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FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
1 
7 JUL -2 
21 
OF THE PHILIPPINES 
First Regular Session 
) 
S E N A T E  
Senate Bill No. 3 2 4 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
In this age of virtual reality, ignorance can be fatal! 
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 andlor software. 
U 
Senator 
/ 


FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
7 Ju? -2 ;\ ; 
:!- ;I 
First Regular Session 
) 
S E N A T E  
tjECF1VED IKY :.- 
Senate Bill No. 3 2 4 
INTRODUCED BY SEN. 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 Senafe 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 
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.” 
TECHNOLOGY EQUIPMENT. - FOR PURPOSES OF 
SEC 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 
NOTWITHSTANDING 
ANY 
PROVISIONS 
TO 
THE 
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 
EDUCATIONAL AND/OR RESEARCH INSTITUTIONS. - 


YEAR 2000 COMPLAINT (YZK): 
PROVIDED, FURTHER 
THAT FOR A DONATION OF COMPUTER HARDWARE 
AND/OR SOFTWARE TO QUALIFY FOR THE BENEFITS 
GRANTED 
HEREUNDER, 
THE 
SAME 
MUST 
BE 
NEED TO ADD ANY PERIPHERALS OR OTHER GADGETS. 
AND THE SAME MUST NOT 
REQUIRE AN UPGRADE 
TOMAKE IT FULLY FUNCTIONAL; PROVIDED, HOWEVER, 
THAT IN CASES OF DONATIONS MADE BY A COMPANY 
TO 
ITS 
SUBSIDIARY 
ENGAGED 
IN 
COMPUTER 
EDUCATION, 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. 
COMPLETELY BUILT-UP, FULLY USEABLE WITHOUT A 
THE 
DEDUCTIBILITY 
OF 
DONATION 
OF 
INFORMATION 
TECHNOLOGY 
EQUIPMENT 
TO 
EDUCATIONAL 
AND/OR 
RESEARCH 
INSTITUTIONS 
GRANTED HEREUNDER SHALL BE ALLOWED ONLY IN 
THE IMMEDIATELY PRECEDING TAXABLE YEAR AFTER 
THE DONATION,” 
SEC 3. - Subsection (A), Section 101 of the same Code is hereby further 
amended to read as follows: 
“SEC. 101. €xernpfion of Certain Gifts. The following 
gifts or donations shall be exempt from the tax provided for 
in this Chapter: 
(A) In the Case of Gifts Made by a Resident 
(1) 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 (Pl0,OOO.OO) 
(2) Gifts made to or for the use of the National 
Government or any entity crated by any of its 
agencies which is not conducted for profit, or to 
any political subdivision of the said Government; 
and 
(3) 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%) 
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 and/or charitable corporation, 
accredited non-government organization, trust or 


philanthropic 
organization 
andlor 
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 studenfs fees or 
gifts, donations, subsidies or other forms of 
Philanthrophy, to 
the 
accomplishment and 
promotion of the purpose enumerated in its 
Articles of Incorporation. PROVIDED FURTH€R, 
THAT NOTWITHSTADING ANY PROVISION TO 
THE 
CONTRARY, 
ALL 
GRATUITUOUS 
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. 
SEC 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. 
SEC 5. All laws, decrees, executive orders, memorandum circulars, 
administrative orders, ordinances or any part thereof, inconsistent herewith are 
hereby repealed or modified accordingly. 
SEC 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,