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'8 
THIRTEENTH LONGRESS 
OF THE REPUBLIC 
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OF THE~PHILIPP~NES 
1 
First Regular S'ession 
) 
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! 
Introduced by Senator S. R. OsmeAa 111 
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EXPLANATORY NOTE 
Presidehtial Decree 198 launched the concept of local water districts 
operating stric ly on loan borrowings, without subsidy nor appropriation from the 
national government. Under this concept, some 546 local water districts were 
organized as 
Section 46 
t 
June 1996. 
PD 198 
In order to support the growth of local water districts, 
exempted water districts from the payment of all taxes, 
The tax exemptions were withdrawn with the issuance of Executive Order 
No. 93 but te In porarily restored though Republic Act 7109 until its expiration on 
August 15, 1946. 
Today, Some 387 water districts continue to be operational, serving some 
ten million peoble all over the country. Small to medium scale water districts which 
constitute 91 O//O' of total operational districts report negative net profits as they have 
to contend wijh high interest 'expenses and low operating revenues, given low 
profit margins. 
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This billiseeks to restore the tax exemptions under Section 46 of PD 198 as 
a support to the viability of local water districts. 
This bill also seeks to exempt 
local water districts from the requirement to remit 50% of annual net income to the 
National govdrnment, 
and to condone unpaid taxes, duties and required 
remittances sitke August 15, 1996. 
Water service is a key public good that government should ensure to its 
citizens. Local water districts should have the support of the national government, 
and at the very least, should be spared from the burden of taxes. 
In view of the foregoing, early passage of this bill is earnestly requested 
L 
L 
SERGIO OSMENA 111 
Senator 


THIRTEENTH CONGRESS OF THE REPUBLI 
) 
"04 JliN 30 P5 :3s 
First Regular Session 
OF THE PHILIPPINES 
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) , t'r.-a 
" '< 
t ^i. , 
S E N A T  
S. No. 
Introduced by Senator S. R. Osmefia 111 
AN ACT 
RESTORING THE TAX EXEMPTION PRIVILEGE OF LOCAL WATER 
DISTRICTS UNDER SEC. 46 OF P.D. 198 AS AMENDED, AND FOR OTHER 
PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Republic of 
the Philippines in Congress assembled: 
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SECTION I, - Section 46 of P.D. 198, as amended, granting tax 
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exemption privileges to local water districts is hereby restored and shall be 
effective for a period of ten (IO) years from the approval of this Act. 
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Sec. 2. 
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Water districts shall likewise be exempted from the 
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provisions of R.A. 7656 
requiring government-owned and controlled 
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corporations (GOCCs) to remit 50% of their annual net income to the National 
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Government, Provided, That the amount supposed to be remitted, is utilized 
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by the water district concerned, for the continuing expansions and improvement 
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of its system. 
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Sec. 3. 
- All unpaid taxes, duties and required remittances to the 
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government or any portion thereof due from local water districts for the period 
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starting August 15, 1996 until the effectivity of this Act, are hereby condoned 
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Sec. 4. 
- All laws, decrees, orders, rules and regulations and other 
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issuances inconsistent with the provisions of this Act are deemed modified, 
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revoked or repealed accordingly. 
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SEC. 5. This Act shall take effect fifteen (15) days after its publication in 
two (2) leading newspapers of national circulation. 
Approved, 
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