WHEREAS, the development and promotion of Philippine export is essential to economic growth;

WHEREAS, there are many export producers which lack the facilities and expertise necessary for direct exports;

WHEREAS, it is necessary to encourage these producers to sell to export traders by extending to them the tax benefits available to direct exporters under the National Internal Revenue Code, as amended:

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby decree:

SECTION 1. Section 187 of the National Internal Revenue Code, as amended, is hereby amended by adding the following definition of words and phrases:

"(y) 'Registered export producer' shall mean any person, corporation, partnership, or other entity doing business in the Philippines, (1) registered with Philippine Export Council, (2) engaged in the manufacture, production or processing of articles or products for export in commercial quantity, and (3) directly exporting its products, or selling them (a) to a registered export trader that subsequently exports the said products, or (b) to another export producer who utilizes said products as direct materials or input in product subsequently manufactured or processed by them and thereafter exported or (c) to foreign tourists, when paid for acceptable foreign currency and actually brought out of the Philippines by the buyers upon their departures.

"(z) 'Registered export trader' shall mean any person, corporation, partnership or other entity doing business in the Philippines (1) registered with the Philippine Export Council and (2) who is engaged in the buying of Philippine-made products and subsequently exporting the same.

"(aa) 'Export sales' shall mean the Philippine port F. O. B. value, determine from invoices, bills of lading, inward letters of credit, landing certificates, and other commercial documents, of export products exported directly by a registered export producer or registered export trader, or the net selling price of export products sold by a registered export producer to another export producer, or registered export trader who subsequently exports the same, or the net selling price of export products in acceptable foreign currencies sold by a registered export producer or registered export trader to foreign tourists and foreign travelers. Sales of export products to another export producer or to a registered export trader shall only be deemed export sales when actually exported by the latter."

SEC. 2. Section 202 of the National Internal Revenue Code is hereby amended by adding sub-paragraph (f) in the enumeration of articles not subject to percentage tax on sales, as follows:

"(f) Articles sold by 'registered export producers' to (1) other 'registered export producers', (2) 'registered export traders' or (3) foreign tourists or travelers, which are considered as 'export sales'.

SEC. 3. Conditions for Availment of Tax Benefit.—Any export producer or export trader who wants to avail of the tax benefits extended to indirect exports under this Decree, must register as such with the Philippine Export Council.

SEC. 4. Requirements for Registration. —

1. Any export producer applying for registration must show proof of the following:
   
   
   1. He/it is actually engaged in the manufacture, processing or production of articles or products for export; and
   2. His/its products meet the quality standards set by the Bureau of Standards for such products.
      
      
2. An export trader applying for registration must show proof of his/its export operations indicating (a) the products or potential products for exportation, (b) expected revenues and (c) selling and administrative costs.

SEC. 5. Issuance of Certificate of Registration: Grounds for Revocation.—Upon qualification for registration, the applicant export producer or export trader shall be issued the corresponding certificate of registration by the Philippine Export Council.

The certificate of registration shall be subject to revocation on any of the following grounds:

1. Any violation of the provisions of this Decree or the rules and regulations implementing the same;
2. Any violation of laws relating to taxation, currency, immigration and national economy or security; or
3. Failure to meet the quality standards set by the Bureau of Standards.

SEC. 6. The Secretary of Finance shall, upon the recommendation of the Commissioner of Internal Revenue in consultation with the Chairman President of the Philippine Export Council, promulgate the necessary rules and regulations for the effective implementation of the provisions of this Decree.

SEC. 7. This Decree shall take effect upon approval.

DONE in the City of Manila this 11th day of June, in the year of Our Lord, nineteen hundred and seventy-eight.

			(Sgd.) FERDINAND E. MARCOS President of the Philippines
	By the President:
	(Sgd.) JACOBO C. CLAVE
		Presidential Executive Assistant