Republic of the Philippines
House of Representatives
Quezon City, Metro Manila

Fifteenth Congress
First Regular Session

House Bill No. __ 863

Introduced by the Honorable Simeon A. Datumanong,

Explanatory Note

While the government has effectively enacted measures to increase and
enhance revenue generation, there still exist loopholes in the collection efforts
particularly those related to the collection of fees, penalties, and other charges
imposed by government agencies. An example is the proliferation of fake receipts,
invoices, orders of payment and other official government forms, which cause
significant losses to the government.

The objective of this bill is to require all government agencies,
instrumentalities, local government units and government owned and controlled
corporations, to use security paper either made from indigenous materials or water-
marked security paper in their receipts and invoices, permits, licenses, clearances,
official papers or documents. A watermark, will be the security feature of such
payment-related and other official forms, and shall bear the seal of the covered
institutions.

This way, verification of the authenticity of the document can immediately be
made simply by examining the paper's watermark. Consequently, collection of taxes,
and other forms of payment to the government will be greatly strengthened because
it will significantly minimize, if not eliminate, the use of fake receipts and other
official payment forms in transactions with the government.

This Bill was previously filed in the 14" Congress and was authored by this
representation, together with congressmen Velarde, Coscolluela, Tieng, Codilla,
Javier, Gonzales (N) and De Guzman. The contents of this Bill was in consonance
with the consolidated version, which was approved by the House of Representatives

on third reading.
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2e4 District, Maguindanao


Republic of the Philippines
House of Representatives

Quezon City, Metro Manila

Fifteenth Congress
First Regular Session

869

House Bill No.

Introduced by the Honorable Simeon A. Datumanong

AN ACT
REQUIRING ALL GOVERNMENT AGENCIES, INSTRUMENTALITIES, LOCAL
GOVERNMENT UNITS AND GOVERNMENT-OWNED AND/OR
CONTROLLED CORPORATIONS TO USE SECURITY PAPER MADE FROM
INDIGENOUS MATERIALS OR WATER-MARKED SECURITY PAPER IN
THEIR RECEIPTS AND INVOICES, PERMITS, LICENSES, CLEARANCES,
OFFICIAL PAPERS OR DOCUMENTS.

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

SECTION 1. Title - This Act shall be known as the “Use of Security Water-
Marked Paper in all Receipts and Invoices, Permits, Licenses, Clearances, Official
Papers or Documents Act of 2010.”

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” shall refer to a written admission or acknowledgment 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.

() “Sales invoice or delivery receipts” shall refer to a written account
of goods or services rendered and the price charged therefor, 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.

© “Security paper” shall refer to a security paper which is made from
abaca or other indigenous materials or a water-marked security paper, either of
which bears such authorized security feature duly etched and embedded in the
paper during its manufacturing process. It is especially designed for the printing of
official receipts, sales invoices, permits, licenses, clearances and other official papers
or documents.

SEC. 4 Covered Institutions/Establishments. - All government agencies and
instrumentalities, including government-owned and/or controlled corporations
(GOCCs), and all Local Government Units (LGUs) shall use security paper made
from abaca or other indigenous materials or water-marked security 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
Bangko Sentral ng Pilipinas (BSP), through its Banknotes and Securities Printing
Department (BSPD), and the National Printing Office (NPO), in coordination with
said government agencies and instrumentalities, GOCCs and LGUs, shall develop
procedures such that receipts, invoices, forms, permits, licenses, clearances, and other
official documents, whenever applicable and possible, shall be printed on security
paper made from indigenous materials or water-marked security paper, the sizes and
forms of which shall be uniform.

SEC. 6. Size and Form of Security Watermarked Paper. - The Department of
Finance (DOF), the Bureau of Internal 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 size and forms of security paper to be
used for all transactions of all government agencies and instrumentalities, including,
GOCCs and all LGUs.

SEC. 7. Covered Forms. - All receipts, invoices, permits, licenses, clearances,
and all other official documents of all government agencies, instrumentalities,
GOCCs and LGUs shall, after a period of six (6) months from the effectivity of this
Act, be printed in security paper made from indigenous materials and water-marked
security paper: Provided, That any such receipts, invoices, commercial documents,
permits, licenses, clearances and all other official documents 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 shall no longer be
allowed for use in any transaction in the Philippines.


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
paper made from indigenous materials or water-marked security paper is prescribed,
as well as any government functionary involved in the monitoring of regulating
these transactions, shall be subject to all the appropriate sanctions and penalties
provided for in the National Internal Revenue Code and other pertinent laws, rules
and regulations.

SEC. 9. Implementing Rules and Regulations (IRR). - The Secretary of the
Department of Finance, upon the recommendation of the Commissioner of Internal
Revenue and the Commissioner of Customs, Governor of BSP, and the Director of
NPO, shall promulgate appropriate rules and regulations, including the
identification and setting of the standards upon which the security 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 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 or in at least two (2) newspapers of

general circulation, whichever comes earlier.