Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
EIGHTEENTH CONGRESS 
Second Regular Session 
HOUSE BILL NO. ____ 
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR. 
AN ACT 
AMENDING SECTION 27 (B) OF THE NATIONAL INTERNAL REVENUE CODE, 
AS AMENDED, AND FOR OTHER PURPOSES 
The first sentence of Section 27(B), as amended, provides: 
"(B) Proprietary Educational Institutions and Hospitals. – Proprietary educational 
institutions and hospitals which are nonprofit shall pay a tax of ten percent (10%) on their 
taxable income except those covered by Subsection (D) hereof: Provided, That 
beginning July 1, 2020 until June 30, 2023, the tax rate herein imposed shall be one 
percent (1%): Provided, further. That if the gross income from 'unrelated trade, business 
or other activity' exceeds fifty percent (50%) of the total gross income derived by such 
educational institutions or hospitals from all sources, the tax prescribed in Subsection (A) 
hereof shall be imposed on the entire taxable income, x x x." 
Section 27(B) of the National Internal Revenue Code (NIRC) creates an ambiguity as 
to whom the preferential tax rates apply to. Specifically, as to the qualifications, i.e. 
proprietary and nonprofit. An effective tax administration system is one that is clear 
and unambiguous and can easily be followed by both the tax office and the taxpayer. 
To remedy this ambiguity and protect the Constitutional mandate of incentivizing 
proprietary educational institutions, this measure seeks to amend Sec. 27(B) to 
clearly indicate that the preferential tax rate shall apply to: a. all proprietary 
educational institutions, including those that are stock and for profit; and b. nonprofit 
hospitals. 
In view of the foregoing, the immediate approval of this bill is earnestly sought. 
LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR. 
June 30, 2021
12:13 pm
9672


 
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR. 
AN ACT 
AMENDING SECTION 27 (B) OF THE NATIONAL INTERNAL REVENUE CODE, 
AS AMENDED, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives in the Philippines in 
Congress assembled: 
SECTION 1. Section 27 (B) of the National Internal Revenue Code of 1997, as 
amended, is hereby further amended to read as follows:  
"Sec. 27. Rates of Income Tax on Domestic Corporations. –  
“B) [Proprietary Educational Institutions and Hospitals – Proprietary 
educational institutions and hospitals which are nonprofit] HOSPITALS 
WHICH ARE NONPROFIT, AND PROPRIETARY EDUCATIONAL 
INSTITUTIONS shall pay a tax of ten percent (10%) on their taxable 
income except those covered by Subsection (D) hereof: Provided, That 
beginning July 1, 2020 until June 30, 2023, the tax rate herein imposed 
shall be one percent (1%): Provided, further, That if the gross income from 
'unrelated trade, business or other activity' exceeds fifty percent (50%) of 
the total gross income derived by such educational institutions or hospitals 
from all sources, the tax prescribed in Subsection (A) hereof shall be 
imposed on the entire taxable income. For purposes of this Subsection, 
the term 'unrelated trade, business or other activity' means any trade, 
business or other activity, the conduct of which is not substantially related 
to the exercise or performance by such educational institution or hospital 
of its primary purpose or function. 'Proprietary' means a private hospital, 
or any private school maintained and administered by private individuals 
or groups with an issued permit to operate from the Department of 
Education (DepEd) or the Commission on Higher Education (CHED), or 
the Technical Education and Skills Development Authority (TESDA), as 
the case may be, in accordance with existing laws and regulations.  
Sec. 2. Implementing Rules and Regulations. – The Department of Finance shall 
promulgate the necessary rules and regulations for the effective implementation of 


 
 
the provisions of this Act.  
 
Sec. 3. Separability Clause. – If any portion or provision of this Act is subsequently 
declared invalid or unconstitutional, other provisions hereof which are not affected 
thereby shall remain in full force and effect. 
 
 
Sec. 4. Repealing Clause. – All laws, decrees, orders, rules and regulations and other 
issuances or parts thereof, which are inconsistent with this Act, are hereby repealed 
or modified accordingly.  
 
Sec. 5. Effectivity. – This Act shall take effect fifteen (15) days after its publication in 
the Official Gazette or in a newspapers of general circulation.  
 
Approved,