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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Batasan Hills, Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL No. _____ 
-------------------------------------------------------------------------------------------------------- 
Introduced by  
ACT Teachers Party-List Rep. FRANCE L. CASTRO,  
GABRIELA Women’s Party Rep. ARLENE D. BROSAS,  
and KABATAAN Party-List Rep. RAOUL DANNIEL A. MANUEL 
-------------------------------------------------------------------------------------------------------- 
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. 933, 
AND FOR OTHER PURPOSES 
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 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 have dramatically increased by 833.2% in the East concession 
areas and by 520% in West concession areas. At the onset of the agreement, the Maynilad 
water rate was only ₱7.21 per cubic meter, while Manila Water was only ₱4.02 per cubic 
meter. In 2021, the average basic charge for Maynilad is ₱36.24/cubic meter, while the 
Manila Water is ₱28.52/cubic meter. Meanwhile, according to the Local Water Utilities 
November 9,  2022
1:51 pm
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Administration, the average basic rate of water districts is ₱20.72/cubic meter1 from 
₱6.75/cubic meter in 1996. 
 
Not contented with these exorbitant water rates, the Government is now even 
acceding to pay for the corporate income taxes of these water firms in the form of sovereign 
guarantees. For example, the MWSS, a government regulatory body, disallowed Manila 
Water and Maynilad from recovering their corporate income taxes by hiking their water 
rates. Both concessionaires ran to the International Chamber of Commerce and sought 
arbitration  on whether the two (2) firms are public utilities and whether corporate income 
taxes are recoverable expenses.  
 
The privatization of our water resources, supposedly touted by the Government as 
cost-efficient, ironically proved more costly to the public, and the Government is 
apparently doing nothing against it..  
 
As consumers are weighed down by the rising cost of water services, amid access 
to water being an international human right, the 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 not only relief, but could 
be one of the measures the Filipino people could rightfully demand  to stem the effects of 
damages brought upon by the failure of the privatization of water distribution, as clearly 
shown in the first quarter of 2019 when residents under the Manila Water concession area 
suffered not only longer water interruption services but, worse,  there was no water at all 
for several days.      
 
Exempting water services from VAT 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 cheaper production costs, as well as increased efforts 
in the collection of other taxes. 
 
This measure will give immediate economic relief to the Filipino people and allow 
them to invest in food, education and health which will ensure a healthy population and 
labor force, as well as a progressive nation.  
 
It was first filed by Bayan Muna Party-List during the 15th Congress as House Bill 
6889 and was refiled in the succeeding Congresses. 
 
                                                 
1 “Philippine Water Districts Average Yearly Water Rates.” Local Water Utilities Administration, 30 June 2022. 
http://122.54.214.222/waterrates/RatesTable.asp  


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In view of the foregoing, approval of this bill is earnestly sought. 
Approved, 
________________________________ 
Rep. FRANCE L. CASTRO 
ACT Teachers Party-List 
________________________________ 
Rep. ARLENE D. BROSAS 
GABRIELA Women’s Party 
________________________________ 
Rep. RAOUL DANNIEL A. MANUEL 
KABATAAN Party-List 


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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Batasan Hills, Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL No. _____ 
-------------------------------------------------------------------------------------------------------- 
Introduced by  
ACT Teachers Party-List Rep. FRANCE L. CASTRO,  
GABRIELA Women’s Party Rep. ARLENE D. BROSAS,  
and KABATAAN Party-List Rep. RAOUL DANNIEL A. MANUEL 
-------------------------------------------------------------------------------------------------------- 
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. 933, 
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 
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“(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,