Republic
Act No. 8180
AN ACT DEREGULATING THE DOWNSTREAM
CHAPTER I GENERAL
PROVISIONS
SECTION 1. Short Title. This Act shall be known as the Downstream
Oil Industry Deregulation Act of 1996.
SEC. 2. Declaration of Policy. It shall be the policy of the State to
deregulate the downstream oil industry to foster a truly competitive market
which can better achieve the social policy objectives of pair prices and
adequate, continuous supply of environmentally-clean and high-quality petroleum
products.
SEC. 3. Coverage. This Act shall apply to all persons or
entities engaged in any or all the activities of the domestic downstream oil
industry, as well as persons or companies directly importing refined petroleum
products for their own use.
SEC. 4. Definition of Terms. For purposes of this Act, the following
terms are hereinbelow defined:
a) Downstream oil industry shall refer to the business
of importing, exporting, re-exporting, shipping, transporting, processing,
refining, storing, distributing, marketing and/or selling, crude oil, gasoline,
diesel, liquefied petroleum gas (LPG), kerosene, and other petroleum and crude
oil products;
b)
DOE shall refer to
the
Department of Energy;
c)
Board shall refer to
the
Energy Regulatory Board;
d) Person shall refer to any person, whether natural or
juridical, who is engaged in the downstream oil industry;
e) Petroleum shall refer to a naturally occurring mixture of
compounds of hydrogen and carbon with a small proportion of impurities and
shall include any mineral oil, petroleum gas, hydrogen gas, bitumen, asphalt,
mineral wax, and all other similar or naturally-associated substances, with the
exception of coal, peat, bituminous shale, and/or other stratified mineral fuel
deposits;
f) Crude oil shall refer to oil in its natural state before
the same has been refined or otherwise treated, but excluding water, bottom
substances and foreign substances;
g) Petroleum products shall refer to 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
such as, but not limited to, LPG, Naphtha, gasolines, solvent, kerosenes,
aviation fuels, diesel oils, fuel oils, waxes and petrolatums, asphalts,
bitumens, coke and refinery sludges, or such refinery petroleum fractions which
have not undergone any process or treatment as to produce separate
chemicallydefined 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 fifty percent (50%) by weight of such petroleum
products;
h) Wholesale Posted Price (WPP) shall refer to the ceiling
price of petroleum products set by the
Board
based on a formula using the Singapore Posting;
i) Singapore Import Parity (SIP) shall refer to the
deemed landed cost of a petroleum product imported from Singapore at a
free-on-board price equal to the average Singapore Posting for that product at
the time of loading;
j) Singapore Posting shall refer to the price of
petroleum products periodically posted by oil refineries in
k)
Basel Convention shall refer to the international
accord which governs the trade or movement of hazardous and toxic waste across
borders.
SEC. 5. Liberalization
of Downstream Oil Industry and Tariff Treatment. a) Any law to the contrary notwithstanding,
any person or entity may import or purchase any quality of crude oil and
petroleum products from foreign or domestic source, lease or own and operate
refineries and other downstream oil facilities and market such crude oil and petroleum
products either in generic name or its own trade name, or use the same for his
own requirement: Provided, That
any person of entity who shall engage in any such activity shall give prior
notice thereof to the
DOE for monitoring
purposes: Provided, further, That
such notice shall not exempt such person or entity from securing certificates
of quality, health and safety and environmental clearance from the proper
governmental agencies: Provided,
furthermore, That such person or entity shall, for monitoring purposes,
report to the
DOE his or its every
importation/exportation: Provided,
finally, That all oil importation shall be in accordance with the Basel
Convention.
b) Any law to the contrary notwithstanding and starting with
the effectivity of this Act, tariff duty shall be imposed and collected on
imported crude oil at the rate of three percent (3%) and imported refined
petroleum products at the rate of seven percent (7%), except fuel oil and LPG,
the rate for which shall be the same as that for imported crude oil: Provided, That beginning on January 1,
2004 the tariff rate on imported crude oil and refined petroleum products shall
be the same: Provided, further, That
this provision may be amended only by an Act of Congress.
c) For as long as the
National
Power Corporation (NPC) enjoys exemptions from taxes and duties on
petroleum products used for power generation, the exemption shall apply to
purchases through the local refineries and to the important of fuel oil and
diesel.
SEC. 6. Security of Supply. To ensure the security and continuity of
petroleum crude and products supply, the
DOE
shall require the refiners and importers to maintain a minimum inventory
equivalent to ten percent (10%) of their respective annual sales volume or
forty (40) days of supply, whichever is lower.
SEC. 7. Promotion of
Fair Trade Practices. The
Department of Trade and Industry (DTI) and
DOE shall take all measures to promote fair
trade and to prevent cartelization and monopolies and combinations in restraint
of trade and any unfair competition, as defined in Articles 186, 188 and 189 of
the Revised Penal Code, in the
downstream oil industry. The
DOE shall continue to encourage certain
practices in the oil industry which serve the public interest and are intended
to achieve efficiency and cost reduction, ensure continuous supply of petroleum
products, or enhance environmental protection.
These practices may include borrow-and-loan agreements, rationalized
depot operations, hospitality agreements, joint tanker and pipeline
utilization, and joint actions on oil spill control and fire prevention.
SEC. 8. Monitoring. The
DOE
shall monitor and publish daily international oil prices to enable the public
to determine whether current market oil prices are reasonable. It shall likewise monitor the quality of
petroleum products and stop the operation of business involved in the sale of
petroleum products which do not comply with the national standards of
quality. The
Bureau of Product Standards (BPS), in
coordination with
DOE, shall set national
standards of quality that are aligned with the international standards/protocols
of quality.
The
DOE shall monitor the refining and
manufacturing processes of local petroleum products to ensure that clean and
safe (environment worker-benign) technologies are applied. This shall also apply to the process of
marketing local and imported petroleum products.
The
DOE shall maintain a periodic schedule
of present and future total industry inventory of petroleum products for the
purpose of determining the level of supply.
To implement this, the importers, refiners, and marketers are hereby
required to submit monthly to the
DOE
their actual and projected importations, local purchases, sales and/or
consumption, and inventory on a per crude/product basis.
Any report from any person of an unreasonable rise in the prices of petroleum
products shall immediately acted upon.
For this purpose, the creation of a
Department
of Energy (DOE)-Department of Justice
(DOJ) Task Force is hereby mandated to determine the merits of report and
to initiate the necessary actions warranted under the circumstances to prevent
cartelization, among others.
SEC. 9. Prohibited Acts. To ensure fair competition and prevent
cartels and monopolies in the downstream oil industry, the following acts are
hereby prohibited:
a) Cartelization which means any agreement, combination or
concerted action by refiners and/or importers or their representatives to fix
prices, restrict outputs or divide markets, either by products or by areas, or
allocating markets, either by products or by areas, in restraint of trade or
free competition; and
b) Predatory pricing which means selling or offering to sell
any product at a price unreasonably below the industry average cost as to attract
customers to the detriment of competitors.
Any person, including but not limited to the chief operating officer or chief
executive officer of the corporation involved, who is found guilty of any of
the said prohibited acts shall suffer the penalty of imprisonment for three (3)
years and fine ranging from Five hundred thousand pesos (P 500,000) to One
million pesos (P 1,000,000).
SEC. 10. Other prohibited Acts. To ensure compliance with the provisions of
this Act, the failure to comply with any of the following shall likewise be
prohibited: 1) submission of any
reportorial requirements; 2) maintenance of the minimum inventory; and 3) use
of clean and safe (environment and worker-benign) technologies.
Any person, including but not limited to the chief operating officer or chief
executive officer of the corporation involved, who is found guilty of any of
the said prohibited acts shall suffer the penalty of imprisonment for two (2)
years and fine ranging from Two hundred fifty thousand pesos (P 250,000.00) to
Five hundred thousand pesos (P 500,000.00)
CHAPTER II TRANSITION
PHASE
SEC. 11. Phases of
Deregulation. In order to provide
a smooth implementation of deregulation, the policy shift shall be done in two
phases: Phase I (Transition Phase) and
Phase II (Full Deregulation Phase).
SEC. 12. OPSF Claims/Buffer
Fund. Upon the effectivity of this
Act and prior to Phase I, the
Secretary of DOE
shall seek the condonation of all outstanding claims against the OPSF: Provided, however, That it shall keep
or provide a buffer fund of One billion pesos (P 1,000,000,000) therein.
SEC. 13. OPSF Coverage. Paragraph (c) Section 8 of
Presidential Decree No. 1956, as amended by
Executive Order No. 137, is hereby further amended to read
as follows:
c) Any additional amount to be imposed on petroleum products to augment the
resources of the Fund through an appropriate Order that may be issued by the
Board requiring payment by persons or persons or companies engaged in the
business of importing, manufacturing and/or marketing of petroleum products,
including persons or companies that will directly import refined petroleum
products for their own use.
SEC. 14. Automatic Oil Pricing
Mechanism. To enable the domestic
price of petroleum products to approximate and promptly reflect the price of
oil in the international market, an automatic pricing mechanism shall be
established. To this end, the following
laws are hereby amended:
a) Paragraph (a), Section 8 of
Republic
Act No. 6173, as amended by Section 3 of
Executive
Order No. 172, to read as follows:
SEC. 8. Powers of the
Board Upon Notice and Hearing. The
Board
shall have the power:
a) To set the wholesale posted price of petroleum products
during the transition phase.
For this purpose and for the protection of the public interest, the
Board shall, after due notice and hearing at
which any consumer of petroleum products and other parties who may be affected
may appear and be heard, and within three (3) months after the effectivity of
this Act, approve a formula to determine the wholesale posted prices (WPP) of
petroleum products based on the Singapore posting of refined petroleum
products.
Thereafter, the
Board shall at the proper
times automatically adjust the WPP of petroleum products based on the
The
Board shall, on the dates of
effectivity of the automatic oil pricing formula, the initial WPP or the
adjusted WPP, publish the same, together with the corresponding computation, in
two (2) newspaper of general circulation.
b) Paragraph 1 of Letter of Instruction No. 1441, to read as
follows:
1. To review and reset prices of
domestic petroleum products up or down as necessary on or before the third Monday
of each month to reflect the new WPP or refined petroleum products based on the
approved automatic pricing formula.
c) Paragraph 2 of Letter of Instruction No. 1441 is hereby
deleted. In lieu of a new paragraph is
inserted to read as follows:
2. The price adjustment shall be
reflected automatically in the approved wholesale posted prices of each
petroleum product. Any price increase
beyond fifty centavos (P 0.50) per liter shall be charged against the OPSF. For this purpose, the OPSF accrued balance
shall be initially fixed at one billion pesos (P 1,000,000,000).
The provisions of Section 3 (a) and (c) and Section 5 of
Executive
Order No. 172 to the contrary notwithstanding, the
Board shall, during the Transition Phase,
maintain the current margin of dealers and the rates charged by water transport
operators, haulers and pipeline concessionaires. Depending on the basis of the automatic
pricing mechanism, the
Board may, within
three (3) months after the effectivity of this Act and after proper notice and
full public hearing, prescribe a formula which will automatically set the
margins of the refiners, marketers and dealers, and the rates charged by water
transport operators, haulers and pipeline concessionaries: Provided, That such formula shall take
effect simultaneously with the effectivity of the automatic oil pricing
formula. Thereafter, The
Board shall set the said margins and rates
based on the approved formula without the necessity for public notice and
hearing.
The
Board shall, on the day of the
effectivity of the aforesaid formula, publish in at least two (2) newspaper of
general circulation the mechanics of the formula for the information of the
public.
CHAPTER
SEC. 15. Implementation of
Full Deregulation. Pursuant to
Section 5(e) of
Republic Act No. 7638, the
DOE shall, upon approval of the President,
implement the full deregulation of the downstream oil industry not later than
March, 1997. As far as practicable, the
DOE shall time the full deregulation when the
prices of crude oil and petroleum products in the world market are declining
and when the exchange rate of the peso in relation to the US dollar is
stable. Upon the implementation of the
full deregulation as provided herein, the transition phase is deemed terminated
and following laws are deemed repealed:
a) Republic Act No.
6173, as amended;
b) Section 5 of
Executive Order No. 172, as amended;
c) Letter of
Instruction No. 1431 dated October 15, 1984;
d) Letter of
Instruction No. 1441, dated November 20, 1984, as amended;
e) Letter of
Instruction No. 1460, dated May 9, 1985;
f)
Presidential Decree No. 1956, as amended by
E.O. No. 137.
SEC. 16. Section 3 of
Executive Order No. 172, is hereby amended to read as
follows:
SEC. 3. Jurisdiction, Powers and
Functions of the
Board. The
Board
shall, upon proper notice and hearing, fix and regulate the rate of schedule or
prices of piped gas to be charged duly franchised gas companies which
distribute gas by means of underground pipe system.
SEC. 17. Foreign Exchange
Forward Cover. Any law to the
contrary notwithstanding and upon full deregulation, no foreign exchange
forward cover shall be extended by the Government to any private importation of
crude oil and petroleum products.
SEC. 18. OPSF Balance. Upon full deregulation, all outstanding
claims during the transition phase against the OPSF shall be settled out of the
One billion-peso (P 1,000,000,000) buffer fund and the balance, if any, shall
be transferred to the General Fund.
CHAPTER IV FINAL
PROVISIONS
SEC. 19. Implementing Rules
and Regulations. The
DOE, in coordination with the
Board, the
Department
of Environment and Natural Resources,
Department
of Labor and Employment,
Department of
Health,
Department of Finance,
Department of Trade and Industry and
National Economic and Development Authority,
shall formulate and issue the necessary implementing rules and regulations
within sixty (60) days after the effectivity of this Act.
SEC. 20. Administrative
Fine. The
DOE may, after notice and hearing, impose a
fine in the amount of not less than One hundred thousand pesos (P 100,000) but
not more than One million pesos (P 1,000,000) upon any person or entity who violates
any of its reportorial and minimum inventory requirements, without prejudice to
criminal sanctions.
The
Secretary of the DOE may recommend to
the proper government agency the suspension of revocation and termination of
the business permit of the offender concerned.
SEC. 21. Public Information
Campaign. The
DOE, in coordination of the
Board and the
Philippine
Information Agency, shall undertake an information campaign to educate the
public on the deregulation program of the downstream oil industry.
SEC. 22. Budgetary
Appropriations. Such amount as may
be necessary to effectively implement this Act shall be taken by the
DOE from its annual appropriations and the
DOEs Special Fund created under Section 8 of
Presidential Decree No. 910, as amended.
SEC. 23. Separability
Clause. If, for any reason, any
section or provision of this Act is declared unconstitutional or invalid, such
parts not affected thereby shall remain in full force and effect.
SEC. 24. Repeating Clause. All laws, presidential decrees, executive
orders, issuances, rules and regulations or parts thereof, which are
inconsistent with the provisions of this Act are hereby repealed or modified
accordingly.
SEC. 25. Effectivity. This Act shall take effect fifteen (15)
days after its complete publication in at least two (2) newspaper of general
circulation.
Approved, 28 March 1996
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