Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City !

fy RECEIVED

NINETEENTH CONGRESS
First Regular Sessi

nouse eit no. 400

introduced by Honorable Representatives.
ARLENE D. BROSAS (Gabriela Women’s Party),
FRANCE L. CASTRO (ACT Teachers Partylist),

and RAOUL DANNIEL A. MANUEL (Kabataan Partylist)

AN ACT LOWERING THE PRICE OF OIL AND OTHER PETROLEUM PRODUCTS,
AMENDING FOR THIS PURPOSE REPUBLIC ACT NO. 10963 OR THE TAX REFORM
FOR ACCELERATION AND INCLUSION (TRAIN) LAW, AND REPUBLIC ACT 8424 OR

THE TAX REFORM ACT AS AMENDED BY RA 9337

EXPLANATORY NOTE

Filipinos are left without any reprieve from the barrage of oil price hikes since the start of
2022 even as the COVID-19 pandemic already pushed 26.14 million people into poverty.
The successive rounds of oil price hikes have pushed transportation and production
costs higher, leading to a chain of commodity price hikes which severely affect low
income earners. Unabated oil price hikes have significantly contributed to a two-year
high inflation rate of 5.4 percent in May 2022

Data from the Department of Energy (DOE) show that year-to-date adjustments of
petroleum products stand at a net increase of P29.50 per liter for gasoline, P44.25 per
liter for diesel, and P39.65 per liter for kerosene as of June 21, 2022. Local pump prices
are expected to breach the P100 per liter mark, with more rounds of oil price hikes on
the horizon under a deregulated regime. The Russia-Ukraine crisis is being used as
scapegoat for the series of oil price hikes, as the country actually does not significantly
source its oil supply from the two countries.

The nonstop oil price hikes are made worse by the imposition of excise taxes on
petroleum under the Tax Reform for Acceleration and Inclusion (TRAIN) Law, and the 12
percent Value Added Tax (VAT) on petroleum products. These taxes aggravate the
suffering of public utility (PUV) drivers, who can barely feed their families with a very
meager take-home pay. Commuters meanwhile are made to shoulder the oil price hikes
with fake hikes. Farmers and fisherfolk are also experiencing heavy losses due to
skyrocketing diesel, gasoline and kerosene prices.

This proposed measure seeks to immediately lower the price of oil and other petroleum
products by scrapping the excise tax on petroleum products imposed under the TRAIN
Law, and by including petroleum products in the list of exemptions under the E-VAT
Law

iN

vay

2 DAT ESUN 3.0 202%:



‘Suspending the oil excise taxes under the TRAIN will provide immediate relief to
Filipinos. This will remove Php3 from the price per kilo of liquefied petroleum gas (LPG),
lowering the price of an 11-kilo tank by Php33 not including VAT. The price per liter of
diesel can be immediately slashed by P6, and the price of unleaded gasoline by P5.35

per liter

According to think tank |BON Foundation, oil revenue losses can be offset by also
suspending corporate income tax (CIT) cuts under the Corporate Recovery and Tax
Incentives for Enterprises Act or CREATE. The group noted that the government
projects revenue losses of Php115.8 billion in 2021 and Php 101.8 billion in 2022 from
CREATE's CIT cuts. Reducing indirect consumption taxes such as on oil and increasing
direct taxes on income makes the tax system more progressive.

SUMMARY OF PROPOSAL TO SCRAP TRAIN EXCISE TAXES ON OIL AND

PETROLEUM PRODUCTS
j CURRENT EXCISE | PROPOSED UNDER | REDUCTION
! TAX THIS BILL !
an {per kilo/ liter) _
' Lubricating oils and 10.00 P550 j
greases — —_ |
Processed gas | P1000 -
Waxes and petrolatum | ——=P10.00— |
Denatured alcohol P10.00 _ 1
Naphtha, regular P10.00 |
“gasoline —
Leaded premium NIA
| gasoline
Unleaded premium 10.00
gasoline | j
tion fuel and gas P40 i |
“Kerosene ~P5.00 TT
Diesel fuei oil ~ P6.00.
Liquefied petroleum 3.00 |
gas = a
—Asphaits | «P1000 ~PO56 -
Bunker fuel oi ‘P6.00 000 5.
Petroleum coke P6.00 _ P0.00 oC



In view of the foregoing, the approval of this bill is earnestly sought.

1
NE. BROSAS
Gkbriela Women's Party



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

NINETEENTH CONGRESS
First Regular Session

400

HOUSE BILL No.

Introduced by Honorable Representatives

ARLENE D. BROSAS (Gabriela Women’s Party),
FRANCE L. CASTRO (ACT Teachers Partylist),
and RAOUL A. MANUEL (Kabataan Partylist)

AN ACT LOWERING THE PRICE OF OIL, PETROLEUM PRODUCTS,
AMENDING FOR THIS PURPOSE REPUBLIC ACT NO. 10963 OR THE TAX REFORM
FOR ACCELERATION AND INCLUSION (TRAIN) LAW, AND REPUBLIC ACT 8424 OR

THE TAX REFORM ACT AS AMENDED BY RA 9337

SECTION 1. Section 43 of Republic Act 10963 is hereby amended to read as follows:

Section 43. Section 148 of the NIRC, as amended, is hereby further amended to read
as follows:

“Sec. 148. Manufactured Oils and Other Fuels. - There shall be collected on refined
and manufactured mineral oils and motor fuels, the following excise taxes which shall
attach to the goods hereunder enumerated as soon as they are in existence as such

[Effective January 1,2018]

(a) Lubricating oils and greases, including but not limited to, base stock for lube oils
and greases, high vacuum distillates, aromatic extracts and other similar preparations,
and additives for lubricating oils and greases, whether such additives are petroleum
based or not, per liter and kilogram, respectively, of volume capacity or weight {Eight
pesos-{P8.00)] FOUR PESOS AND FIFTY CENTAVOS (P4.50): Provided, That
lubricating oils and greases produced from base stocks and additives on which the
excise tax has already been paid shall no longer be subject to excise tax: Provided,
further, That locally produced or imported oils previously taxed as such but are
subsequently reprocessed. refined or recycled shall likewise be subject to the tax
imposed under this Subsection;

"(b) Processed gas, per liter of volume capacity, [Eight-pesos{P8.00)] FIVE
CENTAVOS (P0.05)

“(¢) Waxes and petrolatum, per kilogram, {Eight pesos (P8.00)} THREE PESOS AND
FIFTY CENTAVOS (P3.50):

"(d) On denatured alcohol to be used for motive power, per liter of volume capacity,
[Eight pesos_(P8.00)] FIVE CENTAVOS (P0.05): Provided, That unless otherwise
provided by special laws, if the denatured alcohol is mixed with gasoline, the excise
tax on which has already been paid, only the alcoho! content shall be subject to the tax


herein prescribed. For purposes of this Subsection, the removal of denatured alcohol
of not less than one hundred eighty degrees (180°) proof (ninety percent (90%)
absolute alcohol) shall be deemed to have been removed for motive power, unless
shown otherwise:

"(e) Naphtha, regular gasoline, pyrolysis gasoline and other similar products of
distillation, per liter of volume capacity {Seven-pesos (P7.00)] FOUR PESOS AND
THIRTY CENTAVOS (P4.35): Provided, however, That naphtha and pyrolysis
gasoline, when used as a raw material in the production of petrochemical products, or
in the refining of petroleum products, or as replacement fuel for natural-gas-fired-
combined cycle power plant in lieu of locally-extracted natural gas during the non-
availability thereof, subject to the rules and regulations to be promulgated by THE
SECRETARY OF ENERGY, IN CONSULTATION WITH the Secretary of Finance, per
liter of volume capacity, zero (P0.00): Provided, further, That the production of
petroleum products, whether or not they are classified as products of distillation and
for use solely for the production of gasoline shall be exempt from excise tax: Provided,
finally, That the by-product including fuel oil, diesel fuel, kerosene, pyrolysis gasoline,
liquefied petroleum gases and similar oils having more or less the same generating
power, which are produced in the processing of naphtha into petrochemical products
shall be subject to the applicable excise tax specified in this Section, except when such
by-products are transferred to any of the local oil refineries through sale, barter or
exchange, for the purpose of further processing or blending into finished products
which are subject to excise tax under this Section;

"49 Unleaded premium gasoline, periiter of volume. capacity Sever pesos {P7.00}}

“(F) LEADED PREMIUM GASOLINE, PER LITER VOLUME CAPACITY, FIVE
PESOS AND THIRY-FIVE CENTAVOS (P5.35); UNLEADED PREMIUM GASOLINE,
PER LITER VOLUME CAPACITY, FOUR PESOS AND THIRTY-FIVE CENTAVOS
(P4.35);”

“(g) Aviation turbo jet fuel, aviation gas, per liter of volume capacity, {Four pesos
(P4.00)} THREE PESOS AND SIXTY-SEVEN CENTAVOS (P3.67):

“(h) Kerosene, per liter of volume capacity, [Three-pesos-(P3.00}] ZERO (P0.00):
Provided, That kerosene, when used as aviation fuel, shall be subject to the same tax
on aviation turbo jet fuel under the preceding paragraph (g), such tax to be assessed
on the user thereof,

"(i) Diesel fuel oil, and on similar fuel oils having more or less the same generating
power, per liter of volume capacity, fFwo-pesos and fifty centavos{P2.50)] ZERO
{P0.00);

"Q) Liquefied petroleum gas, per kilogram, [One-peso-{P400}] ZERO (PO.00):
Provided, That liquefied petroleum gas when used as raw material in the production of
petrochemical products, subject to the rules and regulations to be promulgated by the
Secretary of Finance, shall be taxed zero (0.00) per kilogram

“Provided, finally, That liquefied petroleum gas used for motive power shall be taxed
at the equivalent rate as the excise tax on diesel fuel oil;

“(k) Asphaits, per kilogram, [Eight pesos (P8.00)] FIFTY-SIX CENTAVOS (P0.56):
“()) Bunker fuel oil, and on similar fuel oils having more or less the same generating

power, per liter of volume capacity, [Two pesos and fifly centavos (P2.50)] ZERO
{P0.00): Provided, however, That the excise taxes paid on the purchased basestock


(bunker) used in the manufacture of excisable articles and forming part thereof shall
be credited against the excise tax due therefrom; and

“(m) Petroleum coke, per metric ton, fFwo-pesos-and-fifty centavos-(P2.50)] ZERO
{P0.00): Provided, however, That, petroleum coke, when used as feedstock to any
power generating facility, per metric ton, zero (PO.00)

PEsective Januaryt,2019

"Ya}-Lubricating-olls-and- greases, including-but-not limited to, basestock for-tube-olls
and-greases. high vacuum distilates, tic extracts. and other similar prep:

and additives-for lubricating oils-and greases, whether such additives ‘ye petroleum
based-or-not-perliter and kilogram, respectively. of volume-capacity-or weight, Nine
pesos {9.00}: Provided, That lubricating oils-and-greases.produced from basestocks
and additives-on which the excise tax has already been paid shall ne longer be-subject
to-excise tax-Provided, further That locally produced or imported-cils previously taxed
.as-such-but-ave-subsequently_reprocessed,rerefined_or recycled-shall likewise-be
subject to the tax imposed under this Subsection.

“{b) Processed.gas. per liter of volume capacityNine pesos (P9.00};
"(e) Waxes-and_petrolatum, per-kil Nine-pesos (P9.00)-

“(@) On denatured alcohol to be used for motive power, per Iter of volume capaciy,

shail be exempt from-exoise tax: Provided,-finally, That the by-product including fuel
oil. diesel fuel, kerosene, pyrolysis gasoline, liquefied petroleum, gases and similar oils
‘Raving more or less the same-generating power, which are produced in the processing
of naphtha inte-petrochemical products shall-be-subject to the applicable excise tax
specified in-this Section-except when-such by-products-are-transferred.toany-of the
localcil_refineries—through—sale—barler-or-exchange,—for the purpose_of further
precessing or blending into finished products which are subjectto excise tax under this
Section;

"(f}-Unleaded_ premium gasoline--perliter of volume-capacity-Nine pesos {P9.00}:

“4g)-Aviationturbo_jet_fuel_aviation-gas,per-liter-of_volume-capacity. Four pesos
(4.00);

“(h) Kerosene, per liter of volume capacity, Four pesos (P4.00):-Provided, That
kerosene--whea-used-as-aviation- fuel, shall-be-subject tothe same tax-on-aviation


turbo jet-fuel under the preceding paragraph (g)- such-tax-to-be-assessed-on the user
thereof:

"()) Diesel fuel-oil,-and-on-similar fuel oils having-more-or less the-same-generating
power,-perliter of volume capacity, Four pesos and fifty centavos (P4.50);

"@) Liquefied -petroleum-gas, per kilogram Two pesos{P2.00}: Provided, That liquefied
petroleum-gas.when used as. raw-material in the production of petrochemical products.
subject to the rules-and-regulations to be promulgated by the Secretary of Finance-per
kilogranszero-(®0.00): Provided, finally, Thal liquefied petroleum gas used-for motive
power shall-be-taxed-at the equivalent ate.as the excise-tax-on-dieselfuel-oik

“(k)-Asphalts, per kilogram-Nine-pesos (29-00):

"()-Bunker fuel oil,-and-on-similar fuel oils i Joss-the same generating
power. per liter of volume-capacity, Four pesos.and fifty centavos (P4.50)- Provided,
however—That the excise taxes paid-on-the purchased basestock (bunker) used. inthe
manufacture of excisable articles and forming part thereof shall be credited.against the
excise tax due-tnerefrom; and

“(mn) Petroleum-coke_-per- metric ton, Four pesos and/fifly centavos {P4.50)-Provided,
however, That-petroleum coke when-used as feedstock to any power-generating
facility, permetric ton, zero-(0.00).

$10.00): Provided-That lubricating-oils and

"(3) On denatured alcohol to-be-used tor motive power.-per titer of volume capacity,
Ten pesos (P'10.00): Provided, That unless otherwise provided by special laws, if the
denatured-alcohol-is mixed with gasoline—the-excise tax-on-which-has-already-been
paid—only-the-alechol_content_shall_be-subject-to-the-tax-herein-preseribed For
purposes of this Subsection_the removal of denatured-alcohol of not less than one
hundred eighty degrees (180°)-proot {ninety percent (90%) absolute alcoho!) shall be
deemed-to- have been-removed for motive pewer, unless shown otherwise:

“(@) Naphtha,- regular gasoline, pyrolysis-gasoline and other similar-products. of
distilation, per liter of volume capacity Ten pesos (P 10.00)-Provided, however. That
naphtha-and_pyrolysis-gascline,when-used_as-a_raw-material-in_the-production-of
petrochemical products,-orin the refining-of petroleum products or as-replacement {uel
for natural-gas-fred-combined cycle power plant in-lieu of locally-extracted-natural gas
during—the—nen-availability_thereof, subject to_the_rules—and—regulations—to—be
promulgated by the Secretary of Finance, per liter of volume capacity, zero (P0.00):
Provided, further That the production of petroleum products, whether or not they are


Jassified-as-product i" m ly for-the-production-of
shall-be-exemptfrom-excise-tax- Provided. finally, That the by-product including-fuel
oil, diesel fuel-kerosene, pyrolysis gasoline, liquefied petroleum gases and similar-ols
having more orless-the same generating power, which are produced in the-processing
of naphtha-into petrochemical products-shall be subject-to the applicable-excise tax
specified-in this Section, except when-such by-products. are-transferred-te-any ofthe
locat-oil-refineries-through-salebarter_or_exchange,for-the-purpose—of further
processing or blending into finished -products which are subject to excise tax-under this
Sestion:

"(-Unieaded-premium gasoline, per liter of volume capacity, Ten pesos {P10:00);
“4g) Aviation turbojet fuel_ aviation gas. per-iter of volume capacity-Four pesos (P4.00):
“h)-Kerosene,-per_iter_of volume capacity. Five-pesos_{P5.00): Provided, That

kerosene-wh tion-fuel,shall-be-subject-to- th tax-on-aviation

turbo jel fuel under: the preceding paragraph-(g},-suchtax-to be assessed.on-the-user

thereof,

"4i)-Diesel-{uel-oil_and-on-similar fuel-oils-having-more-or jess the same-generating
power, perliter of volume capacity, Sixpesos(P6.00};

"G)-Liquefiedpetroleum_gas.—per_kilogram,—Three_pesos (3.00); Provided, That

liquefied petroleum gas when used as raw material in the production of petrochemical

“4m) Petroleum coke, per metrie_ton, Six pesos (P6.00)- Provided, however, That,
petroloum-coke-when used_as feedstock 1o-any power generating-facility. per metric
ton, zero (0-00)

"Petroleum products, including naphtha, LPG, petroleum coke, refinery fuel and other
products of distillation, when used as input, feedstock or as raw material in the
manufacturing of petrochemical products, or in the refining of petroleum products, or
as replacement fuel for natural-gas-fired-combined cyclepower plant in lieu of locally-
extracted natural gas during the non-availability thereof, subject to the rules and
regulations to be promulgated by the SECRETARY OF ENERGY IN CONSULTATION
WITH THE Secretary of Finance, per liter of volume capacity, zero (P0.00): Provided,
That the by-product including fuel oil, diesel fuel, Kerosene, pyrolysis gasoline,
liquefied petroleum gases, and similar oils having more or less the same generating
power, which are produced in the processing of naphtha into petrochemical products
shall be subject to the applicable excise tax specified in this Section, except when such
by-products are transferred to any of the local oil refineries through sale, barter or
‘exchange, for the purpose of further processing or blending into finished products
which are subject to excise tax under this Section


price-based-on Mean of Platts Singapore {MOPS)for three-(3}-months prior to the
scheduled increase of the month-reaches-or exceeds Eighty-dolars {USD-80)-per
barrel.)

“Provided, That the [Department—of—Finance] DEVELOPMENT BUDGET
COORDINATION COMMITTEE (DBCC) shall perform an annual review of the
implementation of the excise tax on fuel and shall, based on projections provided and
recommendations of the Development Budget Coordination Committee, fas reconciled
from—the—conditions—as_provided—above], recommend the fimplementation—of]
suspension OR REDUCTION of the excise tax {on fuel] UNDER THIS SECTION
Provided, ffurther,] That the recommendation shall be given on a yearly basis
[Provided, finally, That-any-suspension-of the increase in excise tax shall notresultin

any-reduction- of the-excise tax being imposed at the time of the suspension."}

SECTION 2. Section 109 (1), Chapter 1, Title IV of the National Internal Revenue Code as
amended is hereby amended to read as follows:

Section 109. Exempt Transactions. — (1) Subject to the provisions of subsection (2)
hereof, the following transactions shall be exempt from the value-added tax:

(A) 20x
After paragraph A, insert paragraph (B),

“(B) THE SALE OF OIL, GASOLINE, LPG, KEROSENE AND OTHER PETROLEUM
PRODUCTS;

And re-letter the succeeding paragraphs.

SECTION 3. Separability Clause. Any provision or portion of this Act that may be declared
unconstitutional shall not have the effect of nullifying other parts thereof,

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

SECTION 5. Effectivity Clause. This Act shall take fifteen (15) days after its complete
publication in the Official Gazette or in newspaper of general circulation,

Approved,