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SIXTEENTH CONGRESS OF THE 
) 
i&1\(l\~I' t,f 11,,' :,-"''-:''I>hf\! 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
'13 
,JUL -4 (\1'::21 
SENATE 
S. No. 
Introduced by Senator Ralph G. Recto 
Explanatory Note 
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 of 
removals 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 and 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, and 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 
annual gross output. Under the National Internal Revenue Code (NIRC), as amended, the rates 
were uniform at two percent (2%) of actual market value ofthe anuual gross output. 
Based on available data, the excise tax collections from minerals and quarry resources 
were 942.1 Min 2007; 660.3 Min 2008; 718.8 Min 2009, 1.3 B in 2010 and 6.98 B in 2011. [IJ 
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. 
The potential revenue from the proposed increase in 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 from 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 education.al materials will be addressed. 
I 
The proposed increase in the excise tax on mineral and quarrying activitids would not 
even be commensurate to the natural hazards brought about by mining and quarrying activities to 
I Mines and Geosciences Bureau. "Minin-&lndustrv Statistics, 2013" 
http://www.mgb.gov.phlFiJes/StatisticsiBistoricalMineralIndustryStatistics.pdf. (accessed February 28, 
2013). 


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. [2] 
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 is 
estly r quested. 
mjlflo 
2 "Exacting Growth From Mining." Senate Economic Planning Office, (November 2005), pA. 


SIXTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S. No. 
Introduced by Senator Ralph G. Recto 
AN ACT 
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: 
1 
SECTION 1. Section 151(A), Chapter VII, Title VI of the National Internal Revenue 
2 
Code of 1997, as amended, is hereby amended to read as follows: 
3 
"SEC. 151. Mineral Products.-
4 
(A) Rates 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 (PlO.OO) per metric ton; 
7 
"(2) On all [nonmetallic] minerals, MINERAL PRODUCTS and quarry 
8 
resources, a tax of SEVEN [two] percent (7%) [(2%)] based on the actual 
9 
market value of the gross output thereof at the time of removal, in the case 
10 
of those locally extracted or produced; or the value used by the Bureau of 
11 
Customs in determining tariff and customs duties, net of excise tax and 
12 
value-added tax, in the case of importation. 
13 
"Notwithstanding the provision of paragraph (3) [(4)] of Subsection 
14 
(A) of this Section, locally extracted natural gas and liquefied natural gas 
15 
shall not be subject to the excise tax imposed herein. 
16 
["(3) On all .metallic minerals, a tax based on the actual market value 9f 
17 
the gross output thereof at the time of removal, in the case of those locallp' 
18 
extracted or produced; or the value used by the Bureau of Customs in 
19 
determining tariff and customs duties, net of excise tax and value-added 
20 
tax, in the case of importation, in accordance with the following schedule: 
21 
"(a) Copper and other metallic minerals: 
22 
(i) On the first three (3) years upon effectivity of Republic Act No. 
23 
7729, one percent (1 %); 
Page 1 of4 


I 
(ii) On the fourth and the fifth years, one and a half percent (I 
2 
v,%); and 
3 
(iii) On the sixth year and thereafter, two percent (2%); 
4 
"(b) Gold and chromite, two percent (2%).] 
5 
"(3)[(4)] On indigenous petroleum, a tax of three percent (3%) of the fair 
6 
international market price thereof, on the first taxable sale, barter, exchange 
7 
or such similar transaction, such tax to be paid by the buyer or purchaser 
8 
before removal from the place of production. The phrase 'first taxable sale, 
9 
barter, exchange or similar transaction' means the transfer of indigenous 
10 
petroleum in its original state to a first taxable transferee. The fair 
II 
international market price shall be determined in consultation with an 
12 
appropriate government agency. 
13 
"x x x." 
14 
SEC. 2. Section 287, Chapter II, Title XI of the National Internal Revenue Code of 
15 
1997, as amended, is hereby amended to read as follows: 
16 
"SEC. 287. x x x 
, 
17 
"(A) Amount of Share of Local Government Units (LGUs). -
Local 
18 
government units shall, in addition to the internal revenue allotment, have a share 
19 
of forty percent (40%) of the gross collection derived by the national government 
20 
(NG) from the preceding fiscal year from [excise taxes on mineral products,] 
21 
royalties[,] and such other taxes, fees or charges, including related surcharges, 
22 
interests or fines, and from its share in any co-production, joint venture or 
23 
production sharing agreement in the utilization and development of the national 
24 
wealth within their territorial jurisdiction. 
25 
"(B) REVENUE FROM THE EXCISE TAX ON MINERALS, MINERAL 
26 
PRODUCTS AND QUARRY RESOURCES. - THE REVENUE COLLECTED 
27 
FROM THE EXCISE TAX ON MINERALS, MINERAL PRODUCTS AND 
28 
QUARRY RESOURCES SHALL BE EQUALLY DIVIDED BETWEEN THE 
29 
NG AND THE LGUs WHERE THE MINERALS, MINERAL PRODUCTS 
30 
AND 
QUARRY 
RESOURCES 
ARE 
EXTRACTED. 
REVENUES 
31 
EQUIVALENT TO THREE AND A HALF PERCENT (3.5%) EXCISE TAX 
32 
ON MINERALS, MINERAL PRODUCTS AND QUARRY RESOURCES 
33 
SHALL ACCRUE TO THE NG, AS PROVIDED IN SECTION 283 OF THIS 
34 
CODE, AND REVENUES EQUIVALENT TO THE REMAINING THREE 
35 
AND A HALF PERCENT (3.5%) EXCISE TAX ON MINERALS, MINERAL 
36 
PRODUCTS 
AND 
QUARRY 
RESOURCES 
SHALL BE DIRECTLY 
37 
REMITTED TO THE LGUs WHERE THE RESOURCES ARE EXTRACTED. 
Page 2 of4 


I 
1 
PROVIDED, THAT, THE REVENUES EQUIVALENT TO THE 
2 
REMAINING. THREE AND A HALF PERCENT (3.5%) EXCISE TAX ON 
3 
MINERALS, 
MINERAL 
PRODUCTS 
AND 
QUARRY 
RESOURCES 
4 
ALLOCATED TO THE LGUs SHALL BE SET ASIDE AND USED 
5 
EXCLUSIVELY AS SUPPORT TO THE SPECIAL EDUCATION FUND (SEF) 
6 
ADMINISTERED BY THE LGUs TO FINANCE THE HIRING OF NEW 
7 
TEACHERS, REP AIR OF CLASSROOMS, ACQUISITION OF CHAIRS AND 
8 
TABLES, AND PURCHASE OF TEXTBOOKS, TEACHERS' MANUALS 
9 
AND TEACHING AIDS, AND OTHER INSTRUCTIONAL MATERIALS. 
10 
PROVIDED, FINALLY, THAT THE ALLOCATION OF THE LOCAL 
11 
GOVERNMENT SHARE ON EXCISE TAX ON MINERALS, MINERAL 
12 
PRODUCTS AND QUARRY RESOURCES SHALL BE DISTRIBUTED AS 
13 
SPECIFIED IN SUBSECTION (D) HEREOF. 
14 
[(B») "(C) Share of the Local Governments from Any Government Agency or 
15 
Government-Owned or -Controlled Corporation. - Local Government Units shall 
16 
have a share, based on the preceding fiscal year, from the proceeds derived by any 
17 
government agency or government-owned or -controlled corporation engaged in 
18 
the utilization and development of the national wealth based on the following 
19 
formula, whichever will produce a higher share for the [local government unit) 
20 
LGU: 
21 
(1) One percent (1%) of the gross sales or receipts of the preceding 
22 
calendar year, or 
23 
(2) Forty percent (40%) of the excise taxes on mineral products, royalties, 
24 
and such other taxes, fees or charges, including related surcharges, 
25 
interests or fines the government agency or government-owned or 
26 
controlled corporations would have paid if it were not otherwise exemjJt. 
27 
[(C)) "(D) Allocation of Shares. - The share in the preceding Section shall be 
28 
distributed in the following manner: 
29 
(1) Where the natural resources are located in the province: 
30 
(a) Province - twenty percent (20%); 
31 
(b) Component city/municipality - forty-five percent (45%); and 
32 
(c) Barangay-thirty-fivepercent (35%). 
33 
Provided, however, That where the natural resources are located in two (2) 
34 
or more provinces, or in two (2) or more component cities or 
35 
municipalities or in two (2) or more barangays, their respective shares 
36 
shall be computed on the basis of: (1) Population - seventy percent (70%); 
37 
and (2) Land area - thirty percent (30%). 
Page 3 of4 


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3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
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19 
• 
(2) Where the natural resources are located III a highly urbanized or 
independent component city: 
(a) City - sixty-five percent (65%); and 
(b) Barangay - thirty-five percent (35%). 
Provided, however, That where the natural resources are located in two (2) 
or more cities, the allocation of shares shall be based on the fonnula on 
population and land area as specified in subsection [(C)] (D)(l) hereof. 
SEC. 3. Implementing Rules and Regulations. - The Secretary of Finance shall, upon the 
recommendation of the Commissioner of Internal Revenue, promulgate not later than thirty (30) 
days upon the effectivity of this Act the necessary rules and regulations for its effective 
implementation. 
. 
I 
SEC. 4. Separability Clause. - If any provision of this Act is declared unconstitutional 
I 
or invalid, other parts or provisions hereof not affected thereby shall continue to be in full force 
and effect. 
SEC. 5. Repealing Clause. - All laws, decrees, executive orders, rules and regulations or 
parts thereof which are contrary to or inconsistent with this Act are hereby repealed, amended or 
modified accordingly. 
SEC. 6. Effectivity. - This Act shall take effect fifteen (15) days after its publication in 
the Official Gazette or in any two (2) newspapers of general circulation. 
Approved, 
Page 4 of4