Republic Act No. 6173

Republic Act No. 6173

(As Amended by Presidential Decrees Numbered 56, 102, 389-A, 429-A, 456 and 1128)

AN ACT

DECLARING A NATIONAL POLICY ON THE PETROLEUM INDUSTRY, REGULATING THE ACTIVITIES AND RELATIONS OF PERSONS AND ENTITIES ENGAGED THEREIN, ESTABLISHING AN OIL INDUSTRY COMMISSION TO EFFECTUATE THE SAME, AND DEFINING ITS FUNCTIONS, POWERS AND OBJECTIVES, AND FOR OTHER PURPOSES

SECTION 1. Title. – This Act shall be known as the Oil Industry Commission Act.

SEC. 2. Definition of Terms. –

(a) “Commission” shall mean the Oil Industry Commission.

(b) “Petroleum” shall be construed to mean a complex mixture of 84 to 87 per cent carbon, 13 to 11 per cent hydrogen, and 1 to 4 per cent impurities such as nitrogen, sulfur, and helium. It shall include products commercially known as natural gas, gasoline and kerosene in liquid form and a wide range of lubricating oils, asphalt and pitch in solid state.

(c) “Petroleum products” shall mean products formed in the course of refining crude petroleum through distillation, cracking, solvent refining and chemical treatment, coming out as primary stocks from the refinery like: LPG, naphtha, gasolines, solvents, kerosenes, aviation turbine fuels, automatic/industrial diesel oils, industrial/residual fuel oils, waxes and petrolatums, asphalts, bitumins, coke and refinery sludges, or such refinery petroleum fractions which have not undergone any process or treatment as to produce separate chemically defined compounds in a pure or commercially pure state; and to which various substances may have been added to render them suitable for particular uses, provided that the resultant product contains not less than 50% by weight of such petroleum products. (As amended by P.D. 1128, April 25, 1977)

SEC. 3. Declaration of Policy and Purposes. – Petroleum and its products being vital to national security, and their continued supply at reasonable prices being essential to the general welfare, it is hereby declared to be the policy of the State that the act and business of importing, exporting, re-exporting, shipping, transporting, processing, refining, storing, distributing, marketing, and selling crude oil, gasoline, kerosene, gas and other refined petroleum products as well as operations and activities of natural and juridical persons, firms and entities engaged in the petroleum industry shall be carried out in a manner consistent with the public interest, so as to attain the following objectives and purposes:

(a) To assure that the country shall have a proper adequate and continuous supply of crude oil and refined petroleum products under the most economic and competitive terms possible considering all available sources of supply;

(b) To assure that the petroleum industry, as a business vital to the national interest, operates under conditions of orderly and economic competition;

(c) To assure the public of reasonable prices for petroleum products considering the international price levels of crude oil and petroleum products and after allowing for proper and reasonable cost of importing, shipping, transporting, processing, refining, storing, distributing, marketing, and selling crude oil and petroleum products in the Philippines, and for a fair and reasonable return; and to prevent collusive practices in the industry, particularly as to prices;

(d) To protect petroleum dealers and distributors from unfair and onerous trade conditions;

(e) To minimize the cost of, and the outflow of foreign exchange involved in the operations of the industry;

(f) To induce and effect the increasing participation of Filipino capital, labor and management in the industry and to prevent discrimination against any person by reason of race, color, creed or political belief; and

(g) To regulate investments of oil companies, in order to prevent monopoly, combinations in restraint of trade, unfair competition and economic domination.

However, this Act shall not apply to oil exploration or to industries not connected with petroleum importation, refining or distribution. (As amended by P.D. 1128)

SEC. 4. Oil Industry Commission. – To implement the national policy and attain the objectives and purposes of this Act, an independent Commission is hereby created, which shall be known as the Oil Industry Commission, and shall be organized within sixty days after the approval of this Act. The Commission shall be composed of a Chairman and four Associate Commissioners. The Chairman and the Associate Commissioners shall be natural-born citizens and residents of the Philippines. In addition, the Chairman shall possess all the qualifications of a Justice of the Supreme Court and the Associate Commissioners shall be at least thirty-five years old, of good moral character and of recognized competence in the field of economics, finance, banking, commerce, industry, agriculture, engineering, management, law or labor. They shall be appointed by the President of the Philippines, with the consent of the Commission on Appointments. No person who has worked within three years immediately prior to his appointment or is working in any firm engaged in the petroleum industry or any other entity whose main business is directly related to any such firm shall be appointed to the Commission.

The term of office of the Chairman and the Associate commissioners shall be four years, but the first Chairman appointed shall hold office for four years and of the first four commissioners two shall hold office for a term of two years, and two for a term of three years. No person may be appointed to serve more than two successive terms.

The Chairman and Associate Commissioners shall, upon assumption of office and within the month of January of every other year thereafter, as well as upon the expiration of their respective terms of office, or upon their resignation or separation from office, prepare and file with the offices of the President, the President of the Senate and the Speaker of the House of Representatives a true, accurate, complete, detailed and sworn statement of assets and liabilities, including a statement of amounts and sources of income, amounts of personal and family expenses, and amounts of income taxes paid for the next preceding calendar year: Provided, That the first statement may be filed within the month of January next following if the Chairman or Associate Commissioner concerned assumes office less than two months before the end of the calendar year.

Three members of the Commission shall constitute quorum and the vote of three members shall be necessary for the adoption of any rule, ruling, order, resolution, decision or other act of the Commission.

The commission shall hold office in the city of Manila or at such other place as the President of the Philippines may designate.

SEC. 5. Compensation of Commissioners. – The Chairman of the Oil Industry Commission shall receive a compensation of Fifty thousand pesos and a monthly commutable allowance of six hundred pesos. The Chairman and Associate Commissioners shall devote their full time to the Commission and shall not accept other employment.

SEC. 6. Staff. – The commission shall appoint and maintain an adequate staff, which shall include a Secretary-Executive Director who shall be a member of the Philippine Bar with at least five years experience in the active practice of law in the Philippines or in the discharge of an office requiring as an indispensable requisite admission to the practice of law in the Philippines. He shall be the recorder and official reporter of the Commission, and of reports, documents and papers filed in connection with any case or proceedings before the Commission. He shall likewise be responsible for the effective implementation of the policies, rules and directives promulgated by the Commission, shall coordinate and supervise the activities of the different operating units and shall perform such functions as may be assigned to him by the Chairman and/or by the Commission.

The members of the technical staff, except for those performing purely clerical functions, shall possess at least a bachelor’s degree in the line of specialization required by their respective positions: Provided, That except to positions which are policy-determining, highly technical or primarily confidential, all positions in the Commission are subject to the provisions of the Civil Service Law and Rules, but are exempt from the regulations of the Wage and Position Classification Office. (As amended by P.D. 1128)

SEC. 7. Functions of the Commission. – The Commission shall have supervision and jurisdiction over all persons, corporations, firms or entities engaged in the business of importing, exporting, re-exporting, shipping, transporting, processing or refining of indigenous and imported crude oil or other petroleum products, storing, marketing, distributing, or selling, both at wholesale and retail, gasoline, gas, oil, kerosene, and other crude or refined petroleum products, and shall regulate and supervise the operations and activities of said persons and entities including the following:

(a) To set conditions which would accomplish the purposes of this Act, under which persons, natural or juridical, can engage or continue engaging in the business of importing, exporting, re-exporting, shipping, transporting, processing, refining, storing, distributing, marketing or selling crude oil, gasoline, kerosene, gas, and other refined petroleum products or by-products;

(b) To study the importation of crude oil into the Philippines and to determine its most economical sources, transportation routes, and freight rates;

(c) To look into all available sources of supply of crude oil, draw up plans to cope with such contingencies as may arise should prevailing sources of supply become closed or inaccessible, and enter into such preliminary negotiations or arrangements with possible alternative sources as may be necessary to assure a stable, adequate and continuous supply of crude oil and refined petroleum products under the most economic and competitive terms possible;

(d) To encourage and assist in the organization of associations of Filipino oil and petroleum dealers and distributors throughout the Philippines, public utility operators, oil and petroleum consumers, and other similar groups, through the formation of cooperatives or through other group action;

(e) To recommend to the President that the State, thru such agency or agencies as the President may designate, acquire equity in any refinery now existing or that may be organized hereafter: Provided, however, That equity so acquired shall be made available to the public, giving priority to dealers of petroleum products and gasoline owners or operators; and

(f) To do and perform any and all such acts as may be necessary and proper to carry out the purpose of this Act.

The jurisdiction of, and all functions exercised by, the Bureau of Mines over petroleum refineries are hereby transferred to the Commission. (As amended by P.D. 1128)

SEC. 8. Powers of the Commission Upon Notice and Hearing. – The Commission shall have power, upon proper notice and hearing, in accordance with the provisions of this Act:

(a) To determine whether current market prices of petroleum products are reasonable and to set the prices of the same, providing for a fair and reasonable return. No changes in prices may thereafter be made by the Commission without prior public notice and hearing at which any consumer of petroleum products and other parties who may be affected may appear and participate. In setting prices or making changes, thereof, the Commission shall be guided by the following considerations:

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

(2) Whether expenses and costs which are claimed to have been incurred, or are being incurred, or are to be incurred are reasonable, and whether any increases therein may be offset by increased efficiency and reduction of excessive or unnecessary expenses;

(3) The impact of the proposed prices or change therein on the economy and on the consuming public, particularly low income groups and industries essential to the national welfare or security; and

(4) The cost and profit levels of the industry.

(b) To regulate the capacities of existing refineries or additional capacities of existing refineries so as to accomplish the purposes and objectives of this Act;

(c) To license refineries that may be organized after the passage of this Act, under such terms and conditions as are consistent with the national interest;

(d) To regulate the operations and trade practices of the industry in order to encourage orderly competition, prevent monopolies and collusive practices within the industry, giving due regard to the ecological and environmental needs of the country;

(e) To review the cost at which crude oil had been imported into the Philippines within the preceding year, whether by private entities or by the Government, whenever the Commission had received a formal complaint or has reason to believe that prices or shipping costs at which crude oil has been or being imported into the Philippines are unreasonable or out of line with trends in the international market, taking consideration among other factors, the quality and security of supply, availability and location of crude oil, and freight rates prevailing at the time; and, if found to unreasonable or out of line, to require the importer or importers concerned to reimburse the excess of the foreign exchange involved to the Central Bank and to fix the maximum import cost, requiring that, before future importations be made at a cost in excess thereof, the approval of the Commission in the exercise of this power shall be binding on the Central Bank, the Bureau of Customs and all other executive agencies of the government;

(f) To require that preference be given to Philippine vessels and bottoms for the purpose of transporting crude oil to and from the Philippines where said vessels can undertake said function on substantially the same basis as foreign-owned vessels;

(g) To take adequate steps to prevent monopolies and combinations in restraint of trade within the petroleum industry, or involving enterprises engaged in the petroleum industry;

(h) To recommend to the President that the State, through such agency as the President may designate, take over the operation of any refinery or other firm, corporation or entity engaged in the petroleum industry whenever the public welfare or national interest so requires or (1) such refinery, firm, corporation or entity ceases or threatens to cease or substantially reduces or threatens to reduce substantially its operations; and (2) its cessation or threatened cessation or reduction or threatened reduction of operations threatens the continued supply of petroleum products at reasonable prices to the general public or to industries dependent on petroleum products for sources of energy, or otherwise creates a clear and present danger to the national welfare or national security: Provided, however, That the operation by the State shall continue only for such period of time as the threat or danger persists: Provided, further, That just compensation shall be paid for the use of the property: Provided, finally, That any unrecovered investment made by the State during the take-over shall be reimbursed by the refinery, firm, corporation or entity;

(i) Whenever the Commission has determined that there is a shortage of any petroleum product affecting public interests, it may, in order to relieve the shortage, authorize or approve the importation by an agency or instrumentality of the government or a government owned or controlled corporation of crude oil or petroleum product from any available source, and take such other steps as it may consider necessary, including the temporary adjustment of the levels of prices of petroleum products and the adoption of a mechanism which will require the payment of the Special Fund created under the next succeeding paragraph by persons or entities engaged in the petroleum industry of such amounts, as may be determined by the Commission, which will enable the importer to recover its cost of importation. (As amended by Presidential Decree No. 429-A, April 6, 1974)

(j) Whenever an authorized increase in the prices of petroleum products would result in an extra ordinary gain from existing inventories, the Commission is hereby empowered to take measures, including the payment by the persons or companies benefited, to a Special Fund which is hereby created, of such amounts as the Commission may determine in an appropriate order, as would assure that said extra ordinary gain shall redound to the public interest.

Until otherwise provided the Special Fund herein created shall be utilized for projects relating to the consumption or use of crude oil, gas and other petroleum products; for the development of other sources of energy ; for exploration and researches on conservation, anti-pollution and other similar studies to subsidize importation of crude oil and refined petroleum products by government agencies, or government-owned or -controlled corporations, to assure adequaate and continuous supply of petroleum products at reasonable prices; and such other special economic and social projects as may be determined by the President of the Philippines. The special Fund shall be administered as the President may direct. (As amended by Presidential Decree No. 389-A, Feb. 14, 1974 and further amended by Presidential Decree No. 456, May 14, 1974)

SEC. 9. Powers of the Commission Without Hearing. – The Commission shall have the power to do the following without hearing:

(a) Require importers of crude oil and petroleum products to file with the Commission data on the import and shipping costs as well as other material information relative thereto;

(b) Require all persons, corporations and other entities engaged in the petroleum industry and their associations or institutes, to furnish it with such relevant information as it may need to discharge its duties under this Act, and to exercise its functions and powers under Section seven, eight and ten of this Act;

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

(e) Promulgate rules and regulations relevant to procedures governing hearings before Commission and enforce compliance with any rule, regulations, order, or other requirement of this Act or of the Commission: Provided, That said rules and regulations shall take effect fifteen days after publication in the Official Gazette; and

(f) Perform such other acts as may be necessary or conducive to the exercise of its functions and powers and the discharge of its duties under this Act. (As amended by P.D. 1128)

SEC. 10. Other Duties of the Commission. – The Commission shall undertake a continuing study of the petroleum industry in its domestic and international aspects, gather and collate information and statistics bearing on the industry, submit an annual report to the members of Congress and to the President of the Philippines on its activities and the results of its studies, including therein such matters as it may deem appropriate subjects of legislation or executive action. The Commission shall likewise keep itself regularly and thoroughly informed of conditions in the industry in order to enable it to perform its functions, exercise its powers and discharge its duties effectively.

The annual report of the Commission shall include, among others, the following data on a company by company basis:

(a) Volume, weight, type, import price, and supplier of crude oil and petroleum products imported;

(b) Tonnage, type, nationality and ownership of vessels used in importing crude oil and petroleum products, as well as shipping costs;

(d) Data on exported products, price of same, country of destination, and vessel used;

(e) Listed wholesale price of gasoline on a monthly basis;

(f) Posted and market prices of crude oil at sources of importation and other known sources of crude oil supply; and

(g) Cost of refining petroleum products.

SEC. 11. Commission Procedures. – All inquiries, studies, hearings, investigations and proceedings conducted by the Commission shall be governed by rules adopted by the Commission, and in the conduct thereof the Commission shall not be bound by the technical rules of evidence: Provided, That the Commission may summarily punish for contempt by a fine not exceeding five hundred pesos or by imprisonment not exceeding thirty days or both, any person guilty of such misconduct in the presence of the Commission or so near thereto as to seriously interrupt any hearing or session or any proceedings before it, including cases in which a person willfully fails or refuses, without just cause, to comply with a summons, subpoena, subpoena duces tecum, decision or order, rules and regulations legally issued or promulgated by the Commission or being present at a hearing, session or investigation refuses to be sworn as a witness or to answer questions when lawfully required to do so, or to furnish information required by the Commission under this Act. The sheriff and other police agencies of the place where the hearing or investigation is conducted shall, upon the request of the Commission, assist it to enforce the provision of this Section. (As amended by P.D. 1128)

SEC. 12. Review of Commission’s Order; Commission Authority to Grant Provisional Relief. – A party adversely affected by a decision or any order of the Commission, may, within seven (7) days from receipt of said decision or order, appeal in writing, stating clearly and distinctly the grounds relied upon, to the Office of the President, which shall have exclusive authority and jurisdiction to review, reverse, modify or amend the same. The decision or order of the Commission in such cases, shall be final, unless reversed, altered or modified, either on appeal or on review motu proprio within the period herein below stated.

The Office of the President shall likewise have the power to review, motu proprio, any decision or order of the Oil Industry Commission fixing the prices of petroleum products. For this purpose, certified copies of such decisions or orders of the Commission shall be forwarded to the Office of the President immediately upon promulgation thereof.

The decision of the Office of the President, on appeal or after review motu proprio, shall be final. Unless the Office of the President directs otherwise, appeal or motu proprio review shall not stay execution or implementation of the decisions or orders of the Oil Industry Commission, which shall be executory upon the expiration of seven (7) days after their promulgation.

The Commission may, upon the filing of an application, petition or complaint or at any stage thereafter, and without prior hearing, on the basis of supporting papers duly verified or authenticated, grant provisional relief on motion of a party in the case or on its own initiative, without prejudice to a final decision after hearing, should the Commission find that the pleadings, together with such affidavits, documents and other evidence which may be submitted in support of the motion, substantially support the provisional order. (As further amended by P.D. 1128)

SEC. 13. Petroleum Dealers’ or Distributors’ Association. – For the purpose of this Act, a petroleum dealers’ or distributors’ association is an organization or association of petroleum dealers or distributors dealing in petroleum products duly registered with the Securities and Exchange Commission.

SEC. 14. Requirements to Petroleum Dealers’ and Distributors’ Association. – Every petroleum dealers’ or distributors’ association duly registered with the Securities and Exchange Commission, shall keep books and records containing a list of its members in alphabetical order and the minutes if its meetings, a list of its officers and in general shall comply with all the rules and regulations of the Securities and Exchange Commission.

SEC. 15. Appropriations. – For the proper implementation of this Act, the sum of one million five hundred thousand pesos is hereby appropriated out of any funds in the National Treasury not otherwise appropriated for the operating expenses of the Commission for the fiscal years nineteen hundred and seventy-two. Any unobligated balance of this initial appropriation may, however, still be used by the Commission in subsequent fiscal years.

Beginning with fiscal year nineteen hundred and seventy-three, the operational expenses of the Commission shall be drawn from fees and charges collected under the authority of Section 15, hereafter to be cited as Section 16 of this Act and from application, licensing, registration and other fees or charges and administrative fines and surcharges which the Commission is hereby authorized to impose or collect.

All applications, licensing, registration and other fees or charges hereby authorized to be imposed or collected shall be payable on or before the dates prescribed by the Commission. If the said fees or charges are not paid within the prescribed time, the amount thereof shall be increased by twenty-five per centum to become part of the fee or charge.

In the exercise of its functions and enforcement and implementation of this law, its decisions, orders, and regulations, the Commission may require that amounts unrefunded to purchasers by dealers found guilty of overpricing in the sales of petroleum products, be deposited with its cashier as a trust fund of the Commission, said amounts to be disposed of as financial assistance to the Barangay of the locality where the overpricing was committed or to other Barangays in coordination with the Department of Local Governments and Community Development. The funds and monies that may come to the possession of the Commission from administrative fines for violations of its decisions, order, rules and regulations and from surcharges on delinquent payment of prescribed fees, as well as from payment of application, registration and license fees shall be disbursed by the Commission for the health, welfare and other similar benefits of its employees: Provided, That the additional amounts so distributed do not exceed fifty per centum (50%) of the annual basic salary of each employee: Provided, further, That such disbursements shall be subject to existing rules and regulations. (As further amended by P.D. 1128)

SEC. 16. Additional Fee on Importations and Turn-Over of Collections. – Effective July one, nineteen hundred and seventy-one, there shall be levied, assessed and collected, an additional fee of one tenth of one percent of the CIF value of crude oil and petroleum products imported into the Philippines. The fee imposed herein shall be collected at the same time, in the same manner and subject to the same penalties as the duties and taxes regularly imposed on such products. This fee shall not be a basis for any increase in the price of any petroleum product as of the approval of this Act.

The Commissioner of Customs shall turn over the collections to the Treasurer of the Philippines monthly within the first ten days of the succeeding month. (As amended by Presidential Decree No. 102, January 19, 1973 and further amended by Presidential Decree No. 389-A, February 14, 1974.)

SEC. 17. Payment to Special Fund. – The Commission is hereby empowered to require through an appropriate order, payment by persons or companies engaged in the business of importing, manufacturing and /or marketing petroleum products, to the Special Fund created under Section 8 (j) of this Act, or amounts not exceeding fifteen centavos (P 0.15) per liter or refined petroleum products. In the exercise of this power, the Commission shall take into account the requirements of Special Fund in relation to the purposes for which it was created, the effect of the payment on prices of petroleum products and corollarily, its cost impact on the economy and/or the consuming public and the cost and profit levels of the industry. (As amended by Presidential Decree No. 456, May 14, 1974)

SEC. 18. Penalties. – (a) Any person who gives false or misleading data or information or willfully or through gross negligence, conceals or falsifies a material fact, in any investigation, inquiry, study or other proceedings held pursuant to this Act, shall be punished with imprisonment of not less than two or more than six months, and with a fine of not less than five hundred nor more than one thousand pesos: Provided, however, That if the false or misleading data or information shall have been given under oath, the maximum penalty for giving false testimony or perjury shall be imposed;

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

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

(d) If the offender be a member of the Oil Industry Commission, and the commission of the offense is attended by clear abuse of discretion on his part, or by any corrupt practice defined in Republic Act Numbered Three thousand nineteen, otherwise known as the Anti-Graft and Corrupt Practices Act, or other similar irregularity, the penalty imposed shall be a fine of fifty thousand pesos and imprisonment of not less than ten years. A like penalty shall be imposed upon any private person, whether in the government service or not, who induces, aids or abets the offender in the Commission of the offense;

(e) It shall be an offense, penalized as provided in paragraph (c) or (d) above, whichever may be applicable, for any person serving in the Oil Industry Commission either as a Commissioner or as a staff member to directly or indirectly be employed by, or to receive any compensation from, or to have any direct or indirect financial interest in, any firm engaged in importing. refining or marketing crude oil or any petroleum product;

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

SEC. 19. Separability of Any Provision. – If any provision of this Act shall be held invalid, the remainder of this Act shall not be affected thereby.

SEC. 20. Repealing Clause. – The provisions of Republic Act Numbered Sixty-one hundred and twenty-four, otherwise known as the Price Control Law, referring to petroleum products and all Acts or parts of Acts inconsistent with this Act are hereby repealed but the repeal shall not affect judicial actions, prosecutions or proceedings begun while the same were in force.

SEC. 21. Effective Date. – This Act shall take effect upon its approval.

Approved, April 30, 1971.

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