REPUBLIC ACT No.

6969 October 26, 1990

AN ACT TO CONTROL TOXIC SUBSTANCES AND HAZARDOUS AND NUCLEAR WASTES,

PROVIDING PENALTIES FOR VIOLATIONS THEREOF, AND FOR OTHER PURPOSES

"Toxic Substances and Hazardous and Nuclear Wastes Control Act of 1990."

STATE POLICY It is the policy of the State to regulate, restrict or prohibit the importation, manufacture,
processing, sale, distribution, use and disposal of chemical substances and mixtures that present unreasonable
risk and/or injury to health or the environment; to prohibit the entry, even in transit, of hazardous and nuclear
wastes and their disposal into the Philippine territorial limits for whatever purpose; and to provide
advancement and facilitate research and studies on toxic chemicals.

SCOPE This Act shall cover the importation, manufacture, processing, handling, storage, transportation,
sale, distribution, use and disposal of all unregulated chemical substances and mixtures in the Philippines,
including the entry, even in transit as well as the keeping or storage and disposal of hazardous and nuclear
wastes into the country for whatever purpose.

OBJECTIVES

a) To keep an inventory of chemicals that are presently being imported, manufactured, or used, indicating,
among others, their existing and possible uses, test data, names of firms manufacturing or using them, and
such other information as may be considered relevant to the protection of health and the environment;

b) To monitor and regulate the importation, manufacture, processing, handling, storage, transportation, sale,
distribution, use and disposal of chemical substances and mixtures that present unreasonable risk or injury to
health or to the environment in accordance with national policies and international commitments;

c) To inform and educate the populace regarding the hazards and risks attendant to the manufacture, handling,
storage, transportation, processing, distribution, use and disposal of toxic chemicals and other substances and
mixture; and

d) To prevent the entry, even in transit, as well as the keeping or storage and disposal of hazardous and
nuclear wastes into the country for whatever purpose.

DEFINITION OF TERMS

a) Chemical substance means any organic or inorganic substance of a particular molecular identity, including:

i) Any combination of such substances occurring in whole or in part as a result of chemical reaction or
occurring in nature; and

ii) Any element or uncombined chemical.

b) Chemical mixture means any combination of two or more chemical substances if the combination does
not occur in nature and is not, in whole or in part, the result of a chemical reaction, if none of the chemical
substances comprising the combination is a new chemical substance and if the combination could have been
manufactured for commercial purposes without a chemical reaction at the time the chemical substances
comprising the combination were combined. This shall include nonbiodegradable mixtures.

c) Process means the preparation of a chemical substance or mixture after its manufacture for commercial
distribution:

i) In the same form or physical state or in a different form or physical state from that which it was received
by the person so preparing such substance or mixture; or

ii) As part of an article containing a chemical substance or mixture.

d) Importation means the entry of a products or substances into the Philippines (through the seaports or
airports of entry) after having been properly cleared through or still remaining under customs control, the
product or substance of which is intended for direct consumption, merchandising, warehousing, or for further
processing.

e) Manufacture means the mechanical or chemical transformation of substances into new products whether
work is performed by power-driven machines or by hand, whether it is done in a factory or in the worker's
home, and whether the products are sold at wholesale or retail.

f) Unreasonable risk means expected frequency of undesirable effects or adverse responses arising from a
given exposure to a substance.

g) Hazardous substances are substances which present either:

1) short-term acute hazards, such as acute toxicity by ingestion, inhalation or skin absorption, corrosivity or
other skin or eye contact hazards or the risk of fire or explosion; or

2) long-term environmental hazards, including chronic toxicity upon repeated exposure, carcinogenicity
(which may in some cases result from acute exposure but with a long latent period), resistance to
detoxification process such as biodegradation, the potential to pollute underground or surface waters, or
aesthetically objectionable properties such as offensive odors.

h) Hazardous wastes are hereby defined as substances that are without any safe commercial, industrial,
agricultural or economic usage and are shipped, transported or brought from the country of origin for
dumping or disposal into or in transit through any part of the territory of the Philippines.

Hazardous wastes shall also refer to by-products, side-products, process residues, spent reaction media,
contaminated plant or equipment or other substances from manufacturing operations, and as consumer
discards of manufacture products.

i) Nuclear wastes are hazardous wastes made radioactive by exposure to the radiation incidental to the
production or utilization of nuclear fuels but does not include nuclear fuel, or radioisotopes which have
reached the final stage of fabrication so as to be usable for any scientific, medical, agricultural, commercial,
or industrial purpose.

FUNCTION, POWERS AND RESPONSIBILITIES OF THE DENR

The Department of Environment and Natural Resources shall be the implementing agency tasked with the
following functions, powers, and responsibilities:
a) To keep an updated inventory of chemicals that are presently being manufactured or used, indicating,
among others, their existing and possible uses, quality, test data, names of firms manufacturing or using them,
and such other information as the Secretary may consider relevant to the protection of health and the
environment;

b) To require chemical substances and mixtures that present unreasonable risk or injury to health or to the
environment to be tested before they are manufactured or imported for the first time;

c) To require chemical substances and mixtures which are presently being manufactured or processed to be
tested if there is a reason to believe that they pose unreasonable risk or injury to health or the environment;

d) To evaluate the characteristics of chemicals that have been tested to determine their toxicity and the extent
of their effects on health and the environment;

e) To enter into contracts and make grants for research, development, and monitoring of chemical substances
and mixtures;

f) To conduct inspection of any establishment in which chemicals are manufactured, processed, stored or
held before or after their commercial distribution and to make recommendations to the proper authorities
concerned;

g) To confiscate or impound chemicals found not falling within said acts cannot be enjoined except after the
chemicals have been impounded;

h) To monitor and prevent the entry, even in transit, of hazardous and nuclear wastes and their disposal into
the country;

i) To subpoena witnesses and documents and to require other information if necessary to carry out the
provisions of this Act;

j) To call on any department, bureau, office, agency, state university or college, and other instrumentalities
of the Government for assistance in the form of personnel, facilities, and other resources as the need arises
in the discharge of its functions;

k) To disseminate information and conduct educational awareness campaigns on the effects of chemical
substances, mixtures and wastes on health and environment; and

l) To exercise such powers and perform such other functions as may be necessary to carry out its duties and
responsibilities under this Act.

INTER-AGENCY TECHNICAL ADVISORY COUNCIL

There is hereby created an Inter-Agency Technical Advisory Council attached to the Department of
Environment and Natural Resources which shall be composed of the following officials or their duly
authorized representatives:

Secretary of Environment and Natural Resources Chairman

Secretary of Health Member
Director of the Philippine Nuclear Research Institute Member
Secretary of Trade and Industry Member
 Secretary of Science and Technology Member
Secretary of National Defense Member
Secretary of Foreign Affairs Member
Secretary of Labor and Employment Member
Secretary of Finance Member
Secretary of Agriculture Member
Representative from a non-governmental organization on health and Member
safety

The representative from the non-governmental organization shall be appointed by the President for a term of
three (3) years.

The Council shall have the following functions:

a) To assist the Department of Environment and Natural Resources in the formulation of the pertinent rules
and regulations for the effective implementation of this Act;

b) To assist the Department of Environment and Natural Resources in the preparation and updating of the
inventory of chemical substances and mixtures that fall within the coverage of this Act;

c) To conduct preliminary evaluation of the characteristics of chemical substances and mixtures to determine
their toxicity and effects on health and the environment and make the necessary recommendations to the
Department of Environment and Natural Resources; and

d) To perform such other functions as the Secretary of Environment and Natural Resources may, from time
to time, require.

PRE-MANUFACTURE AND PRE-IMPORTATION REQUIREMENTS Before any new chemical

substance or mixture can be manufactured, processed or imported for the first time as determined by the
Department of Environment and Natural Resources, the manufacturer, processor or importer shall submit the
following information: the name of the chemical substance or mixture; its chemical identity and molecular
structure; proposed categories of use; an estimate of the amount to be manufactured, processed or imported;
processing and disposal thereof; and any test data related to health and environmental effects which the
manufacturer, processor or importer has.

TESTING SHALL BE REQUIRED IN ALL CASES WHERE:

a) There is a reason to believe that the chemical substances or mixture may present an unreasonable risk to
health or the environment or there may be substantial human or environmental exposure thereto;

b) There are insufficient data and experience for determining or predicting the health and environmental
effects of the chemical substance or mixture; and

c) The testing of the chemical substance or mixture is necessary to develop such data.

The manufacturers, processors or importers shall shoulder the costs of testing the chemical substance or
mixture that will be manufactured, processed, or imported.
Action by the Secretary of Environment and Natural Resources of his Duly Authorized Representative. –
The Secretary of Environment and Natural Resources or his duly authorized representative shall, within
ninety (90) days from the date of filing of the notice of manufacture, processing or importation of a chemical
substance or mixture, decide whether or not to regulate or prohibit its importation, manufacture, processing,
sale, distribution, use or disposal. The Secretary may, for justifiable reasons, extend the ninety-day pre-
manufacture period within a reasonable time.

CHEMICAL SUBSTANCES EXEMPT FROM PRE-MANUFACTURE NOTIFICATION

The manufacture of the following chemical substances or mixtures shall be exempt from pre-manufacture
notification:

a) Those included in the categories of chemical substances and mixtures already listed in the inventory of
existing chemicals;

b) Those to be produced in small quantities solely for experimental or research and developmental purposes;

c) Chemical substances and mixtures that will not present an unreasonable risk to health and the environment;
and

d) Chemical substances and mixtures that exist temporarily and which have no human or environmental
exposure such as those which exist as a result of chemical reaction in the manufacture or processing of a
mixture of another chemical substance.

PUBLIC ACCESS TO RECORDS, REPORTS OR NOTIFICATION

The public shall have access to records, reports, or information concerning chemical substances and mixtures
including safety data submitted, data on emission or discharge into the environment, and such documents
shall be available for inspection or reproduction during normal business hours except that the Department of
Environment and Natural resources may consider a record, report or information or particular portions thereof
confidential and may not be made public when such would divulge trade secrets, production or sales figures
or methods, production or processes unique to such manufacturer, processor or distributor, or would
otherwise tend to affect adversely the competitive position of such manufacturer, processor or distributor.
The Department of Environment and Natural Resources, however, may release information subject to claim
of confidentiality to a medical research or scientific institution where the information is needed for the
purpose of medical diagnosis or treatment of a person exposed to the chemical substance or mixture.

PROHIBITED ACTS

a) Knowingly use a chemical substance or mixture which is imported, manufactured, processed or distributed
in violation of this Act or implementing rules and regulations or orders;

b) Failure or refusal to submit reports, notices or other information, access to records, as required by this Act,
or permit inspection of establishment where chemicals are manufactured, processed, stored or otherwise held;

c) Failure or refusal to comply with the pre-manufacture and pre-importation requirements; and

d) Cause, aid or facilitate, directly or indirectly, in the storage, importation, or bringing into Philippines
territory, including its maritime economic zones, even in transit, either by means of land, air or sea
transportation or otherwise keeping in storage any amount of hazardous and nuclear wastes in any part of the
Philippines.
CRIMINAL OFFENSES AND PENALTIES

a) (i) The penalty of imprisonment of six (6) months and one day to six (6) years and one day and a fine
ranging from Six hundred pesos (P600.00) to Four thousand pesos (P4,000.00) shall be imposed upon any
person who shall violate section 13 (a) to (c) of this Act and shall not be covered by the Probation Law.f the
offender is a foreigner, he or she shall be deported and barred from any subsequent entry into the Philippines
after serving his or her sentence;

ii) In case any violation of this Act is committed by a partnership, corporation, association or any juridical
person, the partner, president, director or manager who shall consent to or shall knowingly tolerate such
violation shall be directly liable and responsible for the act of the employee and shall be criminally liable as
a co-principal;

(iii) In case the offender is a government official or employee, he or she shall, in addition to the above
penalties, be deemed automatically dismissed from office and permanently disqualified from holding any
elective or appointive position.

b) (i) The penalty of imprisonment of twelve (12) years and one day to twenty (20) years, shall be imposed
upon any person who shall violate section 13 (d) of this Act.f the offender is a foreigner, he or she shall be
deported and barred from any subsequent entry into the Philippines after serving his or her sentence;

(ii) In the case of corporations or other associations, the above penalty shall be imposed upon the managing
partner, president or chief executive in addition to an exemplary damage of at least Five hundred thousand
pesos (P500,000.00).f it is a foreign firm, the director and all officers of such foreign firm shall be barred
from entry into the Philippines, in addition to the cancellation of its license to do business in the Philippines;

(iii) In case the offender is a government official or employee, he or she in addition to the above penalties be
deemed automatically dismissed from office and permanently disqualified from holding any elective or
appointive position.

c) Every penalty imposed for the unlawful importation, entry, transport, manufacture, processing, sale or
distribution of chemical substances or mixtures into or within the Philippines shall carry with it the
confiscation and forfeiture in favor of the Government of the proceeds of the unlawful act and instruments,
tools or other improvements including vehicles, sea vessels, and aircrafts used in or with which the offense
was committed. Chemical substances so confiscated and forfeited by the Government at its option shall be
turned over to the Department of Environment and Natural resources for safekeeping and proper disposal.

d) The person or firm responsible or connected with the bringing or importation into the country of hazardous
or nuclear wastes shall be under obligation to transport or send back said prohibited wastes;

Any and all means of transportation, including all facilities and appurtenances that may have been used in
transporting to or in the storage in the Philippines of any significant amount of hazardous or nuclear

ADMINISTRATIVE FINES In all cases of violations of this Act, including violations of implementing
rules and regulations which have been duly promulgated and published in accordance with Section 16 of this
Act, the Secretary of Environment and Natural Resources is hereby authorized to impose a fine of not less
than Ten thousand pesos (P10,000.00), but not more than Fifty thousand pesos (P50,000.00) upon any person
or entity found guilty thereof. The administrative fines imposed and collected by the Department of
Environment and Natural Resources shall accrue to a special fund to be administered by the Department
exclusively for projects and research activities relative to toxic substances and mixtures.
Republic Act No. 7832 December 8, 1994

AN ACT PENALIZING THE PILFERAGE OF ELECTRICITY AND THEFT OF ELECTRIC

POWER TRANSMISSION LINES/MATERIALS, RATIONALIZING SYSTEM LOSSES BY
PHASING OUT PILFERAGE LOSSES AS A COMPONENT THEREOF, AND FOR OTHER
PURPOSES

"Anti-electricity and Electric Transmission Lines/Materials Pilferage Act of 1994."

ILLEGAL USE OF ELECTRICITY

It is hereby declared unlawful for any person, whether natural or juridical, public or private, to:

(a) Tap, make or cause to be made any connection with overhead lines, service drops, or other electric service
wires, without previous authority or consent of the private electric utility or rural electric cooperative
concerned; 1awphil@alf

(b) Tap, make or cause to be made any connection to the existing electric service facilities of any duly
registered consumer without the latter's or the electric utility's consent or authority;

(c) Tamper, install or use a tampered electrical meter, jumper, current reversing transformer, shorting or
shunting wire, loop connection or any other device which interferes with the proper or accurate registry or
metering of electric current or otherwise results in its diversion in a manner whereby electricity is stolen or
wasted;

(d) Damage or destroy an electric meter, equipment, wire or conduit or allow any of them to be so damaged
or destroyed as to interfere with the proper or accurate metering of electric current; and

(e) Knowingly use or receive the direct benefit of electric service obtained through any of the acts mentioned
in subsections (a), (b), (c), and (d) above.
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THEFT OF ELECTRIC POWER TRANSMISSION LINES AND MATERIALS. - (a) It is hereby

declared unlawful for any person to:

(1) Cut, saw, slice, separate, split, severe, smelt, or remove any electric power transmission line/material or
meter from a tower, pole, or any other installation or place of installation or any other place or site where it
may be rightfully or lawfully stored, deposited, kept, stocked, inventoried, situated or located, without the
consent of the owner, whether or not the act is done for profit or gain;

(2) Take, carry away or remove or transfer, with or without the use of a motor vehicle or other means of
conveyance, any electric power transmission line/material or meter from a tower, pole, any other installation
or place of installation, or any place or site where it may be rightfully or lawfully stored, deposited, kept,
stocked, inventoried, situated or located without the consent of the owner, whether or not the act is done for
profit or gain;

(3) Store, possess or otherwise keep in his premises, custody or control, any electric power transmission
line/material or meter without the consent of the owner, whether or not the act is done for profit or gain; and

(4) Load, carry, ship or move from one place to another, whether by land, air or sea, any electrical power
transmission line/material, whether or not the act is done for profit or gain, without first securing a
clearance/permit for the said purpose from its owner or the National Power Corporation (NPC) or its regional
office concerned, as the case may be.

(b) For purposes of this section, "electrical power transmission line/material" refers to electric power
transmission steel towers, woodpoles, cables, wires, insulators, line hardwares, electrical conductors and
other related items with a minimum voltage of sixty-nine kilovolts (69 kv), such as the following:

(1) Steel transmission line towers made of galvanized steel angular members and plates or creosoted and/or
lannelized woodpoles/ concrete poles and designed to carry and support the conductors;

(2) Aluminum conductor steel reinforced (ACSR) in excess of one hundred (100) MCM;

(3) Overhead ground wires made of 7 strands of galvanized steel wires, 3.08 millimeters in diameter and
designed to protect the electrical conductors from lightning strikes;

(4) Insulators made of porcelain or glass shell and designed to insulate the electrical conductors from steel
towers or woodpoles; and

(5) Various transmission line hardwares and materials made of aluminum alloy or malleable steel and
designed to interconnect the towers, conductors, ground wires, and insulators mentioned in subparagraphs
(1), (2), (3), and (4) above for the safe and reliable operation of the transmission lines.
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PRIMA FACIE EVIDENCE. - (a) The presence of any of the following circumstances shall constitute
prima facie evidence of illegal use of electricity, as defined in this Act, by the person benefitted thereby, and
shall be the basis for: (1) the immediate disconnection by the electric utility to such person after due notice,
(2) the holding of a preliminary investigation by the prosecutor and the subsequent filing in court of the
pertinent information, and (3) the lifting of any temporary restraining order or injunction which may have
been issued against a private electric utility or rural electric cooperative:

(i) The presence of a bored hole on the glass cover of the electric meter, or at the back or any other part of
said meter;

(ii) The presence inside the electric meter of salt, sugar and other elements that could result in the inaccurate
registration of the meter's internal parts to prevent its accurate registration of consumption of electricity;

(iii) The existence of any wiring connection which affects the normal operation or registration of the electric
meter;

(iv) The presence of a tampered, broken, or fake seal on the meter, or mutilated, altered or tampered meter
recording chart or graph, or computerized chart, graph, or log;

(v) The presence in any part of the building or its premises which is subject to the control of the consumer or
on the electric meter, of a current reversing transformer, jumper, shorting and/or shunting wire, and/or loop
connection or any other similar device;

(vi) The mutilation, alteration, reconnection, disconnection, bypassing or tampering of instruments,

transformers, and accessories;

(vii) The destruction of, or attempt to destroy, any integral accessory of the metering device box which
encases an electric meter, or its metering accessories; and
(viii) The acceptance of money and/or other valuable consideration by any officer of employee of the electric
utility concerned or the making of such an offer to any such officer or employee for not reporting the presence
of any of the circumstances enumerated in subparagraphs (i), (ii), (iii), (iv), (v), (vi), or (vii) hereof: Provided,
however, That the discovery of any of the foregoing circumstances, in order to constitute prima facie
evidence, must be personally witnessed and attested to by an officer of the law or a duly authorized
representative of the Energy Regulatory Board (ERB).

(b) The possession or custody of electric power transmission line/material by any person, natural or juridical,
not engaged in the transformation, transmission or distribution of electric power, or in the manufacture of
such electric power transmission line/material shall be prima facie evidence that such line/material is the fruit
of the offense defined in Section 3 hereof and therefore such line/material may be confiscated from the person
in possession, control or custody thereof.

INCENTIVES. - An incentive scheme by way of a monetary reward in the minimum amount of Five
thousand pesos (P5,000) shall be given to any person who shall report to the NPC or police authorities any
act which may constitute a violation of Section 3 hereof. The Department of Energy (DOE), in consultation
with the NPC, shall issue the necessary guidelines for the proper implementation of this incentive scheme
within thirty (30) days from the effectivity of this Act.

DISCONNECTION OF ELECTRIC SERVICE. - The private electric utility or rural electric cooperative
concerned shall have the right and authority to disconnect immediately the electric service after serving a
written notice or warning to that effect, without the need of a court or administrative order, and deny
restoration of the same, when the owner of the house or establishment concerned or someone acting in his
behalf shall have been caught en flagrante delicto doing any of the acts enumerated in Section 4(a) hereof, or
when any of the circumstances so enumerated shall have been discovered for the second time: Provided, That
in the second case, a written notice or warning shall have been issued upon the first discovery: Provided,
further, That the electric service shall not be immediately disconnected or shall be immediately restored upon
the deposit of the amount representing the differential billing by the person denied the service, with the private
electric utility or rural electric cooperative concerned or with the competent court, as the case may be:
Provided, furthermore, That if the court finds that illegal use of electricity has not been committed by the
same person, the amount deposited shall be credited against future billings, with legal interest thereon
chargeable against the private utility or rural electric cooperative, and the utility or cooperative shall be made
to immediately pay such person double the value of the payment or deposit with legal interest, which amount
shall likewise be creditable against immediate future billings, without prejudice to any criminal, civil or
administrative action that such person may be entitled to file under existing laws, rules and regulations:
Provided, finally, That if the court finds the same person guilty of such illegal use of electricity, he shall,
upon final judgment, be made to pay the electric utility or rural electric cooperative concerned double the
value of the estimated electricity illegally used which is referred to in this section as differential billing.

Differential billing shall refer to the amount to be charged to the person concerned for the unbilled electricity
illegally consumed by him as determined through the use of methodologies which utilize, among others, as
basis for determining the amount of monthly electric consumption in kilowatt-hours to be billed, either: (a)
the highest recorded monthly consumption within the five-year billing period preceding the time of the
discovery, (b) the estimated monthly consumption as per the report of load inspection conducted during the
time of discovery, (c) the higher consumption between the average consumptions before or after the highest
drastic drop in consumption within the five-year billing period preceding the discovery, (d) the highest
recorded monthly consumption within four (4) months after the time of discovery, or (e) the result of the
ERB test during the time of discovery and, as basis for determining the period to be recovered by the
differential billing either: (1) the time when the electric service of the person concerned recorded an abrupt
or abnormal drop in consumption, or (2) when there was a change in his service connection such as a change
of meter, change of seal or reconnection, or in the absence thereof, a maximum of sixty (60) billing months
up to the time of discovery: Provided, however, That such period shall, in no case, be less than one (1) year
preceding the date of discovery of the illegal use of electricity.
PENALTIES. - (a) Violation of Section 2. - The penalty of prision mayor or a fine ranging from Ten
thousand pesos (P10,000) to Twenty thousand pesos (P20,000) or both, at the discretion of the court, shall be
imposed on any person found guilty of violating Section 2 hereof.

(b) Violation of Section 3. - The penalty of reclusion temporal or a fine ranging from Fifty thousand pesos
(P50,000) to One hundred thousand pesos (P100,000) or both at the discretion of the court, shall be imposed
on any person found guilty of violating Section 3 hereof.

(c) Provision common to violations of Section 2 and Section 3 hereof. - If the offense is committed by, or in
connivance with, an officer or employee of the power company, private electric utility or rural electric
cooperative concerned, such officer or employee shall, upon conviction, be punished with a penalty one (1)
degree higher than the penalty provided herein, and forthwith be dismissed and perpetually disqualified from
employment in any public or private utility or service company and from holding any public office.

If, in committing any of the acts enumerated in Section 4 hereof, any of the other acts as enumerated is also
committed, then the penalty next higher in degree as provided herein shall be imposed.

If the offense is committed by, or in connivance with an officer or employee of the electric utility concerned,
such officer or employee shall, upon conviction, be punished with a penalty one (1) degree higher than the
penalty provided herein, and forthwith be dismissed and perpetually disqualified from employment in any
public or private utility or service company. Likewise, the electric utility concerned which shall have
knowingly permitted or having knowledge of its commission shall have failed to prevent the same, or was
otherwise guilty of negligence in connection with the commission thereof, shall be made to pay a fine not
exceeding triple the amount of the 'differential billing' subject to the discretion of the courts.

If the violation is committed by a partnership, firm, corporation, association or any other legal entity,
including a government-owned or -controlled corporation, the penalty shall be imposed on the president,
manager and each of the officers thereof who shall have knowingly permitted, failed to prevent or was
otherwise responsible for the commission of the offense.

AUTHORITY TO IMPOSE VIOLATION OF CONTRACT SURCHARGES. - A private electric utility

or rural electric cooperative may impose surcharges, in addition to the value of the electricity pilfered, on the
bills of any consumer apprehended for tampering with his electric meter/metering facility installed on his
premises, as well as other violations of contract like direct connection, use of jumper, and other means of
illicit usage of electricity found installed in the premises of the consumer. The surcharge for the violation of
contract shall be collected from and paid by the consumer concerned as follows:

(a) First apprehension. - Twenty five percent (25%) of the current bill as surcharge;

(b) Second apprehension. - Fifty percent (50%) of the current bill as surcharge; and

(c) Third and subsequent apprehensions. - One hundred percent (100%) of the current bill as surcharge.

The private electric utility or rural electric cooperative is authorized to discontinue the electric service in case
the consumer is in arrears in the payment of the above imposed surcharges.

The term 'apprehension' as used herein shall be understood to mean the discovery of the presence of any of
the circumstances enumerated in Section 4 hereof in the establishment or outfit of the consumer concerned.

No writ of injunction or restraining order shall be used by any court against any private electric utility or
rural electric cooperative exercising the right and authority to disconnect electric service as provided in this
Act, unless there is prima facie evidence that the disconnection was made with evident bad faith or grave
abuse of authority.

If, notwithstanding the provisions of this section, a court issues an injunction or restraining order, such
injunction or restraining order shall be effective only upon the filing of a bond with the court, which shall be
in the form of cash or cashier's check equivalent to the "differential billing," penalties and other charges, or
to the total value of the subject matter of the action: Provided, however, That such injunction or restraining
order shall automatically be refused or, if granted, shall be dissolved upon filing by the public utility of a
counterbond similar in form and amount as that above required: Provided, finally, That whenever such
injunction is granted, the court issuing it shall, within ten (10) days from its issuance, submit a report to the
Supreme Court setting forth in detail the grounds or reason for its order.

There is hereby established a cap on the recoverable rate of system losses as follows:

(a) For private electric utilities:

(i) Fourteen and a half percent (14 1/2%) at the end of the first year following the effectivity of this Act;

(ii) Thirteen and one-fourth percent (13 1/4%) at the end of the second year following the effectivity of this
Act;

(iii) Eleven and three-fourths (11 3/4%) at the end of the third year following the effectivity of this Act; and

(iv) Nine and a half-percent (9 1/2%) at the end of the fourth year following the effectivity of this Act.

Provided, That the ERB is hereby authorized to determine at the end of the fourth year following the
effectivity of this Act, and as often as necessary taking into account the viability of private electric utilities
and the interest of the consumers, whether the caps herein or theretofore established shall be reduced further
which shall, in no case, be lower than nine percent (9%) and accordingly fix the date of the effectivity of the
new caps: Provided, further, That in the calculation of the system loss, power sold by the NPC or any other
entity that supplies power directly to a consumer and not through the distribution system of the private electric
utility shall not be counted even if the billing for the said power used is through the private electric utility.

The term "power sold by NPC or any other entity that supplies power directly to a consumer" as used in the
preceding paragraph shall for purposes of this section be deemed to be a sale directly to the consumer if: (1)
the point of metering by the NPC or any other utility is less than one thousand (1,000) meters from the
consumer, or (2) the consumer's electric consumption is three percent (3%) or more of the total load
consumption of all the customers of the utility, or (3) there is no other consumer connected to the distribution
line of the utility which connects to the NPC or any other utility point of metering to the consumer meter.

(b) For rural electric cooperatives:

(i) Twenty-two percent (22%) at the end of the first year following the effectivity of this Act;

(ii) Twenty percent (20%) at the end of the second year following the effectivity of this Act;

(iii) Eighteen percent (18%) at the end of the third year following the effectivity of this Act;

(iv) Sixteen percent (16%) at the end at the fourth year following the effectivity of this Act; and

(v) Fourteen percent (14%) at the end of the fifth year following the effectivity of this Act.
Provided, That the ERB is hereby authorized to determine at the end of the fifth year following the effectivity
of this Act, and as often as is necessary, taking into account the viability of rural electric cooperatives and
the interest of the consumers, whether the caps herein or theretofore established shall be reduced further
which shall, in no case, be lower than nine percent (9%) and accordingly fix the date of the effectivity of the
new caps.

Provided, finally, That in any case nothing in this Act shall impair the authority of the ERB to reduce or
phase out technical or design losses as a component of system losses.

RECOVERY OF PILFERAGE LOSSES. - Any private electric utility or rural electric cooperative which
recovers any amount of pilferage losses shall, within thirty (30) days from said recovery, report in writing
and under oath to the ERB: (a) the fact of recovery, (b) the date thereof; (c) the name of the consumer
concerned, (d) the amount recovered, (e) the amount of pilferage loss claimed, (f) the explanation for the
failure to recover the whole amount claimed, and (g) such other particulars as may be required by the ERB.
If there is a case pending in court for the recovery of a pilferage loss, no private electric utility or rural electric
cooperative shall accept payment from the consumer unless so provided in a compromise agreement duly
executed by the parties and approved by the court.
Republic Act No. 8479 February 10, 1998

AN ACT DEREGULATING THE DOWNSTREAM OIL INDUSTRY AND FOR OTHER

PURPOSES

"Downstream Oil Industry Deregulation Act of 1998."

STATE POLICY It shall be the policy of the State to liberalize and deregulate the downstream oil industry
in order to ensure a truly competitive market under a regime of fair prices, adequate and continuous supply
of environmentally-clean and high-quality petroleum products. To this end, the State shall promote and
encourage the entry of new participants in the downstream oil industry, and introduce adequate measures to
ensure the attainment of these goals.

COVERAGE This Act shall apply to all persons or entities engaged in any and all activities of the domestic
downstream oil industry, as well as persons or companies directly importing refined petroleum products for
their own use.

DEFINITION OF TERMS

(a) Basel Convention shall refer to the international accord which governs the trade or movement of
hazardous and toxic wastes across borders;

(b) Board shall refer to the Energy Regulatory Board;

(c) BOI shall refer to the Board of Investments;

(d) Crude Oil shall refer to oil in its natural state before the same has been refined or otherwise treated, but
excluding water, bottoms, sediments and foreign substances;

(e) Dealer shall refer to any person, whether natural or juridical, who is engaged I the marketing and direct
selling of petroleum products to motorists, end users, and other consumers;

(f) DOE shall refer to the Department of Energy;

(g) DOJ shall refer to the Department of Justice;

(h) Downstream Oil Industry(DOI) or 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 products;

(i) Hauler shall refer to any person, whether natural or juridical, engaged in the transport, distribution,
hauling, and carriage of petroleum products, whether in bulk or packed form, from the oil companies and
independent marketers to the petroleum dealers and other consumers;

(j) LPG Distributor shall refer to any person or entity, whether natural or juridical, engaged in exporting,
refilling, transporting, marketing, and/or selling of LPG to end users and other consumers;

(k) New Industry Participants shall refer to new participants in a particular sub-sector of the downstream oil
industry with investments and initial business operations commencing after January 1, 1994;
(l) Person shall refer to any person, whether natural or juridical, who is engaged in any activity of the
downstream oil industry;

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

(n) Petroleum Products shall refer to products formed in the case 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, solvents, kerosenes, aviation fuels, diesel oils, fuel oils,
waxes and petrolatums, asphalt, bitumens, coke and refinery sludges, or other 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 fifty
percent (50%) by weight of such petroleum products;

(o) 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;

(p) Singapore Posting shall refer to the price of petroleum products periodically posted by oil refineries in
Singapore and reported by independent international publications; and

(q) Wholesale Posted Price (WPP) shall refer to the ceiling price of petroleum products set by the Board
based on its duly approved automatic pricing formula.

LIBERALIZATION OF THE INDUSTRY Any law to the contrary notwithstanding, any person or entity
may import or purchase any quantity of crude oil and petroleum products from a 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 a generic name or his or its own trade name, or use the same for his or its own
requirement: Provided, That any person who shall engage in any such activity shall give prior notice thereof
to the DOE for monitoring purposes: Provided, further, That such notice shall 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 importations shall
be in accordance with the Basel Convention.

TARIFF TREATMENT

(a) Any law to the contrary notwithstanding and starting with the effectivity of this Act, a single and uniform
tariff duty shall be imposed and collected both on imported crude oil and imported refined petroleum products
at the rate of three percent (3%): Provided, however, That the President of the Philippines may, in the exercise
of his powers, reduce such tariff rate when in his judgment such reduction is warranted, pursuant to Republic
Act No. 1937, as amended, otherwise known as the Tariff and Customs Code: Provided, further, That
beginning January 1, 2004 or upon implementation of the Uniform Tariff Program under the World Trade
Organization and ASEAN Free Trade Area commitments, the tariff rate shall be automatically adjusted to
the appropriate level notwithstanding the provisions under this Section.

(b) 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 importation of fuel oil and diesel.
PROMOTION OF FAIR TRADE PRACTICES

The Department of Trade and Industry (DTI) and DOE shall take all measures to promote fair trade and
prevent cartelization, monopolies, combinations in restraint of trade, and any unfair competition in the
Industry as defined in Article 186 of the Revised Penal Code, and Articles 168 and 169 of Republic Act No.
8293, otherwise known as the "Intellectual Property Law". The DOE shall continue to encourage certain
practices in the industry which continue to encourage certain practices in the Industry which serve the public
interest and are intended to achieve efficiency and cost reduction, ensure continuous supply of petroleum
products, and enhance environmental protection. These practices may include borrow-and-loan agreements,
rationalized depot and manufacturing operations, hospitality agreements, joint tanker and pipeline utilization,
and joint actions on spill control and fire prevention.

The DOE shall monitor the relationship between the oil companies (refiners and importers) and their dealers,
haulers and LPG distributors to help ensure the observance of fair and equitable practices and to ensure the
enforcement of existing contracts: Provided, That the DOE shall conciliate and arbitrate any dispute that may
arise with respect to the contractual relationship between the oil companies and the dealers, haulers and LPG
distributors involving the dealers' mark-up, the freight rate in transporting petroleum products and the
margins of LPG distributors for the protection of the public and to prevent ruinous competition: Provided,
further, That the arbitration award of the DOE shall be subject to judicial review under existing law.

The DOE, the Department of Foreign Affairs (DFA) and the DTI shall jointly formulate and establish a
program that will promote the entry of new participants in the Industry. Such program shall, among others,
include a strategic international information campaign to be implemented through selected embassies and
consular offices of the Philippines. This program shall commence implementation after three (3) months from
the effectivity of this Act.

INCENTIVES FOR NEW INVESTMENTS. – To the extent applicable, persons with new investments as
determined by the DOE and registered with the BOI in refining, storage, marketing and distribution of
petroleum products, shall be extended the same incentives granted to BOI-registered enterprises engaged in
a preferred area of investments pursuant to Executive Order No. 226, otherwise known as the "Omnibus
Investments Code of 1987".

Such incentives shall include:

(1) Income tax holiday;

(2) Additional deduction for labor expenses;

(3) Minimum tax and duty of three percent (3%) and value-added tax (VAT) on imported capital equipment;

(4) Tax credit on domestic capital equipment;

(5) Exemption from contractor's tax;

(6) Unrestricted use of consigned equipment;

(7) Exemption from the real property tax on production equipment or machineries;

(8) Exemption from taxes and duties on imported spare parts; and

(9) Such other applicable incentives under Article 39 of Executive Order No. 226.
Any provision of the law to the contrary notwithstanding, the said incentives may be availed by persons with
new investments for a period of five (5) years from registration with the BOI: Provided, however, That in the
storage, marketing and distribution of petroleum products, only the investments of new industry participants
shall be entitled to incentives provided in the said Code. As used herein, "marketing of petroleum products"
shall include the establishment of gasoline stations.

For this purpose, the industry shall be included in the annual Investment Priorities Plan (IPP): Provided, That
nothing in herein contained shall preclude qualified persons or entities as provided under the "Omnibus
Investments Code" from applying from or continue enjoying incentives and benefits under the said Code.

PROMOTION OF RETAIL COMPETITION. – To achieve the social and policy objective of fair prices,
facilitate the attainment of a truly competitive product market in the retail level, the DOE shall promote and
encourage by way of information dissemination, networking, and management/skills training, the active and
direct participation of the private sector and cooperatives in the retailing of petroleum products through joint
venture/supply agreements with new industry participants for the establishment and operation of gasoline
stations: Provided, That the training herein shall include LPG retailing.

To this end, the DOE shall, in accordance with the Technology and Livelihood Resource Center (TLRC) and
Technical Education and Skills Development Authority (TESDA), coordinate with new industry participants
and existing petroleum dealers' associations in the formulation and implementation of a two-fold program on
management and skills training for the establishment, operation, and maintenance of gasoline stations.

Persons who successfully complete the two-fold program shall be entitled to government assistance being
extended by government lending agencies, in the form of medium- to long-term loans with low interest rates
and to the gasoline training station training and loan fund provided hereunder, to serve as capital for the
establishment and operation of gasoline stations.

For these purposes, there is hereby established a gasoline station and loan fund with the initial amount of
Three hundred million pesos (P 300,000,000.00) to be provided by the Philippine Amusement and Gaming
Corporation (PAGCOR) and administered by the DOE under a separate account.

Of this amount, two percent (2%) plus any additional funding shall be allocated for he two-fold program; one
percent (1%) plus any additional funding shall be set aside for administrative, maintenance, and other
operating expenses; ninety-four percent (94%) shall be used exclusively for lending and financial assistance;
the remaining three percent (3%) shall be utilized in accordance with the provisions of Section 26 of this
Act: Provided, That the loans to be awarded herein shall be from short- to medium-term with low interest
rates; Provided, further, That these loans shall be awarded to qualified persons who are able to comply with
the conditions set forth in the next two (2) preceding paragraphs.

To ensure fair competition and prevent cartels and monopolies in the Industry, the following acts are
hereby prohibited:

(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 markets, either by products or by areas,
or allocate markets, either by products or by areas, in restraint of trade or free competition, including any
contractual stipulation which prescribes pricing levels and profit margins;

(b) Predatory pricing which means selling or offering to sell any oil product at a price below the seller's or
offeror's average variable cost for the purpose of destroying competition, eliminating a competitor or
discouraging a potential competitor from entering the market: Provided, however, That pricing below
average variable cost in order to match the lower price of the competitor and not for the purpose of destroying
competition shall not be deemed predatory pricing. For purposes of this provision, "variable cost" as
distinguished from "fixed cost", refers to costs such as utilities or raw materials, which vary as the output
increases or decreases and "average variable cost" refers to the sum of all variable costs divided by the number
of units of outputs.

Any person, including but not limited to the chief operating officer, chief executive officer or chief finance
officer of the partnership, corporation or any entity involved, who is found guilty of any of the said prohibited
acts shall suffer the penalty of three (3) to seven (7) years imprisonment, and a fine ranging from One million
pesos (P 1,000,0000.00) to Two million pesos (P 2,000,000.00).

To ensure compliance with the provisions of this Act, the refusal to comply with any of the following shall
likewise be prohibited:

(a) submission of any reportorial requirements;

(b) use of clean and safe (environment and worker-benign) technologies;

(c) any order or instruction of the DOE Secretary issued in the exercise of his enforcement powers under
Section 15 of this Act; and

(d) registration of any fuel additive with the DOE prior to its use as an additive.

Any person, including but not limited to the chief operating officer or chief executive officer of the
partnership, corporation or any entity involved, who is found guilty of any of the said prohibited acts shall
suffer the penalty of imprisonment for two (2) years and a fine ranging from Two hundred fifty thousand
pesos (P 250,000.00) to Five hundred thousand pesos (P 500,000.00).

REMEDIES

(a) Government Action. – Whenever it is determined by the Joint Task Force created under Section 14 (d) of
this Act, there is a threatened or imminent or actual violation of Section 11 of this Act, it shall direct the
provincial or city prosecutors having jurisdiction to institute an action to prevent or restrain such violation
with the Regional Trial Court of the place where the defendants reside or has his place of business. Pending
hearing of the complaint and before final judgment, the court may at any time issue a temporary restraining
order or an injunction as shall be deemed just within the premises, under the same conditions and principles
as injunctive relief is granted under the Rules of Court.

Whenever it is determined by the Joint Task Force that the Government or any of its instrumentalities or
agencies, including government-owned or –controlled corporations, shall suffer loss or damage in its business
or property by reason of violation of Section 11 of this Act, such instrumentality, agency or corporation may
file an action to recover damages and the costs of the 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 aid of which the DOE Secretary may
exercise the powers under Section 15 of this Act. The Joint Task Force shall prepare a report embodying its
findings and recommendations as a result of any such investigation, and the report shall be made at the
discretion of the Joint Task Force. In the event that the Joint Task Force determines that there has been a
violation of Section 11 of this Act, the private person or entity shall be entitled to sue for and obtain injunctive
relief, as well as damages, in the Regional Trial Court having jurisdiction over any of the parties, under the
same conditions and principles as injunctive relief is granted under the Rules of Court.
MONITORING. – (a) The DOE shall monitor and publish daily international crude oil prices, as well as
follow the movements of domestic oil prices. It shall likewise monitor the quality of petroleum products and
stop the operation of businesses involved in the sale of petroleum products which do not comply with the
national standards of quality that are aligned with the national standards/protocols of quality. The Bureau of
Product Standards of the DTI, together with the Department of Environment and Natural Resources (DENR),
the DOE, the Department of Science and Technology (DOST), representatives of the fuel and automotive
industries and the consumers, shall set the specifications for all types of fuel and fuel-related products to
improve fuel composition for increased efficiency and reduced emissions. The BPS shall also specify the
allowable content of additives in all types of fuels and fuel-related products.

(b) The DOE shall monitor the refining and manufacturing processes of local petroleum products to ensure
that clean and safe (environment and worker-benign) technologies are applied. This shall also apply to the
process of marketing local and imported petroleum products.

(c) 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 importations, local purchases, sales
and/or consumption, and inventory on a per crude/product basis.

(d) Any report from any person of an unreasonable rise in the prices of petroleum products shall be
immediately acted upon. For this purpose, the creation of the DOE-DOJ Task Force is hereby mandated to
determine within thirty (30) days the merits of the report and initiate the necessary actions warranted under
the circumstance: Provided, That nothing herein shall prevent the said task force from investigating and/or
filing the necessary complaint with the proper court or agency motu propio.

Upon the effectivity of this Act, the Secretaries of Energy and Justice shall jointly appoint the members of a
committee who shall be tasked with the drafting of the rules and guidelines to be adopted by the Task Force
in the performance of its duty. These guidelines shall ensure the efficiency, promptness, and effectiveness in
the handling of its cases. The Task Force shall be organized and its members appointed within one (1) month
from the effectivity of this Act.

(e) In times of national emergency, when the public interest so requires, the DOE may, during the emergency
and under reasonable terms prescribed by it, temporarily take over or direct the operation of any person or
entity engaged in the Industry.

PHASES OF DEREGULATION

In order to provide a smooth implementation of deregulation, the policy shift shall be done in two (2) phases:
Phase I (Transition Phase) and Phase II (Full Deregulation Phase).

BUFFER FUND. – The President may, when the interest of the consumers so requires, taking into account
the rise in the domestic prices of petroleum products, use the "Reserve Control Account" as a buffer fund in
an amount not exceeding Two billion nine hundred million pesos (P 2,900,000,000.00) to cover increases in
the prices of petroleum products, except premium gasoline, during the Transition Phase over the prices
prevailing as of the date of the effectivity of this Act. The "Reserve Control Account" refers to a lump sum
collation of reserve impositions deducted from the appropriations approved by Congress for the operation of
the government and the implementation of projects and programs.

AUTOMATIC OIL PRICING MECHANISM. – To enable the domestic price of petroleum products to
approximate and promptly reflect the prices 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 one (1) month after the effectivity of this Act, approve a market-oriented formula to determine the WPP of
petroleum products based solely on the changes of either the Singapore Posting of refined petroleum products, the
SIP or the crude landed cost.

"Thereafter, the Board shall at the proper times automatically adjust the WPP of petroleum products based on the
approved formula, through appropriate orders, without the need for notice and hearing.

"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) national newspapers of general
circulation."

(b) Paragraph 1 of Letter of Instruction No. 1441, to read as follows:

"1. To review and reset the prices of domestic petroleum products up or down as necessary on or before the third
Monday of each month to reflect the new WPP of refined petroleum products based on the approved automatic
pricing formula."

(c) Paragraph 2 of Letter of Instruction No. 1441 is hereby deleted. In lieu thereof a new paragraph is inserted to
read as follows:

"2. The price adjustment shall be reflected automatically in the approved WPP of each petroleum product."

(d) 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
rates charged by water transport operators, haulers and pipeline concessionaires. Depending on the basis of
the APM, the Board shall, within one (1) month after the effectivity of this Act and after proper notice and
full public hearing, prescribe a formula which will automatically set the margins of marketers and dealers,
and the rates charged by water transport operators, haulers and pipeline concessionaires: 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) newspapers
of general circulation the mechanics of the formula for the information of the public.

START OF FULL DEREGULATION. – Full deregulation of the Industry shall start five (5) months
following the effectivity of this Act: Provided, however, That when the public interest so requires, the
President may accelerate the start of full deregulation upon the recommendation of the DOE and the
Department of Finance when the prices of crude oil and petroleum products in the world market are declining
and the value of the peso in relation to the US dollar is stable, taking into account the relevant trends and
prospects: Provided, further, That the foregoing provisions notwithstanding, the five (5)-month Transition
Phase shall continue to apply to LPG, regular gasoline, and kerosene as socially-sensitive petroleum products
and said petroleum products shall be covered by the automatic pricing mechanism during the said period.
Upon the implementation of full deregulation as provided herein, the Transition Phase is deemed terminated
and the following laws are 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 15, 1984;

(e) Letter of Instruction No. 1460, dated May 9, 1985;

(f) Presidential Decree No. 1889; and

(g) Presidential Decree No. 1956, as amended by Executive Order No. 137:

Provided, however, That in case full deregulation is started by the President in exercise of the authority
provided in this Section, the foregoing laws shall continue to be in force and effect with respect to LPG,
regular gasoline and kerosene for the rest of the five (5)-month period.

OPSF BALANCE All outstanding claims against OPSF as of the effectivity of this Act, subject to the
existing auditing rules and regulations of the Commission on Audit (COA), shall be considered as accounts
payable of the National Government. For this purpose, and any law to the contrary notwithstanding, the
reimbursement certificates issued by the DOE covering the said outstanding claims shall be honored and
accepted by the Bureau of Customs and the Bureau of Internal Revenue as payment to the extent of ten
percent (10%) per payment of the tariff duties and specific taxes from the creditor-claimants against the OPSF
until such claims are settled in full: Provided, That the reimbursement certificates shall not be transferable.

INITIAL PUBLIC OFFERING. – In compliance with the constitutional mandate to encourage private
enterprises to broaden their base of ownership and in recognition of the vital role of oil in the national
economy, any person or entity engaged in the oil refinery business shall make a public offering through the
stock exchange of at least ten percent (10%) of its common stock within a period of three (3) years from the
effectivity of this Act or the commencement of its refinery operations: Provided, That no single person or
entity shall be allowed to own more than five percent (5%) of the stock offering: Provided, further, That any
crude oil refining company and any stockholder thereof shall not acquire, directly or indirectly, any share of
stock offered by any other crude oil refining company pursuant to his Section: Provided, finally, That any
such company which made the requisite public offering before the effectivity of this Act shall be exempted
from the requirement.

PENAL SANCTION. – Any person who violates any of the provisions of this Act shall suffer the penalty
of three (3) months to one (1) year imprisonment and a fine ranging from Fifty thousand pesos (P 50,000.00)
to Three hundred thousand pesos (P 300,000.00).