Can next Congress rescind tax perks under franchise for Bulacan airport? Drilon says no


Senate Minority Leader Franklin Drilon has manifested that the tax incentives to be given to San Miguel Aerocity Inc. shall not be removed even by lawmakers who will sit in the next Congress.

After the upper chamber approved House Bill No. 7507 on third reading on Monday, Drilon took the chance to spread a crucial question into the Senate records.

"After the private sector, the grantee, has invested sizable sums of money, of private funds, in pursuit of this project, can the next Congress rescind and remove all these incentives?" he asked during session on Monday.

"My submission is that the State and Congress, even in the exercise of its plenary powers, cannot revoke this franchise granted," he added.

Drilon underscored that the franchise should be considered "a contract between the investor and the state."

He further said principles of equity will not permit the state to suddenly withdraw the incentives it granted in the middle of the game as it was the reason why the private sector took the risk to invest.

The 50-year franchise bill exempts the San Miguel Aerocity from all direct and indirect taxes and fees during the 10-year construction period of the airport.

For the remaining years of its franchise, the airport developer shall be exempt only from income and property taxes until it has recouped its investments. After which, it shall be subjected to all taxes.

After the franchise expires, the ownership of the airport shall be turned over to the national government.


Senator Grace Poe, sponsor of the bill, agreed with Drilon.

"It's really detrimental if we move the goal posts in the middle of the game. I think we already committed to this, and maybe that could also spill over to CREATE [Corporate Recovery and Tax Incentives for Enterprises] bill, that the contracts that we already made in the past, we should really be able to honor that," she said.

"The goal is for our commitment here for this franchise that the terms not be repealed by a general law or anything after that because the government really means to honor this contract," she added.

Senator Francis Tolentino said the grantee could also invoke property right if the incentives provided under the airport franchise would suddenly be cancelled.

"It now becomes the property right of the proponent here because investments will have to be made, linkages with other investors will have to be made. Thereafter, if it is a property right, just compensation would have to be made if it will be thwarted by a general law," he said.

Senator Panfilo Lacson previously raised a related issue concerning a potential conflict between this franchise and the CREATE bill which seeks to rationalize incentives.

He said a catch-all phrase in CREATE's provisions may impair the airport franchise bill and stir up a Constitutional issue later on.

Nevertheless, he said this can be remedied by reconciling the two bills.

The airport franchise will be discussed in bicam while the CREATE bill is still under the period of amendments in the Senate. — BM, GMA News