ENERGY Department of Energy Act of 1992 The Department shall have the following powers and functions: a.

Formulate policies for the planning and implementation of a comprehensive program for the efficient supply and economical use of energy consistent with the approved national economic plan and with the policies on environmental protection and conservation and maintenance of ecological balance, and provide a mechanism for the integration, rationalization, and coordination of the various energy programs of the Government; b. Develop and update the existing Philippine energy program which shall provide for an integrated and comprehensive exploration, development, utilization, distribution and conservation of energy resources, with preferential bias for environment-friendly, indigenous, and low-cost sources of energy. The program shall include a policy direction towards the privatization of government agencies related to energy, deregulation of the power and energy industry and reduction of dependency on oil-fired plants. Said program shall be updated within nine (9) months from its completion and not later than the fifteenth day of September every year thereafter; c. Establish and administer programs for the exploration, transportation, marketing, distribution, utilization, conservation, stockpiling and storage of energy resources of all forms, whether conventional or nonconventional; d. Exercise supervision and control over all government activities relative to energy projects in order to attain the goals embodied in Section 2 of this Act; e. Regulate private sector activities as provided under existing laws: Provided, That the Department shall endeavour to provide for an environment conducive to free and active private sector participation and investment in all energy activities. At the end of four (4) years from the effectivity of this Act, the Department shall, upon approval of the President, institute the programs and timetable of deregulation of appropriate energy projects and activities of the energy industry; f. Assess the requirements of, determine priorities for, provide direction to, and disseminate information resulting from energy research and development programs for the optimal development of various forms of energy production and utilization technologies; g. Formulate and implement programs, including a system of providing incentives and penalties, for the judicious and efficient use of energy in all energyconsuming sectors of the economy; h. Formulate and implement a program for the accelerated development of nonconventional energy systems and the promotion and commercialization on its applications; i. Devise ways and means of giving direct benefits to the province, city, or municipality, especially the community and people affected, and equitable and preferential benefit to the region that hosts the energy resource and/or the

energy-generating facility: Provided, however, That the other provinces, cities, municipalities, or regions shall not be deprived of their energy requirements; j. Encourage private enterprises engaged in energy projects, including corporations, cooperatives, and similar collective organizations, to broaden the base of their ownership and thereby encourage the widest public ownership of energy-oriented corporations; k. Formulate such rules and regulations as may be necessary to implement the objectives of this Act; and l. Exercise such other power as may be necessary or incidental to attain the objectives of this Act.

Electric Power Industry Reform Act of 2001 Republic Act No. 9136, also known as the Electric Power Industry Reform Act of 2001, mandated the creation of the Energy Regulatory Commission (ERC). Section 43(b) of the Act also provides that the ERC promulgate and enforce a National Grid Code and a Distribution Code which shall include, but not limited to: (a) Performance Standards for TRANSCO O & M Concessionaire, distribution utilities and suppliers, and (b) Financial Capability Standards for the generating companies, the TRANSCO, distribution utilities and suppliers. The Act also mandates the ERC to enforce compliance to the Grid Code, the Distribution Code and the Market Rules and to impose fines and penalties for violations of their provisions. The Grid Code is organized into nine (9) Chapters. These are: Chapter 1 of the PGC contains the general provisions that apply to all the other Chapters of the Grid Code. It specifies the authority of the ERC to promulgate and enforce the Grid Code. It also contains articles on definition of terms, abbreviations, and construction of references used in the Grid Code. Chapter 2 of the PGC specifies the guidelines for Grid Management, the procedure for dispute resolution, the required Operational reports and the process for Grid Code enforcement and revision. Chapter 3 of the PGC specifies the minimum technical, design and operational criteria and the procedures to be complied with by any User who is connected or seeking connection to the Grid and the minimum technical, design and operational criteria of the Grid Owner at the Connection Site with Users. It also presents a unified listing of all the data required by the System Operator from Users and by Users from the Grid Owner. Chapter 4 of the PGC specifies the technical and design criteria and procedures to be applied by the System Operator and Grid Owner in planning the development or reinforcement of the Grid and to be taken into account by Users in planning the

expansion of their own Systems. Articles on Demand Forecasts and required technical planning studies are also included in this Chapter. Chapter 5 of the PGC establishes the rules and procedures to be followed by the Grid Owner, System Operator and all Users to ensure the reliability and security of the Grid. Articles such as Operating Principles, Authority and Responsibilities, Control, Protection, Testing, Safety Procedures, Outage/ Maintenance Scheduling and Emergency Procedures are also included in this chapter. Chapter 6 of the PGC establishes the rules, procedures and requirements for real-time dispatch in the Wholesale Electricity Spot Market in order to compensate for imbalances in active power and to provide the ancillary services that are required to ensure power quality and the reliability and security of the Grid. Articles on Operating Margins, Demand Forecasts and Control are also included in this chapter. Chapter 7 of the PGC specifies the technical and design criteria associated with the measurement of electric energy. The provision of metering data for the operation of the Philippine Electricity Market is also included in this Chapter. Chapter 8 of the PGC specifies the rules and procedures pertaining to compliance with the provisions of the Grid Code during the transition period from the existing industry structure to the new industry structure. The procedures for the grant of exemption from specific requirements of the Grid Code are also addressed in this Chapter. Chapter 9 of the PGC specifies the standards to ensure the quality, reliability and efficiency of the Transmission System, as well as safety standards for the protection of personnel in the power transmission environment. Republic Act No. 7156, "An Act Granting Incentives to Mini-Hydro-Electric Power Developers and for Other Purposes Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:: Section 1. Title. This Act shall be known as the "Mini-hydroelectric Power Incentive Act.". Section 2. Declaration of Policy. It is hereby declared the policy of the State to strengthen and enhance the development of the country's indigenous and self-reliant scientific and technological resources and capabilities and their adaptation to the country in order to attain energy self-sufficiency and thereby minimize dependence on outside source of energy supply. In pursuance thereof, it is further declared that minihydroelectric power developers shall be granted the necessary incentives and privileges to provide an environment conducive to the development of the country's hydroelectric power resources to their full potential.

Section 3. Declaration of Objectives. The objectives of the framework being established for the development of mini-hydroelectric power generation are as follows: (1) To encourage entrepreneurs to develop potential sites for hydroelectric power existing in their respective localities; (2) To encourage entrepreneurs to develop potential sites for hydroelectric power existing in the country by granting the necessary incentives which will provide a reasonable rate of return; (3) To facilitate hydroelectric power development by eliminating overlapping jurisdiction of the many government agencies whose permits, licenses, clearances and other similar authorizations issued by various government agencies as presently required for such development, and by vesting in one agency the exclusive authority and responsibility for the development of minihydroelectric power; (4) To apportion a part of the realty and special privilege taxes and other economic benefits of the hydroelectric power potential to the respective localities where they are established; and (5) To provide a contractual framework wherein some stability of conditions can be relied upon for long-term financing purposes. Section 4. Definition of Terms. As used in this Act, the following terms shall be understood, applied and construed as follows: (1) "Hydroelectric power" shall refer to the electric power produced by utilizing the kinetic energy of falling or running water to turn a turbine generator; (2) "Mini-hydroelectric power plant" shall refer to an electric-power-generating plant which: (a) utilizes the kinetic energy of falling or running water (run-of-river hydro plants) to turn a turbine generator producing electricity; and (c) has an installed capacity of not less than 101 kilowatts nor more than 10,000 kilowatts. (3) "Mini-hydroelectric power development" shall refer to the construction and installation of a hydroelectric- power-generating plant and its auxiliary facilities such as transmission, substation and machine shop with an installed capacity of not less that 101 kilowatts nor more than 10,000 kilowatts; (4) "Mini-hydroelectric power developer" or "developer" shall refer to any individual, cooperative, corporation or association engaged in the construction and installation of a hydroelectric-power-generating plant with an installed capacity of not less than 101 kilowatts nor more than 10,000 kilowatts;

(5) "Domestic use" shall refer to the utilization of water for drinking, washing, bathing, cooking or other household needs, home gardens and watering of lawns or for domestic animals; (6) "Municipal use" shall refer to the utilization of water for supplying the water requirements of the community; and (7) "Irrigation use" shall refer to the utilization of water for producing agricultural crops. Section 5. Agency in Charge. The Office of Energy Affairs, hereinafter referred to as the OEA, shall be the sole and exclusive authority responsible for the regulation, promotion and administration of mini-hydroelectric power development and the implementation of the provisions of this Act. Section 6. Powers and Duties of the OEA. The OEA shall exercise the following powers and duties: (1) Within six (6) months from approval of this Act, promulgate, in consultation with the National Water Resources Board (NWRB), such rules and regulations as may be necessary for the proper implementation and administration of this Act; (2) Process and approve applications for mini-hydroelectric power development, imposing such terms and conditions as it may deem necessary to promote the objectives of this Act, subject to the following standards, namely: (a) The applicant must be a citizen of the Philippines or a corporation, partnership, association or joint stock company, constituted and organized under the laws of the Philippines, at least sixty percent (60%) of the stock or paid-up capital of which belongs to citizens of the Philippines; (b) The applicant must prove that the operation of the proposed minihydroelectric project and the authorization to do business will promote the public interest in a proper and suitable manner and, for this purpose, within six (6) months from approval of this Act, formulate, in consultation with the National Economic and Development Authority (NEDA), the National Electrification Administration (NEA), and the Department of Trade and Industry (DTI), standards to measure the technical and financial capability of the developer; and (c) The applicant must be financially capable of undertaking the proposed mini-hydroelectric project and meeting the responsibilities incident to its operations;

(3) Charge reasonable fees in connection with the filing, processing, evaluation, and approval of applications for mini-hydroelectric power development in all suitable sites in the country; (4) Exclusive authority to issue permits and licenses relative to mini-hydroelectric power development; (5) Require the developer to post a bond or other guarantee of sufficient amount in favor of the Government and with surety or sureties satisfactory to the OEA upon the faithful performance by the contractor of any or all of the obligations under and pursuant to the contract within sixty (60) days after the effective date of the contract; and (6) Generally, exercise all the powers necessary or incidental to attain the purposes of this Act and other laws vesting additional powers on the OEA. Section 7. Sale of Power. The mini-hydroelectric power developer must first offer to sell electric power to either the National Power Corporation (NPC), franchised private electric utilities or electric cooperatives at a price per kilowatt-hour based on the NPC's or the utility's avoided cost which shall refer to the costs of the affected grids had NPC generated the equivalent electric power itself before disposing the power to third parties. The NPC shall allow the mini-hydroelectric developer to deliver its generated electricity to the developer's customers through existing NPC lines so as to serve such third parties under terms which are to be mutually agreed upon or, if no agreement can be reached, under terms set by the OEA. Section 8. Non-exclusive Development. Development of less than fifty percent (50%) of the hydroelectric power potential of the proposed site shall be non-exclusive. The OEA, after a thorough review and evaluation of its technical and economic viability, may grant the development of the site to its full power potential to any qualified developer: provided, that first option shall be given to the original developer: provided, further, that in case the original developer forfeits his option to pursue development of the hydroelectric power resource to its full potential, it shall be reimbursed by the successor-developer of the value of its investment based on the declared value of the development for real estate tax purposes over the immediately preceding three (3) years or, in case the declared value over said period differs, on the average value thereof. Section 9. Mandatory Restoration Work. In all cases where the proposed minihydroelectric power development entails the closure or stoppage of existing water outlets, passageways, connections, conduits, apertures or the like from the water source, it shall be mandatory for the developer to restore or reengineer such water outlets, passageways, connections, conduits, apertures or the like on its account or expense, and in such manner that existing users or appropriators shall not be permanently deprived of their use or appropriation.

Section 10. Tax Incentives. Any person, natural or judicial, authorized to engage in mini-hydroelectric power development shall be granted the following tax incentives or privileges: (1) Special Privilege Tax Rates. The tax payable by grantees to develop potential sites for hydroelectric power and to generate, transmit and sell electric power shall be two percent (2%) of their gross receipts from the sale of electric power and from transactions incident to the generation, transmission and sale of electric power. Such privilege tax shall be made payable to the Commissioner of Internal Revenue or his duly authorized representative on or before the 20th day of the month following the end of each calendar or fiscal quarter; (2) Tax and Duty-free Importation of Machinery, Equipment and Materials. Within seven (7) years from the date of award, importation of machinery and equipment, materials and parts shipped with such machinery and equipment including control and communication equipment shall not be subject to tariff duties and value-added tax: provided, that the said machinery, equipment, materials and parts: (a) are not manufactured domestically in reasonable quantity and quality at reasonable prices; (b) are directly and actually needed and will be used exclusively in the construction and impounding of water, transformation into energy, and transmission of electric energy to the point of use; and (c) are covered by shipping documents in the name of the duly registered developer to whom the shipment will be directly delivered by customs authorities: provided, further, that prior approval of the OEA was obtained before the importation of such machinery, equipment, materials and parts was made; (3) Tax Credit on Domestic Capital Equipment. A tax credit equivalent to one hundred percent (100%) of the value of the value-added tax and customs duties that would have been paid on the machinery, equipment, materials and parts had these items been imported shall be given to an awardee-developer who purchases machinery, equipment, materials and parts from a domestic manufacturer: provided, that such machinery, equipment, materials and parts are directly needed and will be used exclusively by the awardee-developer: provided, further, that prior approval by the OEA was obtained by the local manufacturer: provided, finally, that the sale of such machinery, equipment, materials and parts shall be made within seven (7) years from the date of award; (4) Special Realty Tax Rates on Equipment and Machinery. Any provision of the Real Property Tax Code or any other law to the contrary notwithstanding, realty and other taxes on civil works, equipment, machinery and other improvements of a registered mini-hydroelectric power developer shall not exceed two and a half percent (2.5%) of their original cost; (5) Value-added Tax Exemption. Exemption from the ten percent (10%) valueadded tax on the gross receipts derived from the sale of electric power whether through the NPC grid or through existing electric utility lines; and

(6) Income Tax Holiday. For seven (7) years from the start of commercial operation, a registered mini-hydroelectric power developer shall be fully exempt from income taxes levied by the National Government. Section 11. Disposition and Allotment of Special Privilege Taxes. If the minihydroelectric power development is located in a city, sixty percent (60%) of the special privilege taxes collected shall accrue to the city and forty percent (40%) to the National Government. If the mini-hydroelectric power development is located in a municipality, thirty percent (30%) of the special privilege taxes collected shall accrue to the municipality, thirty percent (30%) to the province and forty percent (40%) to the National Government. Section 12. Term of Contract. The term of contract shall be for a period of twentyfive (25) years extendible for another twenty-five (25) years under the same original terms and conditions: provided, that said awardee has complied faithfully with all terms and conditions of the award. Section 13. Official Development Assistance. The provision of Executive Order No. 230 of 1986, on the power of the NEDA Board, and rules and regulations governing the evaluation and authorization for the availment of Official Development Assistance notwithstanding, the privatization of the mini-hydroelectric power plants as provided for in this Act shall be eligible for foreign loans and grants without further evaluation by the NEDA Board, subject to Section 21, Article XII of the Constitution. Section 14. Reporting Requirements. The OEA shall submit an annual report to the Congress of the Philippines with respect to the implementation of this Act. Section 15. Repealing Clause. All laws, decrees, executive orders, rules and regulations, or parts thereof, inconsistent with this Act are hereby repealed, amended or modified accordingly. Section 16. Effectivity. This Act shall take effect fifteen (15) days after its publication in at least two (2) newspapers of general circulation. Republic Act No. 8479, "Downstream Oil Industry Deregulation Act of 1998"

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:: CHAPTER GENERAL PROVISIONS I

Section 1. Short Title. This Act shall be known as the "Downstream Oil Industry Deregulation Act of 1998."

Section 2. Declaration of 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. Section 3. 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. Section 4. Definition of Terms. For purposes of this Act, the following terms are hereinbelow defined: (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 subsector 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. CHAPTER II LIBERALIZATION OF THE DOWNSTREAM OIL INDUSTRY AND PROMOTION OF FREE COMPETITION Section 5. 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. Section 6. 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. Section 7. 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. Section 8. Program to Encourage the Entry of New Participants in the Industry. 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. In this regard, the DOE shall provide a "Philippine Downstream Oil Industry Investment Guide" to new industry participants and prospective participants. This guide, shall, among others, contain: (a) An introduction to the Philippine Downstream Oil Industry and the government's unwavering commitment to deregulation; (b) The entry requirements; (c) Information on the benefits and incentives for new industry participants which shall specify: (i) all the incentives and benefits they can enjoy, and (ii) the procedural and substantive requirements needed for entitlement; and (d) Such other information the DOE may deem necessary to promote the entry of new participants. Section 9. 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. Section 10. 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. CHAPTER ANTI-TRUST SAFEGUARDS, OTHER PROHIBITED ACTS AND REMEDIES III

Section 11. Anti-Trust Safeguards. 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). Section 12. Other Prohibited Acts. 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). Section 13. 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. CHAPTER POWERS AND FUNCTIONS OF THE DOE AND DOE SECRETARY IV

Section 14. 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 DOEDOJ 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. Section 15. Additional Powers of the DOE Secretary. In connection with the enforcement of this Act, the DOE Secretary shall have the following powers: (a) To gather and compile appropriate information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any person or entity in the Industry; (b) To require, by general or special orders, persons or entities engaged in a particular activity of the industry: (i) to file an annual or special report, or both in such form as the Secretary may prescribe; or (ii) to answer specific questions in writing, furnishing to the Secretary such information as he may require as to the

organization, business, conduct, practices, management, and relation to other corporations, partnerships, and individuals of the respective persons or entities filing such reports or answer. Such reports and/or answer shall be filed with the Secretary under oath and within such reasonable time as the Secretary may prescribe; (c) Upon the direction of the President or either House of Congress, to investigate and report the facts relating to any alleged violation of this Act by any person or corporation; (d) Upon the application of the Secretary of Justice, to investigate and make recommendations for the readjustment of the business of any person or entity alleged to be violating this Act in order that such person or entity may thereafter maintain his or its organization, management, and conduct of business in accordance with law; (e) To recommend to the proper government agency the suspension or revocation and termination of the business permit of an offender; (f) Concomitant with the policy of ensuring a continuous, adequate and economic supply of energy to exercise his powers and functions provided under Section 5 (c) of Republic Act No. 7638; (g) To make public from time to time such portions of the information obtained by him hereunder as are in the public interest; and to make annual and special reports to Congress and to submit therewith recommendations for additional legislation; and to provide for the publication of his reports and decisions in such form and manner as may be best adapted for public information and use: Provided, That the Secretary shall have any authority to make public any trade secret or any commercial or financial information which is obtained from any person or entity which is privileged or confidential, except that the Secretary may disclose such information to officers and employees of appropriate law enforcement agencies or to any officer or employee of any such law enforcement agency upon the prior certification by an officer of any such law enforcement agency that such information will be maintained in confidence and will be used only for official law enforcement purposes; and (h) Whenever a final order has been entered against any defendant in any suit brought by the government to prevent and restrain any violation of the anti-trust provisions of this Act to make investigation, upon his initiative, of the manner in which the decree has been or is being carried out, and upon the application of the Secretary of Justice, it shall be his duty to make such investigation. He shall transmit to the Secretary of Justice a report embodying his findings and recommendations as a result of any such investigation, and the report shall be made public at the discretion of the Secretary.

CHAPTER TRANSITION PHASE

Section 16. 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). Section 17. 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. Section 18. 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. CHAPTER FULL DEREGULATION PHASE VI

Section 19. 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. Section 20. Jurisdiction on Pricing of Piped Gas. 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 by duly franchised gas companies which distribute gas by means of underground pipe system." CHAPTER FINAL PROVISIONS VII

Section 21. 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. Section 22. 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. Section 23. Implementing Rules and Regulations. The DOE, in coordination with the Board, the DENR, DFA, Department of Labor and Employment (DOLE), Department of Health (DOH), DOF, DTI, National Economic and Development Authority (NEDA) and TLRC, shall formulate and issue the necessary implementing rules and regulations within sixty (60) days after the effectivity of this Act. Section 24. 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). Section 25. Public Information Campaign. The DOE, in coordination with the Board and the Philippine Information Agency (PIA), shall undertake an information campaign to educate the public on the deregulation program of the Industry. Section 26. Budgetary Appropriations. Such amount as may be necessary to effectively implement this Act shall be taken by the DOE form its annual appropriations, the DOE' Special Fund created under Section 8 of Presidential Decree No. 910, as amended, and such amount allocated under Section 10 of this Act. Section 27. 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. Section 28. Repealing 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 immediately modified accordingly. Section 29. Effectivity. This Act shall take effect upon its complete publication in at least two (2) national newspapers of general circulation. Rules and Regulation Implementing R.A. 7156 Section 1. Title These rules shall be known and cited as the rules and regulations governing the construction and operation of mini-hydroelectric (mini-hydro) power plants. Section 2. Definition of Terms Unless the context otherwise indicates, the following terms as used in these rules shall have the following meanings:

a. Avoided cost shall refer to the costs of the affected grids had NAPOCOR generated the equivalent electric power itself before disposing the power to third parties. b. Capacity shall refer to the electric load for which a generating unit or other electrical apparatus is rated by the manufacturer; its unit of measurement is usually kilowatts (kw). c. Electric cooperative shall refer to cooperatives duly authorized to supply electricity or empowered to supply electric service. d. Electric utility shall refer to an electric cooperative, local government-owned or privately owned, operating a grid within the NAPOCOR grids or other electric systems. e. End-use shall refer to a user of electricity generated by a mini-hydro power plant. f. Feasibility study shall refer to a study which is based on data specific to the site where the mini-hydro power plant will be erected. g. Franchised area shall refer to a geographical area franchised to an electric utility for electricity supply to end-users. h. Grid operator shall refer to any operator of electrical systems of interconnected transmission lines, substations and generating plants of the National Power Corporation or the concerned electric utility as the case may be. i. Hydroelectric power shall refer to electric power produced by utilizing the kinetic energy of falling or running water to turn a turbine generator. j. Mini-hydroelectric power developer or developer shall refer to any individual, cooperative, corporation or association that is engaged in or one who intends to engage in the construction, installation and operation of a hydroelectric-power-generating plant with an installed capacity of not less than 101 kilowatts nor more than 10,000 kilowatts. An end-user may also be a developer. k. Mini-hydroelectric power development shall refer to the construction and installation of a hydroelectric-power-generating plant and its auxiliary facilities such as transmission, substation and machine shop with an installed capacity of not less than 101 kilowatts nor more than 10,000 kilowatts. l. Mini-hydroelectric power plant shall refer to an electric-power-generating plant which (a) utilizes kinetic energy of falling or running water (run-of-river hydro plants) to turn a turbine generator producing electricity; and (b) has an installed capacity of not less than 101 kilowatts nor more than 10,000 kilowatts.

m. NAPOCOR shall refer to the National Power Corporation created pursuant to R.A. 6395. n. OEA shall mean the Office of Energy Affairs. o. Rate shall refer to any price or tariffs with respect to sale or purchase of electric energy, usually measured in pesos per kilowatt-hour for energy payment and pesos per kilowatt for capacity payments. p. Person includes every individual not otherwise disqualified by law, or corporation, partnership, association or joint company, constituted and organized under the laws of the Philippines, at least sixty percent (60%) of the stock or paid-up capital of which belongs to the citizens of the Philippines. q. Water resource shall refer to a surface water course where the flow to be used by the turbines of the mini-hydro power plant is diverted form and restituted to after having passed the installations. r. Wheeling shall refer to the electric energy transmission services extended by NAPOCOR or an electric utility to enable the developer of a mini-hydro power plant to transmit power to another electric grid or end-user. Section 3. Who May Apply Any person defined in Section 2.p if these rules, not otherwise disqualified by law, any apply for authority to construct and operate a mini-hydroelectric power plant. In cases of holders of permits to operate mini-hydro power plants existing and operating at the time of the effectivity of these rules and who wish to avail of the incentive under R.A. 7156, registration and payment with the OEA of the application fee as provided in these rules shall be sufficient bases for the granting of their operating contracts, provided, that they register within six (6) months form the effectivity of these rules. Section 4. Content of the Application All applications shall be made in writing, verified, accomplished in two (2) copies, and must show, among other things, the jurisdictional facts, the name and address of the applicant, the brief description of the project stating, among others, how water will be used, amount of water needed, power to be generated, etc., and place where applicant proposes to construct a mini-hydro power plant.

Section 5. Documents to Accompany Application All applications shall be accompanied by such documents as would reasonably establish prima facie the truth of the factual allegation thereof, including but not limited to the following: a. Certificate of Registration from the Securities and Exchange Commission together with a copy of Articles of Incorporation or Certification from the Department of Trade and Industry in case the applicant is a single proprietorship; b. Proposed Memorandum of Agreement between the applicant and either the NAPOCOR, the franchised electric utility, or other end-user as the case may be, on power purchase as well as on the use of existing lines and the associated wheeling fees, as applicable; c. Comprehensive feasibility study providing the technical, economic, financial, social, as well as the administrative viability of the project. It shall likewise include a feasibility reports particularly highlighting the activities for the proposed project, such as: 1. Data collection and review of any available pre-feasibility study, other pertinent data and study reports relevant to the proposed project; 2. 3. Detailed program for all survey and investigation works required in the study, such as topographic survey which will enable utilization of maps of sufficient scale (1:500) for layout purposes, geologic mapping, drilling (if any), establishment of gauging station, and others which may be deemed necessary; 4. Site inspection and field reconnaissance from time to time to confirm data obtained and design made; 5. Necessary hydrologic and hydraulic studies; 6. Plant operation and maintenance studies for optimization and determination of the power and energy capability of the project; 7. Determination as to whether or not the power and energy from the proposed minihydro power facility is marketable as an isolated facility; 8. Alternative layout of developments on the basis of topographic data available for optimization of selected parameters in the project; 9. Detailed layout and preliminary design to establish configuration of each structure in the development; 10. Establishment of unit prices and preparation of detailed quantity and cost estimates of the recommended schemes; 11. Project Description shall be submitted according to the guidelines set by the Department of Environment and Natural Resources (DENR) which should incorporate the measures that a project proponent intends to take to ensure that the

adverse effects of the proposed project on the environment will be avoided if not minimized. It should also include a watershed development plan and the endorsement from the Local Government Unit; 12. Construction schedule for the proposed project; 13. Economic and financial evaluation including sensitivity analysis on specific factors; 14. Recommendation on additional investigation program to be carried out duing the detailed design and implementation phase, if deemed necessary; and 15. Manual for operations of the power plant which shall be prepared in respect of all requirements provided by law for the operation of a mini-hydro power plant. If power is old to the gird, the operation of the plant shall be governed by dispatch rules assigned by the grid operator. d. Processing fee of one (1) Peso (P1.00) per kilowatt estimated installed capacity. e. Such other papers and documents as may be required by the OEA. Section 6. Financial Requirements In determining the financial capability of the applicant, the OEA shall be guided by the following financial indicators: a. The applicant has minimum working capital of at least Thirty-Five Thousand Pesos (P35,000.00) per kilowatt to support the first two (2) years of the projects work program and must demonstrate that it has the capability to raise additional working capital of at least sixty percent (60%) of the estimated project cost to fund the remaining works and the plants subsequent operations; b. Current ratio of 1.5:1; c. Debt equity ration of 3:1; and d. Such other factors which would substantially establish the applicants financial capability. Section 7. The amounts specified in Section 6.a shall be adjusted accordingly in cases of extraordinary inflation of the Philippines Peso in accordance with the provisions of Article 1250 of the Civil Code of the Philippines. Section 8. Defective Application When an application is filed and it is found to be defective either in form or in substance or incomplete as to certain data, the OEA shall within two (2) days inform the applicant of such a fact in writing, with notice that the correction or deficiency must be supplied within fifteen (15) working days from receipt of the notice. If the applicant fails to supply the required correction within the said period, the application shall be deemed to have been abandoned and forthwith, the same shall be returned to the applicant together with all the documents attached thereto. However, for good cause shown, the period may be extended by the OEA upon written request made before the expiration of the period sought to be extended.

Rules and Regulations Implementing R. A. 9136 - GENERAL PROVISIONS The succeeding rules and regulations shall include the general provisions to be followed in implementing the major structural reforms for the electric power industry and the Privatization of the state-owned NPC. RULE 1. TITLE AND SCOPE Section 1. Title. These rules and regulations shall be referred to as the "Implementing Rules and Regulations of Republic Act No. 9136 (Rules) otherwise known as the Electric Power Industry Reform Act of 2001 (Act). " Section 2. Scope. These Rules are promulgated under the authority of the DOE to formulate, in consultation with relevant government agencies, Electric Power Industry Participants, non-government organizations, End-users and consumers, such rules and regulations as may be necessary to implement the objectives of the Act and pursuant to the exercise of such other powers as may be necessary or incidental to attain the objectives of the Act. These Rules shall govern the relation and responsibilities of Electric Power Industry Participants and governmental authorities, including but not limited to: the DOE, NPC, NEA, ERC, and PSALM. ENVIRONMENT Strategic Environmental Plan for Palawan Act Republic Act No. 7611 Republic Act 7611 otherwise known as the Strategic Environmental Plan (SEP) for Palawan Act is a landmark legislation which had brought together multisectoral efforts in effecting a serious and sustained agenda that will provide for the continued existence of a unique ecological system not found in any part of the world. The SEP is a pioneering work which spells out, with the strength and vigor of the law and the corresponding administrative machinery, how sustainable living can be done now, inspite of the many fora around the world which has so far produced volumes of documents but very little in terms of positive action for the environment. The law declares that it is the policy of the State to protect, develop and conserve the countrys natural resources by supporting the implementation of plans, programs and projects formulated to preserve and enhance the environment while pursuing socioeconomic goals. The policy, as declared, implies the inclusion of areas other than Palawan which can be subjected to the sustainable development activities appropriate for the people and the natural environment in which they live.

It is also the task of the State to support and promote sustainable development through proper conservation, utilization and development of natural resources to provide optimum yields on a continuing basis. To this end, forest conservation and protection will be pursued by the State through the imposition of total commercial logging ban. An institutional machinery shall also be put up by the State with the proper fiscal and financial capability to ensure the effective and efficient implementation of the environmental programs. While the State initiates these fundamental activities, it is explicit in the law that the people shall be encouraged to participate in all the activities leading to the realization of the goals of SEP. SEP Comprehensive Framework Plan Republic Act 7611 has adopted Palawans Comprehensive Framework Plan to serve as a guide for the local government, the government agencies concerned in provincial development, and for those involved in the formulation and implementation of plans and programs. Environmental Impact Statement System Presidential Decree No. 1586 ESTABLISHING AN ENVIRONMENTAL IMPACT STATEMENT SYSTEM, INCLUDING OTHER ENVIRONMENTAL MANAGEMENT RELATED MEASURES AND FOR OTHER PURPOSES WHEREAS, the pursuit of a comprehensive and integrated environment protection program necessitates the establishment and institutionalization of a system whereby the exigencies of socio-economic undertakings can be reconciled with the requirements of environmental quality; WHEREAS, the regulatory requirements of environmental Impact Statements and Assessments instituted in pursuit of this national environmental protection program have to be worked into their full regulatory and procedural details in a manner consistent with the goals of the program. NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution do hereby order and declare: Section 1. Policy. It is hereby declared the policy of the State to attain and maintain a rational and orderly balance between socio-economic growth and environmental protection. Section 2. Environmental Impact Statement System. There is hereby established an Environmental Impact Statement System founded and based on the environmental impact statement required, under Section 4 of Presidential Decree No. 1151, of all agencies and instrumentalities of the national government, including government-owned

or controlled corporations, as well as private corporations, firms and entities, for every proposed project and undertaking which significantly affect the quality of the environment. Section 3. Determination of Lead Agency. The Minister of Human Settlements or his designated representative is hereby authorized to name the lead agencies referred to in Section 4 of Presidential Decree No. 1151 which shall have jurisdiction to undertake the preparation of the necessary environmental impact statements on declared environmentally critical projects and areas. All Environmental Impact Statements shall be submitted to the National Environmental Protection Council for review and evaluation. Section 4. Presidential Proclamation of Environmentally Critical Areas and Projects. The President of the Philippines may, on his own initiative or upon recommendation of the National Environmental Protection Council, by proclamation declare certain projects, undertakings or areas in the country as environmentally critical. No person, partnership or corporation shall undertake or operate any such declared environmentally critical project or area without first securing an Environmental Compliance Certificate issued by the President or his duly authorized representative. For the proper management of said critical project or area, the President may by his proclamation reorganize such government offices, agencies, institutions, corporations or instrumentalities including the re-alignment of government personnel, and their specific functions and responsibilities. For the same purpose as above, the Ministry of Human Settlements shall: (a) prepare the proper land or water use pattern for said critical project(s) or area (s); (b) establish ambient environmental quality standards; (c) develop a program of environmental enhancement or protective measures against calamituous factors such as earthquake, floods, water erosion and others, and (d) perform such other functions as may be directed by the President from time to time. Section 5. Environmentally Non-Critical Projects. All other projects, undertakings and areas not declared by the President as environmentally critical shall be considered as non-critical and shall not be required to submit an environmental impact statement. The National Environmental Protection Council, thru the Ministry of Human Settlements may however require non-critical projects and undertakings to provide additional environmental safeguards as it may deem necessary. Section 6. Secretariat. The National Environmental Protection Council is hereby authorized to constitute the necessary secretariat which will administer the Environmental Impact Statement System and undertake the processing and evaluation of environmental impact statements. Section 7. Management and Financial Assistance. The Ministry of Human Settlements is hereby authorized to provide management and financial support to government offices and instrumentalities placed under its supervision pursuant to this Decree

financed from its existing appropriation or from budgetary augmentation as the Minister of Human Settlements may deem necessary. Section 8. Rules and Regulations. The National Environmental Protection Council shall issue the necessary rules and regulations to implement this Decree. For this purpose, the National Pollution Control Commission may be availed of as one of its implementing arms, consistent with the powers and responsibilities of the National Pollution Control Commission as provided in P.D. No. 984. Section 9. Penalty for Violation. Any person, corporation or partnership found violating Section 4 of this Decree, or the terms and conditions in the issuance of the Environmental Compliance Certificate, or of the standards, rules and regulations issued by the National Environmental Protection Council pursuant to this Decree shall be punished by the suspension or cancellation of his/its certificate or and/or a fine in an amount not to exceed Fifty Thousand Pesos (P50,000.00) for every violation thereof, at the discretion of the National Environmental Protection Council. Section 10. Environmental Revolving Fund. Proceeds from the penalties prescribed in the preceding Section 9 and other penalties imposed by the National Pollution Control Commission as authorized in P.D. 984, shall be automatically appropriated into an Environment Revolving Fund hereby created as an exemption to P.D. 711 and P.D. 1234. The fund shall be used exclusively for the operation of the National Environmental Protection Council and the National Pollution Control Commission in the implementation of this Decree. The rules and regulations for the utilization of this fund shall be formulated by the Ministry of Human Settlements and submitted to the President for approval. Section 11. Repealing Clause. The Inter-Agency Advisory Council of the National Pollution Control Commission created under Section 4 of P.D. 984 is hereby abolished and its powers and responsibilities are forthwith delegated and transferred to the Control of the National Environmental Protection Council. All other laws, decrees, executive orders, rules and regulations inconsistent herewith are hereby repealed, amended or modified accordingly. Section 12. Effectivity Clause. This Decree shall take effect immediately. Philippine Environment Code Presidential Decree No. 1152

PHILIPPINE ENVIRONMENTAL CODE WHEREAS, the broad spectrum of environment has become a matter of vital concern to the government;

WHEREAS, the national leadership has taken a step towards this direction by creating the National Environmental Protection Council under Presidential Decree No. 1121; WHEREAS, it is necessary that the creation of the Council be implemented with the launching of a comprehensive program of environmental protection and management; WHEREAS, such a program can assume tangible and meaningful significance only by establishing specific environment management policies and prescribing environment quality standards in a Philippine Environment Code: NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and decree: Section 1. Short Title. This Decree shall be known and cited as the "Philippine Environment Code." TITLE AIR QUALITY MANAGEMENT Section 2. Purposes. The purposes of this Title are: (a) to achieve and maintain such levels of air quality as to protect public health; and (b) to prevent to the greatest extent practicable, injury and/or damage to plant and animal life and property, and promote the social and economic development of the country. Philippine Environmental Policy Presidential Decree No. 1151 I

PHILIPPINE ENVIRONMENTAL POLICY WHEREAS, the individual and, at times, conflicting, demands of population growth, urbanization, industrial expansion, rapid natural resources utilization and increasing technological advances have resulted in a piecemeal-approach concept of environmental protection; WHEREAS, such tunnel-vision concept is not conducive to the attainment of an ideal environmental situation where man and nature can thrive in harmony with one another; and WHEREAS, there is now an urgent need to formulate an intensive, integrated program of environmental protection that will bring about a concerted effort towards the

protection of the entire spectrum of the environment through a requirement of environmental impact assessments and statements: NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and decree: Section 1. Policy. It is hereby declared a continuing policy of the State (a) to create, develop, maintain and improve conditions under which man and nature can thrive in productive and enjoyable harmony with each other, (b) to fulfill the social, economic and other requirements of present and future generations of Filipinos, and (c) to insure the attainment of an environmental quality that is conducive to a life of dignity and wellbeing. Section 2. Goal. In pursuing this policy, it shall be the responsibility of the Government, in cooperation with concerned private organizations and entities, to use all practicable means, consistent with other essential considerations of national policy, in promoting the general welfare to the end that the Nation may (a) recognize, discharge and fulfill the responsibilities of each generation as trustee and guardian of the environment for succeeding generations, (b) assure the people of a safe, decent, healthful, productive and aesthetic environment, (c) encourage the widest exploitation of the environment without degrading it, or endangering human life, health and safety or creating conditions adverse to agriculture, commerce and industry, (d) preserve important historic and cultural aspects of the Philippine heritage, (e) attain a rational and orderly balance between population and resource use, and (f) improve the utilization of renewable and non-renewable resources. Section 3. Right to a Healthy Environment. In furtherance of these goals and policies, the Government recognizes the right of the people to a healthful environment. It shall be the duty and responsibility of each individual to contribute to the preservation and enhancement of the Philippine environment. Section 4. Environmental Impact Statements. Pursuant to the above enunciated policies and goals, all agencies and instrumentalities of the national government, including government-owned or controlled corporations, as well as private corporations firms and entities shall prepare, file and include in every action, project or undertaking which significantly affects the quality of the environment a detail statement on (a) the environmental impact of the proposed action, project or undertaking (b) any adverse environmental effect which cannot be avoided should the proposal be implemented; (c) alternative to the proposed action;

(d) a determination that the short-term uses of the resources of the environment are consistent with the maintenance and enhancement of the long-term productivity of the same; and (e) whenever a proposal involve the use of depletable or non-renewable resources, a finding must be made that such use and commitment are warranted. Before an environmental impact statement is issued by a lead agency, all agencies having jurisdiction over, or special expertise on, the subject matter involved shall comment on the draft environmental impact statement made by the lead agency within thirty (30) days from receipt of the same. Section 5. Agency Guidelines. The different agencies charged with environmental protection as enumerated in Letter of Instruction No. 422 shall, within sixty (60) days from the effectivity of this Decree, submit to the National Environmental Protection Council (NEPC), their respective guidelines, rules and regulations to carry out the provisions of Sec. 4 hereof on environmental impact assessments and statements. Section 6. Repealing Clause. All Acts, Presidential Decrees, executive orders, rules and regulations or parts thereof which are inconsistent with the provisions of this Decree are hereby repealed, amended or modified accordingly. Section 7. Effectivity. This Decree shall take effect immediately. Environmental Impact Statement System - Areas/Types of Projects Proclamation No. 2146 PROCLAIMING CERTAIN AREAS AND TYPES OF PROJECTS AS ENVIRONMENTALLY CRITICAL AND WITHIN THE SCOPE OF THE ENVIRONMENTAL IMPACT STATEMENT SYSTEM ESTABLISHED UNDER PRESIDENTIAL DECREE NO. 1586. WHEREAS, it is the national policy to attain and maintain a rational and orderly balance between socio-economic growth and environmental conservation and protection; WHEREAS, there is an urgent need to bring about an intensive, integrated program of environmental protection through a requirement of environmental impact assessments and statements; WHEREAS, the environmental impact statement system established under Presidential Decree No. 1586 calls for the proper management of environmentally critical area, WHEREAS, the pursuit of a comprehensive and integrated environmental protection program necessitates the establishment and institutionalization of a system whereby the

exigencies of socio-economic undertakings can be reconciled with the requirements of environmental protection and conservation; WHEREAS, the national leadership mandates the establishment of such a system to regulate and minimize the environmental impacts of projects and undertakings which may significantly affect the quality of the environment in Presidential Decree No. 1586, and WHEREAS, in the effective implementation of such a system, there arises the need to identify and declare certain projects determined to be environmentally critical. NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by law, hereby proclaim the following areas and types of projects as environmentally critical and within the scope of the Environmental Impact Statement System. A. Environmentally Critical Projects I. Heavy Industries a.Non-ferrous metal industries b. Iron and steel mills c.Petroleum and petro-chemical industries including oil and gas d. Smelting plants II. Resource Extractive Industries a.Major mining and quarrying projects b. Forestry projects 1. Logging 2. Major wood processing projects 3. Introduction of fauna (exotic-animals) in public/private forests 4. Forest occupancy 5.Extraction of mangrove products 6. Grazing c. Fishery Projects

1. Dikes for fishpond development projects III. Infrastructure Projects a. Major dams b. Major power plants (fossil-fueled, nuclear fueled, hydroelectric or geothermal) c. Major reclamation projects d. Major roads and bridges. B. Environmentally Critical Areas 1. All areas declared by law as national parks, watershed reserves, wildlife preserves and sanctuaries; 2. Areas set aside as aesthetic potential tourist spots; 3. Areas which constitute the habitat for any endangered or threatened species of indigenous Philippine Wildlife (flora and fauna); 4. Areas of unique historic, archaeological , or scientific interests; 5. Areas which are traditionally occupied by cultural communities or tribes; 6. Areas frequently visited and/or hard-hit by natural calamities geologic hazards, floods, typhoons, volcanic activity, etc. 7. Areas with critical slopes; 8. Areas classified as prime agricultural lands; 9. Recharged areas of aquifers; 10. Water bodies characterized by one or any combination of the following conditions;; a. tapped for domestic purposes;; b. within the controlled and/or protected areas declared by appropriate authorities; c. which support wildlife and fishery activities. 11. Mangrove areas characterized by one or any combination or the following conditions: a. with primary pristine and dense young growth; b. adjoining mouth of major river systems;

c. near or adjacent to traditional productive fry or fishing grounds; d. which act as natural buffers against shore erosion, strong winds and storm floods; e. on which people are dependent for their livelihood. 12. Coral reef characterized by one or any combination of the following conditions: a. with 50% and above live coralline cover; b. Spawning and nursery grounds for fish; c. Which act as natural breakwater of coastlines. This Proclamation shall take effect immediately. IN WITNESS WHEREOF, I have hereunto set my hand and caused the seal of the Republic of the Philippines to be affixed. Done in the City of Manila, this 14th day of December, in the year of Our Lord, nineteen hundred and eighty one.