FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENATE 
1443 
S.B. No. _-'----'=-_=_ 
Introduced by Senator Loren Legarda 
EXPLANATORY NOTE 
·; 
10 
!U'L I J' ;)i: 12 
, 
," 
." 
~ 
This bill seeks to grant tax incentives to members of the broadcast and film 
industry that will produce educational programs for children, in order to make 
quality education accessible to children, especially those from the countryside. 
Section 1, Article XIV of the 1987 Philippine Constitution provides that the 
State shall protect and promote the right of all citizens to quality education at all 
. levels and shall take appropriate steps to make such education accessible to all. 
Furthermore, Section 24, Article II declares that the State recognizes the vital role of 
information in nation-building. Pursuant to this, government launched various 
efforts to make education accessible to all, particularly to children in the 
countryside. One such method is by encouraging the production of educational 
programs for children, given the wide reach and universal appeal of broadcast 
media to them. 
Republic Act No. 8370, otherwise known as the" Children's Television Act of 
1997" was enacted to promote and encourage the production and broadcasting of 
developmentally-appropriate television programs for children through the 
administration of a national endowment fund for children's television. The National 
Endowment Fund was created for the promotion of high standards of indigenous 
program development in children's television and media specifically intended for 
Filipino children. An amount of P30 million sourced from the income of the lotto 
operations of the Philippine Chqrity Sweepstakes Office (PCSO) and another P30 
million from the gross income of the Philippine Gaming Corporation (P AGCOR) 
shall form part of the Fund. Access to the Fund shall be provided by the Council 
through a grant application process for qualified producers and organizations with 
proven track record in the production of high quality children's television programs. 
Despite this law, there are still less child-friendly programs on television 
with no law passed to encourage the production of films that especially cater to 
children in our country. This must be brought about by the heavy taxes imposed on 
mass media and the profit-oriel1ted operations and market-driven functions under 
which they struggle. 
It is therefore imperative that the State intervenes in the form of relevant 
legislation to encourage media entities to invest in our children's future through the 
production of educational programs that would make quality education accessible 
thru mass media. 
This bill aims to accomplish that by exempting the machineries, equipment, 
tools for production, spare parts, supplies, materials and transportation and 
communication facilities to be used actually, directly and exclusively for educational 
1 


\ 
purposes by media producers and publishers from paying duty and internal 
revenue tax. 
Under this proposed measure, the net income derived from educational 
programs and publications shall be tax-exempt for 5 years from the start of its initial 
operation or until the producer and publisher shall have attained reasonable return 
of their Investment. Likewise, all expenses incurred in the production of 
commercials and advertisement~ for educational purposes and approved by the 
Secretary of Education, shall enjoy a tax deduction of not more than 10% of the gross 
operating expenses of the advertisers or sponsors. Finally, broadcast media and 
print media shall be given 10% lower airtime rates and cost of space for every paid 
feature of production or publication with educational content, and the difference 
from the regular rate shall be chargeable to the value-added tax accruable. 
In view of the foregoing; the immediate passage of this bill is earnestly 
sought. 
~~-= 
Senator 
2 


FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENATE 
S.B.No. 1443 
Introduced by Senator Loren Legarda 
AN ACT 
, 
• 
l. 
I', 
IU 
GRANTING FISCAL INCENTIVES TO MEDIA ENTITIES DEVOTING AIR 
TIME AND SPACE TO EDUCATIONAL PROGRAMS FOR CHILDREN, AND 
TO ADVERTISERS OR SPONSORS SUPPORTING SUCH PROGRAMS, AND 
FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
1 
SECTION 1. Declaration of Policy. - It is hereby declared the policy of the 
2 
State to recognize the vital roles of communication and information in nation 
3 
building and shall take appropriate steps to make education accessible to all. 
4 
Pursuant to this policy, the State shall promote, support, and provide incentives to 
5 
mass media, as well as to sponsors or advertisers, who devote air time and space for 
6 
educational purposes. 
7 
8 
SEC. 2. Coverage. - This Act shall apply to all kinds of mass media operating 
9 
within the Philippines. 
10 
11 
SEC. 3. Definition of Terms. - For purposes of this Act, the following terms 
12 
shall mean as follows: 
13 
a. Mass media - refers to means of communication which includes both 
14 
broadcast, film and print media that reach very large numbers of people; 
15 
b. Broadcast media - refers to radio, television, cable broadcast and the like; 
16 
c. Print media - refers to newspapers, magazines, reviews, bulletins and other 
17 
publications appearing at regular interval, with fixed prices for subscriptions 
18 
appearing at regular interval, with fixed prices for subscription and sale and 
19 
published within the Philippines; 
20 
d. Commercials and advertisements - shall mean announcements, descriptions, 
21 
presentations, advertising or promoting of something, as in goods for sale, in 
22 
newspaper, magazine, television, radio, and the like; 
1 


, 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
'1'1 
e. Advertiser or sponsor - shall mean the owner or the principal of the thing or 
product to be advertised or sponsored; 
, 
f. 
Educational purposes - includes, but is not limited to, educational programs, 
publications, commercials and advertisements which: 
1) Give positive influence on entertainment; 
2) Promote social values; 
3) Mobilize community 'support to, and wage information campaigns 
directed at parents to promote the importance of basic education; 
4) Improve the image of technical education and skills training and to 
inculcate the necessary values needed for productive employment; 
5) Propagate culture, foster patriotism and nationalism and other values that 
serve as an instrument in the struggle for Filipino sovereignty, identity, 
national unity and inte'gration; and 
6) Such other similar descriptions as the Secretary of Education may provide 
pursuant to the implementation of this Act. 
SEC. 4. Tax Exempt Importation. - The provisions of existing laws to the 
contrary notwithstanding, the machineries, equipment, tools for production, spare 
parts, supplies, materials and transportation and communication facilities to be used 
actually, directly and exclusively for educational purposes by media producers and 
publishers are not subject to duty and internal revenue tax: Provided, That where the 
National Economic and Development Authority certifies to the availability of the 
abovementioned items in the local market of sufficient quantity, comparable quality, 
and price to meet the needs of said items shall be subject to applicable taxes, the 
importation of such tax-exempt items brought or imported into the Philippines are 
subsequently sold, transferred or exchanged in the Philippines are subsequently 
sold, transferred or exchanged in the Philippines to be devoted to non-educational 
purposes, the purchasers or recipients shall be considered the importer thereof, and 
shall be liable for the duty and internal revenue tax due on such importation subject 
to depreciation allowance. The tax due on such items shall constitute a lien on the 
article itself, superior to all other charges or liens, irrespective of the possessor 


1 
annual income computed without the benefit of any tax incentives under existing 
2 
law shall be tax deductible. 
3 
4 
Properties donated other than cash shall be valued in accordance with the 
5 
rules and regulations prescribed by the Secretary of Finance in consultation with 
6 
appropriate government agencies. 
7 
8 
SEC. 6. Program and Publication. - The net income derived from educational 
9 
programs and publications shall be tax-exempt for (5) years from the start of its 
10 
initial operation or until the producer and publisher shall have attained reasonable 
11 
return of their investment. Thereafter, no part of the net income that inures to the 
12 
benefit of the producer or publisher in an amount not in excess of twenty-five 
13 
percent (25%) of the taxable income derived from the program or publication shall 
14 
be allowed. The excess amount of the net income shall be devoted for the 
15 
enhancement of the educational program and publication and for other educational 
16 
purposes. 
17 
18 
SEC. 7. Commercials and Advertisements. - All expenses incurred in the 
19 
production of commercials and advertisement for educational purposes under 
20 
Section 3 paragraph f of this Act, and approved by the Secretary of Education, shall 
21 
enjoy tax deduction of not more than ten percent (10%) of the gross operating 
22 
expenses of the advertisers or sponsors: Provided, That these commercials and 
23 
advertisements are actually deliv;ered to the general public. 
24 
25 
SEC. 8. Airtime Rates and Cost of Space. - Broadcast media and print media 
26 
shall receive ten percent (10%) lower airtime rates and cost of space for every paid 
27 
feature of production or publication with educational content, as approved and 
28 
certified by the Secretary of Education, or any equivalent government agency. The 
29· 
difference from the regular rate shall be chargeable to the value-added tax accruable. 
30 
31 
SEC. 9. Government Cooperation. - Every department, bureau, office agency 


; 
1 
invalid, other parts or provisions hereof not affected thereby shall remain in full 
2 
force and effect. 
3 
4 
SEC. 11. Repealing Clause. - All laws, decrees, orders, rules and regulation, 
5 
or portions thereof inconsistent with this Act are hereby repealed, amended or 
6 
modified accordingly. 
7 
8 
SEC. 12. Effectivity Clause. - This Act shall take effect fifteen (15) days after 
9 
its publication in at least two (2) rewspapers of general circulation. 
10 
11 
Approved,