Republic of the Philippines

HOUSE OF REPRESENTATIVES
Quezon City

Fifteenth Congress
Second Regular Session

COMMITTEE REPORT NO, 147%
pr nny ont?

‘Submitted by the Committee on Ways and Means on

Re. House Bite, _ 5382

Recommending its approval in substitution of House Bill Nos.
4971, 5171, 5185, 5303

Sponsors: Representatives Hermilando 1. Mandanas, Arthur C. Yap,
Homer Mercado, Victor F. Ortega, Eric G. Singson, Jr., Teddy
F. Casinio

Mr. Speaker:

The Committee on Ways and Means to which were referred House Bill No.
4971, introduced by Representative Arthur C. Yap, entitled:

“AN ACT PROMOTING THE WELFARE OF MOTORISTS AND
THE COMMUTING PUBLIC, ADVANCING COUNTRYSIDE
DEVELOPMENT BY EXEMPTING FROM PAYMENT OF THE
EXPANDED VALUE ADDED TAX THE USE OF TOLL WAYS,
AMENDING FOR THE PURPOSE SECTION 109 OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND
FOR OTHER PURPOSES”

House Bill No. 5171, introduced by Representative Homer Mercado entitled:

“EXEMPTING TOLL FEES COLLECTED 8Y TOLLWAY
OPERATORS FROM THE COVERAGE OF REPUBLIC ACT 7716
(THE 1994 EXPANDED VAT LAW OR EVAT LAW) AND
REPUBLIC ACT 8284 (THE 1997 NATIONAL INTERNAL
REVENUE CODE OR THE NIRC)”

House Bill No. 5185, introduced by Representative Victor F. Ortega, Eric G.
Singson, Jr., Juan C. Ponce-Enrite, Jr., Czarina D. Umali, Baby Aline Vargas-
Alfonso, Emmanuel D. Pacquiao, Robert Raymund M. — Estrella,
Leopoldo N. Bataoil, Susan A. Yap, Sherwin Tugna, Randolph S. Ting,
Imelda Quibranza Dimaporo, Bemardo M. Vergara, Emil L. Ong, Jose F

1


Zubiri, IJ, Francisco Emmanuel R. Ortega Ill, Rex Gatchalian, Arthur 8
Robes, Manuel S. Agyao, Monique Q. Lagdames, Juliet R. Cortuna, Rodotfo
C. Farifias, Agapito H. Guanlao, Roman T. Romulo, Godofredo V. Arquiza,
Napoleon S. Dy, Ponciano D. Payuyo, Angelo B. Palmones, David L. Kho,
Ma. Victoria R. Sy-Alvarado, Eleanor C. Bulut-Begtang, Dakila Carlo E. Cua,
Teddy B. Baguilat, Jr, Ma. Theresa B. Bonoan-David, Maximo B. Dalog.
Eufranio C. Eriguel, Jane T. Castro, Wilfredo Mark M. Enverga, Mohammed
Hussein P. Pangandaman, Salvador H. Escudero, Ili, Raul A. Daza, Aurora E.
Cerilles, Diosdado Macapagal Arroyo, Rodolfo B. Albano, Carmelo F. Lazatin,
Arthur R. Defensor, Jr, Amelita C. Vitarosa, Ronald M, Cosalan, Maria
Jocelyn V. Bemos, Martyn L. Primicias-Agabas, Simeon A. Datumanong ,
Vietor J. Yu, Lani Mercado-Revilla, Reena Concepcion G. Obillo, Ana Cristina
Siquian Go, Herminia B. Roman, Salvio B. Fortuno, Daryl Grace J. Abayon,
Vicente F. Belmonte, Jr., Henry Pryde A. Teves, Florencio T. Miraflores,
Alfredo B. Benitez, Lucy Marie Torres-Gomez, Catalina G. Bagasina, Cesar V.
Sarmiento, Rodel M. Batocabe, Cresente C. Paez, Rene L. Relampagos,
Alfredo B. Maranon Ill, Joaquin Carlos Rahman A. Nava, Met Senen S.
Sarmiento, Carlos M. Padilla, Jr., entitled:

“AN ACT AMENDING SECTIONS 108 AND 109 OF THE
NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED,
AND FOR OTHER PURPOSES TO EXCLUDE TOLL FEES FROM
VAT" and,

House Bill No. 5303, introduced by Representative Teddy F. Casifio entited:

“AN ACT CLASSIFYING SERVICES RENDERED BY TOLLWAY
OPERATORS AS VALUE-ADDED TAX EXEMPT
TRANSACTIONS, AMENDING FOR THE PURPOSE SECTION
109 (1) OF THE NATIONAL INTERNAL REVENUE CODE, AS
AMENDED BY REPUBLIC ACT NO. 9337, AND FOR OTHER
PURPOSES.”

has considered the same and recommends that the attached House Bill No.

5382 _. entitled:

“AN ACT EXEMPTING THE SERVICES RENDERED BY
TOLLWAY OPERATORS FROM THE VALUE-ADDED TAX,
AMENDING FOR THE PURPOSE, SECTIONS 108 AND 109 OF
THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS
AMENDED"

be approved in substitution of House Bill Nos, 4974, 5171, 5185, 5303, with
Representatives Arthur C. Yap, Homer Mercado , Victor F. Ortega, Eric.
Singson, Jr., Teddy F. Casifia, Juan C. Ponce-Enrile, Jr., Czarina D. Umali,
Baby Aline Vargas-Alfonso, Emmanuel D. Pacquiao, Robert Raymund
M. Estrella, Leopoldo N. Bataoil, Susan A Yap, Sherwin Tugna,
Randolph S. Ting, lmeda  Quibranza_Dimaporo, Bemardo | M.
Vergara, Emil L. Ong, Jose F. Zubiri, Ill, Francisco Emmanuel Ortega
ll, Rex. Gatchalian, Arthur B. Robes, Manuel S. _ Agyao, Monique
Q. Lagdameo, Juliet R. Cortuna, Rodolfo C. Farifias, Agapito H.


Guanlao, Roman T. Romulo, Godofredo V. Arquiza, Napoleon 8. Dy,
Ponciano D. Payuyo, Angelo 8. Palmones, David L. Kho, Ma. Victoria R. Sy-
Alvarado, Eleanor C. Sulut-Begtang, Dakila Carfo E. Cua, Teddy 8. Baguilat,
Jt. , Ma, Theresa B. Bonoan-David, Maximo B. Dalog, Eufranio GC. Erigual,
Jane T. Castro, Wilfredo Mark M. Enverga, Mohammed Hussein P.
Pangandaman, Salvador H. Escudero, ill, Raul A. Daza, Aurora E. Cerilles,
Diosdado Macapagal Arroyo, Rodotfo 8. Albano, Carmelo F. Lazatin, Arthur
R, Defensor, Jr., Ameiita C. Villarosa, Ronald M. Cosalan, Maria Jocelyn V.
Bemos, Marlyn L. Primicias-Agabas, Simeon A. Datumanong , Victor J. Yu,
Lani Mercado-Revilla, Reena Concepcion G. Obillo, Ana Cristina Siquian Go,
Herminia B. Roman, Salvio B. Fortuno, Daryl Grace J. Abayon, Vicente F.
Belmonte, J: Henry Pryde A Teves, Florencio T. Miraflores, Alfredo 3.
Benitez, Lucy Marie Tores-Gomez, Catalina C. Bagasina, Cesar V.
Sarmiento, Rodel M. Batocabe, Gresente C. Paez, Rene L. Relampagos,
Alfredo B. Maranon Ill, Joaquin Carlos Rahman A. Nava, Mel Senen S
Sarmiento, Carlos M. Padilla, Jr, Hermilando i, Mandanas, Andres D.
Salvacion, dr., Deogracias B. Ramos, Jr., Jose F. Zubiri, lll, Ryan Luis V.
Singson and Femando V. Gonzales as authors thereof.

. HERMILANDG |. MANDANAS
airman
‘Committee on Ways and Means

The HONORABLE SPEAKER
House of Representatives
Quezon City


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Fifteenth Congress
Second Regular Session

HOUSE BILLNO. 9382

(In Substitution of House Bill Nos. 4971, 5171, 5185, 5303)

Introduced by Representatives Arthur C. Yap, Homer Mercado , Victor F
Ortega, Eric. G. Singson, Teddy F. Casifio, Juan C. Ponce-Eniile, Jr.,
Czarina D. Umali, Baby Aline Vargas-Alfonso, Emmanuel D. Pacquiao
Robert Raymund M. Estrella, Leopoldo N. Bataoil, Susan A. Yap, Sherwin
Tugna, Randolph S. Ting, tmelda Quibranza Dimaporo, Bernardo M.
Vergara, Emil L. Ong, Jose F. Zubiri, Ill, Francisco Emmanuet R. Ortega
lil, Rex Gatchalian, Arthur B. Robes, Manuel S. Agyao, Monique Q.
Lagdameo, Juliet R. Cortuna, Rodolfo C. Farifias, Agapito H. Guanlao,
Roman T. Romulo, Godofredo V. Arquiza, Napoleon S, Dy, Ponciano D.
Payuyo, Angelo B. Palmones, David L. Kho, Ma. Victoria R. Sy-Alvarado,
Eleanor C. Bulut-Begtang, Dakila Carlo E. Cua, Teddy B. Baguilat, Jr.

Ma. Theresa B. Bonoan-David, Maximo 8. Dalog, Eufranio C. Eriguel,
Jane T. Castro, Wilfredo Mark M. Enverga, Mohammed Hussein P.
Pangandaman, Salvador H. Escudero, Ill, Raul A. Daza, Aurora E.
Cerilles, Diosdado Macapagal Arroyo, Rodolfo B. Albano, Carmelo F.
Lazatin, Arthur R. Defensor, Jr., Amelita C. Villarosa, Ronald M. Cosalan,
Maria Jocelyn V. Bernos, Maryn L. Primicias-Agabas, Simeon A
Datumanong , Victor J. Yu, Lani Mercado-Revilla, Reena Concepcion G.
Obillo, Ana Cristina Siquian Go, Herminia B. Roman, Salvio B. Fortuno,
Daryl Grace J. Abayon, Vicente F. Belmonte, Jr., Henry Pryde A. Teves.
Florencio T. Miraflores, Alfredo 8. Benitez, Lucy Marie Torres-Gomez,
Catalina C. Bagasina, Cesar V. Sarmiento, Rodel M. Batocabe, Cresente
C. Paez, Rene L. Relampagos, Alfredo B. Maranon ttl, Joaquin Carlos
Rahman A. Nava, Mel Senen S. Sarmiento, Carlos M. Padilla, Jr.,
Hermilandy |. Mandanas, Andres D. Salvacion, Jr., Deogracias B. Ramos,
uJr., Jose F. Zubiri, lil, Ryan Luis V. Singson and Femando V. Gonzales



“ACT EXEMPTING THE SERVICES RENDERED BY TOLLWAY
OPERATORS FROM THE VALUE-ADDED TAX, AMENDING FOR
THE PURPOSE, SECTIONS 108 AND 109 OF THE NATIONAL
INTERNAL REVENUE CODE OF 1997, AS AMENDED”

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

SECTION 1. Section 108 of the National Internal Revenue Code of
1997, as amended, is hereby further amended to read as follows:

“SEC. 108. Value-added Tax on Sale of Services and Use or Lease
of Properties. —

(A) Rate and Base of Tax. - There shall be levied,
assessed and collected a value-added tax
equivalent to ten percent (10%) of gross
receipts derived from the sale or exchange of
services, including the use or lease of
properties: Provided, That the President, upon
the recommendation of the Secretary of
Finance, shall, effective January 1, 2006, raise
the rate of value-added tax to twelve percent
(12 %), after any of the following conditions has
been satisfied:

(i) Value-added tax collection as a
percentage of Gross Domestic Product
(GDP) of the previous year exceeds
two and four-fifth percent (2 4/5%); or

(i) National goverment deficit as a
percentage of GDP of the previous
year exceeds one and one-half
percent (1 4%).

‘The phrase ‘sale or exchange of services’ means the
performance of all kinds of services in the Philippines
for others for a fee, remuneration or consideration,
including those performed or rendered by construction
and service contractors; stock, reat estate,
commercial, customs and immigration brokers;
lessors of property, whether personal or real;


warehousing services; lessors or distributors of
cinematographic films, persons engaged in milling,
processing, manufacturing or repacking goods for
others; proprietors, operators or keepers of hotels,
motels, resthouses, pension houses, inns, resorts:
proprietors or operators of restaurants, refreshment
parlors, cafes and other eating places, including clubs
and caterers; dealers in securities; lending investors;
transportation contractors on their transport of goods
or cargoes, including persons who transport goods or
cargoes for hire and other domestic common carriers
by land relative to their transport of goods or cargoes;
common carriers by air and sea relative to their
transport of passengers, goods or cargoes from one
place in the Philippines to another place in the
Philippines; sales of electricity by generation
companies, transmission, and distribution companies;
services of franchise grantees of electric utilities,
telephone and telegraph, radio and_ television
broadcasting and all other franchise grantees except
SERVICES RENDERED BY TOLLWAY
OPERATORS AND those under Section 119 of this
Code; and non-life insurance companies, (except their
crop insurances), including surety, fidelity, indemnity
and bonding companies; and similar services
regardless of whether or not the performance thereof
calls for the exercise or use of the physical and
mental faculties. The phrase ‘sale or exchange of
services’ shall likewise include:

100

Sec. 2. Section 109 of the same Code, as amended, is hereby further

amended by inserting a new sub-section (V) to read as follows
“SEC. 109. Exempt Transactions. — (1) Subject to the

provisions of subsection (2) hereof, the following
transactions shall be exempt from the value-added tax:

poe

(Vv) SERVICES RENDERED BY TOLLWAY
OPERATORS;


[(V)] (W) Sale or lease of goods or properties or the
performance of services other than the transactions
mentioned in the preceding paragraphs, the gross
annual sales and/or receipts do not exceed the
amount of One million five hundred thousand pesos
(P1,500,000): Provided, That not later than January
31, 2009 and every three (3) years thereafter, the
amount herein stated shall be adjusted to its present
value using the Consumer Price Index, as published
by the National Statistics Office (NSO).

1K.”

Sec. 3. Implementing Rules and Regulations. - The Secretary of Finance
Shall, in coordination with the Commissioner of Internal Revenue,
Promutgate the necessary rules and regulations for the effective
implementation of this Act.

See. 4. Separability Clause. — If, for any reason or reasons, any part of the
provision of this Act shafl be held unconstitutional or invalid, other parts or
provisions hereof which are not affected thereby shall continue to be in full
force and effect.

Sec. 5. Repealing Clause. — All laws, presidential decrees and executive
orders, rules and regulations or parts thereof inconsistent with the
provisions of this Act are hereby repealed or modified accordingly.

Sec. 6. Effectivity Clause. - This Act shall take effect fifteen (15) days
after its publication in the Official Gazette, or in at least two (2)
newspapers of general circulation.

Approved,


FACT SHEET
per Fae
HOUSE BLL No,_2382
(In Substitution of House Bill Nos. 4971, 5171, 5185 and 5303)

“AN ACT EXEMPTING THE SERVICES RENDERED BY
TOLLWAY OPERATORS FROM THE VALUE-ADDED TAX,
AMENDING FOR THE PURPOSE, SECTIONS 108 AND 109
OF THE NATIONAL INTERNAL REVENUE CODE OF 1997,
AS AMENDED”

introduced by Reps. Arthur C. Yap, Homer Metcado , Victor F. Ortega, Eric. G.
Singson, Teddy F. Casifio, Juan C, Ponce-Enrie, Jr, Czarina D. Umali, Baby
Aline Vargas-Alfenso, Emmanuel D. Pacquiao, Robert Raymund M. Estrella,
Leopoldo N. Bataoil, Susan A Yap, Sherwin Tugna, Randolph S. Ting, Imelda
Quibranza Dimaporo, Bemardo M. Vergara, Emil L. Ong, Jose F. Zubiri, Ill,
Francisco Emmanuel R. Ortega Nil, Rex Gatchatian, Arthur B. Robes, Manuel
S. Agyao, Monique Q. Lagdameo, Juliet R. Cortuna, Rodalfo C. Farinas,
Agapito H. Guanlao, Roman T. Romuto, Gedofredo V. Arquiza, Napoleon S.
Dy, Ponciano D. Payuyo, Angelo B. Palmones, David L. Kho, Ma. Victoria R.
Sy-Alvarado, Eleanor C. Bulut-Begtang, Dakila Carlo E. Cua, Teddy B.
Baguilat, Jr. , Ma. Theresa B. Bonoan-David, Maximo B. Dalog, Eufranio C.
Eniguel, Jane T. Castro, Wilfredo Mark M. Enverga, Mohammed Hussein P_
Pangandaman, Salvador H. Escudero, ill, Raul A. Daza, Aurora E. Cerilles,
Diosdado Macapagal Arroyo, Rodolfo B. Albano, Carmelo F. Lazatin, Arthur R.
Defensor, Jr., Amelita C. Villarosa, Ronald M. Cosalan, Maria Jocelyn V.
Bemos, Marlyn L. Primicias-Agabas, Simeon A. Datumanong , Victor J. Yu,
Lani Mercado-Revilla, Reena Concepcion G. Obillo, Ana Cristina Siquian Go,
Herminia B. Roman, Salvio B. Fortuno, Daryl Grace J. Abayon, Vicente F.
Belmonte, Jr, Henry Pryde A. Teves, Florencio T. Miraflores, Alfredo B.
Benitez, Lucy Marie Torres-Gomez, Catalina C. Bagasina, Cesar V.
Sarmiento, Rodel M. Batocabe, Cresente C. Paez, Rene L. Relampagos,
Alfredo B. Maranon Ill, Joaquin Carlos Rahman A. Nava, Mel Senen S.
Sarmiento, Carlos M. Padilla, Jr, Hermilando |. Mandanas, Andres D.
Salvacion, Jr., Deogracias B. Ramos, Jr., Jose F. Zubiri, Ill, Ryan Luis V.
Singson and Fernando V. Gonzales

Committee Referral: Committee on Ways and Means
Chairman: HERMILANDO I, MANDANAS
OBJECTIVES

* To alleviate the plight of the motorists and the commuting public due to
increase in transport costs.

* To avoid an increase in the cost of basic commodities and other goods
and services caused by the VAT on toil fees.


KEY PROVISIONS

* Seeks to amend Section 108 of the National intemal Revenue Code of
1997, as amended, by excluding services rendered dy toll way
operators from the definition of ‘sale or exchange of services’ covered
by the value-added tax on the sale of services.

* Seeks to amend Section 109 of the same Tax Code by considering

those services rendered by toll way operators as a transaction exempt
from the coverage of the value-added tax.

RELATED LAW

+ National Internal Revenue Code of 1997, as amended


Republic of the PI
HOUSE OF REPRE:
Quezon City

FIFTEENTH CONGRESS

Second Regular Session

House Bill No, 4972

JNYRODUCED BY REPRESENTATIVE ARTHUR C, YAP

EXPLANATORY NOTE

In very recent years, most especially duriug the previous administration, much
emphasis was placed on the construction, developinent (and re-development) of

expressways, highways or toll ways,

Thus, we have seen the North Luvon Expressway, being re-developed and
becoming a world class superhighway, making travel up north very fast and comfortable,
Almost simuitaneous is the upgrading of the South |.uzon Expressway, parallel with the
elevated Skyway, which was also extended up 10 Alabang, Muntinlupa, thus trips to
Southem Luzon are now a first class cruise.

Likewise, we have seen the inauguration of the Subic Clark Tarlac Expressway,
comsecting two very important transport and industrial bubs, the Divsdado Macapagal
Intemational Airport and the rest of the Clark Ecozone, to the Subic Bay Freeport. The
said highway likewise extended the NLEX further up to northern portions of the Tarlac
Province. In the South, the SLEX has been extended by the Southcra ‘Tagalog, Arterial
Road, thus making travel lo Batangas City and the international port therein, also a
breeze, Last would be the Manila-Cavite Expressway which has now been extended alsu
up to Cavite City.

Soon, other toll ways, conceptualized and initiated during the previous
administration would be unveiled and operated. This would include a highway
connecting the'progressive souther provinces of Cavite and Laguna, anc another in the
north that would commence from Tarlac to Pangasinan and all the way to La Union,

For those living in suburban Metto Manila and nearby provinces, the use of
expressways has becourc, not just a lwnury, but a necessity. They now go to work, schoo!
and other daily and routine piace of destinations with ease and speed using the tol) ways

For those from the provinces, these expressways have been cauilysts of their local
industries’ growth and development. Investmenrs aie now flourisbiag in the countryside
counccted by these highways, geneniting income for the government, and more
important, creating jobs by tie millions. The goods from the provines, expecially the
perishable ones like agricultural produce, are brought cheaper snd faster to the center of



ftade and commerce, which is Metro M:
thrives as travel destinations can easi

collers ae very inadequate, if not scarce, most of
the Build Operate and Transfer or similar schemes,
fo the Public Private Partnership

However, since goverument
these projects are undertaken using
Private finding and undertaking ix utilized, similar
being advecated by the preseut administration

these expressways ure basic goverment

In such cases, even though
Motorists and the commuting public pay tol!

infrastructures, they caanot be used for free.
fees fur their use.

many people who complain aboul the expensive tall fees for the use

ressways, And indeed this assertion is wot without basis. ‘The
P6 for mediwn sized

Yet, there are
of the above mentioned ex;
toll fees of sround 3 per kilometer for small oc class 1 vehicles,

vehicles und P9 for large trucks, are quite costly
And now, these is the impending imposition af the Expanded Value Added Tax
(EVAT) on wil fees.

On July 13, 2010, the incumbewt Commissioner of de Bureau of Intemal

Revenue issucd Revenue Memorandum Circular 63-2010. his Circular iny J the
Payrucnl of EVAT on toll fers, The Convuissinnes justified this imposition by stating that
al Revenue Code {NIRC) allows the imposition of

that Section 108 of the National Inte:
RVAT on all services for a fee.

A petition was filed with the Supreme Court against the said Memorandum
Circular. Unfortunaicly, the highest court of the Fand recently denied the peuition and
upheld the iniposition of EVAT on toll fees,

absence of Jegisintion against VAT on toll and said that
aigined as a form of service rendered for a fee should be
exeludes it.

The decision noted

every activity that cau be
deemed inefuded or “¥47uble” unless some provision of law especially

This proposed legislation would now be the legislation against VAT oo toll

In the most recen! Slate of the Nation Adilress, the President mentioned shat hig
administration would noi pursue the passage of new Lax laws.

However. coutrary ty such pronouncement, the BIR. is sill contemplating on
pursuing the imposition of the EVAT vn toll.

Of course, technically. it is vue that the EVAT on toll is not a new tax imposition
‘This is because the SC decision stated that it can be imposed withou! the passeoe of w
new lax measure. Nevertheless, its iinplementation now would be, for all intents and
Purposes, amount (o & new tax imposition on the public. This is since suid tax has rot

been previously imposed.

tut the motorists and the commuting public can
te Tonger afforil an inerease in the price of toll fees. Vhis is especially in these tryin,
times when prices of basiv goods arid services are skyrocketing. The is io abstenie
the increase in the prices of food and groceries, petroleum or wasolintc, and ulilities such
as electricity aud water.

And unfortunately, the reality is

Furthermore, an increiese in the price of the toll fees, brought about by the
‘inposition of EVAY, would bring a tippting effoct of increasing transport fares. and
priees of otler basic conunadities and services. And, coupled by the inelastivity of water,


the ordinary consumer and th
simply break down.

I is Conceded that the goverament isin dire need of additional revenue to finance
its operations. Maybe, te option for the government ie die much bandied about plugging
toopholes in the tax collection system. tt cannot be in the form of new impositions to
Whether it would be in a new tax law or in an aidministinrs circular

oft
ihe gencral public,
interpreting an existing tax law

exclusive diseretion in
laws. Consequently, the
practical consequences

This representation cannot risk a decisiow of the executive to impose this RVAT

sasell ways and is even of the strong opinion that Congress vk

rae

ARTHUR C. YAP
Representative



ippines
ENTATE
Quezon City

MIFTEENTH CONGRESS

First Regular Session

House RIN No._ 49°71

INTRODUCED RY REPRESENTATIVE ARTHUR C.VAP

AN ACT
PROMOTING VIE WELFARE OF MOTORISTS AND THE
COMMUTING ADVANCING — COUNTRYSIDE.

Be it enacted by the Senate and House of Represematives Of the Philippines in Congress

assembled,

1 SECUION 1. Shorr Title, - This Act shall be known an the “EVAT Exemption on

2 Toll Ways Act of 2011"
3 SECTION 2. Declaration of Policy, - It is hereby declared the policy of the State

wiorists and the commuting public

4 10 promote the welfare and alleviate the burden of

and (0 advance the development of the coumryside by making the use of basic public

5
6 infractziccture, including toll ways, iwexpensive. The use of wll ways shall hereinafter be
7 exempted from payment of the expanded value added tx (EVAT), other taxcs and duties, +
8 SECTION 3. Ainendment of Section 199 of the National Anternat Revenue

9 Code. ~ Section 109 of the Nutional Interual Revenue Code or Presidential Decree No.

10. - 1158-48, as amended by among withers, Republic Act No. 8424 or the Tax Reform Act of

mn Act, is hereby fortiver

11 1997, and Republic Act No. 9337 or the Value Added Fax Re

12° amended, to read as follows:


10

nn

12

“SEC1U9. Exempt Transactions. — (1) Subject to the

Provisions of Subsection (21 hereof, the followings wansactions shall be

exempt from the value-ndded tax
MA) sxx

(W) Fees and other charges collected from the use of toll ways or
Silly expressways that are constructed, smaitiained and operted by
Private wltway operators at their own expense unler the Build Operate

and Transter and other similar schemes.

sux

SECTION 4. Separabitity Clause. «If any provision of this Act, ot any pars

thereof, is declawed unconstitutional, the same shall uot affect the validi ly and effectivity

‘of the other portions.
SECTION 5. Repeating Clause. - AM Inws, executive orders, presidential

decrees, proclamations, rules, regulations, issuances and caactments of parts thereof
‘inconsistent with this Actare hereby repealed or maodilied accordingly.

SECTION 6. Effectivity. - This Act shall tke effect fifteen (15) days from its
complete publication in the Official Gazente of in a newspaper of yeneral circulation in

the Hhilippines, whichever comes earlier.

APPROVED.


REPUBLIC OF THE PILLIPPINES
HOUSE OF REPRESENTATIVES
Batasan Complex, Quezon City

FIFTEENTH CONGRESS
Second Regular Session

Sit

House Bill No. __

Introduced by I-LFAK Parry List Representative
ENGR. HOMER MERCADO __

EXPLANATORY NOTE

On 05 May 1994, the Congress of the Philippines enacted Republic Act No. 7716 (Lae
1994 Expanded VAT Law or E-Vat Law). From the time of its enactment, the imposition
of the Value-Added Tax on toll fees was never implemented until sometime in 209,
during the incumbency of Former President Gloria Macapagal-Arroyo, when the Bureau
of Internal Revenue (BIR) attempted to impose VAT on toll fees. However, due to strong
opposition from motorists and other affected sectors, the imposition of VAT on toll fecs

was deferred.

Upon assumption of office by President Benigno C. Aquino Til in June 2010, the BIR
revived the idea and set to impoxe the tax on tall fees starting 15 August 2010. A petition
for declaratory relie( was then filed before the Supreme Court assailing the validity of re
impending imposition of VAT on the collections of tollway operators. Thereafter, the
Supreme Court, on 13 August 2010, issued a Temporary Restraining Order (TRO)
enjoining the implementation of the VAT on toll fees. However, in a decision
promulgated on 19 July 2011, the Supreme Court dismissed the afore-stated petition for
jack of merit and set aside the afore-stated TRO issued on 13 Angust 2010

‘There is now 2 mounting opposition to the implementation of VAT on toll fees and thus,
the need to further defer its implementation despite the recent ruling by the Supreme
Court, Several groups have likewise called the BIR and the Toll Regulatory Board (TRB)
10 conduct further consultations to include also stakeholders im provinces who will be
directly affected by the impact of VAT-inclusive toll fees that would consequently push
up the casts of agricultural produce, bus fares, and husic goods being transported through
the major expressways from the nearby provinces. Recent pronouncements by"the BIR.
indicate their intention to impose the VAT on toll fees starting on 01 October 2011

it will not only affect the hundreds

The issue at hand is impressed with public interest as
i cssways but potentially millions

of thousands of motorists who directly use the major expt
who will be indireculy affected by the huge increase in VAT-inclusive toll fees.


‘As such, in these times of cconomit hardship, not t0 mention the advent of typhoors
affecting the capital region and the nearby provinces, in order to ensare that no further
unnecessary burden be permitted by the government to aggravate and worsen the already
poor conditions of the majority of our people, there should be an amendment to th
pertinent provisions of the National Internal Revenue Code and the EVAT Law, to th
effect that tollway operations be excluded from, and hence, not covered within, ths
meaning af “sale of services” and that the tollway operators be excluded from the
coverage of “franchise grantees” under Section 108 of the National Internal Revenue
Code (NIRC)

Adopted G

» fw

Engr. flomer A. Mercado
1-OTAK Party list



REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Batasan Complex, Quezon City

FIFTEENTH CONGRESS
Second Regular Session
, 5ivt
House Bill No.

introduced by (-UTAK Party-List Representative
ENGR. HOMER MERCADO

EXEMPTING TOLL FEES COLLECTED BY TOJ LWAY OPERATORS FROM THE
COVERAGE OF REPUBLIC ACT 7716 (THE 1994 EXPANDED VAT LAW OR
EVAT LAW) AND REPUBLIC ACT 8284 (THE 1997 NATIONAL INTERNAL

REVENLE CODE OR THE NIRC).

Be it enacted by the Senate and House of Represcatatives in Congress assemble
SECTION 1. The tollway operations are excluded fiom, and hence, not covered within,

the meaning of “sale of services” that are subject to VAT under Section 108 of the
National Internal Revenue Code (NIRC)

SECTION 2. The tollway operators are excluded from the coverage of “iranchise
grantees” under Section 108 of the National Internal Revenuc Code (NIKC).

SECTION 3. Repealing Clause — Alt other laws, decrees, orders, issuances, rules and
regulations which are inconsistent with the provisions of this Act arc hereby repealed,

amended or modified accordingly.

SECTION 4. Separability Clause ~ Ui, for any reason, aay provision of this Act, or any
part thereof, is declared invalid or unconstitutional, all other sections or provisions not
affected thereby shall remain in force and effect.

SECTION 5. Effectivity - This Act shall take effect fifteen (15) days after publication in
two (2) newspapers national circulation

Approved/ UL
/

j
/
fv
—" Engr, HOMER A. MERCADO .
—  SUTAR Party-list. > °

WW


FIFTEENTH CONGRESS OF THE
REPUBLIC OF THE PHILIPPINES )
)

HOUSE OF THE REPRESENTATIVES,
518

a

HB, No

Introduced by HlUNORABLE VICTOR F. ORTEGA ‘

EXPLANATORY NOTE
‘This bill seeks to clarify the legislative intent of Congress that toll fees
on our expressways are not subject to the Value Added Tax (VAT)

Toll fees on our expressways are already a user's tax. To impose
VAT on toll fees is to impose tax on tax. This is against the Constitution
and public interest

The issue of whether toll fees on our expressways is subject to the
VAT is still pending in the Supreme Court. A petition, G.R. 93007 was filed
by Former Congressman Renato V. Diaz of Nueva Ecija and Atty, Aurora
Timbal before the Supreme Court questioning the implementation of VAT

on ioll fees on our expressways

Based on the Congressional records we have examined, VAT on toll
fees was not included in the deliberations of the Expanded VAT law in
1994. The legislators did not expand the coverage to cover toll fees since
the basis of the expanded coverage was from a list of items recommended
by the Department of Finance and the BIR. The contention of the DOF and
BIR is that it is included in the general definition of “sale of services’. and
operation of toll expressways is an executive franchise.

To allow a tax burden to our people without a clear imposition of
Congress sets a very bad precedent. “The power to tax is the power to
destroy.” It is the essence of democracy that there should be no taxation
without representation. As provided by our constitution, all taxes must be
proposed and approved by Congress. To expand the scope of taxation
purely on interpretation upon review of the law, seventeen (17) years since
it was passed in 1994; is definitely not acceptable to our people. The DoF
and BIR should defer any implementation untit Congress has settled and
clarified this issue. President Noynoy Aquino should intervene by deferring
implementation of VAT on tolls and allow the democratic process to be

fotlowed.


To save the Public from the detrimental effects of unjust
implementation of "tax On tax” and to seitie the issue,

Congress to clearly stipulate that t Various expressways
1S not subject to Value Added Tax (VAT) :

is Bill

We, therefore, strongly urge the immediate Passage of thi
1 : |


FIFTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES }

Introduced by UWONORAPLE VicTOR F. URTEGA

—— - AN ACT - = a
AMENDING SECTIONS 108 AND 109 OF THE NATIONAL INTERNAL
REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER
PURPOSES TO EXCLUDE TOLL FEES FROM VAT

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

Section. 1. Section 108 of the National internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:

“SEC. 108. Value-added Tax on Sale of Services and Use or Lease
of Properties, —

(A) Rate and Base of Tax. — There shall be levied, assessed,
and collected a value-added tax equivalent to ten percent
(10%) of gross receipts derived from the sale or exchange of
Services, including the use or lease of Properties: Provided,
That the President, upon the recommendation of the Secretary
of Finance, shall, effective January 1, 2006, raise the rate of
value-added tax to twelve percent (12%), after any of the
following conditions has been satisfied: .

(i) Value-added tax collection as a percentage of Gross
Domestic Product (GDP) of the previous year exceeds
two and four-fifth percent (2 4/5%);or

(i) National government deficit as a percentage of GOP of
the previous year exceeds one and one-half percent (1

Ww%)

“The phrase ‘sale or exchange of services’ means the

performance of all kinds of services in the Philippines for
others for a fee, remuneration or consideration, including
those performed or rendered by construction and service


contractors; stack, real estate, commercial, customs and
immigration brokers, lessors of property, whether
personal or real; warehousing services; lessors or
distributors of cinematographic films; persons engaged in
milling; processing, manufacturing or repacking gaods for
others; proprietors, operators or keepers of hotels,
Motels, rest-houses, pension houses, inns, resorts;
Proprietors or operators of restaurants, refreshment
parlors, cafes and other eating places, including clubs
and caterers; dealers in securities; tending investors;
transportation contractors on their transport of goods or
cargoes, including persons who transport goads or
cargoes for hire and other domestic common carriers by
land relative to their transport of goods or cargoes;
common carriers by air and sea relative to their transport
of passengers, goods or cargoes from one place in the
Philippines to another place in the Philippines; sales of
electricity by generation companies, transmission, and
distribution companies; services of franchise grantees of
electric utilities, telephone and telegraph, radio and
television broadcasting and ail other franchise grantees
except those under Section 119 of this code, TOLLWAY
OPERATORS, and non-life insurance companies (except
their crop insurances), including surety, fidelity, indemnity
and bonding companies; and similar services regardless
of whether or not the performance thereof calls for the
exercise or use of the physical and mental faculties. The
phrase ‘sale or exchange of services’ shall likewise
include:

* XP

EC. 2. Section 109 of the same Code, as amended, is hereby further
mended by inserting a new sub-section (F) and re-number the succeeding
b-sections to read as follows:

“SEC. 109. Exempt Transactions. — (1) Subject to the provisions of
Subsection (2) hereof, the following transactions shall be exempt from
the value-added tax:

“XXX;
(F) SERVICES RENDERED BY TOLLWAY OPERATORS;

(G) Services by agricultural contract growers and milling for
others of palay into rice, corn into grits, and sugar cane into raw
sugar;

Xxx.


Sec. 3. Repealing Clause. — All iaws, presidential decrees and issuances,
executive orders, rules, and regulations or parts thereof inconsistent with
the provisions of this Act are hereby repealed or modified accordingly.

Sec. 4. Separability Clause — If, for any reason or reasons, any part of the
provision of this Act shall be heid unconstitutional or invalid, otter parts or
provisions hereof which are not affected thereby shall continue to be in fl

force and effect. u

Sec. 5. Effectivity. ~ This Act shall take effect fifleen (15) days after its
publication in two (2) national newspapers of general circulation. The
publication shall not be tater than seven (7) days after the approyal hereof.

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Republic of the Philippines
EIOUSE OF REPRESENTATIVES
Quecan Ci

FIFTEENTH CONGRESS
Second Regular Session

Baga
i

LIOUSE BNL No. ___

Introduced by BAYAN MUNA Rep. TEDDY A, CASINO.

EXPLANATORY NO!

‘Fhis bull seeks to amend the National Internal Reveuue Code of 1997, as amensied by Kepabtic Ace hws. 957
by esempting collway services and dhe fees tollway operators collect Irom the: value-added tax (AT)

according to the Bureas of lutemal Revenue (QIK). the yovernment’s wove w collect VAT on coli
operations will ean P2.3 ca P3 billion a yeae Lo osteasihy aelp lund the A*pnav povesnmest’s sucial savices
and unttastacture piojects,

Bur the VAY on tollway operations will jack up all the present coll fee rates wherein Class T vel
os dhe Nosth Luzon Expressway (NLEX) Bou 8
che cucrent P195, while tle highest toll for Class ¥ 3:

3 o.veliing
reas 10 Sta. furs will have to pay total of B21. fons
202 trom Tipo to Tarlac {oom the cussens P2.

Ae ordinary cas taking the South Luzens Expressway I
eon the cunent P86 winile he Sleyway would c:
frou the cumen: PHT, Rutes for trucks and buy
imposition of ake VAT 00 tollway opeeanous

would have to pray 2% Lr AluLang_ es Cadamba

9163 for the elevated porioy feos Medea tes AL amy
sre greater and will becumse even suse expensive wich che

Leepasing the VAT on tollway aperntiuns will detisatels be anozher tauden un the already wver-tased s soulders
of our people, especially for dhase whose incorses ase barely rnouga to coves their busic needs,

1 these dimes of unbridled hikes in the prices of vil, food, odaer commodities and seuvives, itis tue duty
Congress to work for economic teliel w Filipino citizens. The clear-cut removal of VAT on tolhvay services in
the cnerent nternal revenue law is the anost lo rion for Cougress to act on.

Furthermore, in light of the recent Supreme Court deceion favoring the imposition of dhe VAT nm te way

sevices, the burden is cu Comcess t protect she people by removing tollway secvices from the VAT as a
direct For of econointe relief for the Filipano people. Whatever government sevenuc louse: incassed “oll be
offset by the xicreased purchasing power ot ull Bébpinc cidzens dat will prove better in thelong nun an makin
the ecomoiny a vibrant and eyuitable one.

Ju view of the Fareyoing, approval ol this vill is curnesch

Loe Co
REP. ‘TEDDY A, CASINO.
Gayan Muna Party-list


Republic of the Phill
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
Second Regular Session

HOUSE BILL No.

lotioduced hy BAYAN MUNA Rep. TEDDY A. CASING.

AN ACT
CLASSIFYING SERVICES RENDERED BY TOLLWAY OPERATORS AS VALUE-ADDED TAX
EXEMPT TRANSACTIONS, AMENDING FOR THE PURPOSE SECTION 109 (1) OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED BY REPUBLIC ACI’ NO. 9337,
AND FOR OTHER PURPOSES,

the i emusted dy soe Senate and Howse of Repreentaios of the Philipines on Congress aurerrbese

SECTION L Section 109 (1) of the Nativnal Internal Revewus Gade, as amended by
Republic.\ct No, 9337, is hereby further amenuled seal ay follows:

“SEC. 109. Exempr Transacuons, - (U} Snbject ro the provisious of subsection (2)
hrereot, dhe sollowmng, transactions shall be exempt from the value-added tay

“(Aj oe
n(s sx
SU) sex
AV) xxx
“ QV) SERVICES RENDERED BY TOLLWAY OPERATORS.
SECTION 2. Repeating Clause, - All other laws, acts, dncrees, execuive orders, issnoces, and rules and

regulations or parts threat which ure conteary co and inconsesene with any provisions af this det ure hereby
repealed, amended, or mulified accordingly.

SECTION 3. Sepurubility Clause, — IF any provision ot is Act ed
astituional, the valehty of the remaining provisions heecof shal! remain in Jul force aud effect.

sstaqnently de

er iu the

SECTION 4. Edecdvity Clause. ~‘Ibie Act shall the effect ininied:arely after its publication
Oficial Gazette or ms a newspaper of general circutatioe: ia the Palippines,

Approved


Kepudbe of the Whilrppines
Bouse af Represeutaribes
Queson Cup, Meteo Planita

Fitzeenth Congress
Second Regular Session
COMMITTEE ON WAYS AND MEANS

FOR HON. FELICIANO BELMONTE, JR.
Speaker
TARU ATTY, ARLENE C. DADACARNALDO

epuly Secretary Gene!
Committee Afiners Department

RE SPOT REPORT ON TRE MFEVING OF THE COMMITTER OS Ways AND
MEANS HELD ON OCTOBER 4, 2011, 9:39 AM, ROLANDO R ANDAYA HALL,
HOUSE OF REPRESENTATIVES, QUEZON CITY.

DATE OCTOBER 4, 2001

ute bill to House Bill Nus. 3765, 4026, 4793 and

Wo

A. First deliberation on the aanuuibered subs

re: Additional Exemption for Dependents with Disahi

The Committee proved the substitute bill to House Bill Nos. 3765. 1026, 4799
Additional EXempion for Dependents with Dasability

1d STD he:

I. First deliberation un House Biil Nos. 4971, 5171, 5185 and 5303 Re: VAT. Exemption of Toll Fees

Affer hearing the commicnts of the aubors of the bills, sepresentalives of the yoternncat ae sell as
the private sectors and Former © essman Renato Diaz, the Commutiue approved the substitute bill
exempting the services of tollway operators fom value-added tax

Hl. Second deliberation on House Bill Nos. 4794, 5139 and S161 Re: Tax facenthves for the
manufacture, assembly, couversion and importation of electric, hybrid and other aleeroative fuel
vehicles

The Conimittes approved the preparation of the substitute bill Lo House Bill Nos 1°94. 3120 and

3460 granting tax incentives for the manuitaclure. assembly. conversion and Importation of clectie:, hybrid

and other alternative fuel vehicles, subject to approsal in the wext joint public heariny af the € wmnuttece oa

Ways and Means and Tiacle and Industry.

ot

ATU PANCHO A. BELEN
yAice Director

R. PULHIN
committee Socreiary

Noted by,

Lea A
DONALD Z. MARASIGAN
Director IV

eDaevton CAD. The Depts

Cer The Depaty Speakers, The Clhiryersna, Commute, sa dts, ‘Uh Secreta Giowerals ‘the bse
Executive Dacor. CAD: The Serie Dinh. CASS