=== dc2006-05-0007-pages-1.ppm ===
Republic of the Philippines
DEPARTMENT OF ENERGY

DEPARTMENT CIRCULAR NO. DC2006-05-0007 a n2)

GUIDELINES IMPLEMENTING THE MODIFICATION OF IMPORT DUTY
RATES ON CRUDE OIL AND REFINED PETROLEUM PRODUCTS AS
PROVIDED UNDER EXECUTIVE ORDER NO. 527

Pursuant to Section 3 of Executive Order (E.O.) No. 527 issued by the
President of the Republic of the Philippines on May 12, 2006, the Department
of Energy (DOE), in coordination with the Department of Finance (DOF),
Bureau of Customs (BOC), Department of Trade and Industry (DTI), and the
National Economic and Development Authority (NEDA), hereby adopts the
following guidelines to implement the reduction of tariff rates on imported
crude oil and refined petroleum products based on certain trigger prices
indexed to international oil prices in the world market.

1. Title

These guidelines shall be known as the "Implementing Guidelines for the
Modification of Import Duty Rates on Crude Oi! and Refined Petroleum
Products under Executive Order No. 527” and shall hereafter be referred to as
the "Guidelines". :

2. Scope and Coverage

These Guidelines shall apply to all articles listed in Annex A of E.O. No.
527,

3. Determination of the Trigger Price

The MFN rates on crude and refined petroleum products shall be
accordingly reduced if the following minimum price triggers for both Dubai
crude and MOPS-based diesel indexed to average Mean of Platts Singapore
(MOPS) oil price indicators are reached.

Duty (%)
* 66
88

88

1
0

=== dc2006-05-0007-pages-2.ppm ===
4. Notification Process

The DOE shall issue a certification to the DOF and BOC once the trigger
level has been reached, and for which the corresponding Customs
Memorandum Order shall be issued by the BOC. A copy of the certification
shal! be furnished the DTI, NEDA and the oil importers through their industry
associations, the Petroleum Institute of the Philippines (PIP) and the
Independent Philippine Petroleum Companies Association (IPPCA).

Accordingly, the tariffs shall be restored upon certification by the DOE that
the international oil prices moved down based on the same trigger prices.

5. Obligation of Oil Companies

Oil companies shal! accordingly reflect the appropriate tariff reduction in
the pump prices of diese! fuel sold to the public transport sector.

6. Monitoring and Enforcement

The DOE shall ensure that the oil companies shall comply with their
obligation under the immediately preceding section.

For this purpose, oil companies shall adopt measures such as providing
sufficient number of gasoline stations offering the appropriate tariff reduced-
diesel prices to the public transport sector. Oil companies shall likewise
submit monthly reports to the DOE indicating, among others, the actual
volume sold and the corresponding amount offered to the public transport
sector, and such data and information that may be required by the DOE
pertinent to their compliance with these Guidelines.

The DOE shall conduct on-site inspections to monitor compliance by oil
companies with the provisions of these Guidelines.

7. Penalty Provisions

Failure to fully comply with the above requirements as provided under the
immediately preceding sections shall be subject to the appropriate penalty as
indicated under existing laws, rules and regulations, including the
Downstream Oil Industry Deregulation Act of 1998.
=== dc2006-05-0007-pages-3.ppm ===
8. Separability Clause

lf, for any reason, any section or provision of these Guidelines is declared
unconstitutional or invalid, such parts not affected shall remain in full force
and effect.

8. Effectivity

These Guidelines shall take effect immediately upon complete publication
in two (2) newspapers of general circulation.

Issued in Fart Bonifacio, City of Taguig this 16th day of May 2005.

JOR

f MO fe ~ oe

RAPHAEL P. M. LOTILLA
Secretary