. 
THIRTEENTH CONGRESS OF THE 
1 
FIRST REGULAR SESSION 
1 
REPUBLIC OF THE PHILIPPINES 
1 
- .  
~~~,~~ ~~:~~ 
S E N A T E  
S.B. ‘No. 
‘
j
 
96 
Introduced by Senator Jinggoy Ejercito Estrada 
EXPLANATORY NOTE 
In this age of virtual reality, ignorance can be fatal! 
As the whole world braces up for the coming of the new millennium most 
countries attempt 
to speculate the effects and consequences of the so-called 
“millennium bug” to counter whatever adverse results it may bring. However, many 
people in developing countries are still groping in the dark even as to the very basic 
concept of computer of information technology and its all-embracing effects on science 
and technology, research, education, finance, economics agriculture and foreign 
relations, to name a few. Unfortunately, the Philippines is one of them. 
In reality, computers and information technology affect all aspects of human 
endeavor. And there is no way out! We can never escape from it. What the country 
must do is to strive hard to educate our people regarding information technology. And 
we must do it immediately and thoroughly starting from the grade school up to the 
tertiary level. 
Unfortunately, many of our educational institutions are lacking in 
computer hardware and even software. 
It is imperative that we equip our schools with the necessary tools (computer 
hardware and software) in order for them to learn the trade. However, the State cannot 
provide for all of them alone. It must, therefore, encourage private participation by 
granting a tax incentive for every donation of information technology equipment to our 
educational institutions, both public and private. But we should not take for granted our 
research institutions. Together these two institutions must go hand in hand. Each shall 
complement the other. 


This is the only way that we can address the urgent need of our country to cope 
with the technological demands of the cyberspace age in the new millennium. However, 
we must be careful in accepting donations of information technology equipment for our 
educational and research institutions from donor private companies, individuals and 
other entities. We must safeguard against dumping of useless and toxic computer 
hardware and/or software. 
IT0 ESTRADA 
Senator 


THIRTEENTH CONGRESS OF THE 
1 
REPUBLIC OF THE PHILIPPINES 
1 
FIRST REGULAR SESSION 
1 
-* 
S E N A T E  
S.B. No. 960 
Introduced by Senator Jinggoy Ejercito Estrada 
AN ACT 
TO ENCOURAGE, PROMOTE AND ALLOW PRIVATE COMPANIES AND 
INDIVIDUALS TO DONATE INFORMATION TECHNOLOGY EQUIPMENT (ITE) TO 
EDUCATIONAL AND/OR RESEARCH INSTITUTIONS BY PROVIDING TAX 
INCENTIVES THEREFORE, AMENDING FOR THE PURPOSE SECTIONS 34 AND 
101 OF THE NATIONAL INTERNAL REVENUE CODE (NIRC), AS AMENDED, AND 
FOR OTHER PURPOSES. 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. 
Subsection (F), Section 34 of the National Internal Revenue 
Code, as amended, is hereby further amended by adding a new Paragraph (7) therein 
after Paragraph (6) to read as follows: 
“(7) 
DEPRECIATION 
OF 
INFORMATION 
TECHNOLOGY 
EQUIPMENT. - FOR 
PURPOSES 
OF 
COMPUTING 
ALLOWABLE 
DEDUCTIONS UNDER THIS SECTION, INFORMATION TECHNOLOGY 
EQUIPMENT SHALL HAVE A DEPRECIATION RATE OF FIFTY PERCENT 
(50%) FOR THE FIRST YEAR OF ITS USE IN THE BUSINESS, TRADE OR 
EXERCISE OF PROFESSION ON THE SECOND YEAR OF ITS USE, SUCH 
EQUIPMENT SHALL BE CONSIDERED ONE HUNDRED PERCENT (100%) 
DEPRECIATED.” 
SECTION 2. - Subsection (H) , Section 34 of the same Code is hereby 
amended by adding a new Paragraph (5) after Paragraph (4) to read as follows: 
“(5) 
DEDUCTIBILITY 
OF 
DONATION 
OF 
INFORMATION 
TECHNOLOGY 
EQUIPMENT TO EDUCATIONAL AND/OR RESEARCH 
INSTITUTIONS. - NOTWITHSTANDING 
ANY PROVISIONS TO THE 


L 
CONTRARY, 
ANY 
DONATION 
OF 
INFORMATION 
TECHNOLOGY 
EQUIPMENT MADE TO ANY PUBLIC OR PRIVATE EDUCATIONAL AND/OR 
RESEARCH INSTITUTIONS SHALL BE DEDUCTIBLE IN FULL TO BE 
COMPUTED BASED ON ITS FAIR MARKET VALUE: PROVIDED, THAT THE 
EQUIPMENT DONATED MUST NOT BE MORE THAN THREE (3) YEARS OLD 
AND MUST BE YEAR 2000 COMPLAINT (Y2K): 
PROVIDED, FURTHER, 
THAT FOR A DONATION OF COMPUTER HARDWARE AND/OR SOFTWARE 
TO QUALIFY FOR THE BENEFITS GRANTED HEREUNDER, THE SAME 
MUST BE COMPLETELY BUILT-UP, FULLY USEABLE WITHOUT A NEED TO 
ADD ANY PERIPHERALS. OR OTHER GADGETS; AND THE SAME MUST 
NOT REQUIRE AN UPGRADE TO MAKE IT FULLY FUNCTIONAL: 
PROVIDED, HOWEVER, THAT IN CASES OF DONATIONS MADE BY A 
COMPANY TO ITS SUBSIDIARY ENGAGED IN COMPUTER EDUATION, THE 
SAME SHALL BE DISQUALIFIED FROM THE INCENTIVES GRANTED 
HEREUNDER: 
UNLESS THE SAME SHALL DONATE TO ANOTHER 
EDUCATIONAL AND/OR RESEARCH INSTITUTION WHEREIN IT HAS NO 
CORPORATE INTEREST. 
THE 
DEDUCTIBILITY 
OF 
DONATION 
OF 
INFORMATION 
TECH NO LOGY 
EQU I PMENT TO EDUCATIONAL AND/OR RESEARCH 
INSTITUTIONS GRANTED HEREUNDER SHALL BE ALLOWED ONLY IN THE 
IMMEDIATELY PRECEDING TAXABLE YEAR AFTER THE DONATION." 
SECTION 3. - Subsection (A), Section 101 of the same Code is hereby further 
amended to read as follows: 
"SEC. 101. 
Exemption of Certain Gifts. -- 
The following gifts or 
donations shall be exempt from the tax provided for in this Chapter: 
(A) 
(1) 
In the Case of Gifts Made by a Resident. - 
Dowries or gifts made on account of marriage and before its 
celebration or within one year thereafter by parents to each of their legitimate, 
recognized natural, or adopted children to the extent of the first Ten Thousand 
pesos (PI 0,000); 
(2) 
Gifts made to or for the use of the National Government or any 
entity created by any of its agencies which is not conducted for profit, or to any 
political subdivision of the said Government; and 
Gifts in favor of an educational and/or charitable, religious, cultural 
or 
social 
welfare 
corporation, 
institution, 
accredited 
non-government 
organization, trust or philanthropic organization or research institution or 
organization: Provided, however, That not more than thirty percent (30%) of 
(3) 


said gifts shall be used by such done for administration purposes. For the 
purpose of this exemption, a non-profit educational and/or research institution or 
organization’ is a school, college or university andkharitable corporation, 
accredited non-government organization, trust or philanthropic organization 
and/or research institution or organization, incorporated as a nonstick entity, 
paying no dividends, governed by trustees who receive no compensation, and 
devoting all its income, whether student‘s fees or gifts, donations, subsidies or 
other forms of Philanthropy, to the accomplishment and promotion of the 
purposes enumerated in its Articles of incorporation. PROVIDED, 
FURTHER, 
THAT 
NOTWITHSTANDING ANY PROVISION TO THE CONTRARY, ALL 
GRATUITOUS DONATION OF INFORMATION TECHNOLOGY EQUIPMENT 
MADE TO ANY PUBLIC AND/OR PRIVATE EDUCATIONAL AND/OR 
RESEARCH INSTITUTIONS SHALL BE COVERED BY THE EXEMPTION 
GRANTED UNDER THIS SECTION: 
PROVIDED, HOWEVER, THAT THE 
EQUIPMENT DONATED SHALL IF USED EXCLUSIVELY FOR EDUCATION, 
TRAINING, RESEARCH, OR EXPERIMENTATION PURPOSES ONLY IN 
PHYSICAL, BIOLOGICAL, COMPUTER AND OTHER SCIENCES.” 
SECTION 4. 
The Secretary of Finance shall, upon recommendation of the 
Commissioner of Internal Revenue, Promulgate such rules and regulations for the 
proper and effective implementation of this Act. 
SECTION 5. 
All laws, decrees, executive orders, memorandum circulars, 
administrative orders, ordinances or any part thereof, inconsistent herewith are hereby 
deemed repealed or modified accordingly. 
SECTION 6. 
If any provision of this Act is subsequently declared 
unconstitutional, the validity of the remaining provisions hereof shall remain in full force 
and effect. 
Approved,