LOWERING THE COST TO CONSUMERS OF ELECTRICITY BY REDUCING THE FRANCHISE TAX PAYABLE BY ELECTRIC FRANCHISE HOLDERS AND THE TARIFF ON FUEL OILS FOR THE GENERATION OF ELECTRIC POWER BY PUBLIC UTILITIES.

• Number: Presidential Decree No. 551
• Sections: 6

Preamble

WHEREAS, the grantees of electric franchises are unable to

reduce their rates due to their high cost of operation;

WHEREAS, there is a need to provide electric current for

light, heat and power at a cost within the reach of consumers;

WHEREAS, assistance to the franchise holders by reducing

some of their tax and tariff obligations is imperative to attain the

above objectives;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, by virtue of the powers vested in me by the Constitution,

do hereby order and decree:

Section 1

SECTION 1. Any provision of law or local ordinance to the

contrary notwithstanding, the franchise tax payable by all grantees of

franchises to generate, distribute and sell electric current for light,

heat and power shall be two (2%) of their gross receipts received from

the sale of electric current and from transactions incident to the

generation, distribution and sale of electric current.

Such franchise tax shall be payable to the Commissioner of Internal

Revenue or his duly authorized representative on or before the twentieth

day of the month following the end of each calendar quarter or month as

may be provided in the respective franchise or pertinent municipal

regulation and shall, any provision of the Local Tax Code or any other

law to the contrary notwithstanding, be in lieu of all taxes and

assessments of whatever nature imposed by any national or local

authority on earnings, receipts, income and privilege of generation,

distribution and sale of electric current.

Section 2

SEC. 2. Tariff

Heading No. 27.09 of Sec. 104 of the Tariff and Customs Code, as

amended, is hereby further amended as follows:

Tariff

Heading

No.

Description of Articles

Rate of Duty

27.09

Petroleum oils and oils

obtained from bituminous minerals, crude.

(a)

for use as fuel oils for the

generation of electric power imported by electric utilities

Ad Val. 10%

(b)

Others

Ad Val. 20%

Section 3

SEC. 3. Sec. 106 of the Tariff and Customs

Code, as amended, is further amended by inserting a new paragraph "b"

and relettering sub-paragraphs (b), (c), and (d), thereof to (c), (d),

and (e), respectively, the new paragraph (b) of the said Sec. 106 to

read as follows:

"b. On Petroleum Oils and Oils Obtained from Bituminous

Minerals, Crude Eventually Used for Generation of Electric Power. —

On petroleum oils and oils obtained from bituminous minerals, crude oils

imported by non-electric utilities sold, directly or indirectly, in the

same form or after processing, to electric utilities for the generation

of electric power, a refund or tax credit shall be allowed not

exceeding fifty per cent (50%) of the duty imposed by law upon such

oils, which shall be paid or credited under such rules and regulations

as may be prescribed by the Commissioner of Customs with the approval of

the Secretary of Finance."

Section 4

SEC. 4. All the savings realized by electric franchise holders

from the reduction of the franchise tax under Section 1 and tariff

reductions and tax credits under Sections 2 and 3, shall be passed on to

the ultimate consumer.

The Secretary of Finance shall promulgate rules and regulations and

devise a reporting system to carry out the provisions of this Decree.

Violation of this section or the regulations promulgated by the

Secretary of Finance to implement it shall be penalized by a fine of not

more than P50,000.00 and imprisonment of not more than six (6) months.

In addition, the Secretary of Finance may order compulsory price or rate

reduction, which may be either prospective or retroactive in

application. If the offense is committed by juridical person, the

manager or person in charge of the management of the business or affairs

thereof shall be responsible therefor.

Section 5

SEC. 5. This Decree shall take effect immediately.

Done in the City of Manila, this 11th day of September, in the year of

Our Lord, nineteen hundred and seventy-four.

(Sgd.)

FERDINAND E. MARCOS

President of the Philippines

By the President:

(Sgd.)

ALEJANDRO MELCHOR

Executive Secretary