SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
FIRST REGULAR SESSION 
SENATE 
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SENATE BILL NO. ~ __ 
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INTRODUCED BY SENATOR JOSEPH VICTOR G. EJERCITO 
EXPLANATORY NOTE 
.1 
The cost of petroleum products influences the prices and services of the 
local market, Every increase of the petroleum products would surely brings 
heavy burden to the Filipino people, whose incomes are meager that they could 
not cope and easily adjust with the inflation. 
With the political tensions heating up in the Middle East, Syria and the 
looming decline in petroleum reserves worldwide, the price of oil has 
tremendously incre;ased causing great burden to the Filipino 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 on 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 was to address the prevailing 
looming crisis brought about by an unprecedented increase in national debt. 
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 2010, the country's debt-to--gross domestic product ratio fell 
to 55.4%, a large improvement from the 2004 level. The economic team 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 tbe VAT from the sale 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 being treated as off-budget items 
subject to the full control of the Office of the President. The funds from these 
sources are sufficient enough to replenish for the lost revenues. 


The projected gross income of Pagcor for FY 2012 is P 45 Billion, while 
peso 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 
overcoming 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 oil 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 ·VIC\~~~CITO 


SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
FIRST REGULAR SESSION 
SENATE 
SENATE BILL NO .. _--'to 
Tl JUL-l 
11:11 :12 
INTRODUCED BY SENATOR 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 following transactions shall be exempt from the 
Value-Added Tax: 
(A) 
xxxx 
(B) 
xxxx 
After paragraph (B), insert the following paragraphs (C) and (D). 
(C) 
SALE OR IMPORTATION OF PETROLEUM PRODUCTS (EXCEPT 
LUBRICATING 
OIL, 
PROCESSED 
GAS, 
GREASE 
WAX, 
PETROLATUM, AND COAL AND NATURAL GAS IN WHATEVER 
FORM OR STATg) 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, 
PROCESfmD GAS, GREASE, WAX AND 
pgTROLATUM; 
xxxx " 
SECTION 2. hnpleDlenting 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 long 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,