DEPARTMENT OF ENERGY

Prior 1971
There is no government agency that regulates the Oil Prices.
During 1971
President Marcos had seen the need for the regulatory commission to stabilize the oil prices in the Philippines.
He created the Oil Industry Commission.
On November 9, 1973
President Marcos created the PNOC (Philippine National Oil Company) to break the control by foreigners of our
oil industry. It acquired ownership of ESSO Philippines and Filoil. It operated under the business name of PETRON
Corporation.
On 1984
He created the Oil Price Stabilization Fund to cushion the effects of frequent changes in the price of oil caused
by exchange rate adjustments or increase in the world market prices of crude oil and imported petroleum products.

On May 22, 1987
President Aquino signed EO 172 creating ERB (Energy Regulatory Board) to regulate the business of energy
resources when warranted and only when public necessity requires. It transfers adjudicatory powers of PD 1206 known
as Bureau of Energy Utilization (currently known as Energy Utilization Management Bureau)
*ERB has the power to determine, fix and prescribe rates of all energy providers.
*Decisions of ERB is appealable to CA via petition for review within 15 days from notice of decision, or final order, or
denial of MR
Energy Resource means any substance or phenomenon which by itself or combination with othersgenerates or causes the emanation or
generation of energy

On December 9, 1992
RA 7638 known as DEPARTMENT OF ENERGY ACT OF 1992 was approved.
It was created to prepare, integrate, coordinate, supervise, and control all plans, projects, programs & activities of the
government. Thrust of the Philippine program under the law is toward:
1. Privatization of government agencies
2. Deregulation of power & energy industry
3. Reduction of dependency on oil-fired plants.
*ERBs non-price regulatory jurisdiction is transferred to DOE.
*Secretary of the DOE has visitorial and examining authority over non-govt entities.
*Section 12 empowers the Secretary of the DOE subject to the approval of the Pres.
1. to reorganize
2. restructure
3. & redefine the functions of the Bureaus and services
4. & to create regional offices

Administrative Support Services was redefined into 3 Distinct Services:
1. Administrative Services
2. Financial Services
3. Legal Services

During 1993
Due to the thrust of RA 7638 (DOE) towards privatization of government agencies, 40% of PNOC (PETRON) was
sold to Aramco Overseas Company on December 16, 1993.

On March 1996
The Congress enacted RA 8180 entitled the Downstream Oil Industry Deregulation Act of 1996. Under this
law, Downstream Oil Industry is subject only to monitoring by the DOE.
Downstream Oil Industry refers to the business of importing, exporting, re-exporting, shipping, transporting, processing, refining, storing,
distributing, marketing and/or selling, crude oil, gasoline, diesel, and liquefied petroleum gas (LPG), kerosene, and other petroleum and crude oil
products.
Deregulation Process has 2 Phases
1. Transition under this phase, controls of the non-pricing aspects of the oil industry were to be lifted.
The following were to be accomplished:
(1.) Liberalization of oil importation, exportation, manufacturing, marketing and distribution.
(2.) Implementation of an automatic pricing mechanism.
(3.) Implementation of an automatic formula to set margins of dealers and rates of haulers, water
transport operators and pipeline concessionaires.
(4.) Restructuring of oil taxes.

2. Full Deregulation controls on the price of oil and the foreign exchange cover were to be lifted and the OPSF was to
be abolished.


On February 8, 1997
The president implemented the full deregulation of the Downstream Oil Industry through EO 372.

On November 5, 1997
RA 8180 was held unconstitutional and EO 372 void.
Petitioners offered the following submissions:
1. EO 372 is arbitrary and unreasonable because it was enacted due of the alleged depletion of the OPSF fund a
condition not found in RA 8180.
2. RA 8180 and EO 372 allow the formation of a de facto cartel among the three existing oil companies Petron, Caltex,
Shell in violation of the constitutional prohibition against monopolies, combinations in restraints of trade and unfair
competition.
Some provisions of RA 8180 which allegedly violate Section 19 of the Constitution are:
(these provisions is intimately the esse of the law)
1. Section 5 (b) imposable tariff duty for imported crude oil is 3% and imported refined oil is 7%.
(4% differential for new players who will import refined oil considering they have no refineries yet as new
players)
2. Section 6 requirement of minimum inventory to refiners and importers of 10 % of their annual sales volume or 40
days of supply whichever is lower.
3. Section 9 (b) prohibition on predatory pricing
Predatory pricing means selling or offering to sell any product at a price unreasonably below the industry average cost as to attract customers to
the detriment of competitors.

On February 10, 1998
The Congress enacted RA 8479 (Downstream Oil Industry Deregulation Act of 1998).
Anti-thrust Safeguards (Section11 prohibits the following acts)
1. Cartelization any agreement, combination or concerted action by refiners, importers and/or dealers, or their
representatives, to fix prices, restrict outputsin restraint of trade or free competition
2. Predatory Pricing.



On June 8, 2001
RA 9136 (Electric Power Industry Reform Act of 2001) amended RA 7638 (DOE).
*expanded the functions of the DOE
*created the ERC and abolished the ERB
*This law transfers all the functions and powers of the ERB to ERC
*Gives the ERC the authority to issue provisional rate increases
*This gives the commission the authority to grant provisional relief
*The law ordains the division of the industry into: 1. Generation 2. Transmission 3. Distribution 4. Supply
On August 23, 20012
AO 38 reorganized, restructured and redefined the functions of the following bureaus and services of the DOE:
1. Energy Resource Development Bureau (ERDB)
2. Energy Utilization Management Bureau (EUMB)
3. Energy Policy and Planning Bureau (EPPB)
4. Electric Power Industry Administration Bureau (EPIAB)
5. Oil Industry Administration Bureau (OIAB)
6. The National Transmission Corporation (TRANSCO)
7. The Power Sector Assets and Liabilities Management Corporation (PSALM)
8. National Electrification Administration (NEA)