Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
Second Regular Session

House Brit No. 3.4

Introduced by Rep. JOSEPH VICTOR G. EJERCITO

EXPLANATORY NOTE

with the political tensions heating up in the Middle East and the
jooming decline in petroleum reserves warldwide, the price of oil has
tremendously Increased causing great ‘burden to the Fitipino people. Being
an importer and heavily dependent on the use of petroleum and other
petroleum-based products, every price increase on oil has an adverse effect
bn the economy. Every increase in the prices of gasoline, diesel, kerosene
and other petroleum-based products has a domino effect to the price of
prime commodities. This situation if not abated will certainly retard our
economic growth targets ‘and create widespread poverty among our people.

When the Expanded Value Added Tax (Republic Act No. 9337) was
enacted by Congress in 2004, its purpose wos to address the prevailing
Jooming crisis brought about by an Unprecedented increase in national dept.
The existing economic situation then was the country’s debt-to-gross
domestic product ratio was at record high ‘of 78.2%. Debt payments then
were equivalent to 86.1% of government revenues which was unparalleled
since 1986.

However, in 2020, the country’s debt-to-gross domestic product ratio
fell to 55.4%, a large improvement from the 2004 level. The economic tearm
of President Aquino is ‘committed in cutting the debt-to-gross domestic
product ratio to 46% when his term ends. Furthermore, even the known
financial and economic analysts forecast that the peso will strengthen and
the Philippine economy will rebound this year.

Albeit, removing the VAT from the sate and importation of petroleum
products would reduce government revenues, it is imperative to consider the
incomes and revenues derived from the Philippine Amusement and Gaming
Corporation, Philippine Charity Sweepstakes Office as well as of that
Malampaya gas project. These revenues should be included in the annual
drafting of the national budget instead of peing treated as off-budget items
subject to the full control of the Office of the President. The funds from these
sources ave sufficient ‘enough to reptenish for the fost revenues.


The projected gross income of Pagcor for FY 2012 is P 45 Billion, while
PCSO and Malampaya will have a total of P 31 Billion and P 43 Billion gross
incomes respectively.

The Pantawid Pasada program of the government falls short in
avercoming the burden of the Filipino masses. Neither the bus, jeepney and
taxi operators and drivers agree that it is the solution to the skyrocketing
cost of gasoline, diesel, kerosene and LPG. It does not benefit the people at
all.

Thus, instead of having another a dole-out program such as the
Pantawid Pasada program, it is high time to have an immediate relief for the
Filipino people from the increasing cost of ofl by classifying it as an exempt
transaction from the Value Added Tax.

In view of the foregoing, the passage of this measure is earnestly
sought.

JOSEPH VICTOR G. EJERCITO


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
Second Regular Session

HOUSE BILL NO.

Introduced by Rep. JOSEPH VICTOR G. EJERCITO

AN ACT EXEMPTING THE SALE OR IMPORTATION OF PETROLEUM
PRODUCTS AND RAW MATERIALS IN THE MANUFACTURE THEREOF
FROM THE EXPANDED VALUE ADDED TAX, AMENDING FOR THE
PURPOSE SECTION 109 (1} OF THE NATIONAL INTERNAL REVENUE
CODE (NIRC) OF 1997, AS AMENDED BY REPUBLIC ACT 9337, AND
FOR OTHER PURPOSES.

Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress assembled:

SECTION 1. Section 109 (1), Chapter 1, Title IV, Value Added Tax of
Republic Act No. 8424, otherwise known as the Tax Reform Act of 1997, as
amended by Republic Act No. 9337, is hereby amended to read as follows:

“SECTION 109. Exempted Transactions. (1) Subject to the provisions
of subsection (2) hereof, the fotlowing transactions shall be exempt from the
Value-Added Tax:

(A) Xxxx
(BB) Xxxx

After paragraph (B), insert the following paragraphs (C) and (BD).

(C) SALE OR IMPORTATION OF PETROLEUM PRODUCTS (EXCEPT
LUBRICATING OIL, PROCESSED GAS, GREASE WAX,
PETROLATUM, AND COAL AND NATURAL GAS IN WHATEVER
FORM OR STATE) SUBJECT TO EXCISE TAX IMPOSED UNDER
TITLE VI;

(D} SALE OR IMPORTATION OF RAW MATERIALS TO BE USED BY
THE BUYER OR IMPORTER HIMSELF IN THE MANUFACTURE OF
PETROLEUM PRODUCTS SUBJECT TO EXCISE TAX, EXCEPT
LUBRICATING OIL, PROCESSED GAS, GREASE, WAX AND
PETROLATUM;


SECTION 2. Implementing Rules and Regulations (IRR). - Within sixty
(60) days upon the approval of this Act, the Secretary of Finance, upon the
recommendation by the Commissioner of Internal Revenue, shall issue the
Implementing Rules and Regulations for the effective implementation of this
Act.

SECTION 3. Separability Clause. - Any provision or portion of this Act
that may be declared unconstitutional or invalid shall not have the effect of
nullifying other portions or provisions hereof, as !ong as such remaining
provisions or portions can still subsist and be given effect in their entirety.

SECTION 4. Repealing Clause. - All laws, acts decrees, executive orders,
issuances, and rules and regulations or parts thereof which are contrary to
and inconsistent with this Act are hereby repealed, amended or modified
accordingly.

SECTION 5. Effectivity. - This Act shall take effect fifteen (15) days after

its complete publication in the Official Gazette or in at least two (2)
newspapers of general circulation.

Adopted,