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FOURTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES 
) 
D, 
hL!h 17 i' .< :ti7 
Third Regular Session 
) 
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S E N A T E  
Submitted by the Committee on Ways and Means on 
AU6 1 7 2009 
Re: 
S.B. No. 
2 
Recommending its approval in substitution of H.B. No. 5210 and S .  No. 3152 taking into 
consideration S. Jt. Res. No. 24. 
Sponsors: 
Senators Lacson and Escudero 
MR. PRESIDENT: 
The Committee on Ways and Means to which were referred House Bill No. 521 0, 
introduced by Representative Antonino-Custodio, Angara, Castro, et al, entitled: 
AN ACT 
AMENDING SECTIONS 27, 30, 34, 108 AND 109 OF THE NATIONAL 
INTERNAL REVENUE CODE OF 1997, AS'AMENDED 
Senate Bill No. 3152, introduced by Senator Lacson, entitled: 
AN ACT 
EXEMPTING LOCAL WATER DISTRICTS FROM lNCOME TAX, 
AMENDING FOR THE PURPOSE SECTION 27(C) OF THE NATIONAL 
INTERNAL REVENUE CODE, AS AMENDED 
and Senate Joint Resolution No. 24, introduced by Senator Escudero, entitled: 
A JOINT RESOLUTION 
INCLUDING LOCAL WATER DISTRICTS WITHIN THE APPLICATION, 
COVERAGE AND SCOPE OF SECTION 32(b)(7)(b) OF REPUBLIC ACT 
NO, 8424 BEING THE LEGISLATIVE INTENT MEANT AND APPROVED 
BY CONGRESS IN PASSING THESAID LAW 
has considered the same and has the honor to re 
the recommendation that the attached S.B. No. 
entitled: 
bills back to the Senate with 
prepared by the Committee, 
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AN ACT 
GRANTING INCOME TAX EXEMPTION TO LOCAL WATER DISTRICTS, AMENDING 
FOR THE PURPOSE SECTION 27(C) OF THE NATIONAL INTERNAL REVENUE 
CODE, AS AMENDED 
be approved in substitution of House Bill No. 5210 and S. B. No. 3152 taking into 
consideration S. Jt. Res. No. 24 with Senators Lacson and Escudero as authors thereof. 
Respectfully submitted: 
PA 
Committ k e yairman 
on Ways and Means 
Members: 
MAR ROXA$ 
%o 
/hfi 
EDGARDO J. A N G A M  
A 
AN COMPAhERO S. CAYETANO 
F 
J 
MANNY VILLA!? 
L 


Ex-Officio Members: 
idenf Pro-Tempore 
- 
, PIMENTEL, JR. 
HON. JUAN PONCE ENRILE 
Senate President 
Pasay City 
c 
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FOURTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES 
) 
Second Regular Session 
) 
S E N A , T E  
s. No. 
(In substitution of H. No. 5210 and S.B. No. 3152 takin 
No. 24) 
Prepared by the Committee with Senators Lacson and Escudero as authors thereof 
AN ACT 
GRANTING INCOME TAX EXEMPTION TO LOCAL WATER DISTRICTS, AMENDING 
FOR THE PURPOSE SECTION 27(C) OF THE, NATIONAL INTERNAL REVENUE 
CODE. AS AMENDED 
Be it enacted by the Senate and House of Represenfafives of the Philippines in 
Congress assembled: 
SECTION 1. Section 27(C) of the National Internal Revenue Code of 1997, as 
amended by Republic Act No. 9337, is hereby further amended to read as follows: 
"SEC. 27. Rafes of lncome Tax on Domesfic Corporations.. - xxx 
"(C) Government-owned or -Controlled 
Corporations, Agencies or 
Instrumentalities. - The provisions of existing special or general laws to 
the 
contrary 
notwithstanding, 
all 
corporations, 
agencies, 
or 
instrumentalities owned or controlled by ?he Government, except the 
Government Service and Insurance System (GSIS), the Social Security 
System (SSS), the Philippine Health Insurance Corporation (PHIC), THE 
LOCAL WATER DISTRICTS (LWD) and the 
Philippine Charity 
Sweepstakes Office (PCSO), shall pay such rate of tax upon their taxable 
income as are imposed by this Section upon corporations or associations 
engaged in a similar business, industry, or activity 
"x x x" 
SEC. 2. Tax savings. - The amount that would have been paid as income tax 
and saved by the local water district by virtue of its exemption to the income taxes shall 
be used by the local water district concerned for capital equipment expenditure in order 
to expand water services coverage and improve water quality in order to provide safe 
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and clean water in the provinces, cities, and municipalities: Provided, That, the water 
district shall adopt internal control reforms that would bring about their economic and 
financial viability: Provided, further, That the water district shall not increase by more 
than twenty percent (20%) a year its appropriation for personal services, as well as for 
travel, transportation or representation expenses and purchase of motor vehicles. 
SEC. 3. Condonation of Taxes Due. - All unpaid taxes or any portion thereof due 
from a local water district for the period starting August 13, 1996 until the effectivity date 
of this Act are hereby condoned by the Government subject to the following conditions: 
(1) That the Bureau of Internal Revenue, after careful review of the financial 
statements of a water district applying for condonation of taxes due, 
establishes its financial incapacity, after providing for its maintenance and 
operating expenses, debt servicing and reserve fund, to meet such 
obligations for the period stated herein; and 
(2) That the water district availing of such condonation shall submit to Congress 
of the Philippines a program of internal reforms, duly certified by the Local 
Water Utilities Administration, that would bring about its economic and 
financial viability. 
SEC. 4. Statistical and Financial Statements. - All water districts, through the 
Local Water Utilities Administration, shall furnish the Committee of Ways and Means of 
the Senate and House of Representatives, on an annual basis, with statistical data and 
financial statements regarding their operations and other information as may be 
required, for purposes of monitoring compliance with the provisions of this Act and 
reviewing the rationalization for tax exemption privileges. 
SEC. 5. lrnplernenting Rules and Regulations. - The Secretary of Finance shall 
promulgate and publish the necessary rules ,and regulations for the effective 
enforcement of the provisions of this Act. 
SEC. 6. Separabilify Clause. - if any provision of this Act is held unconstitutional 
or invalid, all other provisions not affected thereby shall remain valid. 
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SEC. 7. Repealing Clause. - All laws, decrees, executive orders, issuances, 
rules and regulations or parts thereof, which are inconsistent with this Act, are hereby 
repealed, amended or modified accordingly. 
SEC. 8. Effectivity. -This Act shall take effect upon its approval. 
Approved, 
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