Expanding the Incentive Features of Letter of Instructions (Loi) No. 1352 Dated September 8, 1983 To Encourage Crude Oil Export Processing Activities in the Country By Including Therein Intermediate Products For Feedstocks and Authorizing the Swap Or Exchange of Petroleum Products, Thereby Amending Loi No. 1352, and For Other Purposes

Case Overview and Summary

Summary of Executive Order No. 280

Expanding Incentives for Crude Oil Export Processing Activities
- Amends Letter of Instructions (LOI) No. 1352 to encourage crude oil export processing activities in the Philippines. (Sec. 1)
- Includes intermediate products for feedstocks within the scope of crude oil export processing activities. (Sec. 1)
• Any foreign entity/third party offshore may bring into the Philippines crude oil and other feedstocks/intermediate products for further processing into finished petroleum products, over which it shall retain ownership. (Sec. 1)
• These will be processed by a local oil company under a processing agreement, in consideration for a processing fee payable in foreign currency. (Sec. 1)
• The processed petroleum products will be shipped out of the Philippines by the foreign entity/affiliate. (Sec. 1)
• Local oil companies may process additional volumes of their own imported crude oil to exploit export opportunities for petroleum products. (Sec. 1)

Authorizing Swaps/Exchanges of Petroleum Products
- Allows arrangements for the swap/exchange of petroleum products processed from foreign-owned crude oil under an export processing agreement, with petroleum products refined by and belonging to a local oil company on a value-for-value basis using internationally recognized reference prices. (Sec. 2)
• The foreign entity/affiliate shall continue to enjoy all benefits and incentives under LOI No. 1352, provided that the petroleum products received in swap/exchange are actually exported. (Sec. 2)
• The foreign entity/affiliate shall not be deemed to have engaged in trade or business in the Philippines, and no taxes, duties, fees, charges, and other imposts, including income taxes, shall be due on account of such swap/exchange. (Sec. 2)
• The petroleum products to be actually exported by the foreign entity/affiliate after the swap/exchange shall be deemed to be the processing yield, results for the crude oil brought into the country, as certified by the Energy Regulatory Board. (Sec. 2)
• The petroleum products received in swap/exchange by the local oil company, if intended for local sale, shall be subject to applicable excise taxes, fees, charges, and other imposts, except customs duties and other import charges and fees since they have already been paid. (Sec. 2)
• The subsequent export of said swapped/exchanged petroleum products by the local oil company shall continue to be given the same tax/duty treatment accorded to other petroleum product exports, allowing recovery of import duties, charges, imposts, and other fees paid. (Sec. 2)
• Local oil companies shall be allowed to recover the excise taxes on refinery fuel and loss volumes that may have been paid in the case of products given in swap/exchange which were taken or lifted from tax-paid stocks. (Sec. 2)

Continuity of Export Processing Incentives
- Ensures that nothing in this Order or in any prior and existing other laws, presidential decrees, executive orders, letters of instructions, including administrative orders, rules and regulations, since the enactment of LOI No. 1352, shall operate or be construed as an interruption, disruption, diminution or impairment whatsoever of the privileges, benefits and incentives available under LOI No. 1352, previous to the effectivity of this Order. (Sec. 3)

Implementation
- The Department of Finance, the Bureau of Internal Revenue, the Bureau of Customs, the Energy Regulatory Board, the Central Bank of the Philippines, the Philippine Ports Authority and such other government offices, agencies and other instrumentalities as may be responsible for the observance, application and implementation of LOI No. 1352, are hereby enjoined to facilitate the immediate implementation of this Order. (Sec. 4)

Repealing Clause
- All laws, particularly the Tariff and Customs Code of the Philippines and the National Internal Revenue Code, as amended, decrees, executive orders, letters of instructions, letters of implementation, proclamations, memoranda and rules and regulations inconsistent with any or all of the provisions of this Order are hereby repealed, modified, amended and/or superseded accordingly. (Sec. 5)

Separability Clause
- The provisions of this Executive Order are declared to be separable, and if any provisions or the application thereof is held invalid or unconstitutional, the validity of other provisions shall not be affected thereby. (Sec. 6)

Effectivity
- This Executive Order shall take effect immediately upon completion of its publication in the Official Gazette. (Sec. 7)