In photo: Malampaya gas field / Credit: Shell

The House of Representatives has moved to investigate why the value-added tax (VAT) exemption for indigenous natural gas—a key provision of the Philippine Natural Gas Industry Development Act—has not yet been implemented despite the law and its implementing rules already being in effect.

In House Resolution No. 472 filed on November 17, Rep. Rodolfo “Ompong” Ordanes urged the Committee on Energy to conduct an inquiry into what he described as an “unjustifiable delay” in applying the VAT relief for both the purchase and sale of indigenous natural gas and for the electricity produced from it. The VAT exemption is expressly mandated under Republic Act No. 12120, which was signed into law on January 8, 2025.

The resolution notes that the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular No. 13-2025 on February 7, 2025 to circularize the law, while the Department of Energy (DOE) published the final Implementing Rules and Regulations through Department Circular No. DC2025-04-0005, which took effect on April 23, 2025. Despite these steps, Ordanes said the exemption “remains unimplemented,” with power producers using indigenous gas still being charged the 12% VAT.

The lawmaker said the continued VAT collection has direct cost implications for consumers, citing estimates that households using 200 kWh per month still pay around PHP 42 because the statutory exemption has not yet been applied. He argued that the delay undermines one of RA 12120’s central intentions—to help lower electricity prices, encourage fair competition, and strengthen investor confidence in the country’s gas industry.

RA 12120 identifies indigenous natural gas, including gas from the Malampaya field, as a strategic domestic resource that should be made more cost-competitive. The exemption is designed to reduce fiscal burdens on gas-fired generation and improve pricing outcomes for end-users. Ordanes emphasized that the provision is “self-executing” under the law and therefore enforceable even without further issuances.

The resolution calls for an inquiry “in aid of legislation” to determine the cause of the delay and to compel its proper and timely implementation. A formal probe could require the DOE, BIR, and industry stakeholders to clarify administrative, regulatory, or procedural bottlenecks preventing the exemption from taking effect. 

What do you think this investigation signals for gas development, pricing, and regulatory certainty in the Philippines? Let’s discuss.

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