SIXTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES 
) 
Second Regular Session 
) 
SENATE 
s.B. NO. 
2749 
Introduced by: SENATOR SERGIO OsMENA '" 
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MAY -5 P 2 :44 
AN ACT AMENDING SECTION 109 (A) AND (F) OF THE NATIONAL INTERNAL 
REVENUE CODE, AS AMENDED BY REPUBLIC ACT NO. 9337, AND FOR 
OTHER PURPOSES 
EXPLANATORY NOTE 
This bill seeks to amend the National Internal Revenue Code of 1997, as 
amended, by clarifying the definition and providing for the technical meaning of "Raw 
Cane Sugar" in order to reflect the true intent of the legislature in exempting from 
value-added tax (VAT) the sale of "Raw Cane Sugar." 
Section 109 (1) (A) of Republic Act No. 8424 otherwise known as the National 
Internal Revenue Code of 1997, as amended by Republic Act No. 9337 provides, 
among others, that raw cane sugar and molasses shall be considered in the original 
state and shall be exempt from the value-added tax. 
On September 19, 2008, the Department of Finance, upon the recommendation 
of the Bureau of Internal (BIR), issued Revenue Regulations (RR) No. 13-2008 
defining raw sugar as sugar whose content of sucrose by weight in dry state, 
corresponds to a polarimeter reading of less than 99.5 degrees. It was also provided 
that direct consumption sugars, such as washed sugar and premium raw sugar that 
have reached only a polarimeter reading of 99.00 to 99.35, are considered as raw 
sugar exempt from VAT. 
However, on September 20, 2013 or five (5) years after the issuance of RR No. 
13-2008, the BIR issued RR No. 13-2013, which amended Section (2) (b) of RR No. 
13-2008 and redefined raw sugar as sugar produced by simple process of 
conversion of sugar cane without need of any mechanical or similar devices such as 
muscovado. It specified that raw sugar refers only to muscovado sugar. It further 
stated that the centrifugal process of producing sugar is not a simple process, 
therefore, any type of sugar that undergoes said process is not exempt from VAT. 
The local sugar industry clamors for the adoption of the definition of raw sugar 
under RR No. 13-2008 which is based on the Tariff and Customs Code and the 
internationally accepted standard definition. Imposing the value-added tax on raw 
sugar covered by RR No. 13-2013 would also mean additional cost for the 
consuming public due to the pass-on nature of VAT. A deviation from the said 
definition will further affect the global trade and country's trading partners. 
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Moreover, the new revenue regulations effectively amend Art. 61 of the Republic 
Act No. 6938 otherwise known as the Cooperative Code of the Philippines insofar as 
the affected cooperatives registered under the Cooperative Development Authority 
(CDA) who are supposed to be enjoying the privileges of exemptions from any 
government taxes and fees under the NIRC of 1997, as amended. 
The clarification of the definition of "Raw Cane Sugar" and the adoption of its 
internationally accepted technical meaning is one of the reliefs that Congress should 
immediately act upon. 
As provided in Codex Alimentarius· Codex Standard For Sugars (CODEX STAN 
212·1999), the Philippine National Standards On Raw Sugar (PNS/BAFPS 81:2010 
ICS 67.180.10) and the Tariff and Customs Code of the Philippines -
ASEAN 
Harmonized Tariff Nomenclature (AHTN • Chapter 17), "Raw Cane Sugar or Raw 
Sugar" has a specific technical meaning with its corresponding standards. 
To 
change the same in order to justify additional collection of revenues for the 
government would also necessarily result in a violation of our international 
agreements which use the accepted international definition. 
As the bill promises to benefit the country's fiscal management, it is still 
imperative that Congress act with dispatch to approve it as maintaining the VAT 
exempt status on the sale of "Raw Cane Sugar" constitutes an invaluable economic 
relief for all Filipino households and businesses. 
The sale of "Raw Cane Sugar or Raw Sugar" has always been VAT exempt. 
Thus, any foregone revenue can be offset by the increased purchasing power of all 
households and businesses. The resulting cheaper production costs will then parlay 
to a more robust and equitable economy for the country. 
The immediate approval of this bill is therefore earnestly sought. 
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4,~v 
-£ERGIO OSMENA 11/ 
Senator 


SIXTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES) 
Second Regular Session 
) 
SENATE 
S.B. No. 2749 
Introduced by: SENATOR SERGIO OSMENA III 
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MAY -5 P 2 :44 
AN ACT AMENDING SECTION 109 (A) AND (F) OF THE NATIONAL INTERNAL 
REVENUE CODE, AS AMENDED BY REPUBLIC ACT NO. 9337, AND FOR OTHER 
PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
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SEC. 1. Section 109 (A) of the National Internal Revenue Code, as amended, is 
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hereby further amended to read as follows: 
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"SEC. 109. Exempt Transactions. - (1) Subject to the provisions of 
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subsection (2) hereof, the following transactions shall be exempt from the value-
s 
added tax: 
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(A) Sale or importation of agricultural and marine food products in their 
original state, livestock and poultry of a kind generally used as, or yielding 
or producing foods for human consumption; and breeding stock and 
genetic materials therefor. 
Products classified under this paragraph shall be considered in their 
original state even if they have undergone the simple processes of 
preparation or preservation for the market, such as freezing, drying, 
salting, broiling, roasting, smoking or stripping. Polished and/or husked 
rice, corn grits, RAW SUGAR OR raw cane sugar and molasses, ordinary 
salt, and copra shall be considered in their original state; 
FOR THIS PURPOSE, "RAW SUGAR OR RAW CANE St../:GAR" 
MEANS PARTIALLY PURIFIED SUCROSE, WHICH IS CRYSTALLISED 
FROM PARTIALLY PURIFIED CANE JUICE, WITHOUT FURTHER 
PURIFICATION, 
BUT 
WHICH 
DOES 
NOT 
PRECLUDE 
CENTRIFUGATION OR DRYING, AND WHICH IS CHARACTERISED 
BY SUCROSE CRYSTALS COVERED WITH A FILM OF CANE 
MOLASSES AND WHOSE CONTENT OF SUCROSE BY WEIGHT, IN 
THE DRY STATE, CORRESPONDS TO A POLARIMETER READING 
OF LESS THAN 99.5 0. 
xxx 
(F) Services by agricultural contract growers and milling for others of palay 
into rice, corn into grits and sugar cane into raw sugar OR RAW CANE 
SUGAR" , 
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1 
SEC. 2.-
Repealing Clause.- All other laws, acts, decrees, executive orders, 
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issuances, and rules and regulations or parts thereof which are contrary to and 
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inconsistent with any provisions of this Act are hereby repealed, amended or modified 
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accordingly. 
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SEC. 3. - Separability Clause. - If any provision of this Act is subsequently 
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declared unconstitutional, the validity of the remaining provisions hereof shall remain in 
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fu II force and effect. 
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SEC. 4. - Effectivity Clause - This Act shall take effect immediately after its 
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complete publication either in the Official Gazette or in a newspaper of general 
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circulation in the Philippines. 
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Approved. 
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