Republic of the Philippines 
House of Representatives 
Quezon City 
TWENTIETH CONGRESS 
First Regular Session 
House Bill No. 864
Introduced by  
APEC Party-List Representative Sergio C. Dagooc 
EXPLANATORY NOTE 
This bill proposes to exempt the sale of electricity from the payment of 
value-added tax (VAT). Prior to the enactment of Republic Act No. 9337, also 
known as the Expanded Value Added Tax Law, the cost of electricity in the 
Philippines was already one of the highest in Asia, and the subsequent 
imposition of VAT on not only the generation, but also on the transmission 
and distribution of power, further increased this cost.  
The Philippine Statistics Authority, based on the results of 2011 
Household Energy Consumption Survey (HECS), has said that electricity 
remains as the most common source of energy used by household in the 
Philippines. About 87 percent of 21.0 million households used electricity from 
March to August 2011. This accounts for 4.800195% or more than 1/25 of all 
household expenditures in the Philippines goes towards electricity. 
The challenge is for the state to ensure affordable, reliable, and 
accessible electricity at the heart of balancing price fluctuations. This is 
especially true in view of the massive increases of fuel costs which is reflected 
by higher generation charges in our electricity bill. The effect of pricier oil 
products on our power rates will be a continuing burden to Filipino consumers 
until the global market improves. 
In view of the foregoing and in order to help alleviate the crippling 
burden of high power costs, this proposed measure seeks to exempt the sale 
July 1, 2025
2:30 pm


of electric power from VAT. By lowering the cost of electricity, this bill hopes 
to spur additional investments, boost the competitiveness of small and 
medium enterprises through lower operating costs, and increase the 
purchasing power of a household. The amount of VAT foregone through this 
exemption will eventually be recovered by the State through the consumption 
of goods and services from this increased purchasing power. 
The passage of this bill is earnestly and sincerely sought. 
REP. SERGIO C. DAGOOC 
APEC Party-List 


Republic of the Philippines 
House of Representatives 
Quezon City 
TWENTIETH CONGRESS 
First Regular Session 
House Bill No. 864
___________________________________________________________________________ 
Introduced by  
APEC Party-List Representative Sergio C. Dagooc 
AN ACT 
EXEMPTING 
THE 
SALE 
OF 
ELECTRICITY 
BY 
GENERATION, 
TRANSMISSION AND DISTRIBUTION COMPANIES AND ELECTRIC 
COOPERATIVES FROM THE IMPOSITION OF VALUE ADDED TAX, 
AMENDING FOR THE PURPOSE, SECTIONS 108 (A) AND 109 (1) OF THE 
NATIONAL INTERNAL REVENUE CODE, AS AMENDED BY REPUBLIC 
ACT NOS. 9337 AND 10863, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Section 108 of Republic Act No. 8424, as amended by 
1 
Republic Act No 9337 and 10963, otherwise known as the National Internal 
2 
Revenue Code of 1997, is hereby further amended to read as follows: 
3 
“Sec. 108. Value-added Tax on Sale of Services and Use or 
4 
Lease of Properties. – 
5 
(A) Rate and Base of Tax. – There shall be levied, assessed
6 
and collected, a value-added tax equivalent to twelve 
7 
percent (12%) of gross receipts derived from the sale or 
8 
exchange or services, including the use or lease of 
9 
properties. 
10 
“The phrase ‘sale or exchange of services’ means the 
11 
performance of all kinds of services in the Philippines for 
12 
others for a fee, remuneration or consideration, including 
13 


 
 
those performed or rendered by construction and service 
1 
contractors; stock, real estate, commercial, customs and 
2 
immigration brokers; lessors of property, whether personal 
3 
or real; warehousing services; lessors or distributors of 
4 
cinematographic films; persons engaged in milling, 
5 
processing, manufacturing or repacking goods for others; 
6 
proprietors, operators or keepers of hotels, motels, 
7 
resthouses, pension houses, inns, resorts; proprietors or 
8 
operators of restaurants, refreshment parlors, cafes and 
9 
other eating places, including clubs and caterers; dealers 
10 
in securities; lending investors; transportation contractors 
11 
on their transport of goods or cargoes, including persons 
12 
who transport goods or cargoes for hire and other domestic 
13 
common carriers by land relative to their transport of goods 
14 
or cargoes; common carriers by air and sea relative to their 
15 
transport of passengers, goods or cargoes from one place 
16 
in the Philippines to another place in the Philippines; [sales 
17 
of electricity by generation companies, transmission 
18 
by any entity, and distribution companies, including 
19 
electric cooperatives;] services of franchise grantees of 
20 
[electric utilities,] telephone and telegraph, radio and 
21 
television broadcasting and all other franchise grantees 
22 
except those under Section 119 of this Code and non-life 
23 
insurance companies (except their crop insurances), 
24 
including 
surety, 
fidelity, 
indemnity 
and 
bonding 
25 
companies; and similar services regardless of whether or 
26 
not the performance thereof calls for the exercise or use of 
27 
the physical or mental faculties. The phrase ‘sale or 
28 
exchange of services’ shall likewise include:” 
29 
SECTION 2. Section 109 (1) of Republic Act No. 8424, as amended by 
30 
Republic Act No 9337, otherwise known as the National Internal Revenue 
31 
Code of 1997, is hereby further amended to read as follows: 
32 
“Sec. 109. Exempt Transactions – (1) Subject to the 
33 
provisions 
of 
Subsection 
(2) 
hereof, 
the 
following 
34 
transactions shall be exempt from the value-added tax:  
35 
x x x 
36 
(CC) Sale or lease of goods or properties or the performance 
37 
of services other than the transactions mentioned in the 
38 
preceding paragraphs, the gross annual sales and/or 
39 


 
 
receipts do not exceed the amount of Three million pesos 
1 
(P3,000,000); 
2 
(DD) Sale of electricity by generations, transmission, 
3 
and distribution companies and electric cooperatives; 
4 
and 
5 
(EE) Services of Franchise Grantees of Electric 
6 
Utilities.” 
7 
SECTION 3. Repealing Clause. - All laws, presidential decrees, 
8 
executive orders, letters of instruction, administrative rules and regulations or 
9 
parts thereof which are contrary to or inconsistent with the provisions of this 
10 
Act are hereby repealed or modified accordingly. 
11 
SECTION 4. Separability Clause. – Should any part or provision of 
12 
this Act be held unconstitutional or invalid, all other provisions hereof which 
13 
are not affected thereby shall continue to be in full force and effect.  
14 
SECTION 5. Effectivity. – This Act shall take effect after fifteen (15) 
15 
days following its complete publication in the Official Gazette or in two (2) 
16 
newspapers of general circulation whichever is earlier. 
17 
Approved, 
18