Executive Order No. 137 (1987)
\ ~N ~JS P M S. LIBRAB \ ~ MALACANANG Manila EXECUTIVE ORDER NO. 137 EXPANDING THE SOURCES AND UTILIZATION OF THE OIL PRICE STABILIZATION FUND (OPSF) BY AMENDING PRESI- DENTIAL DECREE NO. 1956 "
WHEREAS, an Oil Price. Stabilization Fund was created under
Section 8 of Presidential Decree No. 1956 to be used to reimburse the oil companies for cost increases on crude oil and imported petroleum products resulting from exchange rate adjustment and/or increase in world market prices in the desire to stabilize the prices of petrol~um products for a longer period despite exchange rate adjustments .or world market price. changes; ~-. \ q .
WHEREAS, Letter of Instructions No. 1431 provided for the utilization of the Oil Price Stabilization Fund to reimburse oil companies the additional costs of impot-ta~ tion of crude oil and petroleum products due to ,£:luctuations in foreign exchange rates, to assure adequate and continuous supply of petroleum products at reasonable prices;
WHEREAS., the spot prices of crude oil in the internati0nal market have been unstable;
WHEREAS, it is the policy of the government to recognize immediately declines in crude oil prices by reducing domestic petroleum product prices for the benefit of the public;
WHEREAS', the prevailing circumstances require the expan-sion of the sources and utilization of the Oil Price Stabi-lization Fund to maintain stability in the domestic prices of oil products at reasonable levels; NOW, THEREFORE, I, CORAZON C. AQUINO, Pre"sident of thePhilippines, do hereby order: .
SECTION 1. Section 8 of Presidenti;'l Decree No. 1956is hereby amended to read "!!:s follows:.
2
"SECTION 8. There is b~reby created a Trust Account in the books of accoun~of the Ministry of Energy to be designated as Oil Price Stabi-' . lization Fund (OPSF) for the purpose of mini-mizing frequent price changes brought about by exchange rate adjustments and/or changes in world market prices of crude oil and imported petroleumproducts. The Oil Price Stabilization Fund (OPSF) may be sourced from any of the following:
a) Any increase in the tax collection from ad valorem tax or cus~oms duty imposea on petroleum products ~ubject to tax under this Decree arising from exchange rate adjustment, as may be determined by the Minister of Finance in consultation with the Board of Energy;
b) Any increase ~n the tax collection as a result of theilifting of tax exemptions of government corporations, as may be determined by the Minister of Finance in consultation with 'the Board of Energy; ." .. c Any additional amount to be imposed on .. petrQleum products to augment the resources of the Fund through an appropriate Order that may be issued by the Board of Energy requiring payment by persons or companies engaged in the business of importing, manufacturing and/or marketi~g petroleum products;. . I;~ d) Any resulting peso cost differentials in case the actual peso costs paid by oil companies in the importation of crude oil and petroleum products is less than the peso costs computed using the reference foreign exchange rate as fixed by the Board of Energy. The Fund herein created shall be used for the following :.
1) . To reimburse the oil companies for cost increases in crude oil and "imported' petroleum products resulting from exchange rate adjustment and/or increase in world market prices of crude oil;
3 2 To reimburse the oil companies for possible cost underrecovery incurred as a resultof the reduction of domestic prices of petroleum products. The magnitude of the underrecovery, if any, shall be determined by the Ministry of Finance. 'Cost underrecovery' shall include thefollowing:
i. ~ Reduction in oil company take as directed by the Board of Energy without the corresponding reduction in the landed cost of oil inven-tories in the possession of the oil companies at the time of the. pricechange;
ii. 'Reduction in internal ad valorem taxe: as a result of foregoing government mandated price reductions;
iii. Other factors as may be determined by the Ministry of Finance to result in. .-:c;'c;"'" cost underrecovery ". .,...,.co_, -. -: ~_:~- .::. -~: ::-~::::'-- The Oil Price Stabilization Fund (OPSF) shall be administered by the Ministry of Energy. II -.* ,- --c; ~ -"..-,'-:~ S.ECTION 2. The- Ministe_r of ,.Finance shall, in consulta-tiQn with the Ministry of Energy, promulgate th'e necessaryrules and regulations to implement this Executive Order.
SECTION 3. All laws, orders, issuances, and rules andregulations or parts thereof inconsistent with this ExecutiveOrder are hereby repealed or modified accordingly.
SECTION 4. This Executive Order shall be effective start- .. ing with the domestic produc.ts price reduction 'authorized on JaT1;uary 24, 1986.
Done in the City of Manila, this 27th day of Februaryin the year of Our Lord, nineteen hundred and eighty-seven. . ..If ~.
By the President:
P. ARROYO Executiye Secretary