Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL NOD O89

INTRODUCED BY: REPRESENTATIVE TOBIAS “TOBY” M. TIANGCO

EXPLANATORY NOTE

Section 11 of Article XII of the 1987 Philippine Constitution recognizes the power of
Congress to grant, amend, alter or even repeal franchises in all public utilities where the
common good is involved. Through the years, the legislature had granted many franchises
to different sectors and industries engaged in the establishment and operations of public
utilities.

‘Tax exemptions and incentives were granted to support the initial stages of some of
these businesses. Some of these businesses have become the country’s most profitable
corporations and yet the tax incentives provided were never recalled, withdrawn or
revoked.

The government is presently proposing measures to generate additional revenue.
Some of these measures include imposing excise taxes on diesel, which will affect the price
ofall basic commodities and will definitely result in a higher cost of living for the poor.

These franchises have also avoided paying local taxes and have deprived local
government units of their locally generated revenue.

This bill seeks to raise the much-need revenue of the government by withdrawing
all the tax exemptions and incentives given to Telecommunication Companies granted with
legislative franchises. Consequently, the government can shift the revenues collected to
fund the infrastructures and programs urgently needed by the country.

In view of the foregoing, the passage of this bill is earnestly sought for.

Tobias “Toby” M. Tiangco


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 508°

INTRODUCED BY: REPRESENTATIVE TOBIAS “TOBY” M. TIANGCO

AN ACT WITHDRAWING ALL TAX EXEMPTIONS AND INCENTIVES GRANTED
TO ALL TELECOMMUNICATIONS SERVICES COMPANY WITH LEGISLATIVE
FRANCHISE

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

Section 1. Withdrawal of All Tax Exemptions and Incentives. - All tax
exemptions or incentives of whatever nature, whether local or national, granted
to, or presently enjoyed by all persons, natural or juridical, rendering
telecommunications services and enjoying legislative franchises are hereby
withdrawn and revoked upon the effectivity of this Act.

Section 2. Tax provisions. - The grantee, its successors or assigns, of a
telecommunications services franchise shall be liable to pay the same taxes on
their real estate, buildings, and personal property as other persons or
telecommunications entities are now or hereafter may be required by law to pay.
In addition thereto, the grantee, its successors or assigns shall pay a franchise tax
equivalent to three percent (3%) of all gross receipts of the business transacted
under the franchise by the grantee, its successors or assigns. The grantee, its
successors and assigns shall continue to be liable for income taxes payable under
Title Il of the National Internal Revenue Code unless the latter enactment is
amended or repealed, in which case the amendment or repeal shall be applicable
thereto.

The grantee, its successors, assigns shall file the return with and pay the
taxes due thereon to the Commissioner of Internal Revenue or his duly
authorized representatives in accordance with the National Revenue Code and
the return shall be subject to audit by the Bureau of Internal Revenue.

Section 3. Prohibition on equality clause. - No franchise for
telecommunications services, or any amendment or revision to any such
franchise, shall provide for tax exemptions, tax incentives, privilege or immunity
from payment of taxes and duties, nor shall it provide for terms more favorable

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and beneficial than any other franchise for the same or similar
telecommunications services.

Section 4. Rules and Regulations. - Within thirty (30) days upon the
effectivity of this Act, the Secretary of Finance shall, upon recommendation of the
Commissioner of Internal Revenue, and in consultation with the Congress
Committee on Ways and Means, promulgate the necessary rules and regulations
for its effective implementation.

Section 5. Repealing Clause. - All laws, rules and regulations which are
inconsistent with this Act are hereby repealed, amended or modified accordingly.

Section 6. Effectivity Clause. - This Act shall take effect fifteen (15) days
after its publication in any newspaper of general circulation.

Approved,