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RECEIVED
Republic of the Philippines 6
HOUSE OF REPRESENTATIVES ave: 30 JUN 201
Quezon City, Metro Manila sive. JO: 90
Seventeenth Congress BY:
First Regular Session
651 RES'STRATION UNIT

House Bill No. __

Introduced by HON. HENRY S. OAMINAL

EXPLANATORY NOTE

The National Grid Corporation of the Philippines (NGCP) is a private
corporation, which has a legislative franchise to engage in the business of
conveying or transmitting electricity through high back-bone system of
interconnected transmission lines by virtue of Republic Act No. 9511. It has taken
over the tasks from the National Transmission Corporation (TRANSCO) to operate,
maintain and manage the country’s transmission system

It is sad to note however, that while TRANSCO, a government-owned and
controlled corporation was required to pay all types of taxes relative to the
operation, maintenance and management of our transmission system, the NGCP, a

private entity, is exempted from paying all types of taxes, except the three percent
(3%) franchise tax

With the special privileges granted to the NGCP, its incomes grow
significantly over the years depriving our cash-strapped government of the much
needed revenues in billions of pesos that could have helped finance health
programs, construction of school buildings, road projects and other worthy
undertakings. In fact, NGCP placed in the 25" spot in the latest Securities and
Exchange Commission’s (SEC) list of Top 500 corporations in the Philippines but
nowhere to be found in the Bureau of Internal Revenue’s (BIR) list of top paying
corporations, Records reveal that for the years 2007 and 2008 just before its
privatization, TRANSCO paid income and other taxes of P6,650,915,050.00 and
P7,294,156,060 respectively while NGCP, for the years 2009 and 2010, just two
after the turn-over from TRANSCO, paid measly sums of franchise tax of
P1,055,214,574.00 and P1,344,956,518,00 respectively. Even in the event that the
government will impose taxes to the NGCP, the same will just be passed on to the
consumers as provided under the Concession Agreement.

This bill therefore seeks to amend Section 9 of Republic Act No. 9511 in
order to provide a legal remedy for the common good as the franchise is grossly
disadvantageous to the government. Otherwise, the government will continue to
lose billions of pesos of tax receivables from NGCP alone. After all, Section 2 of
this law, which contains the terms and conditions of the franchise, explicitly
provides that the franchise was granted “under the condition that it shall be subject
to amendment, alteration, or repeal by Congress when common good so requires.”

In view of the foregoing reasons, the approval of
legislation is earnestly sought

Representative
2" District, Misamis Occidental

SRESENTATIVES

BILLS AND .AOEX SERVICE


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

Seventeenth Congress
First Regular Session

651

House Bill No.

Introduced by Hon. Henry S. Oaminal

AN ACT

WITHDRAWING CERTAIN TAX EXEMPTION PRIVILEGES GRANTED TO
THE NATIONAL GRID CORPORATION OF THE PHILIPPINES (NGCP),
AMENDING FOR THE PURPOSE SECTION 9 OF REPUBLIC ACT NO. 9511

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

SECTION 1. Section 9 of Republic Act No. 9511 is hereby amended to read
as follows:

“Section 9. Tax Provisions. In consideration of the
franchise and rights hereby granted, the Grantee, its
successors or assigns, shall pay [a franchise equivalent to
three percent (3%) of all gross receipts derived by the
Grantee from its operation under this franchise. Said tax, in
liew of] income tax and any and all taxes, duties, fees and
charges of any kind, nature or description levied, established
or collected by any authority whatsoever, local or national,
on its franchise, rights, privileges, receipts, revenues and
profits, and on properties used in connection with its
franchise. [, from which taxes, duties and charges, the
Grantee is hereby expressly exempted: Provided, That the]
THE Grantee, its successors or assigns, shall be liable to pay
[the same] taxes on their real estate, buildings and personal
property, exclusive of this franchise, as other corporations
are now or hereby may be required by law to pay: Provided,
[further,] That payment by the Grantee of the concession fees
due to PSALM under the concession agreement shall not be
subject to income tax and value-added tax (VAT).” FOR THE
FIRST TWENTY FIVE YEARS.

NOTHING HEREIN CONTAINED SHALL ALLOW THE
GRANTEE TO PASS-THROUGH CHARGES TO THE
CONSUMERS.

SEC. 2. All laws, decrees, executive orders, rules and regulations and the
Concession Agreement which are inconsistent with this Act, are hereby amended,
repealed or modified accordingly.

SEC. 3. This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in any newspaper of general circulation.

Approved,