Setllltr, 
FIFTEENTH CONGRESS OF THE 
) 
(~fh;l' llf tl!€ .jrrri"hIr~ 
REPUBLIC OF THE PHILIPPINES ) 
Second Regular Session 
) 
'11 
I\UG -1 P 4 :1 9 
SENATE 
S. No.2927 
RECEIVED BY:-@::-
Introduced by Senator Juan Miguel F. Zubiri 
EXPLANATORY NOTE 
A seamless transport network is one of the drivers of economic development. 
The said network should be one that is safe, efficient, reliable and coordinated in order 
to move people, goods and services. At the same time, the transport network should be 
accessible and fully capable of responding to the current demand of motorists and of 
the expected traffic volume in the future as determined by the country's economic 
managers in their development plans. 
On the other hand, the government has its own needs to consider such as 
financial resources. The Philippines adopted the Build-Operate-Transfer mode of project 
financing in order to respond to the rising road transport needs especially in connecting 
the economic growth centers to its peripheries. 
However, despite the government's regulation of toll fees, the capacity of 
hundreds of thousands of motorists to use the tollways is influenced by the cost which is 
expected to rise due to the imposition of the 12 per cent Value-Added Tax on tollway 
operators. Others believe that the imposition of VAT on tollways is dOUble-taxation as a 
toll fee is already a levy being imposed on users of tollways. 
Thus, in order to ease the burden of motorists and the riding public in these times 
of rising prices of petroleum products and basic commodities, services rendered by 
tollway operators should be exempt from VAT. 
This bill seeks to amend Sections 108 and 109 of the National Internal Revenue 
Code, as amended to exempt services rendered by tollway operators from the Value-
Added Tax. 
The immediate passage of this Bill, is therefore, respectfully sought. 


S~1:wtt' 
FIFTEENTH CONGRESS OF THE 
) 
HfW1ri' of till' ~rrrrbru 
REPUBLIC OF THE PHILIPPINES ) 
Second Regular Session 
) 
'11 
AUG ·-1 
P 4 :20 
SENATE 
S. No, 2927 
Introduced by Senator JUAN MIGUEL F. ZUBIRI 
I 
2 
AN ACT 
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AMENDING SECTIONS 108 AND 109 OF THE NATIONAL INTERNAL REVENUE 
4 
CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES 
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Be it enacted by the Senate and the House of Representatives of the Philippines in 
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Congress assembled: 
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Section. 1. Section 108 of the National Internal Revenue Code of 1997, as amended, is 
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hereby further amended to read as follows: 
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"SEC. 108. Value-added Tax on Sale of Services and Use or Lease of 
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Properties. -
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(A) Rate and Base of Tax. - There shall be levied, assessed and collected, 
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a value-added tax equivalent to ten percent (10%) of gross receipts 
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derived from the sale or exchange of services, including the use or lease 
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of properties: Provided, That the President, upon the recommendation of 
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the Secretary of Finance, shall, effective January 1, 2006, raise the rate of 
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value-added tax to twelve percent (12%), after any of the following 
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conditions has been satisfied: 
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(i) Value-added tax collection as a percentage of Gross Domestic 
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Product (GOP) of the previous year exceeds two and four-fifth 
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percent (2 4/5%); or 
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(ii) National government deficit as a percentage of GOP of the 
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previous year exceeds one and one-half percent (1 1/2%). 
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"The phrase 'sale or exchange of services' means the performance 
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of all kinds of services in the Philippines for others for a fee, 
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remuneration or consideration, including those performed or 
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rendered by construction and service contractors; stock, real 
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estate, commercial, customs and immigration brokers; lessors of 
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property, whether personal or real; warehousing services; lessors 
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or distributors of cinematographic films; persons engaged in milling, 
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processing, 
manufacturing 
or 
repacking 
goods 
for 
others; 
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proprietors, operators or keepers of hotels, motels, rest-houses, 
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pension houses, 
inns, 
resorts; 
proprietors or operators of 
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restaurants, refreshment parlors, cafes and other eating places, 


including clubs and caterers; dealers in securities; lending 
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investors; transportation contractors on their transport of goods or 
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cargoes, including persons who transport goods or cargoes for hire 
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and other domestic common carriers by land relative to their 
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transport of goods or cargoes; common carriers by air and sea 
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relative to their transport of passengers, goods or cargoes from one 
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place in the Philippines to another place in the Philippines; sales of 
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electricity by generation companies, transmission, and distribution 
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companies; services of franchise grantees of electric utilities, 
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telephone and telegraph, radio and television broadcasting and all 
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other franchise grantees except those under Section 119 of this 
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Code, TOLLWAY OPERATORS, and non-life insurance companies 
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(except their crop insurances), including surety, fidelity, indemnity 
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and bonding companies; and similar services regardless of whether 
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or not the performance thereof calls for the exercise or use of the 
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physical or mental faculties. The phrase 'sale or exchange of 
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services' shall likewise include: 
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"Xxx." 
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SEC. 2. Section 109 of the same Code, as amended, is hereby further amended by 
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inserting a new sub-section (F) and re-number the succeeding sub-sections to read as 
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follows: 
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"SEC. 109. Exempt Transactions. - (1) Subject to the provisions of subsection (2) 
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hereof, the following transactions shall be exempt from the value-added tax: 
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"Xxx; 
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(F) SERVICES RENDERED BY TOLLWAY OPERATORS; 
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(G) Services by agricultural contract growers and milling for others of 
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palay into rice, corn into grits and sugar cane into raw sugar; 
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Xxx." 
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Sec. 3. Repealing Clause. - All laws, presidential decrees and issuances, executive 
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orders, rules and regulations or parts thereof inconsistent with the provisions of this Act 
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are hereby repealed or modified accordingly. 
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Sec. 4. Separability Clause. - If, for any reason or reasons, any part of the provision of 
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this Act shall be held unconstitutional or invalid, other parts or provisions hereof which 
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are not affected thereby shall continue to be in full force and effect. 
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Sec. 5. Effectivity. - This Act shall take effect fifteen (15) days after its publication in two 
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(2) national newspapers of general circulation. The publication shall not be later than 
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seven (7) days after the approval hereof. 
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Approved, 
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2