REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

House Bill No. S79

Introduced by MAGDALO Party List RepresentativesFranciscoAshley L. Acedillo and
Gary C. Alejano

EXPLANATORY NOTE

It has always been the goal of the government to increase and enhance revenue collection and to put @
stop to tax fraud and corruption. However, there seems to be an absence of a simple yet effective manner
of easily verifying and/or authenticating all receipts, invoices, permits, licenses, clearances and official
papers issued by all government agencies and instrumentalities, Government Owned and Controlled
Corporations (GOCCs) and Local Government Units (LGUs) as well as private businesses, that will
ensure full accounting and proper documentation of all business and commercial transactions in the
country.

In this regard, there is a need to establish and implement a simple yet fool-proof way of authenticating
and verifying the correctness of transactions even by a mere naked eye examination to substantially
enhance and improve government revenue without increasing taxes.

This bill proposes the use of specialized or watermarked security paper on which all receipts, invoices,
permits, licenses, clearances and all other official papers and documents issued by both the government as
well as private entities shall be printed. Consequently, the adoption of such legislation will greatly
enhance and strengthen tax monitoring and collection if the use of security watermarked paper for all
receipts and other documents will be made a mandatory requirement for all commercial and business
transactions.

It should be noted that he National Tax Research Center (NTRC) of the Department of Finance (DOF),
the government's lead agency when it comes to taxation, has expressed its support and full backing for the
proposal to use water-marked paper in all receipts and similar documents to be issued by state agencies,
local government units and even private and commercial establishments. The NTRC said this move
would enhance and strengthen the tax monitoring and collection functions of the government. To quote
the NTRCT',

"It is also expected that the use of watermarked paper in all commercial and business
transactions could minimize if not completely eliminate the use of falsified receipts and
other documents.”

In the light of all the foregoing, the immediate consideration and passage of ths bill is most earnestly
sought. .

FRANCISCO ASHLEY L. ACEDILLO YARY C. ALEJANO

" ease sce the article: “Use of watermarked paper for receipts backed"; Philippine Star - July 8, 2008; See also:
Pista com - p/w phistar.conv Arik appr articlel=71550


REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES,
Quezon City

SIXTEENTH CONGRESS
First Regular Session

House Bill No. 979

Introduced by MAGDALO Party List Representatives Francisco Ashley L. Acedillo and
Gary C. Alejano

AN ACT
REQUIRING ALL GOVERNMENT AGENCIES, INSTRUMENTALITIES, LOCAL
GOVERNMENT UNITS, AND GOVERNMENT OWNED AND CONTROLLED
CORPORATIONS (GOCCs) AND PRIVATE ESTABLISHMENTS TO USE SECURITY
WATER-MARKED PAPER IN ALL RECEIPTS AND INVOICES, PERMITS,
LICENSES, CLEARANCES, OFFICIAL PAPERS OR DOCUMENTS

Be it enacted in the Senate and House of Representatives of the Philippines in Congress
assembled

SECTION 1. Short Title. - This Act shall be known as the "Document Authentication
and Security Act”.

SEC. 2. Declaration of Policy. - It is hereby declared the policy of the State to:
(a) Enhance tax monitoring and collection;
(b) Increase revenue collection; and
(©) Avoid tax fraud and graft and corruption in the tax collection efforts.

SEC. 3. Definition of Terms. - The following definition of terms is hereby adopted:
(a) "Receipt" is a written admission or acknowledgement of the fact of payment in money or
other settlement between seller and buyer of goods, debtor and creditor, or person rendering
services and client or customer printed in accordance with these regulations.
(b) "Sales or commercial invoice or delivery receipts" is a written account of goods are services
rendered and the price charged therefore, or a list of goods consigned and the value at which the
consignee is to receive them or any other list by whatever name is known which is used in the
ordinary course of business evidencing sale and transfer or agreement to sell or transfer goods
and service, e.g. purchase orders, delivery receipts, job orders, provisional and temporary

receipts, and others;


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(©) “Security watermarked paper” shall refer to a paper material which bear watermark
containing such authorized security feature duly etched and embedded in the paper during its
manufacturing process. It is especially designed for the printing of receipts or sales or commercial

invoices.

SEC. 4. Covered Institutions/Establishments, — All government agencies and
instrumentalities, including Government-Owned and/or Controlled Corporations, and all Local
Government Units and private and commercial establishments, whether corporations, partnerships
or sole proprietorships, shall use water-marked paper in all receipts, invoices, forms, permits,
licenses, clearances, official papers and documents which they issue to all natural and juridical

persons transacting business with them.

SEC. 5. Procedure for Printing of Security Watermarked Paper. ~ The said agencies,
GOCCs and LGUs as well as all private establishments shall strictly comply with the implementing
rules and regulations (IRR) prescribing the procedures in accordance with which such receipts,
invoices, forms, permits, licenses shall be printed, as provided below. The said documents shall be
printed on security water-marked paper in accordance with prescribed form and dimensions.

SEC. 6. Size and Form of Security Watermarked Paper. - The Department of Finance
(DOF), the Bureau of Intemal Revenue (BIR) and the Bureau of Customs (BOC) shall prescribe
and formulate within a period of two (2) months from the effectivity of this Act, the appropriate
uniform dimensions and form of security watermarked paper to be used for all business and
commercial transactions in the Philippines.

SEC. 7. Covered Forms. — All receipts, invoices, permits, licenses and clearances and other
accountable forms shall, after a period of six (6) months from the effectivity of this Act, all be
printed in security water-marked paper: Provided, That any such receipts, invoices, commercial
documents, permits, licenses and clearances as well as other accountable forms which remain
unused and unconsumed after the lapse of said six-month period may still be used: Provided,
further, that appropriate inventory thereof as confirmed and approved by the BIR is conducted and:
Provided, finally, That, after a period of six (6) months thereafter, the said unused receipts,
invoices, permits, licenses and clearances as well as other accountable forms shall no longer be
allowed for use in any transaction in the Philippines.


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SEC. 8. Penalty. — Any person who fails to comply with the requirements of this Act,
including the parties involved in a transaction where the use of security water-marked paper is
prescribed, as well as government functionaries involved in the monitoring of regulating these
transactions, shall be subject to all the appropriate sanctions and penalties provided for in the
National Intemal Revenue Code and other pertinent laws, rules and regulations.

SEC. 9. Implementing Agency. — The Secretary of the Department of Finance, upon the
recommendation of the Commissioner of Internal Revenue and the Commissioner of Customs, shall
immediately promulgate and adopt the appropriate implementing rules and regulations (IRR) of this
Act. Said IRR shall include the identification and setting of the standards upon which the security
watermarked paper shall be sourced and supplied and such other details as would be necessary and

appropriate for the effective implementation of this Act.
SEC. 10. Separability Clause. — If for any reason any provision of this Act is declared
unconstitutional or invalid, the remainder or any provisions hereof not affected thereby shall remain

in full force and effect

SEC. 11. Repealing Clause. ~ The provisions of any law, executive orders, presidential
decrees or other issuances inconsistent with this Act are hereby repealed or modified accordingly.

SEC. 12. Effectivity. ~ This Act shall take effect fifteen (15) days after its complete
publication in the Official Gazette and in at least two (2) newspapers of general circulation.

Approved,