FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENATE 
S.No, 2754 
Introdnced by Senator Ralph G. Recto 
EXPLANATORY NOTE 
'11 
tlAR 21 
P 3 :01 
The national government is perpetually searching for sources of revenues to 
finance its operations. Over the years, the tax rates on some excisable products have 
remained unchanged. Hence, increments in tax collections from these products come 
from increases in the volume ofremovals or the products' prices. 
Historically, the excise tax on nonmetallic minerals and quarry resources is 
imposed based on the actual value of the gross output at the rate of one and a half percent 
(1.5%) from 1939 to 1977. Then it was increased to three percent (3%) until 1994. The 
rate was reduced in 1994 to two percent (2%) of the actual market value or the value used 
by the Bureau of Customs in determining the tariff aDd customs duties in the case of 
importation. 
The rate on metallic minerals was initially set at one and a half percent (1.5%) of 
actual market value of the annual gross output, then increased to five percent (5%) in 
1977. With the passage of Republic Act No. 7729 in 1994, the rates were trimmed down: 
for copper and other metallic minerals, to one percent (1 %) until 1997 and slowly 
increased to its present rate at two percent (2%); and for gold and chromite, two percent 
(2%) of actual market value of the al1l1ual gross output. Under the National Internal 
Revenue Code (NLRC), as amended, the rates were uniform at two percent (2%) of actual 
market value of the annual gross output. 
Based on available data, the excise tax collections (in million pesos) from 
minerals and quarry resources were 489.6 in 2006; 942.1 in 2007; 660.3 in 2008; and, 
718.8 in 2009. 
This bill proposes to increase the tax on minerals and quarry resources from two 
percent (2%) to seven percent (7%). Although the ad valorem rate guarantees increased 
tax revenues during periods of high commodity prices, these increments are volatile. 
With the passage of this bill, the national government can look forward to higher 
revenues than it has collected in recent years. All things other than the excise tax rates 
being the same, the government will expect an excise tax collection from minerals and 
quarry resources amounting to between Php 1.7 B to Php 3.3 B. 
The potential revenue from the proposed increased excise tax on mineral products 
shall be equally divided between the national government and the local government units 
(LGUs) where the mineral and quarry resources are extracted. In particular, revenues 
ii'om the three and a half percent (3.5%) tax on minerals shall accrue to the National 
Treasury, while revenues from the other three and a half percent (3.5%) tax on minerals 
shall be remitted directly to the LGUs as support for the Special Education Fund (SEF) of 
the LGUs. With the infusion of additional funds, it is hoped that the perennial shortages 
of classrooms, tables and chairs, books, teaching aids and other educational materials will 
be addressed. 


The proposed increase in the excise tax on mineral and quarrying activities would 
not even be commensurate to the natural hazards brought about by mining and quarrying 
activities to our environment particularly in areas that are rich in biodiversity, in 
geohazard zones or within the ancestral domain of indigenous peoples. Mineral wastes 
cause sulfurous dust clouds that result in acid rain. Abandoned strip mines are often used 
as unregulated landfills for hazardous wastes. Mine tailings and their associated metal 
contaminants, such as arsenic, cadmium, lead, mercury, sodium cyanide, and zinc can 
contaminate nearby water sources rendering them useless as sources of food, water, and 
livelihood. Mining in upland areas further reduce forest cover and leave a toxic heritage 
for succeeding generations. 
It is hoped that the increase in tax on mineral products will become synonymous 
to a revitalized and strengthened responsible mining and environmental protection. 
In view of the foregoing, approval of this bill' 
arnestly equested. 


FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
) 
) 
) 
S. No. 2754 
Introduced by Senator Ralph G. Recto 
AN ACT 
'11 
MAR 21 
P J :01 
INCREASING THE EXCISE TAX ON MINERALS, MINERAL PRODUCTS AND 
QUARRY 
RESOURCES, 
AMENDING 
FOR THE 
PURPOSE 
CERTAIN 
SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS 
AMENDED 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
SECTION 1. Section lSI(A), Chapter VII, Title VI of the National Internal 
2 
Revenue Code of 1997, as amended, is hereby amended to read as follows: 
3 
"SEC. 151. Mineral Products. -
4 
(A) Rales of Tax. - There shall be levied, assessed and collected on 
5 
minerals, mineral products and quarry resources, excise tax as follows: 
6 
"(1) On coal and coke, a tax ofTen pesos (PiO.OO) per metric ton; 
7 
"(2) On all [nonmetallic] minerals, MINERAL PRODUCTS and 
8 
quarry resources, a tax of SEVEN [two] percent (7%) [(2%)] based 
9 
on the actual market value of the gross output thereof at the time of 
10 
removal, in the case of those locally extracted or produced; or the 
II 
value used by the Bureau of Customs in determining tariff and 
12 
customs duties, net of excise tax and value-added tax, in the case 
13 
of importation. 
14 
"Notwithstanding the provision of paragraph (3) [(4)] of 
15 
Subsection (A) of this Section, locally extracted natural gas and 
16 
liquefied natural gas shall not be subject to the excise tax imposed 
17 
herein. 
18 
["(3) On all metallic minerals, a tax based on the actual market 
19 
value of the gross output thereof at the time ofremoval, in the case 
20 
of those locally extracted or produced; or the value used by the 
21 
Bureau of Customs in determining tariff and customs duties, net of 
22 
excise tax and value-added tax, in the case of importation, in 
23 
accordance with the following schedule: 
24 
"(a) Copper and other metallic minerals: 


(i) On the first three (3) years upon effectivity of Republic 
2 
Act No. 7729, one percent (1 %); 
3 
(ii) On the fourth and the fifth years, one and a half percent 
4 
(I Yz%); 
5 
"(b) Gold and chromite, two percent (2%).) 
6 
"(3)[(4)) On indigenous petroleum, a tax of three percent (3%) of 
7 
the fair international market price thereof, on the first taxable sale, 
8 
barter, exchange or such similar transaction, snch tax to be paid by 
9 
the buyer or purchaser before removal from the place of 
10 
production. The phrase 'first taxable sale, barter, exchange or 
11 
similar transaction' means the transfer of indigenous petroleum in 
12 
its original state to a first taxable transferee. The fair international 
13 
market price shall be determined in consultation with an 
14 
appropriate government agency. 
IS 
"x x x." 
16 
SEC. 2. Section 287, Chapter II, Title XI of the National Internal Revenue Code 
17 
of 1997, as amended, is hereby amended to read as follows: 
18 
"SEC. 287. x x x 
19 
"(A) Amount of Share of Local Government Units (LGUs). - Local 
20 
government units shall, in addition to the internal revenue allotment, have 
21 
a share of forty percent (40%) of the gross collection derived by the 
22 
national government (NG) from the preceding fiscal year from [excise 
23 
taxes on mineral products,) royalties[,) and such other taxes, fees or 
24 
charges, including related surcharges, interests or fines, and from its share 
25 
in any co-production, joint venture or production sharing agreement in the 
26 
utilization and development of the national wealth within their territorial 
27 
jurisdiction. 
28 
"(B) REVENUE FROM THE EXCISE TAX ON MINERALS, 
29 
MINERAL PRODUCTS AND QUARRY RESOURCES. - THE REVENUE 
30 
COLLECTED FROM THE EXCISE TAX ON MINERALS, MINERAL 
31 
PRODUCTS AND QUARRY RESOURCES SHALL BE EQUALLY 
32 
DIVIDED BETWEEN THE NG AND THE LGUs WHERE THE 
33 
MINERALS, MINERAL PRODUCTS AND QUARRY RESOURCES 
34 
ARE EXTRACTED. REVENUES EQUIVALENT TO THREE AND A 
35 
HALF PERCENT (3.5%) EXCISE TAX ON MINERALS, MINERAL 
36 
PRODUCTS AND QUARRY RESOURCES SHALL ACCRUE TO THE 
37 
NG, AS PROVIDED IN SECTION 283 OF THIS CODE, AND 
38 
REVENUES EQUIVALENT TO THE REMAINING THREE AND A 
2 


HALF PERCENT (3.5%) EXCISE TAX ON MINERALS, MINERAL 
2 
PRODUCTS AND QUARRY RESOURCES SHALL BE DIRECTLY 
3 
REMITTED TO THE LGUs WHERE THE RESOURCES ARE 
4 
EXTRACTED. 
5 
PROVIDED, THAT, THE REVENUES EQUIVALENT TO THE 
6 
REMAINING THREE AND A HALI' PERCENT (3.5%) EXCISE TAX 
7 
ON 
MINERALS, 
MINERAL 
PRODUCTS 
AND 
QUARRY 
8 
RESOURCES ALLOCATED TO THE LGUs SHALL BE SET ASIDE 
9 
AND USED EXCLUSIVELY AS SUPPORT FOR THE SPECIAL 
10 
EDUCATION FUND (SEF) ADMINISTERED BY THE LGUs TO 
11 
FINANCE THE HIRING OF NEW TEACHERS, REPAIRS OF 
12 
CLASSROOMS, CHAIRS AND TABLES, AND PURCHASES OF 
13 
TEXTBOOKS, TEACHERS' MANUALS AND TEACHING AIDS, 
14 
AND OTHER EDUCATIONAL MATERIALS. 
15 
PROVIDED, FINALLY, THAT THE ALLOCATION OF THE 
16 
LOCAL GOVERNMENT SHARE ON EXCISE TAX ON MINERALS, 
17 
MINERAL PRODUCTS AND QUARRY RESOURCES SHALL BE 
18 
DISTRIBUTED AS SPECIFIED IN SUBSECTION (D) HEREOF. 
19 
[(B)] "(C) Share of the Local GovernmentsFom Any Government Agency 
20 
or Government-Owned or -Controlled Corporation. - Local Government 
21 
Units shall have a share, based on the preceding fiscal year, from the 
22 
proceeds derived by any government agency or government-owned or -
23 
controlled corporation engaged in the utilization and development of the 
24 
national wealth based on the following formula, whichever will produce a 
25 
higher share for the [local government unit] LGU: 
26 
(1) One percent (1 %) of the gross sales or receipts of the preceding 
27 
calendar year, or 
28 
(2) Forty percent (40%) of the excise taxes on mineral products, 
29 
royalties, and such other taxes, fees or charges, including related 
30 
surcharges, 
interests or tines the government agency or 
31 
government-owned or -controlled corporations would have paid if 
32 
it were not otherwise exempt. 
33 
[(C)) "(D) Allocation o/Shares. -- The share in the preceding Section shall 
34 
be distributed in the following manner: 
35 
(1) Where the natural resources are located in the province: 
36 
(a) Province - twenty percent (20%); 
37 
(b) Component city/municipality -
forty-five percent 
38 
(45%); and 
3 


(e) Barangay-thiliy-five percent (35%). 
2 
Provided. however, That where the natural resources are located in 
3 
two (2) or more provinces, or in two (2) or more component cities 
4 
or municipalities or in two (2) or more barangays, their respective 
5 
shares shall be computed on the basis of: (I) Population - seventy 
6 
percent (70%); and (2) Land area - thirty percent (30%). 
7 
(2) Where the natural resources are located in a highly urbanized or 
8 
independent component city: 
9 
(a) City -- sixty-five percent (65%); and 
10 
(b) Barangay-thirty-fivepercent (35%). 
] I 
Provided, however, That where the natura] resources are located in 
12 
two (2) or more cities, the allocation of shares shall be based on the 
13 
formula on population and land area as specified in subsection 
14 
[(C)] (D)(1) hereof. 
IS 
SEC. 3. Implementing Rules and Regulations. - The Secretary of Finance shall, 
16 
upon the recommendation of the Commissioner of Internal Revenue, promulgate the 
] 7 
necessary rules and regulations for the effective implementation of this Act. 
] 8 
SEC. 4. 
Separability Clause. -
If any provision of this Act IS declared 
19 
unconstitutional or invalid, other parts or provisions hereof not affected thereby shall 
20 
continue to be in full force and effect. 
21 
SEC. 5. Repealing Clause. - All laws, decrees, executive orders, rules and 
22 
regulations or parts thereof which are contrary to or inconsistent with this Act are hereby 
23 
repealed, amended or modified accordingly. 
24 
SEC. 6. 
Effectivity. - This Act shall take effect fifteen (15) days after its 
25 
publication in the Otlicial Gazette or in any two newspapers of general circulation, 
26 
whichever comes earlier. 
Approved, 
4