January 12, 2007

a) AFTA shall refer to the ASEAN Free Trade Agreement

initiated by the Association of Southeast Asian Nations;

REPUBLIC ACT NO. 9367

b) Alternative Fuel Vehicles/Engines shall refer to

vehicles/engines that use alternative fuels such as biodiesel,
bioethanol, natural gas, electricity, hydrogen and automotive
LPG, instead of gasoline and diesel;

AN ACT TO DIRECT THE USE OF BIOFUELS,

ESTABLISHING FOR THIS PURPOSE THE BIOFUEL
PROGRAM, APPROPRIATING FUNDS THEREFOR, AND
FOR OTHER PURPOSES
SECTION 1. Short Title. This Act shall be known as the
"Biofuels Act of 2006". ETIHCa
SECTION 2. Declaration of Policy. It is hereby declared the
policy of the State to reduce dependence on imported fuels
with due regard to the protection of public health, the
environment, and natural ecosystems consistent with the
country's sustainable economic growth that would expand
opportunities for livelihood by mandating the use of biofuels
as a measure to: 2007lpe
a) develop and utilize indigenous renewable and sustainablysourced clean energy sources to reduce dependence on
imported oil;

c) Bioethanol shall refer to ethanol (C2H5OH) produced

from feedstock and other biomass;
d) Biodiesel shall refer to Fatty Acid Methyl Ester (FAME)
or mono-alkyl esters derived from vegetable oils or animal
fats and other biomass-derived oils that shall be technically
proven and approved by the DOE for use in diesel engines,
with quality specifications in accordance with the Philippine
National Standards (PNS);
e) Bioethanol Fuel shall refer to hydrous or anhydrous
bioethanol suitably denatured for use as motor fuel, with
quality specifications in accordance with the PNS;
f) Biofuel shall refer to bioethanol and biodiesel and
other fuels made from biomass and primarily used for
motive, thermal and power generation, with quality
specifications in accordance with the PNS;

d) ensure the availability of alternative and renewable clean

energy without any detriment to the natural ecosystem,
biodiversity and food reserves of the country.

g) Biomass shall refer to any organic matter,

particularly cellulosic or ligno-cellulosic matter, which is
available on a renewable or recurring basis, including trees,
crops and associated residues, plant fiber, poultry litter and
other
animal
wastes,
industrial
wastes,
and
the
biodegradable component of solid waste;

SECTION 3. Definition of Terms. As used in this Act, the

following terms shall be taken to mean as follows:

h) DA shall refer to the Department of Agriculture

created under Executive Order No. 116, as amended;

b) mitigate toxic and greenhouse gas (GHG) emissions;

c) increase rural employment and income; and

i) Diesel shall refer to refined petroleum distillate,

which may contain small amounts of hydrocarbon or
nonhydrocarbon additives to improve ignition quality or other
characteristics, suitable for compression ignition engine and
other suitable types of engines with quality specifications in
accordance with the PNS;
j) DENR shall refer to the Department of Environment
and Natural Resources created under Executive Order No.
192, as amended;
k) DOE shall refer to the Department of Energy created
under Republic Act No. 7638, as amended;
l) DOLE shall refer to the Department of Labor and
Employment created under Executive Order No. 126, as
amended;
m) DOF shall refer to the Department of Finance
created under Administrative Order Nos. 127 and 127-A;
n) DOST shall refer to the Department of Science and
Technology created under Republic Act No. 2067;
o) DOTC shall refer to the Department of Transportation
and Communications created under Executive Order No. 125A, as amended;
p) DTI shall refer to the Department of Trade and
Industry created under Executive Order No. 133;
q) Feedstock shall refer to organic sources such as
molasses, sugarcane, cassava, coconut, jatropha, sweet
sorghum or other biomass used in the production of biofuels;
r) Gasoline shall refer to volatile mixture of liquid
hydrocarbon, generally containing small amounts of
additives, suitable for use as a fuel in spark-ignition internal
combustion engines with quality specifications in accordance
with the PNS;

s) Motor fuel shall refer to all volatile and inflammable

liquids and gas produced, blended or compounded for the
purpose of, or which are suitable or practicable for, operating
motor vehicles;
t) MTBE shall refer to Methyl Tertiary Butyl Ether;
u) NBB or Board shall refer to the National Biofuel
Board created under Section 8 of this Act;
v) Oil Company shall refer to any entity that distributes
and sells petroleum fuel products;
w) Oxygenate shall refer to substances, which, when
added to gasoline, increase the amount of oxygen in that
gasoline blend;
x) PNS shall refer to the Philippine National Standards;
consistent with Section 26 of R.A. No. 8749, otherwise known
as the "Philippine Clean Air Act of 1999";
y) Renewable Energy Sources shall refer to energy
sources that do not have an upper limit on the total quantity
to be used. Such resources are renewable on a regular basis;
and
z) WTO shall refer to the World Trade Organization.
SECTION 4. Phasing Out of the Use of Harmful Gasoline
Additives and/or Oxygenates. Within six months from the
effectivity of this Act, the DOE, according to duly accepted
international standards, shall gradually phase out the use of
harmful gasoline additives such as, but not limited to,
MTBE. SCETHa
SECTION 5. Mandatory Use of Biofuels. Pursuant to the
above policy, it is hereby mandated that all liquid fuels for
motors and engines sold in the Philippines shall contain
locally-sourced biofuels components as follows:
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5.1 Within two years from the effectivity of this Act, at

least five percent (5%) bioethanol shall comprise the annual
total volume of gasoline fuel actually sold and distributed by
each and every oil company in the country, subject to the
requirement that all bioethanol blended gasoline shall
contain a minimum of five percent (5%) bioethanol fuel by
volume:Provided, That the ethanol blend conforms to PNS.
5.2 Within four years from the effectivity of this Act, the
NBB created under this Act is empowered to determine the
feasibility and thereafter recommend to DOE to mandate a
minimum of ten percent (10%) blend of bioethanol by volume
into all gasoline fuel distributed and sold by each and every
oil company in the country.
In the event of supply shortage of locally-produced
bioethanol during the four-year period, oil companies shall be
allowed to import bioethanol but only to the extent of the
shortage as may be determined by the NBB.
5.3 Within three months from the effectivity of this Act, a
minimum of one percent (1%) biodiesel by volume shall be
blended into all diesel engine fuels sold in the
country: Provided, That the biodiesel blend conforms to PNS
for biodiesel.
Within two years from the effectivity of this Act, the NBB
created under this Act is empowered to determine the
feasibility and thereafter recommend to DOE to mandate a
minimum of two percent (2%) blend of biodiesel by volume
which may be increased taking into account considerations
including but not limited to domestic supply and availability
of locally-sourced biodiesel component.
SECTION 6. Incentive Scheme. To encourage
investments in the production, distribution and use of locallyproduced biofuels at and above the minimum mandated

blends, and without prejudice to enjoying applicable

incentives and benefits under existing laws, rules and
regulations, the following additional incentives are hereby
provided under this Act.
a) Specific tax
The specific tax on local or imported biofuels component,
per liter of volume shall be zero (0). The gasoline and diesel
fuel component shall remain subject to the prevailing specific
tax rates.
b) Value Added Tax
The sale of raw material used in the production of biofuels
such as, but not limited to, coconut, jatropha, sugarcane,
cassava, corn, and sweet sorghum shall be exempt from the
value added tax.
c) Water Effluents
All water effluents, such as but not limited to distillery
slops from the production of biofuels used as liquid fertilizer
and for other agricultural purposes are considered "reuse",
and are therefore, exempt from wastewater charges under
the system provided under Section 13 of R.A. No. 9275, also
known as the Philippine Clean Water Act: Provided, however,
That such application shall be in accordance with the
guidelines issued pursuant to R.A. No. 9275, subject to the
monitoring and evaluation by DENR and approved by DA.
d) Financial Assistance
Government financial institutions, such as the
Development Bank of the Philippines, Land Bank of the
Philippines, Quedancor and other government institutions
providing financial services shall, in accordance with and to
the extent allowed by the enabling provisions of their
respective charters or applicable laws, accord high priority to
3

extend financing to Filipino citizens or entities, at least sixty

percent (60%) of the capital stock of which belongs to
citizens of the Philippines that shall engage in activities
involving production, storage, handling and transport of
biofuel and biofuel feedstock, including the blending of
biofuels with petroleum, as certified by the DOE.
SECTION 7. Powers and Functions of the DOE. In
addition to its existing powers and functions, the DOE is
hereby mandated to take appropriate and necessary actions
to implement the provisions of this Act. In pursuance thereof,
it shall within three months from the effectivity of this Act:
a) Formulate the implementing rules and regulations
under Section 15 of this Act;
b) Prepare the Philippine Biofuel Program consistent with
the Philippine Energy Plan and taking into consideration the
DOE's existing biofuels program;
c) Establish technical fuel quality standards for biofuels
and biofuel-blended gasoline and diesel which comply with
the PNS;
d) Establish guidelines for the transport, storage and
handling of biofuels;
e) Impose fines and penalties against persons or entities
found to have committed any of the prohibited acts under
Section 12 (b) to (e) of this Act;
f) Stop the sale of biofuels and biofuel-blended gasoline
and diesel that are not in conformity with the specifications
provided for under Section 5 of this Act, the PNS and
corresponding issuances of the Department; and

SECTION 8. Creation of the National Biofuel Board (NBB).

The National Biofuel Board is hereby created. It shall be
composed of the Secretary of the DOE as Chairman and the
Secretaries of the DTI, DOST, DA, DOF, DOLE, and the
Administrators of the PCA, and the SRA, as members.
The DOE Secretary, in his capacity as Chairperson, shall,
within one month from the effectivity of this Act, convene the
NBB.
The Board shall be assisted by a Technical Secretariat
attached to the Office of the Secretary of the DOE. It shall be
headed by a Director to be appointed by the Board. The
number of staff of the Technical Secretariat and the
corresponding positions shall be determined by the Board,
subject to approval by the Department of Budget and
Management (DBM) and existing civil service rules and
regulations.
SECTION 9. Powers and Functions of the NBB. The NBB
shall have the following powers and functions:
a) Monitor the implementation of, and evaluate for further
expansion, the National Biofuel Program (NBP) prepared by
the DOE pursuant to Section 7 (b) of this Act;
b) Monitor the supply and utilization of biofuels and
biofuel-blends and recommend appropriate measures in
cases of shortage of feedstock supply for approval of the
Secretary of DOE. For this purpose:
1. The NBB is empowered to require all entities engaged
in the production, blending and distribution of biofuels to
submit reports of their actual and projected sales and
inventory of biofuels, in a format to be prescribed for this
purpose; and

g) Conduct an information campaign to promote the use

of biofuels.
4

2. The NBB shall determine availability of locally-sourced

biofuels and recommend to DOE the appropriate level or
percentage of locally-sourced biofuels to the total annual
volume of gasoline and diesel sold and distributed in the
country. aEIADT

minimum access volume parameters for sugar in the Tariff

and Customs Code.

c) Review and recommend to DOE the adjustment in the

minimum mandated biofuel blends subject to the availability
of locally-sourced biofuels: Provided, That the minimum blend
may be decreased only within the first four years from the
effectivity of this Act. Thereafter, the minimum blends of five
percent (5%) and two percent (2%) for bioethanol and
biodiesel, respectively, shall not be decreased;

a) The DOF shall monitor the production and importation

of biofuels through the Bureau of Internal Revenue (BIR) and
the Bureau of Customs (BOC);

d) Recommend to DOE a program that will ensure the

availability of alternative fuel technology for vehicles,
engines and parts in consonance with the mandated
minimum biofuel-blends, and to maximize the utilization of
biofuels, including other biofuels;

c) The DOST, through the Philippine Council for Industry

and Energy Research and Development (PCIERD), shall
develop and implement a research and development
program supporting a sustainable improvement in biofuel
production and utilization technology. It shall also publish and
promote related technologies developed locally and abroad;

e) Recommend to DOE the use of biofuel-blends in air

transport taking into account safety and technical viability;
and
f) Recommend specific actions to be executed by the DOE
and other appropriate government agencies concerning the
implementation of the NBP, including its economic, technical,
environment and social impact.
SECTION 10. Security of Domestic Sugar Supply. Any
provision of this Act to the contrary notwithstanding, the SRA,
pursuant to its mandate, shall, at all times, ensure that the
supply of sugar is sufficient to meet the domestic demand
and that the price of sugar is stable.
To this end, the SRA shall recommend and the proper
agencies shall undertake the importation of sugar whenever
necessary and shall make appropriate adjustments to the

SECTION 11. Role of Government Agencies. To ensure

the effective implementation of the NBP, concerned agencies
shall perform the following functions:

b) The DOST and the DA shall coordinate in identifying

and developing viable feedstock for the production of
biofuels;

d) The DA through its relevant agencies shall:

(1) Within three months from the effectivity of this Act,
develop a national program for the production of crops for
use as feedstock supply. For this purpose, the Administrators
of the SRA and the PCA, and other DA-attached agencies
shall, within their authority, develop and implement policies
supporting the Philippine Biofuel Program and submit the
same to the Secretary of the DA for consideration;
(2) Ensure increased productivity and sustainable supply
of biofuel feedstocks. It shall institute a program that would
guarantee that a sufficient and reliable supply of feedstocks
is allocated for biofuel production; and
(3) Publish information on available and suitable areas for
cultivation and production of such crops.
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e) The DOLE shall:

(1) Promote gainful livelihood opportunities and facilitate
productive employment through effective employment
services and regulation;
(2) Ensure the access of workers to productive resources
and social protection coverage; and
(3) Recommend plans, policies and programs that will
enhance the social impact of the NBP.
f) The Tariff Commission, in coordination with the
appropriate government agencies, shall create and classify a
tariff line for biofuels and biofuel-blends in consideration of
WTO and AFTA agreements; and
g) The local government units (LGUs) shall assist the DOE
in monitoring the distribution, sale and use of biofuels and
biofuel-blends.

e) False labeling of gasoline, diesel, biofuels and biofuelblended gasoline and diesel.
SECTION 13. Penal Provisions. Any person, who willfully
aids or abets in the commission of a crime prohibited herein
or who causes the commission of any such act by another
shall be liable in the same manner as the principal.
In the case of association, partnership or corporations, the
penalty shall be imposed on the partner, president, chief
operating officer, chief executive officer, directors or officers,
responsible for the violation.
The commission of an act enumerated in Section 12, upon
conviction thereof, shall suffer the penalty of one year to five
years imprisonment and a fine ranging from a minimum of
One million pesos (P1,000,000.00) to Five million pesos
(P5,000,000.00). EaSCAH

b) Sale of biofuel-blended gasoline or diesel that fails to

comply with the minimum biofuel-blend by volume in
violation of the requirement under Section 5 of this Act;

In addition, the DOE shall confiscate any amount of such

products that fail to comply with the requirements of Sections
4 and 5 of this Act, and implementing issuances of the DOE.
The DOE shall determine the appropriate process and the
manner of disposal and utilization of the confiscated
products. The DOE is also empowered to stop and suspend
the operation of businesses for refusal to comply with any
order or instruction of the DOE Secretary in the exercise of
his functions under this Act.

c) Distribution, sale and use of automotive fuel containing

harmful additives such as, but not limited to, MTBE at such
concentration exceeding the limits to be determined by the
NBB;

Further, the DOE is empowered to impose administrative

fines and penalties for any violation of the provisions of this
Act, implementing rules and regulations and other issuances
relative to this Act.

d) Noncompliance with the established guidelines of the

PNS and DOE adopted for the implementation of this Act; and

SECTION 14. Appropriations. Such sums as may be

necessary for the initial implementation of this Act shall be
taken from the current appropriations of the DOE. Thereafter,

SECTION 12. Prohibited Acts. The following acts shall be

prohibited:
a) Diversion of biofuels, whether locally produced or
imported, to purposes other than those envisioned in this
Act;

the fund necessary to carry out the provisions of this Act

shall be included in the annual General Appropriations Act.
SECTION 15. Implementing Rules and Regulations (IRR).
The DOE, in consultation with the NBB, the stakeholders
and other agencies concerned, shall within three months
from the effectivity of this Act, promulgate the IRR of this
Act: Provided, That prior to its effectivity, the draft of the IRR
shall be posted at the DOE website for at least one month,
and shall be published in at least two newspapers of general
circulation.
SECTION 16. Congressional Oversight Committee. Upon
the effectivity of this Act, a Congressional Committee,
hereinafter referred to as the Biofuels Oversight Committee,
is hereby constituted. The Biofuels Oversight Committee shall
be composed of fourteen (14) members, with the Chairmen
of the Committees on Energy of both Houses of Congress as
co-chairmen. The Chairmen of the Committees on Agriculture
and Trade and Industry shall be ex officio members. An
additional four members from each House, to be designated
by the Senate President and the Speaker of the House of
Representatives, respectively. The minority shall be entitled
to pro-rata representation but shall have at least one
representative in the Biofuels Oversight Committee.
SECTION 17. Benefits of Biofuel Workers. This Act shall
not in any way result in the forfeiture or diminution of the
existing benefits enjoyed by the sugar workers as prescribed
under R.A. No. 6982, or the Sugar Amelioration Act of 1991,
in case sugarcane shall be used as feedstock.

The NBB shall establish a mechanism similar to that

provided under the Sugar Amelioration Act of 1991 for the
benefit of other biofuel workers.
SECTION 18. Special Clause. This Act shall not be
interpreted as prejudicial to clean development mechanism
(CDM) projects that cause carbon dioxide (CO 2) and
greenhouse gases (GHG) emission reductions by means of
biofuels use.
SECTION 19. Repealing Clause. The provisions of
Section 148 (d) of R.A. No. 8424, otherwise known as Tax
Reform Act of 1997, and all other laws, presidential decrees
or issuances, executive orders, presidential proclamations,
rules and regulations or parts thereof inconsistent with the
provisions of this Act, are hereby repealed, modified or
amended accordingly.
SECTION 20. Separability Clause. If any provision of
this Act is declared unconstitutional, the same shall not affect
the validity and effectivity of the other provisions hereof.
SECTION 21. Effectivity. This Act shall take effect
fifteen (15) days after its publication in at least two
newspapers of general circulation.
Approved: January 12, 2007

||| (Biofuels Act of 2006, REPUBLIC ACT NO.

9367, [2007])