President Ferdinand Marcos Jr. has signed Executive Order No. 114 temporarily suspending excise taxes on liquefied petroleum gas (LPG) and kerosene for three months, effective immediately, following a spike in global crude oil prices.
The order, signed on April 16, 2026, and released by Malacañang Palace, comes after the Department of Energy (DOE) certified on April 10 that average Dubai crude oil prices based on the Mean of Platts Singapore (MOPS) reached $93.71 per barrel over the preceding 30-day period.
The suspension applies to LPG except when used as raw material for petrochemical production or motive power, and kerosene except when used as aviation fuel. The measure aims to provide relief to Filipino consumers amid rising global energy costs.
Legal Framework Triggers Suspension
The executive order was issued under the authority granted by Republic Act No. 12316, which amended Section 148 of the National Internal Revenue Code of 1997. The law authorizes the President to temporarily suspend or reduce petroleum excise taxes when average Dubai crude oil prices reach or exceed $80 per barrel for one month.
The Development Budget Coordination Committee (DBCC) recommended the full suspension through Resolution No. 2026-3, working in coordination with the DOE. The recommendation specifically called for a three-month suspension period with monthly reviews.
According to the executive order, the current oil price of $93.71 per barrel significantly exceeds the $80 threshold that triggers the suspension mechanism, justifying the immediate implementation of tax relief measures.
Monthly Review Process Mandated
The suspension will be subject to monthly reviews by the DBCC, which will recommend to the President whether to continue, modify, extend, or terminate the tax relief. This review mechanism ensures the policy remains responsive to changing global oil market conditions.
The excise tax rates will automatically revert to standard levels under two conditions: one week after the one-month average Dubai crude oil price falls below $80 per barrel as certified by the DOE, or upon expiration of the three-month duration, whichever occurs first.
This automatic reversion clause ensures the suspension remains temporary and tied to actual market conditions rather than political considerations.
Government Agencies Tasked with Implementation
The executive order directs multiple government agencies to ensure proper implementation and monitoring. The DOE and Department of Finance (DOF), through the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC), must conduct an inventory of existing LPG and kerosene stocks as of the order's effectivity.
The BIR and BOC are required to submit monthly reports to Congress detailing the declared value and volume of petroleum products covered by the suspension. This reporting requirement ensures transparency and accountability in the implementation process.
The DOE must require oil companies to submit monthly information on cost components of the affected petroleum products during the suspension period. This data will be forwarded to both the DBCC and Congress as mandated by law.
Implementing Guidelines and Compliance
The DOF, through the BIR and BOC, along with the DOE, are authorized to issue necessary rules, regulations, and guidelines to effectively implement the order. These agencies will ensure compliance with the requirements of Republic Act No. 12316.
The executive order includes standard legal provisions ensuring its validity even if portions are challenged. If any section is declared unconstitutional or invalid, the remaining provisions will continue in full force and effect.
All existing orders, rules, regulations, and issuances inconsistent with the new executive order are repealed or modified accordingly to prevent conflicting directives.
Economic Impact on Filipino Households
The suspension is expected to provide immediate relief to Filipino households that rely on LPG for cooking and kerosene for various domestic uses. LPG is widely used across the Philippines as the primary cooking fuel for millions of families, particularly in urban areas.
Kerosene, while less commonly used than in previous decades, still serves as an important fuel source for heating and lighting in some rural communities and for specific industrial applications.
The timing of the suspension coincides with ongoing global energy market volatility, which has affected petroleum product prices worldwide. The measure demonstrates the government's use of existing legal mechanisms to respond to international price pressures.
Congressional Oversight Mechanisms
The executive order establishes robust congressional oversight through mandatory monthly reporting requirements. Congress will receive detailed information about the volume and declared value of affected petroleum products, enabling legislative scrutiny of the program's implementation.
The requirement for oil companies to provide cost component data creates additional transparency in petroleum pricing during the suspension period. This information will help policymakers assess the effectiveness of the tax suspension in providing consumer relief.
The executive order took effect immediately upon signing, with Acting Executive Secretary Ralph G. Recto countersigning the document. The measure represents a significant use of executive authority to address economic pressures facing Filipino consumers amid challenging global energy markets.
Photo credit: Photo courtesy of Malacañang Palace