Reforms in the electric power industry

By Abdel aziz Dimapunong
Project Director,Mindanao power Ventures

Republic Act NO. 9136, a law in the Philippines,
is an Act Ordaining Reforms in the Philippine electric Power Industry. It is rather long, a link to this document is provided hereunder, courtesy of the Mindanao Power Ventures. Just click on the link below to touch on this document and if you wish, you may download the document.

REFORMS IN THE ELECTRIC POWER INDUSTRY –

the Charter of the Amanah Islamic Bank

now you can preview the charter of the islamic Bank annotated here. go to my site at docstoc,com, then you candownload my document. thank you.

hello,I’m back

hello,I’m back from hospial confinemen

moroland

Manila Home, May 13, 2009 Hello World. This is your host, Abdel Aziz dimapunong. ALHAMDULILLAH. THANKS GOD. from my confinement at the Manila Doctors Hospital, I am now back  home live and kicking, after an embolic stroke that I suffered last June 3 ,2008. Thats right, almost a year ago.

WATCH FOR THIS SITE FROM NOW ON.

WE SHALL HAVE FUN.

AND YOU SHALL KNOW MORE ABOUT THE  AMANAH ISLAMIC BANK

Kampac Oil Middle East confirms MOA with Amanah Islamic Bank

Kampac Oil Middle East confirms 

MOA with Amanah Islamic Bank

By Abdel Azish Dimapunung

(Abdel Aziz Dimapunong)

Chairman and founder, Amanah Islamic Bank

The Amanah Islamic Investment Bank of the Philippines concluded its 16^th General Stockholders Meeting last Sunday, June 3, 2007 at the Islamic Bank Alkhairi Mosque in Manila. Among other things, the meeting confirmed, approved and ratified the Memorandum of Agreement between Kampac Oil Middle East and the Amanah Islamic Bank.

Kampac Oil signed the Agreement last May 15, 2007 after some due diligence work. The due diligence covers legal and political background check on the Amanah Islamic Bank. I have discussed part of this in my previous blog in this website entitled “Learning from Halliburton”

http://dimapunong.sulekha.com/blog/post/2007/05/learning-from-halliburton.htm

The Board of Directors of the Bank immediately approved the Kampac Oil – Islamic Bank Agreement on the day it was signed. Thereafter, it was submitted for confirmation and ratification by more than two thirds of all common voting stocks of the Islamic Bank. In accordance with the special charter of the Islamic Bank and its By Laws, this requirement has been accomplished during the bank’s 16th general shareholders meeting last June 3, 2007. The Kampac Oil-Islamic Bank agreement calls for a majority ownership of the bank by Kampac Oil M.E.

The Amanah Islamic Bank was founded by yours truly in 1992. Over the years it has grown into more than a billion dollar bank. The Islamic Bank is a proponent of renewable energy, principally biodiesel and bio-ethanol. http://dimapunong.sulekha.com/blog/post/2007/02/amanah-islamic-bank-pushes-for-renewable-energy.htm Both of these products require the basic fossil fuel.

The Kampac Group

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Kampac Oil (KOIL) http://www.kampacgroup.com is an oil company based in the city of Dubai in the United Arab Emirates. Its founder, Mr. Charles Ampofo, now the chairman of the Kampac Group, established the Kampac Group in 1988. According to him, from its modest beginning, the group has seen a steady growth over the last decade. Kampac now has 15 offices in 13 countries around the globe. These offices are located in the Ivory Coast, Nigeria, Jordan, Greece, the United Kingdom, Las Palmas, New York, New Orleans, Syria, and Canada. Kampac has now an office in the Philippines. Over the years Kampac has diversified into different categories of its business activities.

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Charles Ampofo

Chairman, Kampac Group

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Charles was here in the Philippines in the middle of May to see Her Excellency President Gloria Macapagal Arroyo. A top-level cabinet member in the Arroyo Administration arranged the meeting. Charles is particularly proud of having a strong government and business relationships worldwide. “It is our strength”, he said. “Strong government relationships gives us the edge over our peers in the industry”, he added.

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Her Excellency, President Gloria Macapagal Arroyo

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Ampofo’s delegation to the Philippines includes Syed Hafizullah, the young and energetic Managing Director of Simex International FZ LLC, and a member of the Kampac group. It is engaged in metal, minerals and Trans Industrials.

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Charles is coming back to the Philippines soon. According to him, he would probably be in the company of the minister of finance of Dubai and the chairman of the Islamic Bank of Dubai, the pioneering Islamic bank of the world. They would be coming not merely as tourists but as investors. That would be another boost to our currently booming stock market and the flourishing economy of the Philippines under the able leadership of President Gloria Macapagal Arroyo. The confidence of international business for President Arroyo is the topic of my previous blog http://dimapunong.sulekha.com/blog/post/2007/05/votes-of-confidence-for-president-arroyo-and-the-philippines.htm

 

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The international presence of the Kampac group is shown by the fact that it employs over 800 personnel from 25 different countries with various ethnic backgrounds. It has also a team of 50 professionals consisting of high level administrators, bankers, geologists, geo-physicists, petroleum engineers and chemical engineers.

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Investing in the oil industry
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Kampac has recently acquired oil blocks in West and Central Africa. It has also Logistics in South America and Africa. It has committed to invest $115 million to exploration on the Louga and St. Louis blocks for the next 7 years. Kampac has also allocated $120 million for its downstream activities. Downstream operations consist of primarily trading, oil services and retailing. Currently Kampac has interest in more than six oil blocks in Africa. Although Africa is regarded as less endowed with resources, Charles says “we judge right and get it right”. This is what Kampac branded as ‘new frontier investment approach’, the lure of new frontier in oil exploration.

Kampac’s investments in storage facilities in South America and Africa peaked at $129 million. The investments consist of 600,000 metric cube lands and 300,000 metric cube of Floating Storage Units (FSU). Kampac is now investing in the Philippine oil industry as well as in the Amanah Islamic Bank.

The Philippines needs a company like Kampac for its oil requirements. Recently, the country eyes Venezuela and Kuwait for oil imports. According to Energy Secretary Raphael Lotilla, the government is eyeing to get part of its oil requirements from other sources to help ensure a stable supply. The country wants to diversify sources of crude supply but it has to do this in cooperation with the refiners in the country. Government is not into refining so that imports of crude oil have to be in tandem with the schedule of refiners. The country has two refineries: one is being run by Petron Corp. in Bataan with a capacity of 180,000 barrels per day and the other one is in Batangas which is run by Pilipinas Shell Petroleum Corp. with a capacity of 110,000 bpd. This is an area where the assistance of Kampac may serve. Kampac’s investments in storage facilities in South America and Africa peaked at $129 million. The investments consist of 600,000 metric cube lands and 300,000 metric cube of Floating Storage Units (FSU). Kampac is now investing in the Philippine oil industry as well as in the Amanah Islamic Bank.

Lotilla also said that the government would continue to pursue the idea of stockpiling oil, an issue that was taken up in the East Asia Summit. There is a plan to pursue the development of a 30 million barrel strategic stockpile program. Possible stockpiling sites include the Coastal Subic Bay Oil Terminal with about 500,000 to 600,000 barrels of idle storage capacity, which can be converted as oil stockpile. The other site is the Nonoc Terminal in Surigao. Undoubtedly the Philippines needs storage facilities for its oil and Kampac Oil is the right company for the job. As most of the investments required through Kampac would be coming from Islamic funds in the Middle East, the Amanah Islamic Bank becomes a vital link.

Kampac’s corporate mission is stated simply but in global terms. Thus, Kampac aims to build a global company that cuts across all boundaries. Kampac’ vision is likewise simple: To discover, manage and sustain profitability through exceptional customer satisfaction and progress to the very best in the industries the group represents.

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The shadow of the Philippine Amanah Bank

The shadow of

Philippine Amanah Bank

By Abdel Aziz Dimapunong (Abdel Azish Dimapunung)

Founding Chairman, Amanah Islamic Bank

This article and its sequel are written in response to comments on my previous articles and new inquiries about the relationship of the Philippine Amanah Bank and the Amanah Islamic Bank, more particularly on their respective shares of stocks.

It is totally wrong to say that the Amanah Islamic Bank is the former Philippine Amanah Bank. It is wrong to write Amanah Islamic Bank (formerly Philippine Amanah Bank)

This article in two series will attempt to explain that the Amanah Islamic Bank is not the former Philippine Amanah Bank. I will support the explanation with legal provisions of law, legal jurisprudence, accounting and auditing data.

The shadow of the abolished Philippine Amanah Bank still lingers because there is still the confusion and wrong presumption that the Amanah Islamic Bank is the former Philippine Amanah Bank. This error is perpetuated by new government officers of the so-called Privatization and Management Office, successor of the Asset Privatization Trust, who are still trying to sell the dead shares of the Philippine Amanah Bank in the name of the new Amanah Islamic Bank. For this reason, there is a need to get back to the charter of the old Philippine Amanah Bank.

It was during the oil phenomenon in 1973 that the Martial Law government of Ferdinand Marcos established by decree the Philippine Amanah Bank with all its pretension as a Muslim bank if not strictly an Islamic bank. However, this was only for a show to the Muslim world. The truth was this bank was never a truly Islamic bank.

On the background of the establishment of the Philippine Amanah Bank, I have previously written and posted on this site: Tamano and Islamic Banking. Please visit my blog on this title.

http://dimapunong.sulekha.com/blog/post/2007/03/senator-tamano-and-islamic-banking.htm

In August of 1974, Marcos amended PD 264 by issuing PD 542.

To the Muslims in the Philippines, it was very pleasing to read the following preamble to the amendment, thus

“WHEREAS, in order to render more effective the foregoing intentions and objectives of this Decree, it is necessary that the religious beliefs and practices of the Muslim citizens of the Philippines, be followed and respected, unless otherwise it is contrary to law, good morals and public policy.

Section 1 of the amendment was also very pleasing to read, thus:

The Philippine Amanah Bank shall be based on the Islamic Concept of Banking, following the no-interest and partnership principles.”

Despite of the amendment, however, from day one of its operation in 1973 until it was abolished in February 1990; it was paying and charging interest in violation of Islamic banking principle. It was also never owned by Muslims except for nominal few private stockholders.

Capitalized at a meager amount of only P50 million (about USD 1.3 million) in 1973, the PAB was finally insolvent at end of year 1993.

There is not a sensible and meaningful financial analysis about the performance of the abolished Philippine Amanah Bank. There was also nothing in it that the Muslims of the Philippines can be proud of. It was a total failure. It was a total disappointment.

To some Muslim scholars in the Philippines, the operation of the defunct PAB from 1974 up to 1992 under the supervision of the government financial institutions (the Philippine National Bank and later the Development Bank of the Philippines) was meant to degrade and embarrass the Muslim professionals.

Below are a copy of PD 264 that created the Philippine Amanah Bank and a copy of its amendment, PD 542. Presidential Decree 264 as amended is already non-existing as it was repealed entirely by Republic Act No. 6848. I have made some important notations in relations to the Al Amanah Islamic Investment Bank of the Philippines (Islamic Bank)

PRESIDENTIAL DECREE NO 264

(Repealed entirely by R.A. 6848)

AN ACT CREATING A PHILIPPINE AMANAH BANK

WHEREAS, it is a declared policy of the Government to promote and accelerate the socio-economic growth and development of Mindanao, particularly, the economically depressed provinces of Cotabato, Lanao del Sur, Lanao del Norte, Zamboanga del Sur, Zamboanga del Norte, and Sulu;

WHEREAS, surveys and studies indicate a pressing need to expand the banking and credit system in the region to make it more responsive to the investment and credit requirements of this development program;

WHEREAS, it is further recognize that, ultimately, sustained economic development will rely heavily on the capabilities of the people in the region to generate investments through institutional savings;

NOW, THEREFORE, I , FERDINAND MARCOS, President of the Philippines, by virtue of the powers in me vested by the Constitution as Commander-in-Chief of all the Armed Forces of the Philippines, pursuant to Proclamation No. 1081, dated 21 September 1972, as amended, by Proclamation No. 1104, dated 17 January 1973 and General Order No. 1, dated 22 September 1972, as amended, and in order to effect the desired changes and reforms in the social, economic and political structure of the society, do hereby and decree the creation of a Philippine Amanah Bank;

ESTABLISHMENT AND FUNCTIONS

SECTION 1. Purposes, Name and Domicile. – To provide credit, commercial, development and savings banking facilities at reasonable terms to the people of the preliminary Muslim provinces of Mindanao, principally, the provinces of Cotabato, South Cotabato, Lanao del Sur, Lanao del Norte, Sulu, Basilan, Zamboanga del Sur, Zamboanga del Norte and Palawan for the establishment, acquisition, development and expansion of agricultural, commercial and industrial enterprises, there is hereby created a body corporate to be known as the Philippine Amanah Bank, which shall have its principal place of business at Marawi City and shall exist for fifty years.

SEC. 2. Corporate Power.- The Philippine Amanah Bank shall have the power:

(a) to prescribe its by-laws;

(b) to adopt, alter, and use a corporate seal;

(c) to make contracts, to sue and be sued;

(d) to accept savings and time deposits, and open current or checking accounts;

(e) to borrow money; to own real or personal property and to sell, mortgage or otherwise dispose of the same;

(f) to employ such officers and personnel, preferably from the Muslim population in Mindanao and Palawan as may be necessary to carry on its business;

(g) to establish such branches and agencies in the dominantly Muslim provinces in Mindanao and Palawan and such correspondent Offices in other areas as may be necessary for the proper conduct of its business;

(h) to grant loans for the establishment, acquisition, development and expansion of any agricultural, commercial and/or industrial enterprise, including public utilities, mining, livestock and poultry and fishing, whether offshore or inland;

(I) to invest in equities of allied undertakings as pertinent laws and the Central Bank shall authorize;

(j) to carry on trust business in accordance with the provisions of law governing trust corporations;

(k) to issue bonds, debentures, securities, collaterals and/or refinancing of the same, with the approval of the Central Bank, to be used by the Bank in its lending operations for industrial and agricultural projects that will promote the economic development of the region;

(l) to exercise powers granted under this charter and such incidental powers as may be necessary to carry on its business, and to exercise further the general powers mentioned in the Corporation Law and the General Banking Act, as amended in so far as they are not inconsistent or incompatible with the provisions of this charter.

SEC. 3 Authorized Capital Stock-Par Value. – The authorized capital stock of the Amanah Bank shall be one hundred million pesos divided into one million par value shares of one hundred pesos each. The shares shall be divided into four classes, denominated as Series “A”, Series “B”, Series “C”, and Series “D”.

(a) series “A” shall comprise thirty million pesos equivalent to three hundred thousand common shares [emphasis supplied] to be subscribed by the Government of the Republic of the Philippines;

(b) series “B” shall comprise twenty million pesos equivalent to two hundred thousand preferred shares [emphasis supplied] which shall be subscribed by the Government of the Republic of the Philippines, its agencies or instrumentalities, such shares to be entitled to cumulative dividends of three percent per annum and with preference as against common stockholders in The distribution of assets in the event of liquidation;

(c) series “C” shall comprise thirty million pesos equivalent to three hundred thousand common shares [emphasis supplied] to be subscribed solely by the citizens of the Philippines and domestic corporations and entities, seventy per centum of the equity of which is owned by citizens of the Philippines. Preference in the subscription of this class of shares shall be given to residents of the provinces and cities served or to be served by the Bank;

(d) series “D” shall comprise twenty million pesos equivalent to two hundred thousand common shares which shall be available for subscription of foreign nationals, their corporations and/or associations.

………………….

Comments.

Note 1. The government shares were as follows:

Common Shares

National Government Series A P30,000,000

Preferred Shares

Financial Institutions Series B`

Dev. Bank of Philippines P5,000,000

Social Security System P5,000,000

Gov’t. Service Insurance System P5,000,000

Philippine National Bank P5, 000,000

Total Preferred Shares P20, 000,000

Note 2. Only common shares were carried in 1990 by Republic Act 6848 (1990) to the new Islamic Bank. Preferred shares were transferred in 1986 to Asset Privatization Trust (APT), now the Privatization Management Office (PMO)

———

SEC. 4 Loans and investments authorized. – Said Amanah Bank is hereby authorized:

(a) to purchase or discount promissory notes, drafts and bills of exchange issued or drawn for agricultural, commercial or industrial purposes, with securities required by the Bank, or the proceeds of which have been used or are to be used for such purpose;

(b) to grant loans on or to discount notes secured buy harvested and stored crops: That no loans on the security of such harvest and stored crops shall exceed eighty percent (80%) of the market value thereof on the date of the loan; Provided, further; that the crops so mortgaged shall be insured by the mortgagor for the benefit of the Amanah Bank for their entire market value: and Provided, finally, That if, owing to circumstance whatever, the value of the crops given as security shall diminish, the mortgagor shall obligate himself to furnish further security or refund such part of the loan as the Bank may deem necessary. Such loans shall be granted for a period of not to exceed one year, subject to extension in discretion of the Bank;

(c) to grant loans to agriculturists, on installments, for standing crops considered natural products of the Philippines such as rise, copra, sugar, tobacco, corn, etc. not exceeding seventy percent (70%) of the estimated value of such crops; Provided, however, That before granting such loans, the Amanah Bank may impose as a condition that cultivation be under supervision and/or require additional security in the nature of mortgages on real estate duly registered in the name of the debtor, or chattel mortgage, including those upon livestock, machinery and agricultural implements, or personal bonds with sufficient surety or sureties, satisfactory to the Bank;

(d) to grant loans to the several provincial, city and municipality governments and to any other branch or subdivision of the Republic of the Philippines on promissory notes guaranteed by the National Governments, as shown by the endorsement thereon of the Secretary of Finance, approved by the President of the Philippines or to purchase bonds lawfully issued by such provincial, city and municipality governments and any other branches or subdivision of the Government of the Philippines;

(e) to grant loans to cooperative associations against the security of acceptable assets of the cooperative association and /or the individual members thereof;

(f) to grant loans to small farmers, merchants and traders against the security of lands without Torrents title, where the owner of private property can show five years or more of peaceful, continuous and uninterrupted possession in the concept of the owner; or of portions of friar land estates or other lands administered by the Bureau of Lands that are covered by sales contracts and the purchasers have paid at least five years installment thereon, without the necessity of prior approval and consent of Land Authority or corresponding governmental agency; or of homesteads or free patent lands pending the issuance of titles but already approved, the provisions of any law or regulations to the contrary notwithstanding; Provided, That when the corresponding titles are issued the same shall be delivered to the register of deeds of the province where such lands are situated for the annotation of the encumbrance; Provided, further, That in the case of lands pending homestead or free patent titles, copies of notices for the presentation of the final proof shall also be furnished the Bank and, if the borrowers applicants fail to present the final proof within thirty days from date of notice, the Bank may do so for, them at their expense; Provided, finally, That the applicant for homestead or free patent has already made improvements on the land and the loan applied for is to be used for further development of the same or for other productive economic activities;

(g) to grant loans to the employees of the government service or in private industry to acquire stocks in corporations or industries in an amount not exceeding one month’s salary for every year of service against the security of the undertaking of the employee with notice upon the employer for the repayment thereof by monthly payroll deductions within a period of five years;

(1) the said government financial institutions are convinced that the resources of the Amanah Bank are inadequate to meet the legitimate credit requirements of the locality wherein the Bank is established;

(2) there is dearth of private capital in the said locality;

(3) it is not possible for the private stockholders to increase the paid-up capital thereof.

(I) the Bank with the approval of the Monetary Board may rediscount paper with the Central Bank, the Philippine National Bank or other Banks and their branches or agencies and their nature of papers deemed acceptable for rediscounting the rate to be charged by any such institutions.

(j) generally, to make advances or discount paper for agricultural, manufacturing, industrial, or commercial purposes: Provided, That seventy-five percent of the loanable funds of the Bank shall be invested in medium and long-term loans for economic development purposes and in no case shall the Bank invest more than twenty five percent of its loanable funds in short term loans for miscellaneous purposes provided however, that twenty five percent (25%) of the loanable funds for short term loans for miscellaneous purposes provided however, that twenty five percent (25%) of the loanable funds for short term loans maybe loaned on securities other than real estate mortgage.

SEC. 5 Lending Limits. – Said Amanah Bank shall observe the following limits in its lending operations:

(a) the total liabilities of any person, company, corporation or firm, excluding loans or credits prescribed by law or by the Monetary Board as non-risk assets, shall at no time exceed fifteen per cent (15%) of the unimpaired capital and surplus of the Bank.

The total liabilities of any borrower may amount to a further fifteen percent (15%) of the unimpaired capital and surplus of the Bank provided that the additional liabilities are adequately secured by shipping documents, warehouse receipts or other similar documents transferring or securing title covering readily marketable, non-perishable staples must be fully covered by insurance, and must have a market value equal to at least one hundred and twenty five percent
(125%) of such additional liabilities.

The term liabilities as used herein shall mean the direct liability of the maker or the acceptor of paper discounted with or sold to the Bank and liability of the endorser, drawer or guarantor who obtains a loan from or discounts paper with or sells paper under the guaranty to the Bank and shall include in the case of the liabilities of a co-partnership or association the liabilities of several members thereof and shall include in the case of the liabilities of a corporation all liabilities of all subsidiaries thereof in which such corporation owns or controls a majority interest. But the discount of bills of exchange drawn in good faith against actually existing values, and the discount of commercial or business paper actually owned by the person negotiating the same, shall not be considered as money borrowed, for the purpose of this section.

Loan accommodations granted by Amanah Bank to any other bank licensed to do business in the Philippines shall be subject to the loan limit to any other borrower as herein prescribed.

(b) no director or officer of the bank shall, either directly or indirectly, for himself or as the representative or agent of others, borrow any deposits or funds of the Bank, nor shall he be a guarantor, endorser, or surety for loans from the bank to others, or in any manner to be an obligor for money borrowed from the Bank or loaned by it, except with a written approval of the majority of the directors of the Bank, excluding the director concerned. The credit accommodation to such director or officer of this Bank which the Board of Directors may authorize shall in no case exceed his outstanding deposits or the book value of his paid-in capital in the Bank. Any such approval entered upon the records of the Bank and a copy of such entry shall transmitted forthwith to the appropriate supervising department of the Central Bank of the Philippines. The office of any of the director or officer of the Bank who violates the provisions of this section shall immediately become vacant and the director or officer shall be subject to criminal prosecution and suffer the penalties provided by law.

(c) the outstanding credit accommodation which the Bank may extend to stockholders, other than the government of the Republic of the Philippines, its agencies and instrumentalities, owing more than two per cent (2%) or more of the subscribed capital stock of the Bank, shall be limited to an amount equivalent to their outstanding deposits and book value of their paid-in capital contribution in the Bank.

SEC. 6 Board of Directors. – The affairs and business of the Amanah Bank shall be directed and its property managed and preserved unless otherwise provided in this act, by a Board of Directors consisting of nine (9) members duly elected as herein provided, who shall in each session of the Board attended by them, be paid a per diem in such amount as the Board of Directors may fix.

SEC. 7 Elections of Board of Directors.- Annually on the first Monday of March, the stockholders shall meet to elect the members of the Board of Directors for the current year, each stockholder or proxy to be entitled to as many votes as he may have shares of stock, registered in his name on the fifteenth of February last preceding and held by him at the time of the election. Immediately after the election, the directorate shall organize as such and elect from amongst themselves a chairman, a vice-chairman who shall assist the chairman and act in his stead in case of absence or incapacity of the chairman. In case of incapacity of both, the chairman and/or vice-chairman of the Board of Directors shall designate a temporary chairman from among its members: Provided, That no director, shareholder or employee of any other bank shall eligible as member of the Board of Director: Provided, further, That no full-time appointive or elective public official shall at the same time serve as officer, director, legal counsel or consultant of the Bank except in cases where such service is in the exercise of the stockholders rights of the government or is incident to financial assistance provided by the government, its agencies or instrumentalities to the Bank.

SEC. 8. The Board of Directors shall, among other duties, powers, and authority:

(a) formulate policies necessary to carry out effectively the provisions of this Charter and adopt such by-laws, rules and regulations for the effective operation of the Bank, in conformity with this Act and existing laws; and

(b) establish, upon previous authority of the Central Bank, branches, agencies or offices in other countries and at such points within the Philippines, as it may deem advisable, which shall perform functions as may be delegated to them by the Board of Directors.

The Amanah Bank shall have the following officers: a president, or one or more vice-presidents, a secretary, a treasurer, an auditor and a legal counsel who shall be chosen by the Board of Directors, their tenure of office and compensation shall be determined by the Board of Directors. In making these appointments, preference shall be given to members of the cultural minorities.

SEC. 10. Duties and powers of the President. – The President of the Bank shall, among others, execute and administer the policies, measures, orders and resolutions approved by the Board of Directors and direct and supervise the operation and administration of the Bank.

(a) to male loans on commercial paper for periods of time not to exceed four months in sums not exceeding fifty thousand pesos to any one person, company, corporation or firm, but he is required to submit a report on each such loan to the Board of Directors at its next succeeding session.

(b) to make, with the advise and consent of the Board of Directors, all contracts on behalf of the Bank and to enter into all necessary obligations by this charter required or permitted.

(c) to report weekly to the Board of Directors and main facts concerning the operations of the bank during the preceding week and to suggest changes in the rates of discount, exchange, or of policy which may to him seem best.

SEC. 11. Other Officers and Employees. – All other officers and employees of the Bank shall be appointed and removed by the Board of Directors, on recommendation of the President. In making appointments, members of the cultural minorities shall be given preference. Said officers and employees shall not subject to the Civil Service Law, and their duties and compensation shall be fixed by the President with the Approval of the Board of Directors.

SEC. 12. Fidelity Bond for Officers and Employees.- The Board of Directors may require the officers and employees of the Bank and its branches, before entering upon the performance of their duties, to furnish a fidelity bond for the benefit of the Bank, in the form and amount prescribed by the said Board of Directors.

SEC. 13. Project Development Office. – The Amanah Bank shall have a Project Development Office which shall be responsible for the following:

(a) conduct periodic economic surveys and studies of the investment climate and opportunities in the Bank’s sphere of operations and identify the viable projects which may be sponsored by the people in the region;

(b) offer technical consultancy services and studies in the preparation of project studies and in meeting other technical credit requirements of the Bank, including the provision of management consultants rates to be determined by the Board of Directors to projects financially assisted by the Bank.

c) evaluate each project proposal for possible financing by the Bank.

SEC. 14 Auditing Office. – The Auditing Office of the Bank shall be headed by a representative of the Auditor General. All the other employees of the Office shall be appointed by the Directors of the Bank. The operating expenses, salaries and travel expenses of the employees of the Office shall be Payable by the Bank, and the Board of Directors shall make the necessary appropriations therefor. The representative of the Auditor General shall make a quarterly report on the condition of the Bank to the President of the Philippines through the Secretary of Finance, to the Auditor General and to the Board of Directors of the Bank. The report shall contain among others a statement of the resources and liabilities, including earnings and expenses, the amount of capital stock, dividends paid, surplus reserve, and undivided profits, as well as the losses, bad debts and suspended and overdue paper carried in the Bank’s assets as of the day in which the statements are complied.

MISCELLANEOUS PROVISIONS

SEC. 15. Government Shares,- The voting power of all stock of the Amanah Bank owned and controlled by the Republic of the Philippines shall be vested in the President of the Philippines, or in such person or persons as he may from time to time duly designate.

The stockholdings of the government in common or preferred shares with the Amanah Bank, or any part thereof, may be sold at par value at any time to citizens of the Philippines who are registered stockholders of the Amanah Bank in proportion to their respective holdings. They shall have a period of one year from the date of the offer to sell by the government within which to exercise this right. In the absence of such buyers, preference shall be given to Philippine citizens who are residents of the provinces by the Bank before the shares of stock may be publicly offered by listing in the stocks at any stock exchange.

All profits assigned as dividends to the share of the Government shall first be applied in payment to the unpaid subscriptions of the Government. Upon full payment of such subscriptions, the dividends shall thereafter be paid into the Treasury of the Philippines for the general funds thereof.

SEC. 16. Government Assistance on Documentation and Registration. – Any city or municipality judge in his capacity as notary public ex-officio, shall administer oath to or act upon the instruments of the Amanah Bank, its borrowers or mortgagors free from al charges, fees. and documentary stamp tax, collectible under existing laws, relative to any loan or transaction not exceeding five thousand pesos.

Any Register of Deeds shall accept from the Amanah Bank and its borrowers or mortgagors for registration free from all charges, fees, and documentary stamp collectible under existing laws, any instrument, whether voluntary or involuntary, relating to loans or transactions extended by the Bank in an amount not exceeding five-thousand pesos: Provided, however, that charges if any, shall only be collectible on the amount in excess of five thousand pesos; and that in instruments related to assignments of several mortgages consolidated in a single deed, charges or fees, if any, shall be levied only on the amount in excess of five thousand pesos of the consideration in the assignment of each mortgage.

SEC. 17. Prohibition. – No member of the Board of Directors, officers, attorney, agent or employee of the Bank shall in any manner, directly or indirectly participate in the deliberations upon the determination of any question affecting his personal interest, or the interests of any corporation, partnership, or association in which he is directly or indirectly interested. Any persons violating the provisions of this section shall be summarily removed from office.

No fee, commission, gift or charge of any kind shall be exacted, demanded or paid to any director, employee or agent of the Bank for obtaining loans from the Bank, and any director, officer, employee or agent of the Bank exacting, demanding or receiving any fee for services in obtaining a loan shall be summarily removed from office.

SEC 18. Supervision/Inspection by the Central Bank. – The Amanah Bank shall be subject to the examination and supervision of the Central Bank pursuant to applicable laws, and shall contribute to the Central Bank an annual fee to help defray the cost of maintaining the appropriate supervising department within the Central Bank in an amount to be determined by the Monetary Board but in no case to exceed one twentieth of one per cent (1/20 of 1%) of its total assets during the preceding year, as shown on its end-of-the month balance sheets, after deducting its cash on hand and amounts due banks, including the Central Bank.

SEC. 19. Confidential Information.- The Governor, Central Bank, officers of the Central Bank and other officials as may be designated by law or regulations of the Monetary Board to examine for the books for the Amanah Bank shall not reveal the results of any examination conducted by them to any person, government official, bureau or office other than the Monetary Board and the Board of Directors of the Amanah Bank. The reports and other papers relative to such information shall not be opened to the public except only for insofar as such publicity is necessary for the business of the Amanah Bank or is incidental to proceedings upon insolvency or persistent violation of law and regulations.

SEC. 20. Secrecy of Deposits.- All deposits of whatever nature with the Amanah Bank, including investments in bonds issued by the government of the Philippines, its political subdivisions and its instrumentalities, are hereby considered as of an absolutely confidential nature and may not be examined, inquired or looked into by any person, government official, bureau or office except upon written permission the depositor, or in any cases of impeachment, or upon order of a competent court in cases where the money deposited or invested is the subject matter of the litigation.

It shall be unlawful for any official or employee of the Amanah Bank to disclose to any person other than those mentioned above any information concerning said deposits.

SEC. 21. Repealing Clause.- Any law or part of law inconsistent with the provisions of this Charter is hereby repealed.

SEC. 22. This decree shall take effect immediately.

Done in City of Manila, this 2nd day of August, in the year of our Lord, nineteen hundred and seventy-three.

(Sgd.) FERDINAND E. MARCOS

President of the Philippines

By the President:

(Sgd.) ROBERTO V. REYES

Acting Executive Secretary

PRESIDENTIAL DECREE NO. 542

(Abolished by R.A. 6848)

AMENDING PRESIDENTIAL DECREE NO. 264,

CREATING THE PHILIPPINE AMANAH BANK

WHEREAS, Presidential Decree No. 264, dated August 2, 1073 was designed and intended principally to rehabilitate, develop, expand and promote the socio-economic conditions of the economically depressed provinces of Mindanao, particularly in the Muslim Provinces of North Cotabato, Maguindanao, Sultan Kudarat, Lanao del Norte, Lanao del Sur, Sulu, Tawi-Tawi, Zamboanga del Norte, and Zamboanga del Sur, and to provide more opportunities and incentives to the Muslim citizens of the Philippines, in actively and sincerely participating and getting involved in community development and nation-building;

WHEREAS, in order to render more effective the foregoing intentions and objectives of this Decree, it is necessary that the religious beliefs and practices of the Muslim citizens of the Philippines, be followed and respected, unless otherwise it is contrary to law, good morals and public policy.

NOW, THEREFORE, I , FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the constitution, do hereby amend Presidential Decree No. 264, as follows:

SEC. 1 Section 1 of Presidential Decree No. 264, creating the Amanah Bank, is hereby amended as follows:

“SEC. 1. Purpose, Name, Domicile and Basis.- To provide

credit, commercial, development and savings banking facilities at reasonable terms to the people of the primarily Muslim provinces in Mindanao, principally, the provinces of North Cotabato, Maguindanao, Sultan Kudarat, Lanao del Sur, Lanao del Norte, Sulu, Basilan, Zamboanga del Norte, Zamboanga del Sur and Palawan for the establishment, acquisition, development and expansion of agricultural, commercial and industrial enterprises, there is hereby created a body corporate to be known as the Philippine Amanah Bank, which shall have its principal place of business at Zamboanga City and shall exist for fifty years.

The Philippine Amanah Bank shall be based on the Islamic Concept of Banking, following the no-interest and partnership principles.”

SEC. 2. The third paragraph of section 15 of the same decrees is hereby amended to read as follows:

“All profits assigned as dividends to the shares of the government, and all remaining net profits of the bank after the payment of dividends to stockholders other than the government of the Philippines, its agencies or instrumentalities, if there is any, shall be transmitted to the Muslim Development Fund of the Philippine Amanah Bank.”

SEC. 3. All laws, decrees, orders, rules regulations or thereof inconsistent with this Decree are hereby repealed or modified accordingly.

SEC. 4. This Decree shall take effect immediately.

Done in the City of Manila, this 20th day of August, in the year of our Lord, nineteen hundred and seventy four.

(Sgd.) FERDINAND E. MARCOS

President of the Philippines

By the President:

(Sgd.) ALEJANDRO MELCHOR

Executive Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

There is a saying in law:

Ignorantia juris non excusat or Ignorantia legis neminem excusat. This is Latin for ignorance of the law does not excuse any person who is not aware of a law. It is a public policy holding that a person who is unaware of a law may not escape liability for violating a law. It also means that persons are presumed to have knowledge of the law.

Philippine’s biofuels law

Philippine’s Biofuels law

By Abdel Aziz Dimapunong (Abdel Azish Dimapunung)

Chancellor, Islamic Banking Research Institute

 

The Philippine’s Biofuels Act of 2006 has been signed into law during the recently concluded Asean Summit that was held in the city of Cebu, Philippines. The law is now in effect after its required publication. With its effectivity, the Philippines is now committed by law to reduce dependence on imported fuels with due regard to the protection of public health, the environment, and natural ecosystems. Under Section 5 of the said law, it is now mandatory that all liquid fuels for motors and engines sold in the Philippines shall contain locally-sourced biofuels components. All diesel fuels in the local market shall contain at least one percent biodiesel. This will gradually increase as per the schedule under the law. When the requirement for biodiesel rises to 2 percent – all gasoline products will also have 5 percent bioethanol and the mixture will rise to 10 percent bioethanol by 2010. By this time, the local market for biofuels could reach about US$420 million. This is a captive market considering that it is mandatory under the law.

The Philippines imported 91.471 million barrels of crude oil last 2003 and 37.04 million of oil products. The country’s oil import bill last 2005 amounts to US$ 4.1 billion. According to Index Mundi the oil imports of the Philippines in year 2003 were recorded at 312,000 bbl/day. By definition, this entry is the total oil imported in barrels per day (bbl/day), including both crude oil and oil products.

The country’s largest suppliers of crude oil had been Saudi Arabia, the United Arab Emirates and Iran. There is no denying that Iran today is on the spotlight. The question looms, what if the USA and Britain and their alliances invade Iran?

 

Presently, the country eyes Venezuela and Kuwait for oil imports. According to Energy Secretary Raphael Lotilla, the government is eyeing to get part of its oil requirements from other sources to help ensure a stable supply (that could be the answer to the uncertainties in Iran).

The country wants to diversify sources of crude supply but it has to do this in cooperation with the refiners in the country. Government is not into refining so that imports of crude oil have to be in tandem with the schedule of refiners. The country has two refineries: one is being run by Petron Corp. in Bataan with a capacity of 180,000 barrels per day and the other one is in Batangas which is run by Pilipinas Shell Petroleum Corp. with a capacity of 110,000 bpd. Lotilla also said that the government will continue to pursue the idea of stockpiling oil, an issue that was taken up in the East Asia Summit. There is a plan to pursue the development of a 30 million barrel strategic stockpile program. Possible stockpiling sites include the Coastal Subic Bay Oil Terminal with about 500,000 to 600,000 barrels of idle storage capacity which can be converted as oil stockpile. The other site is the Nonoc Terminal in Surigao.

On the renewable energy, it is expected that biofuels will be used not only in the Philippines but in all of Asia. The big markets, China and Japan are also pushing for the promotion of biofuels. These are the two big markets for renewable energy. During the recently concluded East Asia Summit early last month the Cebu Declaration of East Asian Energy Security was signed. It calls for the adoption of measures to improve energy efficiency and reduce dependence on fossil fuels. The Declaration was signed by the leaders of the 10 member Asean, Australia, China, India, Japan, New Zealand and South Korea. The Declaration urges member countries to expand the development of biofuels and other sources of alternative energy. Japan need not be urged. It is on top of biofuels interest. In the last Summit, Japan unveiled its US$ 2 billion package to assist Asian nations develops energy saving technology and reduces the regions’ dependence on traditional fossil fuel. China likewise need not be exhorted. It is already ahead in financing five ethanol projects in the Philippines, including one that has a capacity of 150,000 liters of ethanol per day. It has already announced its involvement in the development of 40,000 hectares of land for ethanol, the produce of which will be exported to China.

According to a Press Release by one Grande M Dianaton, incumbent chairman of Amanah Islamic Bank, a Joint Venture Agreement has already been signed up by the bank with ERA Petroleum Company Limited of Hong Kong. The agreement covers investments to the Islamic Bank and forward sales of biofuels to China thru the ERA Petroleum Company. ERA Petroleum Company is represented by its president, Mr. Abdul Gaffoor Ashroff who happens to be former president of the Amanah Islamic Bank.

The joint venture agreement is now finalized under the name of Biodix Biodiesel J.V. Work is underway to register Biodix with appropriate government agencies in the Philippines.

 

The Islamic Bank has also an agreement with Pacific Development Company of Hong Kong for promotion of its biofuels in Japan. Furthermore the bank is also negotiating with a group of investors from the oil-rich Dubai. This negotiation is course through the Amanah Islamic Bank representative office in California, U.S.A. under the direction of one of the banks directors, Mr. Manuel Peyton Maliwanag.

Is the Philippines ready to supply 10 percent bioethanol in relation to all gasoline products by year 2010? To some businessmen, this is just a pipe dream. But to the Amanah Islamic Bank, this could be a reality. This is the issue that is being addressed by the Islamic Bank. According to Grande Dianaton, incumbent chairman, the Bank has been making the preparations for the last five years. The production of biofuels, both bioethanol and Biodiesel are basically within the sphere of agro-industrial technology. As an agriculturist, “that is my line” Dianaton said. He added: “In terms of availability of suitable agricultural land, the Islamic Bank and the Filipino Muslim Chamber of Agriculture had already signed a Memo Agreement for one million hectares. The chamber of Agriculture is an association of agricultural landowners in the Autonomous Region of Muslim Mindanao. Dianaton goes on to say: “About six hundred thousand hectares had already been surveyed by our project counterpart from California, USA. Our international marketing for a forward sales contract for biofuels had already been finalized with our counterpart in Hong Kong.”

Below is a copy of the Philippines Biofuels Act of 2006.

Biofuels Act of 2006

CONGRESS OF THE REPUBLIC OF THE PHILIPPINES
THIRTEENTH CONGRESS
Third Regular Session

AN ACT TO DIRECT THE USE OF BIOFUELS, ESTABLISHING FOR THIS PURPOSE THE BIOFUEL PROGRAM, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES

 

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:

 

SECTION 1. Short Title. – This Act shall be known as the “Biofuels Act of 2006.”

 

SEC. 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: a) develop and utilize indigenous renewable and sustainably-sourced clean energy sources to reduce dependence on imported oil; b) mitigate toxic and greenhouse gas (GHG) emissions; c) increase rural employment and income; and d) ensure the availability of alternative and renewable clean energy without any detriment to the natural ecosystem, biodiversity and food reserves of the country.

 

SEC. 3. Definition of Terms. As used in this Act, the following terms shall be taken to mean as follows: a) AFTA – shall refer to the ASEAN Free Trade Agreement initiated by the Association of Southeast Asian Nations; b) Alternative Fuel Vehicles – shall refer to vehicles that use alternative fuels such as biodiesel, bioethanol, natural gas, electricity, hydrogen and automotive LPG, instead of gasoline and diesel; 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; 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; h) DA – shall refer to the Department of Agriculture created under Executive Order No. 116, as amended; i) DOE– shall refer to the Department of Energy created under Republic Act No. 7638, as amended; j) DOLE – shall refer to the Department of Labor and Employment created under Executive Order No. 126, as amended; k) DENR – shall refer to the Department of Environment and Natural Resources created under Executive Order No. 192, as amended; l) Diesel – shall refer to refined petroleum distillate, which may contain small amount of hydrocarbon or non-hydrocarbon additives to improve ignition quality or other characteristics, suitable for compression ignition engine and other suitable types of engine with quality specifications in accordance with the PNS; 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 Communication created under Executive Order No. 125-A, 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 amount of additives, suitable for use as a fuel in spark-ignition internal combustion engine 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. z) WTO – shall refer to the World Trade Organization.

SEC. 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, methyl tertiary butyl ether (MTBE).

SEC. 5. Mandatory Use of Biofuels. – Pursuant to the above policy, it is hereby enacted that all liquid fuels for motors and engines sold in the Philippines shall contain locally-sourced biofuels components as follows:

5.1 Within two (2) 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 (4) 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 (10%) percent 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 In lieu of the effectivity of this Act, immediately within three (3) months upon the signing which shall be promulgated upon the approval of this Act of the IRR, 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 (2) years from effectivity of this Act, the NBB created under this Act is empowered to determine the feasibility and thereafter recommend to DOE to mandate a total of two percent (2%) blend of biodiesel by volume subject to domestic supply and availability of locally-sourced biodiesel component.

 

SEC. 6. Incentive Scheme. – To encourage investments in the production, distribution and use of locally-produced 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 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.

 

SEC. 7. Powers and Functions of the Department of Energy. -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 (3) 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

 

g) Conduct an information campaign to promote the use of biofuels.

SEC. 8. Creation of the National Biofuel Board (NBB). -The National Biofuel Board is hereby created. It shall be composed of the Secretary of the Department of Energy or his designated Undersecretary as Chairman and the Secretaries or the designated undersecretaries of the
Department of Trade and Industry (DTI), Department of Science and Technology (DOST), Department of Agriculture (DA), Department of Finance (DOF) and Department of Labor and Employment (DOLE), Philippine Coconut Authority (PCA), Sugar Regulatory Authority. The DOE Secretary or his designated Undersecretary, in his capacity as Chairperson, shall, within one (1) 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 or the Office of the Undersecretary of the DOE as the case maybe. 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.

 

SEC. 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 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

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.

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 (4) years from the effectivity of this Act. Thereafter, the minimum blends of five percent (5%) and one percent (1%) for bioethanol and biodiesel, respectively, shall not be decreased;

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.

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 National Biofuel Program, including its economic, technical, environment and social impact.

SEC. 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 minimum access volume parameters for sugar in the Tariff and Customs Code.

SEC. 11. Role of Government Agencies. – To ensure the effective implementation of the National Biofuel Program, concerned agencies shall perform the following functions:

a) The DOF shall monitor the production and importation of biofuels through the BIR and the BOC;

b) The DOST and the DA shall coordinate in identifying and developing viable feedstock for the production of 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.

d) The DA through its relevant agencies shall:

(1) Within three (3) 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 Sugar Regulatory
Administration (SRA) and the Philippine Coconut Authority, 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 Department of Agriculture 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;

(3) Publish information on available and suitable areas for cultivation
and production of such crops;

e) The Department of Labor and Employment shall:

a. Promote gainful livelihood opportunities and facilitate productive
employment through effective employment services and regulation;
b. Ensure the access of workers to productive resources and social
protection coverage; and

c. Recommend plans, policies and programs that will enhance the social
impact of the Philippines’ Biofuel Program.

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.

g) The Local Government Units (LGUs) shall assist the DOE in
monitoring the distribution, sale and use of biofuels and biofuel-blends.

 

SEC. 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; 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 the Act; c) Distribution, sale and use of automotive fuel containing harmful additives and/or oxygenates at such concentration exceeding the limits to be determined by the NBB; d) Non-compliance with the PNS related to biofuels and established guidelines of the DOE adopted for the implementation of this Act; and e) False labeling of gasoline, diesel, biofuels and biofuel-blended gasoline and diesel.

 

SEC. 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 (1) year to five (5) 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). 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 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. 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.

 

SEC. 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, the fund necessary to carry out the provisions of this Act shall be included in the annual General Appropriations Act.

 

SEC. 15. Implementing Rules and Regulations. – The DOE, in consultation with the NBB, the stakeholders and other agencies concerned, shall within three (3) months from the effectivity of this Act, promulgate the implementing rules and regulations of this Act: Provided, That prior to its effectivity, the draft of the implementing rules and regulations shall be posted at the DOE website for at least one (1) month, and shall be published in at least two (2) newspapers of general circulation.

 

SEC. 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 members, with the chairmen of the Committees on Energy of both Houses of Congress as co-chairmen of the oversight committee. The chairmen of the committees on Agriculture and Trade and Industry shall be ex-officio members. An additional four (4) 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 (1) representative in the Biofuels Oversight Committee.

 

SEC. 17. Benefits of Biofuel Workers. – This Act shall not in anyway 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.

 

SEC. 18. Special Clause. – This Act shall not be interpreted as prejudicial to clean development mechanism (CDM) projects that cause carbon dioxide (CO2) and greenhouse gases (GHG) emission reductions by means of biofuels use.

 

SEC. 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.

 

SEC. 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.

 

SEC. 21. Effectivity. – This Act shall take effect fifteen (15) days after its publication in at least two (2) newspapers of general circulation.

 

Mr. Diesel and the original biofuels

Mr. Diesel and the original biofuels.

By Abdel Aziz Dimapunong (Abdel Azish Dimapunung)

Biodix biodiesel consultant

There cannot be a complete discussion on biofuels and biodiesel without mention of Mr. Rudolph Diesel, the inventor of diesel engine and a biodiesel user and visionary.

And when we speak of blending one form of engine fuel like gasoline with another kind like ethanol, or fossil diesel with biodiesel, we have to learn from another inventor and pioneer of blending fuels, Mr. Fairbanks and his associate Mr. Morse.

Speaking of further development of the diesel engine, we can not overlook Ford, Cummins and Benz.

Looking back at these pioneering scientists and their remarkable inventions in our search for alternative renewable energy, we realize that we are actually going back to the 19^th century. We are not moving forward. History is just repeating itself after more than a century.

Mr. Rudolph Diesel (1858-1913)

The development of the diesel engine by Mr. Rudolph Diesel runs parallel with the use of biofuels. The diesel engine actually began using biofuels until it was replaced by fossil fuels. Now, therefore, we should not find it hard to get back to biodiesel as used by the inventor himself. As we look back to history, we find that it was global politics that relegated biofuels to the background. The story of Diesel and his diesel engine is the technical aspect of the history of biofuels.

Mr. Rudolph Diesel was born to the era of the steam engine. As a scientist, Rudolph Diesel developed a theory that revolutionized the engines of his day. Diesel invented the diesel engine that was named after him. This has been the perfect internal combustion engine in the sense that the fuel burns inside the chamber by air which is compressed to such a degree that there is an extreme rise in temperature. It does not need a lighter such as the spark plug. When fuel is injected into the piston at top dead center with the highly compressed air, the fuel is ignited by the air itself, firing the piston like a canon. Diesel designed his engine in response to the heavy resource consumption and inefficiency of the steam engine of his time. The steam engine was rated at only 12% efficiency.

On February 27, 1892, Diesel filed for a patent at the Imperial Patent Office in Germany. His application was granted for a Working Method and Design for Combustion Engine. With contracts from machine manufacturers, Diesel began building working models of his engine. In 1893, the first model ran under its own power and it was rated with 26% efficiency. This was remarkable because the rating was more than double the efficiency of the steam engines that were in use. Finally, in February of 1897, he ran the first diesel engine suitable for practical use, which operated at 75% efficiency.

In 1898, Rudolph Diesel demonstrated his engine at the Exhibition Fair in Paris. This engine stood as an example of Diesel’s vision because it was fueled by peanut oil – the original pure vegetable oil (PVO) which we now call biodiesel. He thought that the utilization of PVO was the real future of his engine. That is why when we start to use PVO again, we are actually following the visions of Mr. Diesel. He hoped that it would provide a way for the smaller industries and the farmers a means of competing with the monopolizing industries. Just like what we strive for today, Mr. Diesel look at his diesel invention as an alternative for the then existing fuel consumption. Our version of today’s alternative is to replace an existing fossil fuel with a renewable pure vegetable oil (PVO).

As a result of Diesel’s vision, compression ignited engines were powered by vegetable oil until the 1920’s. Today, as we try to get back to biodiesel, we are actually driving ourselves back to that era of discovery. We now wish to power our engines with biodiesel again. I should think we should call it rediscovery.

The early diesel engines were so heavy for many technical reasons. First, the cylinder of a diesel engine was naturally longer because piston displacement requires it in order to have more compression. Second, the diesel engine was heavy because of the size of the fuel injection pump. They were not really suitable for motor vehicles. Their market was for stationary use such as power for industrial and shipping in the early 1900’s. Ships and submarines benefited greatly from the efficiency of this new engine, which was slowly beginning to gain popularity.

Rudolph Diesel disappeared in 1913. There were controversies and some questions about his death. Some think it might have been accidental or even a suicide. That’s what I believed in. However, others considered a possible political motivation. Whether by accident, suicide or murder, the world had lost a brilliant scientist and biofuel visionary.

Thaddeus Fairbanks

The idea of blending gasoline with a certain percentage of another kind of fuel such as ethanol had actually been considered by the Thaddeus Fairbanks. Yet it now appears to be an innovation, some kind of a new technology.

Fairbanks, Morse & Company had its beginning in 1823 when inventor Thaddeus Fairbanks began his business in ironworks. Fairbanks was the leading manufacturer in the United States during his time. He was the best known in the whole world until he was overshadowed by the rise to popularity of Henry Ford.

Fairbanks and Morse began producing oil engines in the 1890s. We can say that Fairbanks was a contemporary of Mr. Diesel. While Diesel was working on diesel engines, Fairbanks was also working on kerosene engines. The Fairbanks and Morse gas engine was widely accepted by farmers. It was used mainly for irrigation and electricity generation. It was also used for oilfield work.

In summary, Fairbanks and Morse power plants evolved by burning kerosene in 1893, then to semi-diesel engines in 1913 and to full diesel engines in 1924.

Fairbanks and Morse Model Z engine

(Blending gasoline with kerosene)

In 1916 the company began production of the Model Z single cylinder engine in one, three and six horsepower sizes.

From 1916 to 1946, Fairbanks and Morse produced over half a million units of Model Z. That was a period of 30 years. In our estimate, about fifty thousand of these units found their way to the Philippine Islands. Most of the units were probably brought into the country by the United States army during World War II. More than a dozen of these units found their way in 1960 to our shed in Lanao Del Norte, Mindanao. My father collected them as a matter of hobby. We excavated most of them from where they were abandoned. Some of them were bought by my father “por kilo” a way of buying steel based on its weight. As I will explain later, this is the first engine that uses a blend of fuels.

After the expiration of Rudolph Diesel’s of license in America in 1912, Fairbanks entered the large engine business. As noted earlier, Mr. Diesel died in 1913. Fairbanks and Morse took over the development of the diesel engine. The company’s larger Model Y semi-diesel became a standard engine of its time. The model Y was available in sizes from one through six cylinders.

The Y-VA Fairbanks engine was the first high compression using full diesel. This machine was developed in Beloit and introduced in 1924.

Fairbanks and Morse continued to build diesel and gas engines. Export offices were established in Rio de Janero and Buenos Aires. The model Z engines were built into the 1970s in Mexico. An Australian branch factory, similar to the Canadian Branch operation, was also opened. Many Fairbanks engines dutifully served into the late twentieth century,

Henry Ford into diesel

As noted earlier, Fairbanks was the best known in the whole world until the rise of Henry Ford in the car industry. But this popularity had to do with the idea of the assembly line of production. And it had to do with the popularly known Ford Model T. Early American Ford automobiles were not diesel driven, but they were powered by ethanol. Yes, this is the ethanol that we are now considering for rediscovery. This is the ethanol that is provided for in the Philippines Biofuel of 2000.

Henry Ford shared a similar vision with Rudolph Diesel. He believed that pure vegetable oil should the fuel of the transportation industry. In a partnership with Standard Oil, he helped developed the biofuel industry. But ethanol disappeared from the scene as a result of the development of the petroleum industry.

Cummins, a diesel engine mechanic inventor

It was Clessie L Cummins, a mechanic-inventor who actually worked on the design problems of the diesel engine. The problems of diesel engine at that time had to do with the size and weight. There was also the issue on the instability created by its fuel system. In 1919, Cummins developed a single disk system that measured the fuel injected. Like the other early engines, Cummins’ products were stationary engines and his main market was the marine industry.

It was also during the 1920’s that diesel engine manufacturers created a major challenge for the biofuel industry. Diesel engines were altered to utilize the lower viscosity of the fossil fuel residue rather than a biomass based fuel. The petroleum industries were growing and establishing themselves during this period. Their business tactics and the wealth that many of these oil tycoons already possessed greatly influenced the development of all engines and machinery.

It was in the 1920s that the alteration to the original engines was first introduced as a step in the elimination of the production structure for purely vegetable oils. It was also a step in forcing the concept of biomass as a potential fuel base into obscurity, erasing the possibilities from the public awareness.

In 1929, the Stock Market crashed. This brought the threat of bankruptcy to Cummins. In an innovative move, however, he installed a diesel engine in a limousine and took his backer, Irwin, for a ride, assuring further investment. Cummins continued to experiment with the diesel motor vehicles.

In 1931, Cummins set a speed record and distance record by driving a truck with a Cummins diesel engine coast to coast in the United States. With this distance, Cummins established an endurance record of 13,535 miles at Indianapolis Speedway. Cummins’ diesel engines were then established and trucks as well as other fleets began using them. Over the years, Cummins has continued to improve the efficiency of the diesel engine, providing technological innovations. Their engines have set a high standard for the industry.

The Mercedes Benz diesel engines.

The 1920’s brought a new injection pump design, allowing the metering of fuel as it entered the engine without the need of pressurized air and its accompanying tank. The engine was now small enough to be mobile and utilized in vehicles. In 1936, Mercedes Benz built the first automobile with a diesel engine. These were dependable, enduring automobiles that lasted well into the second half of the 20^th century.

The oil crisis

The 1970’s arrived and the riding public, who were firmly dependent on foreign oil, yet, unaware of the depth of their dependence, were suddenly faced with a crisis.

In 1973, OPEC, the Middle Eastern organization controlling the majority of the world’s oil, reduced the supply of oil and raised the price, sending the United States and other countries into a crisis. Long lines at pump stations started to appear. I was among them. I remember the gas ration system. This crisis was recreated in 1978. Long lines became more longer at the gas pumps. People panicked as they realized that they depended on the consistent supply of oil – foreign oil. Conservation and alternatives became important.

Because of the oil crisis, the riding public looked to diesel fuel which was more efficient and economical and they began buying diesel-powered automobiles. These automobiles include the Mercedes Benz, Isuzu Volkswagen, plus a good portion of Audi, Volvo and Datsun during the 1970’s. For the first time, American manufacturers began producing automobiles with diesel engines. General Motors made and sold diesel automobiles in the late 1970’s, accounting for 60% of all diesel sales in the United States. This surge of diesel only started to decline in the 1980’s when the price of oil had been re-stabilized. Along with this, the automobiles produced by General Motors were basically converted gasoline engines.

No war for oil

As we entered the 21st Century, we had become conscious of and focus on our environment, clean air, the greenhouse effect, and pollution. It has become fashionable to speak of alternative energy, renewable energy, bioethanol, biodiesel, and many kinds of biofuels. Laws were passed in many countries. Nations discussed oil supply and the reduction of dependence on fossil fuel.

Then came the Iraq War. On March 20, 2003, the United States and it allies invaded Iraq. There was debate on the reason why was erupted. Was it because of the so-called Weapons of Mass Destruction? Was it because of oil? Looking forward to the future, our dependency on foreign oil and its rising prices as well as probable instability due to conflicts that could lead to more wars will drive us to explore alternatives with more open minds.

 

Biodiesel at PHIVIDEC ?

 

Biodiesel at PHIVIDEC?

By Abdel Aziz Dimapunong

(Abdel Azizh Dimapunung)

Biodix biodiesel consultant

I had been asked last month to locate for an industrial site for ERA’s Biodix in the Philippines. Biodix is a brand of biodiesel products that will be produced from pure vegetable oil (PVO). It also refers to a joint venture between ERA Petroleum and the Amanah Islamic Bank that is pushing for biodiesel production using a specific technology and a dispersed strategic production and processing. I understand that Biodix has also a European component that employs biodiesel technology. The group has developed an innovative process technique with which biodiesel easily can be made out of PVOs such as coconut and palm oils.

With the group’s technology biodiesel can be used as a 100% substitute for mineral fuel. That is internationally known as B-100. It can also be blended in any ratio with fossil diesel in all diesel engines, without hardly any adjustments to the fuel system.

Biodix can come up to the expectation of the Philippine government as enunciated under the Biofuels Act of 2000. Under Section 3 of this law are the following definitions, among others that relate to Philippine National Standards on biofuels.

– 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);

– 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;

– Diesel shall refer to refined petroleum distillate, which may contain small amount of hydrocarbon or non-hydrocarbon additives to improve ignition quality or other characteristics, suitable for compression ignition engine and other suitable types of engine with quality specifications in accordance with the PNS;

– Feedstock shall refer to organic sources such as molasses, sugarcane, cassava, coconut, jatropha, sweet sorghum or other biomass used in the production of biofuels;

– 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;

– Oil Company shall refer to any entity that distributes and sells petroleum fuel products;

– 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”;

– 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.

The Philippine’s Biofuels Act of 2006 has been signed into law during the recently concluded Asean Summit that was held in the city of Cebu, Philippines. The law is now in effect. With this law, the Philippines is now committed to reduce dependence on imported fuels. Under Section 5, it is now mandatory that all liquid fuels for motors and engines sold in the Philippines shall contain locally-sourced biofuels components. All diesel fuels in the local market shall contain at least one percent biodiesel. This will gradually increase as per the schedule under the law. By 2010, the local market for biofuels could reach about US$420 million.

The Philippines imported 91.471 million barrels of crude oil last 2003 and 37.04 million of oil products. The country’s oil import bill last 2005 amounts to US$ 4.1 billion. According to Index Mundi the oil imports of the Philippines in year 2003 were recorded at 312,000 bbl/day. The target of the Biofuels Act is to replace these oil imports in Toto at a certain point in time.

Last January 14, 2007, the Asian and Pacific leaders also signed in Cebu City, Philippines an agreement to promote the use of biofuels. The Cebu Declaration on East Asian Energy Security was signed by leaders from Southeast Asia, Australia, New Zealand, India, Japan, China and South Korea after a three-hour summit in Cebu. The agreement aims for reliable, adequate and affordable alternative energy. The declaration calls for improved energy efficiency that will reduce dependence on traditional fossil fuels. It is urging countries to expand renewable energy systems and biofuel production.

On the Biofuels Act of 2006, the salient features are (1) the mandatory use of biofuels under Section 5, and (2) the provisions of a number of incentives under Section 6.

Under its mandatory provisions, all liquid fuels for motors and engines sold in the Philippines shall contain locally-sourced biofuels components in accordance with a schedule under Section 6. The incentives also include exemption from specific tax on local or imported biofuels component. On financing, the Biofuels Act also provides that government financial institutions shall accord high priority to extend financing to Filipino citizens or entities that shall engage in activities involving production, storage, handling and transport of biofuel and biofuel feedstock.

The Musfil Chamber of Agriculture

In the production of biofuels, the Philippines envisions to use renewable raw materials from the agricultural sector such as but not limited to, coconut, jatropha, sugarcane, cassava, corn, and sweet sorghum. Under the Ten Point Agenda of the Macapagal Arroyo administration, the development of 2 million hectares of agricultural land has been given emphasis. It is on this matter that the Musfil Chamber of Agriculture and Fisheries, Inc. comes into the picture of Biodix. According to the Chairman of the Chamber, Mr. Muamar Badio, it is only their chamber that can readily provide such a wide tract of land from the private sector. “The members of the Chamber can easily produce that much from the Autonomous Region in Muslim Mindanao”, he said.

In accordance with the primary purposes of the Chamber of Agriculture as stated in its registered Articles of Incorporation, the chamber has already organized a landholding estate of 1 million hectares of which it now holds Land Titles, under various “Trust Instruments”, constituting of some 500,000 hectares.

The Muslim Filipino Chamber of Agriculture and Fisheries, Inc., the MUSFIL Chamber for short, is a non-governmental organization duly organized and registered with the Securities and Exchange Commission in the Philippines on March 22, 1988 with registration no. 149706.

When it was organized, the Chamber was initially composed of few farmers and landowners headed by Datu Muamar Badio and Solaiman Malambut of Lanao Del Sur. Soon the membership expanded to the provinces of Lanao Del Norte, Maguindanao and Cotabato. By 1990 membership to the chamber counted more than a hundred. In 1995, the chamber expanded its member qualifications to include not only individuals but institutions such as duly organized cooperatives and foundations. By the year 2000, the Chamber counted members from civic groups, cooperatives, associations, foundations and private voluntary organizations.

The members who actually hold land titles that are transferred to or managed by the Chamber of Agriculture under Trust Instruments have now reached five thousand. The areas of landholdings of the Chamber, in the name and on behalf of the members, have now reached 500,000 hectares. That is an average of 100 hectares per individual/cooperative members. The Chamber now focuses its development in the areas of renewable energy, more particularly biofuels from biodiesel.

PHIVIDEC

About my recommendation for the location, I did not think twice. I have submitted last month our recommendation for PHIVIDEC Industrial Authority as the site for Biodix facilities. When Ashroff Gaffoor, President of ERA Petroleum, called me last week, I was told that my earlier recommendation for PIA was accepted by their Board of Directors.

My engagement with ERA Petroleum gives me the opportunity to revisit the PHIVIDEC Industrial Estate. It was an opportunity for me to go and stroll down memory lane. In my younger days as a junior executive, I was connected as an officer of the PHIVIDEC group which used to be composed of many corporate entities under the umbrella of the Philippine Veterans Investments Development Corporation. It was in this mother company where I was appointed back in 1980 as Manager and Assistant Vice President, Loans and Investments. I left PHIVIDEC in 1983 when I went abroad for a greener pasture.

The Phividec group in our days was composed of high caliber personalities (don’t count me in). To name just a few, our vice chairman then was a general by the name of Fidel V. Ramos. Years later General Fidel V. Ramos became the President of the Republic of the Philippines. Our legal counsel was ACCRA Law Office, composing of lawyers Angara, Abello, Conception, Regala and Cruz. Representing ACCRA who frequents PHIVIDEC was simply known then as Atty. Edgardo Angara. Years later, he became President of the University of the Philippines, and later twice Senator of the Philippines. Our president then was known to his peers in PHIVIDEC as “the man in a hurry”, Mr. Jorge Salazar. He has become a successful entrepreneur. About me as then manager and assistant vice president for loans and investments; well I became more of me.

PHIVIDEC was organized under Presidential Decree No. 243, as amended by P.D. Nos. 353 and 918 on December 26, 1973 in line with the Philippine Government’s objective of effecting the desired changes and reforms in the social economic structures of Philippine society through the full utilization of the productive capacities of veterans and retirees of the Armed Forces of the Philippines. Under the law, PHIVIDEC is exempt from payments of any and all taxes, duties, charges, fees and assessment of whatever nature and description imposed by any authority, whether national or local.

The PHIVIDEC Industrial Authority (PIA) was among the many subsidiaries of the Philippine veterans Investments and Development Corporation. The others were the Veterans Electronics Communications Inc. and PHIVIDEC Electronic Components and the PHIVIDEV Construction and Development Corporation.

As for the PHIVIDEC Industrial Authority, it has been 33 years since its inception. It was created by Presidential Decree No. 538 on August 13, 1974, making it a subsidiary agency of PHIVIDEC. PIA is a government corporation vested with special powers to establish, develop, administer and operate industrial areas and the ports and utilities inside such areas. The objective has been aimed at faster development in Northern Mindanao and to pursue the Government’s policy to disperse industries.

The Phividec Industrial Authority (PIA) is fully-owned and controlled by the Government of the Republic of the Philippines. In 1985, Executive Order No. 1031 provided for the constitution of a PIA Board of Directors separate and independent from the PHIVIDEC.

As mandated by its Charter, PD 538, the PIA identifies and develops sites in the country as prospective industrial areas. The PIA equips these areas with the necessary infrastructures to encourage the inflow of domestic and foreign investments. The PIA is empowered to assess and collect real property taxes and port fees; collect lease rentals; issue permits and licenses.

 

In 1994, the Philippines Government designated the PIE-MO as the showcase of its industrial flagship program in Northern Mindanao, the Cagayan de Oro Iligan Special Development Project.

The Northern Mindanao region heavily relies on PIE-MO for its capital infusion. In 1996 alone, for instance, 98 percent of new industrial capital flowing into the province of Misamis Oriental came by way of the PIE-MO, easily surpassing investments approved by the Board of Investments for the province and that infused in the entire Cagayan de Oro-Iligan Corridor. Thus it comes as no surprises that the Philippine Government continues to look at PIE-MO as the entity which shall spearhead sustained industrial development in Northern Mindanao.

The Physical layout of the estate. The PIE-MO is divided into five industrial parks, as follows

 

Industrial Park I. This is now fully occupied by renowned companies including the Ferrochrome Philippines, Inc., Pacific Activated Carbon Co., and Lina Holdings Oleochemicals Inc. The Mindanao Container Terminal Project (MCTP) is also located in this park.

 

Industrial Park II. Park II is available for clean, general, light and special industries. Major industries that are in this park include Metro Paper and Packaging Products, Inc., Southern Industrial Gases, Inc., and Boom Marine Corporation.

 

Industrial Park III. This site covers 200 hectares of flat land. This is the site of Itochu Corporation’s Coresteel Industries Philipinas, Inc., and Pryce Gases, Inc. Park III is also approved for clean, general, and light industries.

Industrial Park IV. This Park is situated along the three plateaus of Kiamo and Kirahon. It is the site of the 200-hectare First Cagayan De Oro Business Park which can accommodate clean, general and light industries.

Industrial Park V. This Park is the site of the 150-hectare Philippines Sinter Corporation, a subsidiary of the Kawasaki Steel of Japan and the Proposed 475-hectare Philippine Integrated Steel Project of the Jacinto Metals Corporation.

The industries which might be brought inside the PIA estate are generally classified as follows:

CLEAN INDUSTRIES. These are Industries whereby the processes employed do not result in noise vibration, smell, fumes, smoke, soot, ash, and other effects detrimental to residential areas.

LIGHT INDUSTRIES. These are similar to clean industries, except that distance between these industries and residential areas must be at least 50 meters. These include research and development entities involving small quantities of chemicals.

GENERAL INDUSTRIES. These are industries whereby processes and the use of machineries can be carried out within an approved 100-meter buffer between industrial and residential areas. These include metal stamping, manufacturers of metal drums, containers, dry cells and batteries, and detergents

SPECIAL INDUSTRIES. These are industries that give rise to excessive air, water and noise pollution and solid waste problems which are offensive and dangerous. They require environmental clearances and must be located at distances of 0.5 to 1 km from residential areas. These include refineries for oil and sugar, brewery, iron, and steel manufacturing/fabrication plants. It is in this category that the Biodix group is coming in.

In terms of classifications, PIE-MO considers as large those which are capitalized at over Pesos 60 million; Medium if the capital is Pesos 50 million up to Pesos 60 million; and light if the capital falls within the range of Pesos 1.5 million to Pesos 15 million. By this classification, Biodix is coming in as among those in the scale of large industries.

The first industrial area administered by PIA is the 3,000-hectare PHIVIDEC Industrial Estate in Misamis Oriental (PIE-MO). In 1994, the Philippine Government under the administration of President Fidel V. Ramos, former vice chairman of PHIVIDEC designated PIE-MO as the hub and showcase of its flagship program for industrialization in Northern Mindanao.

Coming back to ERA Petroleum Company and the Amanah Islamic Bank. The two companies have already inked a joint venture agreement that is known as Biodix Biodiesel J.V. Would its biodiesel refinery rise at PHIVIDEC?

In defense of Gaffoor And Dianaton

In defense of Gaffoor and

Dianaton of

Amanah Islamic Bank

By Abdel Aziz Dimapunong

(Abdel Azish Dimapunung)

Chancellor, Islamic Banking Research Institute

Founding Chairman

Amanah Islamic Bank (1992-1998)

 

Some stockholders of the Islamic bank sent me email messages about malicious postings in a certain website related to a perennial complaint of a certain Engr. Farouk Carpizo. The complainant already died several years ago but his postings on the Internet are still there, forcing his victims to respond – not to him who is dead but to his postings which are still live on the Internet. I received this same kind of email from Ashroff Gaffoor who requested me to present my comments on the issues. I am obliged to make a response on behalf of the respondents by the fact that I was founding chairman of the Amanah Islamic Bank.

This article is based on the results of the investigation of the Department of Justice on a complaint that it received docketed as I.S. No. 99-1806. As the I.S. number indicates, this pertains to a complaint in 1999, or seven years ago. The complaint was filed by certain former lawyers of the Bangko Sentral ng Pilipinas (BSP), Atty. Rolando A.Q Agustin and Atty. Rosalina P Ojascastro as allegedly representing the Monetary Board. The filing of the complaint was based on the original complaint by Farouk Carpizo.

The BSP lawyers just did their job upon receipt of an original complaint that was maliciously filed with the Central Bank by Carpizo. Upon my research, I found that the lawyers of the Bangko Sentral filed the case wrongfully. They filed the case in the name of the Monetary Board but without the consent of the latter. They had no authority to represent the Bangko Sentral ng Pilipinas on legal matters. Under Section 18, par (c) of the new Central Bank Act, R, A. 7653, it is the Governor of the Bangko Sentral ng Pilipinas who is authorized to represent the Bangko Sentral in any legal proceedings, action or specialized legal studies.

On their affidavits, the BSP lawyers had to confess that they were not authorized by the Monetary Board. They were only acting on their own. That was a fatal mistake because they misrepresented the Monetary Board and the Bangko Sentral. Not having been authorized, the case cannot bind the Monetary Board and the Bangko Sentral.

 

The Islamic Banking Research Institute of which I am the chairman has complete files related to the investigations of the Department of Justice on this case. The Institute is being updated by the incumbent chairman of the Amanah Islamic Bank, Mr. Grande M. Dianaton, original stockholder of the old Philippine Amanah Bank and one of the founding stockholders of the Al Amanah Islamic Investment Bank of the Philippines.

First, who was Farouk Carpizo? Who was this man who posted malicious statements on the Internet? I shall not speak about him except that he died some years ago. I knew this because he was my neighbor. The fact the he died already is a good reason not to perpetuate his complaint. But somebody is still hosting his malicious postings on the Internet.

I shall limit myself to what official records have to show about Engr. Farouk Carpizo.

The following is the legal story based on the files of the Amanah Islamic Bank and the Department of Justice of the Philippines.

Seven years after we had formally organized the Islamic Bank in accordance with its charter, R.A. 6848, the Supervision and Examination Department of the Bangko Sentral ng Pilipinas (BSP) was misinformed by one Engr. Farouk Carpizo. Sometime in 1999, he represented himself to the BSP as a government representative. In truth, as the records show he was president of the old abolished Philippine Amanah Bank (PAB) – not the new Al Amanah Islamic Investment Bank of the Philippines. He claimed that the Islamic Bank is a government bank of which he is the president, representing the government. And he further charged Grande Dianaton, Ashroff Gaffoor and some of the directors of the private Islamic Bank as bogus!

Based on hearsay, the BSP lawyers filed a formal complaint allegedly in the name of the Monetary Board against Grande Dianaton, Ashroff Gaffoor and some directors and officers of the original Islamic Bank. Bad publicity in the press and the Internet was made, and investigation was conducted by the Department of Justice. What a waste of time! All the charges were maliciously manufactured. These false charges are the ones that were posted on the Internet.

The complainant charges those innocent officers as bogus – but actually it was he and his group who were the real bogus.

At this point, it bears relevance to introduce the complainant, Engr. Farouk Carpizo based on records of no less than the Hon. Supreme Court of the Philippines.

As I have said, I shall not personally comment on the person of Farouk Carpizo who is already dead but whose postings are still live on the Internet. I will only quote the Honorable SUPREME COURT of the Philippines from a DECISION involving one Engr. Farouk Carpizo.

BEGIN QUOTE FROM SUPREME COURT

(In this case, the Supreme Court speaks through the Hon. Justice of the Supreme Court, Justice Hilarion Davide, Jr. who penned the following Supreme Court Decision about the same Engr. Farouk Carpizo as being “bogus”, who represented a “fake Board”)

“It must be pointed out that two groups had earlier vied for control of the IDP, namely, (1) the Carpizo group headed by Engr. Farouk Carpizo [Underscoring supplied]…Nevertheless, on 20 April 1989, the Carpizo group caused the signing of an alleged Board Resolution authorizing the sale of the two parcels of land mentioned above to private respondent Iglesia ni Cristo (hereafter INC).

“If the SEC can declare who is the legitimate IDP Board, then by parity of reasoning, it can also declare who is not the legitimate IDP Board. This is precisely what the SEC did in SEC Case No. 4012 when it adjudged the election of the Carpizo Group to the IDP Board of Trustees to be null and void. By this ruling, the SEC in effect made the unequivocal finding that the IDP-Carpizo Group is a bogus Board of Trustees. [Underscoring supplied] Consequently, the Carpizo Group is bereft of any authority whatsoever to bind IDP in any kind of transaction including the sale or disposition of IDP property.

xxx xxx xxx

“. . . Nothing thus becomes more settled than that the IDP-Carpizo Group with whom private respondent INC contracted is a fake Board. [Underscoring supplied]

xxx xxx xxx

“… For the sale to be valid, the majority vote of the legitimate Board of Trustees, concurred in by the vote of at least 2/3 of the bona fide members of the corporation should have been obtained. These twin requirements were not met as the Carpizo Group which voted to sell the Tandang Sora property was a fake Board of Trustees [Underscoring supplied], and those whose names and signatures were affixed by the Carpizo group together with the sham Board Resolution authorizing the negotiation for the sale were, from all indications, not bona fide members of the IDP as they were made to appear to be. . . .

All told, the disputed Deed of Absolute Sale executed by the fake Carpizo Board [Underscoring supplied] and private respondent INC was intrinsically void ab initio.

[G.R. No. 127683 August 7, 1998, LETICIA P. LIGON, petitioner, vs. COURT OF APPEALS and IGLESIA NI CRISTO, respondents.]

UNQUOTE

Going back to the case of Ashroff Gaffoor and Grande Dianaton versus Farouk Carpizo and the BSP, the following surfaced:

1. Owing to its fiscal crisis that closely approaches the Nicaraguan syndrome, the Philippine government has never subscribed to the capital stock of the new Amanah Islamic Bank.

 

2. The two BSP lawyers who filed the case had to confess upon investigation that they had no authority to file the case from the Monetary Board. That was an act of misrepresentation.

 

3. The two BSP lawyers did not know also that there was already an earlier Resolution by the Honorable Supreme Court of the Philippines on the same case complained about.

4. They charged Dianaton, Gaffoor and Mangompia for violation of Republic Act No. 337 – not knowing that this was a non-existing law at the time of the filing of the case. That was the old Central Bank Act which was enacted in 1948!

 

In summary the complaint was based on hearsay that was loaded with errors and falsity.

 

This story is not a fiction. The statements are facts of a malicious and baseless complaint (Department of Justice, I.S. No. 99-1806) filed by two misinformed BSP lawyers against innocent officers of the new Amanah Islamic Bank. They not only misrepresented the Monetary Board but they also misrepresented the Office of the President of the Philippines. And worst, they are misleading the general public.

 

The following are the facts that were considered by the Department of Justice (DOJ) in its Resolution on the complaint of the Central Bank

BEGIN QUOTING THE DOJ RESOLUTION.

The respondents, “as summarized, jointly alleges that the complaint-affidavit of the BSP against the respondents for violation of Section 6 of RA 337 in relation to Section 36 of RA 7653, has no basis in fact and in law, based on the following: a) that we are all stockholders and organic directors and officers of the Islamic Bank, a corporation created by RA 6848, and duly organized by most of us with present business development address at No. 3, Block 11, Marawi Avenue, Maharlika Village, Taguig, Metro Manila; b) that respondents Mangompia, Badio, Pangcoga, and Rasuman, were among those present as organizers in the organizational shareholders meeting of the Islamic Bank on April 28, 1992 at the Army and Navy Club, Manila, of which the original and authentic Islamic Bank was officially organized in the manner prescribed by law under R.A. 6848; c) that their decision to subscribe to Series “B” shares and Series “C” shares in the capital of the Islamic Bank was based on their knowledge of this legal processes which was sanctioned by the confirmation letter of the SEC which issued a confirmation letter, dated July 29, 1993, that the Islamic Bank is deemed registered and authorized to operate as of the date of approval of RA 6848, and this was further boosted by another confirmation letter, dated September 8, 1993, that the Islamic Bank is exempted from the Revised Securities Act; d) that the legality of their being stockholders of the Islamic Bank is even supported by the Hon. Court of Appeals in its Decision on Civil Case No. CA GR No. 28445 entitled Abdel Aziz Dimapunong v. Hon. Zosimo Z. Angeles where on page 6, par. 2 the Hon. Court states that “ there is no question that the other petitioners, Abbas, Dianaton, and Malambut, are stockholders of the bank”. Abbas and Malambut were among their predecessor directors while Dianaton is still a director; e) that the legality of their being stockholders of the Islamic Bank is also supported by the Office of the Solicitor General in its Motion and Manifestation dated September 22, 1992; f) that a careful reading of the complaint of the Monetary Board clearly shows that it is a recycled complaint, the original “Complaint For Injunction with Damages” having been filed by then Finance Secretary Roberto De Ocampo and Farouk Carpizo. This is the same complaint by the BSP officials in the instant case; g) that the complaint alleges without basis that “the legitimate government owned Islamic Bank, which is duly recognized by the Bangko Sentral, is the Al Amanah Islamic Investment Bank of the Philippines (AIIBP) which was created and existing pursuant to the provisions of R.A. 6848, and the majority shares of which are held by the National Government, Social Security System (SSS), Government Service Insurance System (GSIS), Development Bank of the Philippines (DBP), and the Asset Privatization Trust (APT)” In response, we state that this is totally wrong because the shareholdings of the National Government, SSS, GSIS, DBP, and APT refers to their shareholdings in the abolished Philippine Amanah Bank (PAB). These government shareholdings have long been totally worthless because of the total bankruptcy and insolvency of the Philippine Amanah Bank which is now being resurrected by the BSP by usurping the name of our Islamic Bank; h) that the complaint states that certain persons were “nominated by the president of the Philippines and elected in the alleged general shareholders meeting held on June 30, 1999. This is not true, the President of the Philippines did not nominate anyone but in his letter of June 22, 1999, he wrote to DBP Chairman Ramoncito Z. Abad (not to the chairman of the Islamic Bank) expressing ONLY A DESIRE – not a nomination; i) that the complainant should be educated about the charter of the Islamic Bank to discover that we do not have to be under the supervision of the BSP because the Islamic Bank is not just a bank as defined under the General Banking Act but also an INVESTMENT HOUSE”. Should it operate as an investment house, the Islamic Bank is under the supervision of the SEC; j) it must also be noted that the charter provides them exemption from the provisions of the General Banking Act and Central Bank Act. The charter provides the following exemption: “SEC. 39. Non-Applicability of Selected Acts. – In order to achieve the international and domestic objectives of Islamic banking business, the provisions of the following acts and laws shall not apply to the Islamic Bank to the extent as herein rendered inoperative: “(1) The provisions of the Central Bank Act and the General Banking Act with particular reference to the determination of bank interest rates, loans and discounts, and any interest-bearing instruments or charge: provided that nothing contained herein shall be construed to impair the powers of the Central Bank to supervise and regulate the activities of the Islamic Bank.”; k) that the undersigned respondents also question the capacities of Rolando A.Q Agustin and Rosalina P Ojascastro as representing the Monetary Board in the instant legal action. Under Section 18, par (c) of the new Central Bank Act, R, A. 7653, it is the Governor of the BSP who is authorized to represent the BSP in any legal proceedings, action or specialized legal studies; r) Finally, it must be noted that in supervising the Islamic Bank, the Monetary Board shall supervise it in accordance with the Sharia’ Law (Sec. 43, R.A. 6848)

[Pages 7, 8, 9, and 10, DOJ Resolution, on I.S. No. 99-1806, dated February 6, 2001, Manila, Philippines]

 

UNQUOTE THE DOJ RESOLUTION

Photo

The organizational meeting at the Army and Navy Club of Manila

With Grande Dianaton, April 28, 1992

Photo

The 1999 International stockholders meeting at Richmond Hotel

With Ashroff Gaffoor (center)

What happens next?

 

The malicious complaint did not progress. The lawyers were not authorized by the Monetary Board of the Bangko Sentral. They confessed to have acted on their own – not the Central Bank.

How do I see the case? Well, it was a DAC, Dead on Arrival at Court.