jurisdiction under and acquiescence where applicable, may be
existing law. (Sec. 57, P.D. No. 49a) considered and applied. (Sec. 9-A, R.A. No.
165)
Section 226. Damages. - No damages may be
recovered under this Act after four (4) years Section 231. Reverse Reciprocity of Foreign
from the time the cause of action arose. (Sec. Laws. - Any condition, restriction, limitation,
58, P.D. No. 49) diminution, requirement, penalty or any
similar burden imposed by the law of a
foreign country on a Philippine national

seeking protection of intellectual property shall enjoy the retirement benefits granted
rights in that country, shall reciprocally be under existing law, otherwise, they shall be
enforceable upon nationals of said country, paid the equivalent of one month basic salary
within Philippine jurisdiction. (n) for every year of service, or the equivalent
nearest fractions thereof favorable to them
Section 232. Appeals. - on the basis of the highest salary received.(n)
232.1 Appeals from decisions of regular Section 235. Applications Pending on Effective
courts shall be governed by the Rules Date of Act. -
of Court. Unless restrained by a higher
court, the judgment of the trial court 235.1 All applications for patents pending in
shall be executory even pending appeal the Bureau of Patents, Trademarks and
under such terms and conditions as the Technology Transfer shall be proceeded
court may prescribe. with and patents thereon granted
in accordance with the Acts under
232.2 Unless expressly provided in this Act or which said applications were filed,
other statutes, appeals from decisions and said Acts are hereby continued
of administrative officials shall be to be enforced, to this extent and for
provided in the Regulations. (n) this purpose only, notwithstanding
the foregoing general repeal thereof:
Section 233. Organization of the Office; Provided, That applications for utility
Exemption from the Salary Standardization models or industrial designs pending
Law and the Attrition Law. - at the effective date of this Act, shall
be proceeded with in accordance
233.1 The Office shall be organized within one with the provisions of this Act, unless
(1) year after the approval of this Act. It the applicants elect to prosecute said
shall not be subject to the provisions of applications in accordance with the
Republic Act No. 7430. Acts under which they were filed.
233.2 The Office shall institute its own 235.2 All applications for registration of
compensation structure: Provided, marks or trade names pending in the
That the Office shall make its own Bureau of Patents, Trademarks and
system conform as closely as possible Technology Transfer at the effective
with the principles provided for under date of this Act may be amended, if
Republic Act No. 6758. (n) practicable to bring them under the
provisions of this Act. The prosecution
Section 234. Abolition of the Bureau of of such applications so amended and
Patents, Trademarks, and Technology the grant of registrations thereon
Transfer. - The Bureau of Patents, shall be proceeded with in accordance
Trademarks, and Technology Transfer under with the provisions of this Act. If
the Department of Trade and Industry is such amendments are not made, the
hereby abolished. All unexpended funds prosecution of said applications shall
and fees, fines, royalties and other charges be proceeded with and registrations
collected for the calendar year, properties, thereon granted in accordance with
equipment and records of the Bureau of the Acts under which said applications
Patents, Trademarks and Technology Transfer, were filed, and said Acts are hereby
and such personnel as may be necessary are continued in force to this extent for
hereby transferred to the Office. Personnel this purpose only, notwithstanding the
not absorbed or transferred to the Office foregoing general repeal thereof (n)

Section 236. Preservation of Existing Rights. Presidential Decree No. 49, including
- Nothing herein shall adversely affect the Presidential Decree No. 285, as
rights on the enforcement of rights in patents, amended, are hereby repealed.
utility models, industrial designs, marks and
works, acquired in good faith prior to the 239.2 Marks registered under Republic Act
effective date of this Act. (n) No. 166 shall remain in force but shall
be deemed to have been granted
Section 237. Notification on Berne Appendix. under this Act and shall be due for
- The Philippines shall by proper compliance renewal within the period provided
with the requirements set forth under for under this Act and, upon renewal
the Appendix of the Berne Convention shall be reclassified in accordance with
(Paris Act, 1971) avail itself of the special the International Classification. Trade
provisions regarding developing countries, names and marks registered in the
including provisions for licenses grantable by Supplemental Register under Republic
competent authority under the Appendix. (n) Act No. 166 shall remain in force but
shall no longer be subject to renewal.
Section 238. Appropriations. - The funds
needed to carry out the provisions of this 239.3 The provisions of this Act shall apply
Act shall be charged to the appropriations to works in which copyright protection
of the Bureau of Patents, Trademarks, and obtained prior to the effectivity of this
Technology Transfer under the current Act is subsisting: Provided, That the
General Appropriations Act and the fees, application of this Act shall not result in
fines, royalties and other charges collected by the diminution of such protection. (n)
the Bureau for the calendar year pursuant to
Sections 14.1 and 234 of this Act. Thereafter Section 240. Separability. - If any provision of
such sums as may be necessary for its this Act or the application of such provision
continued implementations shall be included to any circumstances is held invalid, the
in the annual General Appropriations Act. (n) remainder of the Act shall not be affected
thereby. (n)
Section 239. Repeals. -
Section 241. Effectivity. - This Act shall take
239.1 All Acts and parts of Acts inconsistent effect on 1 January 1998. (n)
herewith, more particularly Republic
Act No. 165, as amended; Republic Act
No. 166, as amended; and Articles 188 Approved: June 6, 1997
and 189 of the Revised Penal Code;

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DEPARTMENT OF ENERGY

COMPENDIUM OF ENERGY LAWS

As members and affiliates of this agency, we should be proud of our accomplishments

JOSE RENE D. ALMENDRAS

An important commitment of the Department of Energy involves the mainstreaming

A valuable tool in achieving this goal comes in the form of a comprehensive

LORETA G. AYSON, CESO I

VOLUME III. DOWNSTREAM

 EXECUTIVE ORDER NO. 377 118

REPUBLIC ACT NO. 9367 215

 DEPARTMENT CIRCULAR NO. 2006-08-0011 222

BATAS PAMBANSA BILANG 33

RULES AND REGULATIONS

RULE I (1) “Bureau” shall mean the Bureau of

BUREAU OF ENERGY UTILIZATION

BEU MEMORANDUM CIRCULAR 85-3-348

TO: ALL AUTHORIZED LIQUIFIED PETROLEUM GAS (LPG) REFILLERS

SUBJECT: AMENDMENT TO RULE IV, SECTION 2a (UNDERFILLING OF LPG CYLINDER) OF THE

EIAB MEMORANDUM CIRCULAR NO. 95-03-001

DEPARTMENT CIRCULAR NO. 2000-05-007

DEPARTMENT CIRCULAR 2000-06-010

REVISED SCHEDULE OF PENALTIES IN THE LPG INDUSTRY OF 2000

SECTION 3. DEFINITION OF TERMS - LPG Marketer/LPG Dealer/LPG Retail Outlet

1st Offense - Fine of P3,000 for each C. LPG RETAIL OUTLET

1st Offense - Fine of P10,000 SECTION 18. EFFECTIVITY – This Department

The HONORABLE SECRETARY VINCENT S. SECTION 5. NO WEIGHING SCALE –

vs. 1st Offense - Fine of P5,000

cylinder 1st Offense - Fine of P1,000 for each

1st Offense - Fine of P1,000 for each

A. LPG REFILLER/MARKETER 1st Offense - Fine of P5,000 for each

B. DEALER 1st Offense - Fine of P3,000 for each

C. LPG RETAIL OUTLET 1st Offense - Fine of P1,500 for each

1st Offense - Fine of P10,000 per

AN ACT DEREGULATING THE DOWNSTREAM OIL

DEPARTMENT CIRCULAR NO. 2001-11-004

DEPARTMENT CIRCULAR NO. 2007-10-0007

LPG CYLINDER OWNERSHIP AND OBLIGATIONS RELATED THERETO

Republic of the Philippines On March 22, 2004, The National Bureau

Rollo, pp. 053-071.

221 SCRA 349 [April 7, 1993].

“Sec. 2. Prohibited Acts. The Nowhere can it be found in the

The use of such pumps, cylinders, “SECTION 1.Section two of Batas

Prescinding from the foregoing, the fact xxx xxx xxx

REPUBLIC ACT NO. 8479

CHAPTER I toxic wastes across borders;

Section 26. Budgetary Appropriations. (Sgd.) JOSE DE VENECIA, JR.

Case No. 1: Upon the outbreak of the Persian Gulf conflict

As I held in my dissent in yet another Maceda It is a matter of opinion whether or not

xxx xxx xxx xxx xxx xxx

Memorandum on Philippine Economic Stabilization Plan, Id.

FIRST DIVISION On June 30, 1983, Shell filed with the

WOULD POSE RUINOUS COMPETITION TO

computation sheets[3][3] that were attached to

storage certain articles specified by

REYNATO S. PUNO

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VOLUME 3 DOWNSTREAM 103

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VOLUME 3 DOWNSTREAM 109

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VOLUME 3 DOWNSTREAM 115

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