P.D.

972

Enacted on July 28, 1976

Decree aims to:

COAL DEVELOPMENT
ACT OF 1976
(Presidential decree 972)

promote an accelerated exploration, development, exploitation, production and utilization of

coal;
Encourage the participation of the private sector with sufficient capital, technical and managerial
resources in the exploitation and production of coal resources;
Upgrade the technical and financial capabilities of coal industry

Energy Resource Development Bureau shall undertake by itself the active exploration, development
and production of coal resources
AREAS COVERED
Public Lands.
Any unreserved or unappropriated coal bearing lands.
Claims located and recorded by private parties.
Areas covered by valid and subsisting coal revocable permits.
Coal leases and other existing rights granted by the government for the exploration and exploitation
of coal lands.
Government mineral reservations.
Coal area/mines whose leases or permits are owned and controlled by the govt.
COAL OPERATING CONTRACT (COC)
Executed on behalf of the government by the DOE Secretary.
Service, technology, and financing are furnished by the operator.

The govt. promoted a transparent and competitive system of awarding COCs through Competitive
Public Contracting. (CPC).
ERDB shall determine prospective coal areas. The DOE Secretary upon recommendation of the ERDB
director and the Usec exercising supervision over the ERDB shall declare areas open for CPC
No application will be accepted or entertained except during CPC.
BLOCKING SYSTEM
Each coal region shall be divided into meridional blocks, each containing 1,000 has.
No person shall be entitled to more than 15 blocks of coal lands in any one coal region.
Alternative procedures in opening contract areas:

Offering an area for bids

Negotiating with qualified party

TERMS & CONDITIONS OF COCs

Operator shall be obliged to spend in direct prosecution of exploration not less than what is stipulated in
the contract.
Exploration contract for 2 years. If operator has complied with requirements, exploration period may be
extended for another 2 years.
All materials, equipments which are movable by nature shall become property of the govt. if not
removed by operator within one year after termination of COC.
Operator is subject to provisions of laws of general application relating to labor, health safety and
ecology.
EMINENT DOMAIN
May be invoked and exercised for the entry, acquisition, and use of private lands for purposes of coal
exploration, development and exploitation.
Prior written notice to surface owner of land or occupant.
If surface owner of land or occupant refuses entry, operator shall notify Bureau.
Coal operator shall post a bond in an amount fixed by the Bureau based on type of the land.
In the absence of an agreement:

For titled lands, at least Php1.00 for every ton of coal extracted plus compensation for the
value of improvements damaged or destroyed.
For untitled lands .50 cents for every ton of coal
improvements damaged or destroyed.

plus compensation for the value of

Fort govt. reserved lands, compensation due shall accrue equally between the supervising
agency and the Bureau to be disbursed for conservation measures.

TIMBER AND WATER RIGHTS

Coal operator may cut trees or timber within his contract area.
If already covered by existing timber rights, timber needed and manner shall be subject to the same
rules and agreed upon by coal operator. If no agreement is reached, Bureau shall decide whose decision
shall be final.
Coal operator shall also enjoy water rights necessary for exploration, development and exploitation.
Water rights already granted shall not be impaired.
Govt. reserves the right to regulate water rights and equitable distribution to prevent monopoly of use.

PETROLEUM ACT OF 1949

(Republic Act No. 387)

R. A. 387
Enacted on June 18, 1949.
Aims to promote the exploration, exploitation and utilization of the petroleum resources of the country,
and employs the concession system for the exploitation of the nations petroleum resources.
Act affirms the concept of jura regalia that all natural deposits or occurrences of the petroleum or
natural gas in public and private lands in the Philippines.
Exploration and exploitation concessions do not confer ownership but only right to explore, exploit and
develop.
Govt. reserves the right to undertake either by itself or instrumentalities or through competent,
qualified persons.
To be executed by the President for the govt. and approved by the Congress.

Exploration or exploitation rights may be exclusive within certain areas but no exclusive rights may be
granted to refining or transportation.
CONCESSIONS
Non Exclusive Exploration non-exclusive right to conduct geological or geophysical exploration.
Exploration Concession Exclusive right to explore for petroleum within specified areas. The aim is
discovery of petroleum but not restricted to, surveying and mapping, aerial photography, surface
geology, geophysical investigations, testing of subsurface conditions by means of borings or structural
drillings.
Exploitation Concession Exclusive right to develop petroleum production within specified areas. The
aim is production of petroleum but not restricted to drilling and operating wells, providing and
operating pumping and storage facilities.
Refining Concession - Right to manufacture or refine petroleum, or to extract its derivatives. It is the
processing or treating of petroleum by chemical or physical means for the purpose of making or
separating marketable products.
Pipeline Concession The right to provide and operate pipeline systems for transporting petroleum.
This is a non-exclusive right to transport petroleum, by means of and through a pipeline or system of
pipelines, between the sources of production and/or refining and the places defined in the pipeline
concession.
FREE & NATL RESERVE AREAS
All lands within territorial limits of the Philippines which are not within the national reserve areas, or
petroleum reservations, or not covered by valid and existing concessions are called free areas.
Areas which have been included in any concession but subsequently given up voluntarily, or concessions
which have expired or been cancelled, or areas found to be in excess of the maximum areas are called
national reserve areas.
EMINENT DOMAIN
Concessionaires are given right to enter private lands for purpose of conducting geological or
geophysical studies
Concessionaire has the obligation to indemnify the owner of land.
In case of denial by land owner or legal occupant, concessionaire may apply with RTC for allowing entry,
upon posting of such bond as may be fixed by court pending final determination of the amount to be
paid by the concessionaire to the land owner or legal occupant.
TERMS

Non-exclusive Exploration Not to exceed 2 years, renewable for another 2 years at the discretion of
the DENR Secretary.
Exploration Concession - Initial term shall not be more than 4 years. If concessionaire has complied
with all terms and conditions, entitled to further extensions but not to exceed 25 years.
Exploitation Term not to exceed 25 years renewable for another 25 years at the option of
concessionaire whose application for renewal must be made prior to the expiration of the original term.
Drilling must commence within one year from the date exploitation concession is granted. Production
operations may not be suspended for more than 6 months without prior written approval of the
Secretary.
Refining Concession - Term not to exceed 25 years renewable for another 25 years at the option of
concessionaire whose application for renewal must be made prior to the expiration of the original term.
Pipeline Concession - Term not to exceed 25 years renewable for another 25 years at the option of
concessionaire whose application for renewal must be made prior to the expiration of the original term.
TRANSFER OF RIGHTS
Transfer of rights may be allowed provided:

Prior written approval of the DENR Secretary

Person is qualified to acquire or hold concession.

EXTINCTION / CANCELLATION OF RIGHTS

Exploration may be cancelled for failure to perform work obligations for 2 consecutive years or for
failure to pay for 2 consecutive years the exploration tax.
Exploitation may be cancelled [1] for failure of concessionaire to perform exploitation work obligations
for 2 consecutive years [2] suspending operations for more than 6 months without prior written
approval [3] for failure to pay for 2 consecutive years the exploitation tax [4] for failure to pay or deliver
to govt. its royalty within one year from date royalty becomes due.
Concession rights shall become extinguished upon [1] expiration of its term [2] or upon cancellation or
renunciation of concession.

Upon renunciation, cancellation or expiration area covered shall automatically become part of the
national reserve.
Concessionaire has 1 year to remove all apparatus upon renunciation, cancellation or expiration
within the first term of 25 years or within 15 years of its renewal.
If cancellation, termination or renunciation occurs after the 15th year from date of renewal, all
property shall become the property of the govt. without payment or indemnification to the
concessionaire.

DEPARTMENT OF ENERGY ACT

Republic Act 7638

December 9, 1992

Created to prepare, integrate, coordinate, supervise and control all plans, programs, projects and
activities of the govt. in relation to energy exploration, development, utilization, distribution and
conservation.
Thrust of Philippine energy program under the law is privatization of govt. agencies related to energy,
deregulation of the power and energy industry and reduction of dependency on oil-fired plants
Dept. upon approval of president institute programs and timetable of deregulation of appropriate
energy projects and activities at the end of four years from effectivity of this act;
POLICIES
A continuous, adequate, and economic supply of energy in view of ultimately achieving selfreliance.
To rationalize, integrate, and coordinate the various programs towards self sufficiency and
enhanced productivity in power energy without sacrificing ecological concerns.

ORGANIZATIONAL STRUCTURE
Tasked to prepare, integrate, coordinate, supervise and control all plans, programs, projects and activities of
govt. relative to energy exploration, development, utilization, distribution and conservation.
FUNCTIONS OF DEPT. SECRETARY

Establish policies and standards for the effective, efficient & economical ops
Exercise direct supervision & control over all functions & activities of the department
Devise a program of intl information on geological & contractual conditions
Act as ex officio member of the board of NEDA

BUREAUS & SERVICES

ENERGY RESOURCE DEVELOPMENT BUREAU

Formulate & implement policies on EDU of energy

ENERGY UTILIZATION MANAGEMENT BUREAU

Formulate & implement policies, programs on new energy technology, alternative fuels, undertake plans
& programs to ensure efficient and judicious utilization of conventional & renewal energy resources

ENERGY POLICY & PLANNING BUREAU

Develop, prepare & update integrated natl plan for energy sector; formulate energy policies, programs &
strategies, assessment on demand & supply
ENERGY REGULATORY BOARD
Entrusted with regulatory functions covering energy sector to achieve coherent & effective policy
formulation, coordination, implementation & monitoring.
Regulate business of importing, exporting, re-exporting, shipping, transporting, processing, refining,
marketing, & distributing energy resources.
Given power to determine, fix and prescribe rates including penalty charges of all energy providers
including NPC

ENERGY REGULATORY BOARD

JURISDICTION, POWERS & FUNCTIONS

Fix & regulate the prices of petroleum products

Fix & regulate the rate schedule or prices of piped gas to be charged by duly franchised gas companies
which distribute gas by means of underground piped system
Fix & regulate the rates of pipeline concessionaires under the provisions of RA 387 as amended
(Petroleum Act of 1949) as amended by PD 1700
Regulate the capacities of new refineries or additional capacities of existing refineries and license
refineries that may be organized

Take steps necessary including temporary adjustment of level of prices of petroleum products &
payment to the Oil price Stabilization Fund
REORGANIZED OR ABOLISHED AGENCIES

EO 172 reconstituted the BOE into ERB

Regulatory & adjudicatory powers & functions of EUMB were also transferred to ERB pursuant to PD 1206
ERBs non-price regulatory jurisdiction, powers, & functions were transferred to DOE via RA 7638
PROVISIONAL RELIEF

Upon filing of application, complaint or petition

At any stage and without prior hearing

On the basis of supporting papers duly verified & authenticated
On motion of a party or motu propio
Without prejudice to final decision after final hearing
Conduct hearing w/in 30 days upon publication & notice

EFFECTIVITY OF DECISIONS/ORDERS
Decision to continue existing service or determining, fixing, and prescribing rates shall be immediately
operative
All other orders become effective upon dates specified therein
Controverted matters not referring to continuance shall take effect after 15 days after notice to parties.
APPEAL on final orders taken to CA via Petition for Review under Rule 43. Appeal to be taken within 15
days from notice of final order or denial of motion for recon.
ELECTRIC POWER INDUSTRY REFORM ACT
RA 9136 June 8, 2001
Energy Regulatory Commission replaced ERB

Independent, quasi-judicial regulatory agency

New thrust is to tap private capital for the expansion & improvement of the industry in order to address
large govt. debt; (Freedom from Debt Coalition vs. ERC ,GR No. 161113 June 15, 2004)
Generation and transmission sectors were centralized & monopolistic but the distribution side was
fragmented
EPIRA provides restructuring of the industry including the privatization of assets of the NPC
Ordains the division of the industry into 4: generation, transmission, distribution and supply
ENERGY REGULATORY COMMISSION
ERB abolished and its powers transferred to ERC including traditional rate & service regulation
functions.
EPIRA however expanded functions of ERC which has now the duty likewise to promote competitive
operations in the electricity market, restructuring & privatization.

Enforce rules & regulations governing the operations of the electricity spot market for purpose
of ensuring greater supply & rational pricing of electricity;

Business & operations of public utility is imbued with public interest

Reason for submission to govt. regulations

Imperative duty of state to interpose its protective power
Valid exercise of states police power

Rate regulations calls for a careful consideration of totality of facts & circumstances material to each
application for an upward rate revision. Rate regulators should strain to strike balance between the
clashing interests of public utility and the consuming public and the balance must assure a reasonable
rate of return to the public utilities without being unreasonable to the consuming public. Republic vs.
Meralco GR 141314
ERCs field of inquiry not limited to computation of cost of service or capital it must also balance
investor and consumer expectations in a way that broad requirements of public interest may be
meaningfully realized. Republic vs Medina GR No. L32068
Regulation of rates to be charged by public utilities is founded upon the police powers of the state and
statutes prescribing rules for the control and regulation of public utilities are valid exercise thereof.
Surigao del Norte Electric Coop. vs ERB GR No. 183626
AUTHORIZED TO ISSUE PROVISIONAL RATE INCREASES
While procedural in character, significant reforms bring about substantial benefits specifically
publication requirement under section 4(e) Rule 3 of EPIRA

Exercise original & exclusive jurisdiction over all cases contesting rates, fees fines & penalties
imposed by the ERC including disputes between/among players in the energy sector.

PUBLIC UTILITY MUST SUBMIT TO GOVT. REGULATIONS

Amend or revoke after due notice & hearing the authority of any person or entity which fails to
comply with the law. In case of divestment, allow affected party sufficient time to remedy
infraction or for an orderly disposal but no case to exceed 12 months

Aimed to protect the public interes vis--vis the rates and services of electric utilities and other
providers of electric power.
Ensure transparent and reasonable prices of electricity in a regime of free and fair competition
and full public accountability;
To balance interests of consumers & public utilities providing electric power through fair & nondiscriminatory treatment of the two sectors

ERC endowed with statutory authority to approve provisional rate under sections 44 and 80 of EPIRA
Powers of ERB transferred to ERC under sec. 44 is in addition to powers conferred upon ERC under
section 43
Section 80 complements section 44 as it mandates continued efficacy of applicable provisions of the
laws referred therein.

Though there is ground to grant provisional rate increase, ERC may do so only after publication
requirement;
Affected consumers are given opportunity to air their side;
Rate increase is only provisional therefore may be modified or recall anytime.
Petition must be verified and accompanied with an acknowledgement that a copy thereof was received
by the legislative body of the LGU concerned together with a certification of notice of publication in
newspaper of general circulation in the same locality (NASECORE vs. ERC GR NO. 163935)
DOWNSTREAM OIL INDUSTRY DEREGULATION ACT OF 1996 (RA 8180)
March 28, 1996
Refers to business of importing, exporting, re-exporting, shipping, transporting, processing, refining,
storing, distribution, marketing &/or selling, crude oil, gas, diesel, LPG, kerosene etc
Any person or entity may lease, or own refineries & other downstream facilities subject only to
monitoring by DOE
HISTORICAL BACKGROUND
No govt. agency regulating oil industry other than those dealing with ordinary commodities until 1971

Refining Companies Shell, Caltex, Bataan Refining Co., & Filoil Refining
Petroleulm Marketing Esso, Filoil, Caltex, Getty, Mobil & Shell

1971 country was hit by oil crisis. It realized the vital role to national security, hence the govt. was
prompted to create Oil Industry Commission to regulate oil business.
Govt. also saw the need for a more active role of Filipinos in the oil industry.
Philippine National Oil Corp (PNOC) was created on Nov. 9. 1973
Acquired ownership ESSO and Filoil to serve as its marketing arm.
Bought controlling shares of Bataan Refining then later put up its own marketing subsidiary Petrophil.
PNOC operated under the business name PETRON
1984 Oil Price Stabilization Fund was created to cushion the effects of frequent changes in the price of
oil in the world market price
May 1987 EO 172 was signed by Pres Aquino creating ERB
DOE was created pursuant to RA 7638 ( Dec. 2, 1992)
RA 8180 provided that DOE shall implement full deregulation not later than March 1997

November 5, 1997 RA 8180 was held unconstitutional and its IRR under EO 392 Void
GROUNDS:

Allowed the formation of de facto cartel among the big 3 players Petron, Shell & Caltex in
violation of constitutional prohibition against monopolies, combinations in restraint in trade
an unfair competition. (Section 19, Article 12 > 1987 Constitution)

Provisions on tariff differential, inventory & predatory pricing which were the principal props of RA
8180 did not reach its intent to have fair competition & eradicate monopoly. On the contrary it inhibit
fair competition and interfere with free interaction of market forces and constrain new players
(prospects) to build new facilities because they will have to spend billions of pesos
DOWNSTREAM OIL INDUSTRY DEREGULATION ACT OF 1998 (RA 8479)
February 10, 1998
Enacted to implement section 19, Article 12 of the Constitution
MONOPOLY joint acquisition or maintenance by members of a conspiracy, formed for that purpose,
of the power to control and dominate trade and commerce in a commodity to such extent that they are
able as a group to exclude actual or potential competitors
CARTEL two or three act in concert to control market prices and resultnt profits, the monopoly is
called an Oligopoly or CARtel . It is a combination of restraint in trade
Under the law, any person or entity may import or purchase any quantity of crude oil & petroleum
products from foreign or domestic source, lease or own and operate refineries & other downstream oil
facilities and market the same.
Any person or entity shall give prior notice to DOE for monitoring purposes prior to operations and
shall report to DOE every import/export transaction.
Single and uniform tariff duty shall be imposed an collected both on imported crude oil and imported
refined petroleum products at the rate of 3%.

Arbitrary and unreasonable because it was enacted due to alleged depletion of OPSF fund, a
condition not found in RA 8180

President may reduce such tariff pursuant to RA 1937 Tariff & Customs Code
Shall automatically adjust upon implementation of Uniform Tariff Program under WTO &
ASEAN Free Trade Area commitments

DTI & DOE mandated to take all measures to promote fair trade and prevent cartelization, monopolies,
combinations in the restraint of trade and any unfair competition as defined in Article 186 of the RPC
and Articles 168 & 169 of RA 8293 Intellectual Property Rights Law

DOE shall monitor the relationship between the oil companies, and their dealers, haulers & LPG
distributors.

Ensure enforcement of existing contracts, & the observance of fair and equitable practices.

DOE empowered to conciliate and arbitrate with respect to contractual relationship between oil
companies, and their dealers, haulers & LPG distributors involving dealers mark-up, freight rate,
margins of LPG
ANTI-TRUST SAFEGUARDS
PROHIBITION against:

Cartelization any agreement, combination or concerted action to fix prices, restrict outputs or divide
markets in restraint of trade or free competition.

variable
Predatory Pricing selling or offering to sell any oil product at a price below the sellers or offerors average
cost for the purpose of destroying competition or discouraging potential competitor from entering
the market.

Failure to comply with : submission of reportorial requirements; use of clean & safe

technologies; any

order or instruction of the DOE Secretary; registration of any fuel additive prior to its use

REMEDIES
Direct provincial or city prosecutors having jurisdiction to institute an action to prevent or restrain such
violation

Lodge at RTC where defendants reside or his place of business

Pending final judgement, court may issue TRO

Any private individual may report any violation. In case it is determined that violation has been
committed, the private person shall be entitled to sue for and obtain injunctive relief as well as damages.