Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
Third Regular Session

HOUSE BILL No& 889

Introduced by Rep. TEDDY A. CASINO

EXPLANATORY NOTE

‘This bill seeks to exempt water services from value-added tax (VAT), amending the National
Internal Revenue Code of 1997, as amended by Republic Act No. 9337.

Since the commencement of the Concession Agreement between the Metropolitan
‘Waterworks and Sewerage System (MWSS) and Manila Water and Maynilad in 1997 and up
until 2011, water rates dramatically increased by 833.2% in the East concession areas and by
520% in West concession areas. At the onset of the agreement, Maynilad water rate was only
P7.21 per cubic meter, while Manila Water was only P4.02 per cubic meter. At present, the
basic water cost for Maynilad is P47.83/cubic meter, while the Manila Water is P36.42/cubic
meter. Meanwhile, according to the Local Water Utilities Administration, the average basic
rate of water districts is P18/cubic meter from P6.75/cubic meter in 1996

As consumers are weighed down by the rising cost of water services, amid access to water
being an international human right, government doubly burdens the public by imposing
value-added tax on water services and other basic utilities. From the introduction of the 10%
VAT to its hike to 12% through the Expanded VAT (E-VAT) law, basic services and utilities
have been unjustly taxed, raising the cost of water services.

‘The exemption of water services from VAT will provide relief to the domestic economy and
the Filipino people. It is one of the most viable options for Congress to immediately act on.
Small revenue losses may easily be offset by the increased purchasing power of households
and as cheaper production costs, as well as increased efforts in the collection of other taxes.

This measure will give economic relief to the Filipino people which will allow them to invest
in food, education and health which will ensure a healthy population and labor force and a
progressive nation.

In view of the foregoing, approval of this bill is earnestly sought.
Approved,

=e he Cae

REP. TEDDY A. CASINO
Bayan Muna Party-list


Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City

FIFTEENTH CONGRESS
‘Third Regular Session

HOUSE BILL No. 889.

Introduced by Rep. TEDDY A. CASINO

AN ACT
CLASSIFYING THE SERVICES OF FRANCHISE GRANTEES OF WATER
UTILITIES, AND SALE OR IMPORTATION OF MACHINERY AND
EQUIPMENT DIRECTLY USED IN OPERATING, MAINTAINING,
IMPROVING AND EXPANDING DISTRIBUTION OF POTABLE WATER BY
WATER UTILITIES AS VALUE-ADDED TAX EXEMPT TRANSACTIONS,
AMENDING FOR THE PURPOSE SECTION 109 (1) OF THE NATIONAL
INTERNAL REVENUE CODE, AS AMENDED BY REPUBLIC ACT NO. 9337,
AND FOR OTHER PURPOSES.

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

SECTION 1. Section 109 (1) of the National Internal Revenue Code, as amended by
Republic Act No. 9337, is hereby further amended to read as follows:

“SEC. 109. Exempt Transactions. - (1) Subject to the provisions of subsection (2)
hereof, the following transactions shall be exempt from the value-added tax:

(A) xxx
“@B) xxx

xxx
“(U) xxx

“(V) SALES OF WATER UTILITIES;
“(W) SERVICES OF FRANCHISE GRANTEES OF WATER
UTILITIES;

“(X) SALE OR IMPORTATION OF MACHINERIES AND EQUIPMENT,
INCLUDING SPARE PARTS, TO BE DIRECTLY USED BY THE BUYER
OR IMPORTER HIMSELF IN THE OPERATING, MAINTAINING,
IMPROVING AND EXPANDING DISTRIBUTION OF POTABLE WATER.
BY WATER UTILITIES.


SECTION 2. Repealing Clause. ~ All laws, presidential decrees, executive orders,
presidential proclamations, rules and regulations or parts thereof inconsistent with this Act
are hereby repealed or modified accordingly.

SECTION 3. Separability Clause. — If any provision of this Act is subsequently declared
unconstitutional, the validity of the remaining provisions hereof shall remain in full force
and effect.

SECTION 4. Effectivity Clause. - This Act shall take effect immediately after its
complete publication either in the Official Gazette or in a newspaper of general circulation
in the Philippines.

Approved,