EIGHTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
Third Regular Session 
)
SENATE 
S. No. 2440
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Introduced by Senator Ralph G. Recto
AN ACT
LOWERING THE COST OF ELECTRICITY AND PETROLEUM PRODUCTS
EXPLANATORY NOTE
This proposed measure seeks to reduce the excise tax on petroleum products 
and coal by fifty percent (50%), suspend the imposition of applicable duties on their 
importation, and exempt the system loss charge in the sale of electricity from the 
value-added tax (VAT), for a period of three (3) years.
According to the Department of Energy (DOE), world oil prices continue to 
rise due to its tight supply and improving demand. Among the reasons cited by the 
DOE for the increase in oil demand are the improving COVID-19 situation, easing of 
mobility restrictions, and re-opening of borders by many countries.1 The price of 
Dubai crude has increased week-on-week by almost US$3.00 per barrel, and the 
Mean of Platts Singapore (MOPS) for gasoline and diesel have also increased by 
nearly US$5.25 per barrel and around US$ 3.80 per barrel, respectively.2
In the domestic market, oil companies implemented a price increase of PI.80 
per liter for gasoline, P1.40-P1.50 per liter for diesel and PI.30 per liter for kerosene 
effective October 19, 2021.3 The year-to-date adjustments now stand at a total net
1 DOE Oil Monitor as of October 19, 2021 / Asia Pacific Weekly Recap by S & P Global
2 DOE Oil Monitor as of October 19, 2021
3 DOE Oil Monitor as of October 19, 2021


increase of P19.65 per liter for gasoline, P18.00 per liter for diesel and P15.49 per 
liter for kerosene.4
Moreover, the looming energy crisis in China and other countries has 
triggered the rise in demand for coal, thereby increasing its prices in the world 
market.5 In the Philippines, coal-type power plants account for 57.17% of the total 
gross power generation.6
The surge in demand for oil and other energy commodities indicates recovery 
from the crisis brought about by the COVID-19 pandemic. Hov;ever, the increase in 
their prices will have an effect on inflation. Each of these commodities is an 
important component in the production of basic goods and services.
All factors affecting the global prices of oil and coal may not be controlled by 
our government, but we are not totally helpless in mitigating their adverse effects on 
the domestic prices of these commodities. The applicable taxes and duties on these 
products may be partially reduced or removed for a certain period of time while our 
country is charting its path towards economic recovery.
In 2005, Republic Act No. 9337, otherwise known as the Reformed Value- 
Added Tax (RVAT) Law, was enacted to widen the tax base by removing a number 
of products and services including petroleum and electricity from the list of VAT- 
exempt transactions under the National Internal Revenue Code of 1997, as 
amended, thereby increasing revenue collections. This is in line with the principle 
that in order for the VAT system to be effective, it should be broad-based and with 
limited exemptions.
Undoubtedly, the VAT reform has produced significant and positive effects on 
our economy. However, as a consequence, such effect is also inflationary. VAT is an
4 DOE Oil Monitor as of October 19, 2021
5 https://www.manilatime5.net/2021/10/14/opinion/columns/ph-i.s-facing-an-energy-di.saster/1818347;
https://www.rappler.com/business/chin3-power-woes-mav-worsen-demand-surgcs-coal-supplv-laR-octobcr-
18-2021; https://www.bloomberg.com/news/articles/2021-10-04/coal-price.s-mav-have-reached-peak-top-
philippine-miner-says;
6 DOE 2020 Power Statistics


indirect tax that is passed on to the consumers of goods and services. Therefore, its 
imposition on the sale of certain products particularly petroleum products and 
electricity has the effect of increasing the prices of basic goods and services.
In 2017, another revenue generating measure but with inflationary impact 
was enacted. Republic Act No. 10963, or the Tax Reform for Acceleration and 
Inclusion (TRAIN) Law. It was intended to finance at least partially the Build, Build, 
Build Program and other social services of the government. However, it imposes 
additional excise tax on petroleum products and coal, and just like the VAT, it has 
the effect of increasing the prices of goods and services. Under this law, the excise 
tax on gasoline was increased from P4.35 to PIO.OO, diesel from zero excise tax to 
P6.00, kerosene from zero excise tax to P5.00, per liter of volume capacity, and coal 
from PIO.OO to P150.00 per metric ton, effective January 1, 2020.7
The imposition of VAT and the increased excise taxes on petroleum products 
and coal are too much of a burden on the consumers and businesses during this 
time of the COVID-19 pandemic. As a mitigating response, it is high time to reduce 
the excise tax on these products by 50%, suspend the applicable duties, and exempt 
the system loss charge from VAT, thereby effectively lowering the prices of 
electricity and consequently other basic goods and services.
In view of the foregoing, the immediate approval of this bill is earnestly
sought.
LPH g: ri
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1 Sections 148 and 151 of the National Internal Revenue Code of 1997, as amended.
3


EIGHTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
Third Regular Session 
)
SENATE 
S. No. 2440
RECEIVED
E-FILED
"P
Oct 25 2021 m
CO
DA re:
3:50 p.m.
Introduced by Senator Ralph G. Recto
AN ACT
LOWERING THE COST OF ELECTRICITY AND PETROLEUM PRODUCTS
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assem bled:
1 
Sec. 1. Section 109 of the National Internal Revenue Code of 1997, as
2 
amended, is hereby further amended to read as follows:
3 
"SEC. 109. Exempt Transactions. —
4 
"(1) Subject to the provisions of Subsection (2) hereof, the following
5 
transactions shall be exempt from the value-added tax:
6 
"(A) xxx;
7 
"xxx;
8 
(AA) xxx;
9 
"(BB) xxx;
10 
"(CC) SYSTEM LOSS CHARGE IN THE SALE OF ELECTRICITY
11 
FOR A PERIOD OF THREE (3) YEARS FROM THE DATE OF
12 
EFFECTIVITY OF THIS ACT; AND
13 
"tCCJ (DD) Sale or lease of goods or properties or the performance of
14 
services other than the transactions mentioned in the preceding paragraphs,
15 
the gross annual sales and/or receipts do not exceed the amount of Three
16 
million pesos (P3,000,000)."
17 
Sec. 2. Section 148 of the National Internal Revenue Code of 1997, as
18 
amended, is hereby further amended to read as follows:


1 
"SEC. 148. Manufactured Oils and Other Fuels. - There shall be
2 
collected on refined and manufactured mineral oils and motor fuels, the
3 
following excise taxes which shall attach to the goods hereunder enumerated
4 
as soon as they are in existence as such:
5 
"xxx
6 
"[For-the period covering-2018 to 2020, the-sehedulcd Increase-in-t-he
7 
excise tax on fuel as imposed in this-Section-sbati be suspended when the
8 
average Dfcrbai-crude-eil-price based on Mean of-Platts-Singapore (MOPS) for
9 
thre&-(-3-)-months prior to the-seheduled increase of the month reaches-or-
10 
exceeds Eighty dollars (USD 80) per bar-relr]
11 
'^Providedr^fPiStFAiPtQ Department of Finance shall perform an annual
12 
review-ef-the implementation of the-excise tax on fuel and shall, based on
13 
pr-ejeet-iens—previded and rccommcndations-ef—the Development—budget
14 
coordination Committee, as reconciled from the-e-onditions as provided ab0ve7
15 
recommend the implementation-or-suspension of the exei5e-ta)o-0n fuel:
16 
Provided, further, That the recommendation shall be given on -a yearly basis:
17 
Provided, finally, That any suspension-of-the-iner-ease in cxciso -t-a-)e-shall-net
18 
result in any reduction of the excise tax being- imposed at the time of the
19
20 
"PROVIDED, THAT BEGINNING FROM THE DATE OF
21 
EFFECTIVITY OF THIS ACT, THE EXCISE TAXES IMPOSED ON
22 
PETROLEUM PRODUCTS UNDER THIS SECTION SHALL BE REDUCED
23 
BY FIFTY PERCENT (50%) AND THE IMPOSITION OF APPLICABLE
24 
DUTIES THEREOF SHALL BE SUSPENDED, FOR A PERIOD OF THREE
25 
(3) YEARS."
26 
Sec. 3. Section 151 of the National Internal Revenue Code of 1997, as
27 
amended, is hereby further amended to read as follows:
28 
"SEC. 151. Mineral Products. -
29 
"(A) Rates of Tax. - There shall be levied, assessed and collected on
30 
minerals, mineral products and quarry resources, excise tax as follows:
31 
"(1) On domestic or imported coal and coke, notwithstanding any
32 
incentives granted in any law or special law:


1 
"Effective January 1, 2018, Fifty pesos (P50.00) per metric ton;
2 
"Effective January 1, 2019, One hundred pesos (PIOO.OO) per metric
3 
ton; and
4 
"Effective January 1, 2020, One hundred fifty pesos (P150.00) per
5 
metric ton.
6 
''PROVIDED, THAT BEGINNING FROM THE DATE OF
7 
EFFECTIVITY OF THIS ACT, THE EXCISE TAX IMPOSED ON COAL AND
8 
COKE UNDER THIS SECTION SHALL BE REDUCED BY FIFTY PERCENT
9 
(50%), AND THE IMPOSITION OF APPLICABLE DUTIES THEREOF
10 
SHALL BE SUSPENDED, FOR A PERIOD OF THREE (3) YEARS."
11 
"xxx"
12 
Sec, 4. Implementing Rules and Regulations (IRR). - Within thirty (30) days
13 
from the effectivity of this Act, the Secretary of Energy and the Secretary of Finance,
14 
upon the recommendation of the Commissioner of Internal Revenue, shall
15 
promulgate the necessary rules and regulations for its effective implementation.
16 
Sec. 5. Separability Clause. - If any provision or part hereof is declared
17 
unconstitutional, the remainder of this Act or any provision not affected shall remain
18 
in full force and effect.
19 
Sec. 6. Repealing Clause. - All laws, acts, decrees, executive orders,
20 
issuances, and rules and regulations or parts thereof which are contrary to and
21 
inconsistent with this Act are hereby repealed, amended or modified accordingly.
22 
Sec. 7. Effectivity. - This Act shall take effect fifteen (15) days after its
23 
complete publication In the Official Gazette or in at least two (2) newspapers of
24 
general circulation.
Approved,