13TH ~ O N ~ ~ E S §  
F THE REPUCPLIC ) 
OF THE PHILIPPINES 
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"p? 0 -6 ti:! 
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First Regular Session 
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S. BILL NO. 
Introduced by Senator Ralph G. Recto 
EXPLANATORY NOTE 
Several measures have already been passed that lay the groundwork for 
the synergistic collaboration of the private sector and government, foremost of 
which is the Build-Operate-Transfer (BOT) Law. However, despite the incentives 
for local and foreign contractors to undertake infrastructure projects, the road to 
development has not been without impediments. There are still certain 
obligations over which the national government has the inherent power and these 
include the acquisition of Right of Way (ROW). 
In projects where the government has the obligation to provide the ROW, 
delay in the implementation is not uncommon by reason of the Government's 
inability to meet its obligation for lack of funds. In these cases, the private 
contractor is discouraged from investing further in the project or other projects 
where the Government has to put up a counterpart capital. 
This bill does not propose to grant additional incentives to proponents of 
infrastructure projects but rather, it offers a scheme through which private 
contractors can claim the advances they have made to the Government for the 
acquisition of the Right of Way for the project. It will hasten the implementation of 
infrastructure projects if private investors are encouraged to advance the funds 
needed to meet Government's obligations relating to the projects through tax 
credits. 
The proposed scheme is a win-win situation for both the private proponent 
and the Government since projects will be pursued on schedule while the 
investors are assured of repayment of its advances. This minimizes wastage of 
resources, both physical and financial, even as it promotes economy and 
efficiency in the implementation of vital projects. 


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13TH C O ~ ~ R ~ S S  
OF THE REPU 
OF THE PHILIPPINES 
1 
First Regular Session 
1 
Introduced by Senator Ralph G. Recto 
AN ACT 
PROVIDING FOR TAX CREDITS AS PAYMENT TO PROPONENTS OF 
INFRASTRUCTURE PROJECTS WHO ADVANCE THE FUNDS REQUIRED 
BY GOVERNMENT TO ACQUIRE THE RIGHT OF WAY 
Be enacted by the 
Senate and 
House of Representatives of the Philippines 
in 
Congress assembled: 
SECTION I. 
Declaration of Policy. - It is declared the policy of the State to 
recognize the indispensable role of the private sector as the main engine for 
national growth and development. 
Accordingly, there is a need to provide 
appropriate incentives and other support mechanisms to mobilize private 
resources for the purpose. 
SEC. 2. Tax Credit. - Any Filipino individual or corporation undertaking an 
infrastructure or development project who advances the funds to the Right of 
Way requirement of the projects which is Government's obligation shall be 
entitled to avail of a tax credit equivalent to the amount of funds advanced plus a 
cost of capital at the T-bill rate prevailing at the time of issuance of the tax credit 
certificate as herein provided plus a premium of six percent (6%). The tax credit 
herein authorized shall be evidenced by a tax credit certificate which shall be 
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issued by the Department of Finance within thirty (30) days upon certification by 
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the government agency involved in the project of the validity and amount of funds 
advanced for which a tax credit shall be availed. 
The tax credit issued hereunder shall be negotiable and may be used if 
applied against any or all taxes including but not limited to income taxes, specific 
taxes, ad valorem taxes, sales taxes, percentage taxes, duties, charges, 
wharfage fees and other taxes, duties, charges or fees due to the National 
Government. The tax credits issued under this law shall be in addition to any 
other benefits or incentives the private proponent may be entitled to under our 
existing laws, decrees, tax regimes or investment programs but shall be valid 
only for a period of ten years from the date of issuance. 
SEC. 3. lmplemenfing Rules and Regulations. - Within thirty (30) days 
from the effectivity of this Act, the Department of Finance and the Department of 
Public Works and Highways shall formulate the rules and regulations 
implementing this Act. 
SEC. 4. Repealing C/ause. - All laws, executive orders, presidential 
decrees, rules and regulation or parts thereof inconsistent with the provisions of 
this Act are hereby repealed or modified accordingly. 
SEC. 5. Effecfivify. - This Act shall take effect fifteen (15) days following 
its publication in any national paper of general circulation. 
Approved, 
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