Republic of the Philippines
DEPARTMENT OF ENERGY
DEPARTMENT CIRCULAR NO. DC 2003-11-010
PROVIDING FOR THE RULES AND REGULATIONS GOVERNING THE BUSINESS OF RETAILING LIQUID PETROLEUM PRODUCTS
WHEREAS, R. A. 8479, otherwise known as the "Downstream Oil Industry Deregulation Act of 1998", applies to all persons or entities engaged in any and all activities of the domestic downstream oil industry and mandates the DOE to promote the entry of new industry participants;
WHEREAS, R. A. 8479 also mandates the DOE to promote fair trade practices, monitor marketing processes and quality of petroleum products and stop the operation of businesses involved in the sale of petroleum products not complying with the national standards of quality,
WHEREAS, Batas Pambansa Big. 33, as amended by Presidential Decree No. 1865, and the Implementing Rules and Regulations therefore, define and penalize certain prohibited acts that are considered inimical to the public interest and national security, including illegal trading in petroleum and/or petroleum products, hoarding of petroleum products, adulteration and underdelivery, among others;
WHEREAS, there now exist petroleum Retail Outlets or gasoline stations engaged in the Retailing of Liquid Petroleum Products which do not comply with safe and appropriate technologies for the petroleum products retail business;
WHEREAS, there is also an increasing proliferation of unsafe practices in Liquid Petroleum Product Retailing particularly with the use of inappropriate containers (e.g. "bote-bote"), storage tanks and tank vehicles;
WHEREAS, the Retailing of Liquid Petroleum Products is subject to pertinent permits and licenses issued by government authorities including the Department of Environment and Natural Resources, Bureau of Fire Protection, Bureau of Internal Revenue and Local Government Units;
WHEREAS, all matters affecting the safe and proper handling, transport, storage, installation and use of equipment and facilities in the downstream oil industry shall be governed by the pertinent provisions of the different national and international safety codes observed and adopted by the industry;
WHEREAS, the continued operation of unsafe and sub-standard Retail Outlets may (i) expose the consuming public to fire, security, health and environmental risks; (ii) deny the public the proper quality and quantity of the Liquid Petroleum Products they purchase; (iii) deprive legitimate Retail Outlets of additional sales volume; (iv) deprive the government of revenue derived from licensing fees, local business taxes and pump calibration charges, among others; and (v) encourage the marketing of Liquid Petroleum Products sourced from illegal activities such as smuggling, pilferage, theft and the like-,
WHEREAS, certain provisions of Department Circular No. 98-03-004, otherwise known as the Rules and Regulations Implementing R. A. 8479, and the Rules and Regulations in the Implementation of Batas Pambansa Blg. 33, as amended by Presidential Decree No. 1865, need to be further clarified, updated, amended and/or repealed, particularly in the conduct of the Liquid Petroleum Product Retailing business;
NOW, THEREFORE, in consideration of the foregoing premises, the following rules are hereby promulgated to govern the Retailing of Liquid Petroleum P roducts.
RULE I GENERAL PROVISIONS
Section 1. TITLE
This Department Circular shall be known and cited as "The Rules and Regulations Governing the Business of Retailing Liquid Petroleum Products" or "Retail Rules."
Section 2. COVERAGE
These Retail Rules shall apply to all Persons engaged or intending to engage in the business of Retailing Liquid Petroleum Products.
Section 3. DEFINITION OF TERMS
Except as provided below, the terms used in these Retail Rules shall have the same meaning as the terms used in Department Circular No. 98-03-004, as amended (Implementing Rules and Regulations of the Downstream Oil Industry Deregulation Act of 1998):
API - shall refer to the American Petroleum Institute;
BFP - shall refer to the Bureau of Fire Protection;
Bote-bote -shall refer to the manner of Retailing Liquid Petroleum Products in soda bottles, plastic containers, jugs and other similar portable containers not intended or suited for storing, handling and dispensing Liquid Petroleum Products;
DOST-ITDI -shall refer to the Department of Science and Technology -Industrial Technology Development Institute;
Liquid Petroleum Products -shall refer to Petroleum Products that are flammable liquids such as gasoline, kerosene and diesel and combustible liquid products formed in the course of refining crude petroleum through distillation, cracking, solvent refining and chemical treatment coming out as primary stocks from the refinery and sold through Retail Outlets; provided, that Liquid Petroleum Products shall refer to class I flammable liquids with a flash point below thirty seven and eight tenths (37.8'C) degrees Celsius, and class II flammable liquids with a flash point at or above thirty seven and eight tenths (37.8'C) degrees Celsius, and below sixty (60'C) degrees Celsius. Combustible Liquid Petroleum Products have flash points at or above sixty (60'C) degrees Celsius;
LGU - shall refer to Local Government Units;
OIMB - shall refer to the Oil Industry Management Bureau of the DOE;
Portable Tank - shall refer to any closed vessel for holding liquids but not intended for fixed installation;
Section 4. RETAILING
Any Person engaged or intending to engage in the Retailing of Liquid Petroleum Products shall comply with the following minimum standards:
a. The Retailing of Liquid Petroleum Products shall be conducted in duly approved premises with an initial minimum lot area of 100 square meters and where vehicles being serviced shall at all times be inside the duly approved business premises.
b. The Retailing of Liquid Petroleum Products shall only be carried out through fixed and permanent dispensing pumps duly approved by the DOE and further subject to the following:
(i) The dispensing pump clearly indicates on its face the type of Liquid Petroleum Product being dispensed and its brand name, if any;
(ii) The dispensing pump accurately displays both the volume of Liquid Petroleum Product dispensed (in liters) and the corresponding amount (in Pesos) up to the 1/100th part;
(iii) The dispensing pump for gasoline displays the Octane Rating of the product as required under Department Circular No. 2001-09-003;
(iv) All dispensing pumps and storage tanks of Liquid Petroleum Products are distinct and labeled to ensure that there shall be no product contamination or inadvertent mixing or misfueling of the different Petroleum Products; and
(v) Dispensing pumps are properly calibrated and sealed in accordance with Section 12 of these Retail Rules.
c. The owner and/or operator of the Retail Outlet must possess valid permits, licenses and certifications for the Retailing, storage, handling, transfer and/or dispensing of Liquid Petroleum Products from the LGU concerned, the BFP, the DENR, DOE and other relevant government authorities.
d. The construction and operation of the Retail Outlet must comply with all applicable laws, rules, regulations and LGU ordinances.
e. The operation of service bays shall be subject to and fully comply with the criteria and/or guidelines set by the DENR-EMB for such facilities and/or operations. Generated waste oil or petroleum from Retail Outlets shall be properly collected, stored and disposed of in accordance with the requirement of DENR DAO 92-29, as amended.
f. The Prior Notice requirement provided for in Section 6 of these Retail Rules shall be fully complied with.
Section 5. FUEL STORAGE, HANDLING, TRANSFER AND/OR DISPENSING
The storage, handling, transfer and/or dispensing of Liquid Petroleum Products shall be subject to the following:
Liquid Petroleum Products shall be transferred only from underground tanks by means of fixed pumps designed and equipped to allow the control of the flow and prevent leakage or accidental discharge;
Liquid Petroleum Products shall not be dispensed from above -ground tanks, portable tanks, tank vehicles, drums, barrels or similar containers, e.g. bote-bote, into the fuel tanks of motor vehicles or containers;
The product suction lines of storage tanks shall be elevated at least four (4) inches from the bottom of the tank to avoid water draw-off with the product;
The discharge of Liquid Petroleum Products into or upon any street, highway, drainage canal or ditch, storm drain or flood control channel, lake or tidal waterway, or upon the ground shall be strictly prohibited.
Section 6. PRIOR NOTICE
No Person may engage in the business of Retailing Liquid Petroleum Products without previously notifying the OIMB in writing of its intention to engage in such activity, Such notification shall contain the following information:
Business name, address, telephone/fax number of the business office;
Location and complete address of Retail Outlet/s;
Project or business plan indicating the scope of operation/activity;
List of facilities and proof of availability of such facilities to support the proposed business; and
Such other requirements as may be imposed by the OIMB from time to time.
Section 7. DOCUMENTARY REQUIREMENTS
In addition to the prior notice requirement of Section 6 of these Retail Rules, the following documents shall also be submitted to the OIMB:
a. Before commencement of construction
(i) Barangay Clearance (Barangay concerned)
(ii) Department of Trade and Industry / Securities and Exchange Commission Registration
(iii) Zoning/Location Clearance (LGU concerned)
(iv) Environmental Compliance Certificate (DENR)
(v) Building Permit (LGU concerned)
(vi) Discharge Permit, if applicable (Laguna Lake Development Authority)
b. Before commencement of Operation
(i) Fire Safety Inspection Certificate (BFP)
(ii) Reference Standards/Codes and compliant statement for Facility Design & Operation
(iii) Mayor's Permit (LGU concerned)
(iv) List of dispensing pumps, storage tanks and Tank Trucks, with corresponding capacities
(v) Lay-out plan and latest photograph of the Retail Outlet
The documents enumerated in this Section 7 must be accompanied by original copies thereof for authentication purposes.
Section 8. CONSUMER SAFETY AND INFORMATIONAL SIGNS
The following signs shall be prominently displayed by the owner and/or operator of the Retail Outlet in strategic and appropriate locations within the premises of the said outlet for the awareness and information of the buying public and service station personnel:
Price Display Board with updated prices for each Liquid Petroleum Product sold in the Retail Outlet pursuant to Rule V, Section 18 a (1) of Department Circular No. 98-03-004;
Signs which require the switching-off of cellular phones while filling pursuant to Department Circular No. 2002-05-002;
No Smoking signs;
Switch off engine while filling signs; and
Other safety signs as may be required by the DOE, other government agencies and relevant LGUs.
Section 9. CERTIFICATE OF COMPLIANCE
The DOE, through the OIMB, shall issue a Certificate of Compliance upon the complete submission of and full compliance by the Retail Outlet owner and/or operator with the requirements provided in the foregoing Sections of this Rule. No Retail Outlet shall operate until a Certificate of Compliance is so secured from the DOE. The owner and/or operator shall be deemed to be engaged in the ILLEGAL TRADING of Liquid Petroleum Products if he/she operates without the Certificate of Compliance and/or violates any of the foregoing Sections, except for Section 8 hereof.
Section 10. ISSUANCE OF RECEIPTS
All transactions involving the Retail of Liquid Petroleum Products must be evidenced by an official receipt bearing the registered name and address of the seller and detailing the quantity, price and type of Liquid Petroleum Product sold, the date of the transaction and such other information required under Republic Act No. 8424, otherwise known as "An Act Amending the National Internal Revenue Code" and Section 237 of the National Internal Revenue Tax Code. Duplicate copies of official receipts shall be made ava ilable for verification by OIMB inspectors.
Section 11. HOARDING
For purposes of these Retail Rules, the following shall constitute prima facie evidence of HOARDING:
The refusal of Retail Outlets to sell Liquid Petroleum Products shortly before a price increase or in times of tight supply, and in both instances if the buyer or consumer has the ability to pay in cash for the product; or
The undue accumulation of Retail Outlets of Liquid Petroleum Products in times of tight supply or shortly before a pric e increase. Undue accumulation shall mean the keeping or stocking of quantities of Liquid Petroleum Products beyond the normal inventory levels maintained by Retail Outlets for thirty (30) days immediately preceding the period of tight supply or price increase.
RULE III PUMP CALIBRATION, TESTING, SEALING AND PRODUCT SAMPLING
Section 12. CALIBRATION AND SEALING OF DISPENSING PUMPS
All dispensing pumps used in Retail Outlets must be properly calibrated once every sixty (60) days and sealed by a duly authorized calibrating entity immediately after calibration. A dispensing pump that is not calibrated and sealed or goes off-calibration shall be clearly marked with an "out of order" sign and shall not be used until the said pump is recalibrated and resealed.
For the purpose of these Retail Rules, the authorized calibrating entities are the Municipal or City Treasurer of an LGU or, in their absence or incapacity, duly authorized representatives of the DOST-ITDI or, in their absence or incapacity, duly authorized representatives of any other
government agency authorized therefor or, in their absence or incapacity, duly authorized representatives of the oil company.
In locations where the Municipal or City Treasurer are capable of calibrating dispensing pumps, the calibration by other authorized entities shall be provisional only and subject to final calibration by the Treasurer. The authority performing the calibration shall install a sea] after calibration to guard against the unauthorized adjustment of the dispensing pump meter which seal may not be broken or removed until the next calibration by an authorized entity.
All calibrations shall be duly documented and signed by the mechanic performing the calibration and countersigned by the Retail Outlet owner and/or operator or the shift supervisor of the Retail Outlet. A copy of these calibration documents shall be kept on file at the Retail Outlet.
After calibration, a sticker provided by the oil company having a dimension of at least one-half (1/2) inch by two (2) inches and bearing the date of the calibration and the signature of the mechanic who calibrated the pump shall be posted on the face of the pump calibrated. For independently owned Retail Outlets or Retail Outlets with its own Liquid Petroleum Product brand name, the owner and/or operator of the Retail Outlet shall be responsible for complying with this Section 12.
Failure of the Retail Outlet owner and/or operator to have his/her dispensing pumps calibrated and sealed shall constitute ILLEGAL TRADING.
Section 13. CALIBRATION, REGISTRATION AND SEALING OF PETROLEUM PRODUCT TRANSPORT CONTAINERS
The capacity of all Tank Trucks used to transport measured amounts of Liquid Petroleum Products in bulk must be certified, calibrated and sealed by the DOST-ITDI.
Tank Trucks transporting Liquid Petroleum Products shall have all valves, hatches and other openings sealed shut by the Marketer before leaving the source depot. Such seal may be removed, tampered with or broken by the buyer or his representative, or by the supplier, and only at their places of business or location designated by the buyer.
A broken or tampered valve or hatch seal, or the absence of one on a loaded compartment, shall give rise to the presumption that the Tank Truck is UNDERDELIVERING or that the product contained is adulterated and the shipment may be refused by the buyer.
Section 14. CALIBRATION AND TESTING OF DISPENSING PUMPS USING A PROPERLY SEALED CALIBRATING BUCKET
Owners and/or operators of Retail Outlet/s shall maintain in their Retail Outlets a DOST-ITDI calibrated and sealed calibrating bucket available for use pursuant to Section 12 hereof. The Retail Outlet's calibrating bucket/s must be recalibrated and resealed once every twelve (12) months.
All dispensing pump meters of Retail Outlets shall be tested daily not later than 9:00 A.M. for accuracy in delivering Liquid Petroleum Products using said calibrating bucket.
Any dispensing pump not delivering the correct quantity shall be marked by the owner and/or operator with an "out-of-order" sign and padlocked and shall not be used until said pump is recalibrated and resealed by the proper authority.
The calibrating bucket and a written record or logbook of the daily testing thereof shall be maintained at all times in the Retail Outlet premises, and presented to OIMB inspectors and to the public upon demand thereof.
Failure to provide the written record or logbook and the properly sealed calibrating bucket shall give rise to the presumption that the dispensing pump is UNDERDELIVERING.
Section 15. SAMPLE TAKING AND TESTING OF DISPENSING PUMPS
Duly authorized inspectors from the OIMB shall undertake random and unannounced inspections in the presence of the owner and/or operator of the Retail Outlet or his designated shift supervisor to test for, among others, the sample taking and calibration of dispensing pumps. Owners and/or operators of the Retail outlets, or their shift supervisors in their absence, shall allow said inspectors to inspect their Retail Outlets and cooperate with them fully.
Retail Outlets shall provide duly authorized OIMB inspectors samples of Liquid Petroleum Products which they are offering for sale, in volumes required by current DOE issuances and circulars on sample taking and as reflected in the Special Assignment covering the said inspection, for product testing on-site or quality tests at the DOE laboratory.
Retail Outlets shall retain a duplicate set of the samples obtained by the OIMB inspectors during their inspection and product quality verification as provided in Memorandum Circular No. 2001-02-001, Refusal to allow entry of the authorized OIMB inspectors to the Retail Outlet and/or to conduct the inspection and sampling shall constitute prima facie evidence of ILLEGAL TRADING.
Section 16. UNDERDELIVERY IN DISPENSING PUMPS
The quantity of Liquid Petroleum Products delivered by dispensing pumps at Retail Outlets as measured by the dispensing pump meter shall not be less than the actual quantity by more than fifty (50) milliliters for every ten (10) liters as measured by a calibrating bucket certified and sealed by the DOST- ITDI.
The calibrating bucket shall be filled to the ten (10)-liter mark three (3) times at low, medium and fast flow rates and the average quantity as measured by the pump meter shall constitute the quantity to be compared with the actual quantity of ten (10) liters. Dispensing pumps delivering less than the tolerable minimum quantity shall be deemed to be UNDERDELIVERING. The absence of an 11 out-of- order" sign or padlock locking the dispensing pump shall be deemed an actual use of the pump for the conduct of Retailing. A dispensing pump found with a broken or no seal shall constitute a prima facie evidence of UNDERDELIVERING.
RULE IV PETROLEUM PRODUCT STANDARDS
Section 17. PRODUCT QUALITY
Only Liquid Petroleum Products complying with the Philippine National Standards (PNS), including the prescribed color coding scheme for the same shall be dispensed at Retail Outlets.
The possession of Liquid Petroleum Products which do not meet the prescribed PNS shall constitute prima facie evidence of ADULTERATION and the sale, distribution, transportation, exchange or barter of adulterated products shall constitute ILLEGAL TRADING.
Section 18. TESTING AND RETENTION OF SAMPLES OF PETROLEUM PRODUCTS BY DEALER/OPERATOR
In order to protect against the delivery of adulterated products, Retail Outlets may do either of the following:
The owner and/or operator shall take one (1) liter samples of each Liquid Petroleum Product delivered to his Retail Outlets. The samples shall be placed in an OIMB-specified container and sealed in the presence of the Tank Truck driver who shall verify the taking of the sample by signing on the invoice. The sample shall be kept by the owner and/or operator for at least one (1) month or until the third delivery thereafter, whichever is shorter.
By using a hydrometer, the owner and/or operator shall take the American Petroleum Institute (API) gravity or density and obtain the corrected API gravity at 60 degrees Fahrenheit or specific gravity at 15 degrees Celsius and compare this against the API gravity at 60 degrees Fahrenheit or density at 15 degrees Celsius as indicated in the product invoice. For this purpose, oil companies shall indicate the API gravity at 60 degrees Fahrenheit or density at 15 degrees Celsius of all deliveries of Liquid Petroleum Products in the corresponding invoice. A Retail Outlet owner/operator may refuse to accept the shipment if the API gravity difference exceeds by 0.6 degrees API or the density difference exceeds by 0.0024. Both the oil company's and Retail Outlet owner's and/or operator's specific gravity or density readings should be recorded in a logbook specifically kept for this purpose.
Retail Outlet owners and/or operators may require their respective oil company suppliers to perform verification quality tests on products received.
RULE V MISCELLANEOUS PROVISIONS
Section 19. REPORTORIAL REQUIREMENTS
In addition to the obligations of the owners and/or operators of Retail Outlets provided under these Retail Rules, all owners and/or operators of Retail Outlets shall:
File a notice to the OIMB of their official start of business at least five (5) days prior to the start of actual operations.
Submit applicable permits for any new, addit ional, renovated or refurbished facilities and their respective operation five (5) days prior to commissioning.
Report to the OIMB any decommissioning, removal from service or abandonment of storage tank/s or of the entire Retail Outlet not later than five (5) days prior to the proposed activity.
Submit to the OIMB, not later than ninety (90) days from the effectivity of these Retail Rules, a list of all its Retail Outlets, their corresponding locations, names of dealers and operators, number and type of storage tanks (e.g. UGT, AGT) and respective capacities, number of dispensing pumps, types of products sold and a layout of their Retail Outlets. This list shall be updated on an annual basis by the submission of a report not later than the
thirtieth (30th) day of January each year. The updating report shall contain, among others, change in dealership; expansions, additions or closures of previously reported outlets; and such other information that the OIMB may require from time to time.
Section 20. PENALTIES AND SANCTIONS BY LGUs
The DOE recognizes and respects the right of the appropriate LGU to refuse issuing the necessary business permits, revoke business permits and/or impose fines and/or penalties in the event of a violation of ordinances enacted by them consistent with these Retail Rules. Likewise, the DOE may recommend to the concerned LGU the suspension, revocation or termination of the business permits of Persons found to be in violation of this Department Circular as provided in Section 15.e. of R. A. 8479.
RULE VI ADMINISTRATIVE FINES AND SANCTIONS
Section 21. FINES/SANCTIONS AGAINST PROHIBITED ACTS
Any Person engaged in the business of Retailing Liquid Petroleum Products who commits any of the prohibited acts defined or provided in this Department Circular such as ILLEGAL TRADING, ADULTERATION, UNDERDELIVERY and HOARDING shall be imposed, for the first offense, a fine of Ten Thousand Pesos (P10,000.00) for every prohibited act. A fine of Ten Thousand Pesos (P10,000.00) shall be imposed against such Person in the event the latter is found to have committed the same prohibited act a second time. In the event such Person is found to have committed the same offense a third time, the DOE shall recommend to the proper government agency the suspension or revocation of the business permit of the offender.
Any Person who does not comply with the consumer safety and informational signs required under Section 8 of these Retail Rules shall be issued a warning for the first offense. In the event such Person is found to have committed the same violation a second time, the DOE may recommend to the proper government agency the suspension or revocation of the business permit of the offender.
Section 22. INITIATION OF ADMINISTRATIVE PROCEEDINGS
Any Person may initiate administrative proceedings against Persons committing any of the prohibited acts defined or provided in this Department Circular in accordance with Department Circular No. 2002-07-004 ("Rules of Practice and Procedure Before the Department of Energy"); provided that, the DOE may motu propio proceed administratively against any Person who violates or does not comply with this Department Circular pursuant to the said Department Circular No. 2002-07-004.
Section 23. INITIATION OF CRIMINAL ACTS
The initiation of an administrative action and/or the imposition of any fine against any Person who violates or does not comply with this Department Circular shall be without prejudice to the filing of any criminal action against such person pursuant to Batas Pambansa Blg. 33, as amended.
RULE VII FINAL PROVISIONS
Section 24. TRANSITION PERIOD
All existing Retail Outlets that have fully complied with the prior notice requirements of the DOE pursuant to Department Circular No. 98-03-004 shall be given six (6) months from effectivity of these Retail Rules to fully comply with the provisions hereof; Provided, that new Retail Outlets under construction shall immediately comply with the same.
Section 25. REPEALING CLAUSE
The following DOE issuances and circulars are hereby repealed or amended accordingly upon the effectivity of these Retail Rules:
a. Department Circular No. 98-03-004, Rules and Regulations Implementing Republic Act No. 8479, "Downstream Oil Industry Deregulation Act of 1998"
(i) Section 5 - Notice Prior to Engagement in any Activity or Business in the Downstream Oil Industry.
b. Rules & Regulations Implementing BP 33 as amended by PD 1865
(i) Rule I Section 2 - Definition of Terms
(ii) Rule 11 - Illegal Trading Section I - BEU Licensing Section 2 - Issuance of Receipts Section 5 - Unloading of Petroleum Products Section 6 - Calibration & Sealing of Dispensing Pumps Section 7 - Calibration, Registration & Sealing of
Petroleum Product Transport Containers
(iii) Rule III - Petroleum Product Adulteration
Section 2 - Sampling & Testing of Finished Petroleum Products by Oil Companies
Section 3 - Testing or Retention of Sample of Petroleum Products by
the Dealer/Operator
Section 4 - Sample taking by the Bureau
Section 5 - Removal of Water phase in Underground Tank by
Dealer/Operator of Petroleum Product Retail Outlet
(iv) Rule IV - Underdelivery & Underfilling Section 1a. - Underdelivery in Dispensing Pumps Section 1b. - Daily Testing of Dispensing Pumps by Dealer Section 1c. - Calibration of Dispensing Pumps by Oil Companies Section 1d. - Testing of dispensing Pumps by Bureau personnel and/or
by other Law Enforcement Agents
(v) Rule V - Hoarding
Section 26. SEPARABILITY CLAUSE
Should any provision herein be declared invalid or unconstitutional by a court of competent jurisdiction, the same shall not affect the validity of the other provisions not so declared.
Section 27. EFFECTIVITY
This Department Circular shall take effect fifteen (15) days from the date of its complete publication in two (2) newspapers of general circulation.
Fort Bonifacio, Taguig, Metro Manila November 14, 2003.
VINCENT S. PEREZ JR.
Secretary