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Republic of the Philippines

House of Representatives
Quezon City

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 5113

Introduced by Honorable Cresente C. Paez & Anthony M.
Bravo

EXPLANATORY NOTE

Our 1987 Philippine Constitution is believed to be among the first of its kind in the
world to recognize non-government organizations (NGOs) and people's
organizations (POs) as partners in development. It goes on in stipulating and
defining their roles in society, The Philippine Development Plan (2011-2016) also
highlights the role of these volunteers in pursuing the vision of inclusive growth and
President Benigno Aquino’s vision of a Social Contract with the Filipino people.

The phenomenal contribution Civil Society Organizations (CSOs) includes its
representation of the citizenry. It is the negotiating force between bureaucratic power
and those who have none (poor), or between those who have the power to make
decisions within the formal structure of policymaking and those who lie outside of it
(Habermas). They expanded to include community empowerment-empowering
through self-organization and raise public awareness on significant issues such as
rape, sexual harassment and rights of women and children. They also engaged in
agricultural development by helping farmers and fisherfolks obtain access to
agricultural services or by participating in the crafting of policies on the countryside.
They also serve as the watchdog over government agencies that implement various
public services and promote public good.

One of the predestined challenges of CSOs are the funding issues. Thus, the
crafting of this bill, Prominent to this bill features a discretion of individual tax payers
to allocate 5% of their income tax to their preferred charitable institutions or other
civil society organization that are eligible under the provisions of this bill. To clear
the doubt of bogus CSOs and to make them accountable to the public, the approval
of this bill is eamestly sought

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. PARZ. HON. ANTHONY M. BRAVO

HON. C)



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Republic of the Philippines

House of Representatives
Quezon City

SIXTEENTH CONGRESS
Second Regular Session

HOUSE BILLNO. 5113

Introduced by Honorable Cresente C. Paez & Anthony M.
Bravo

AN ACT PROVIDING FOR PEOPLE’S DIRECT PARTICIPATION IN FUNDING
CHARITABLE INSTITUTIONS AND OTHER DEVELOPMENT ORIENTED CIVIL
SOCIETY ORGANIZATIONS THROUGH A PERCENTAGE OF THEIR PERSONAL.
INCOME TAX

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled

Section 1. Short title. - This Act shall be known as “People’s Fund Act of 2014"

Section 2. Declaration of Policies. ~ It is the policy of the State to guarantee the
right of the people and their organizations to effective and reasonable participation at
all levels of social, political, and economic decision-making. It is moreover the policy
of the State to promote a just and dynamic social order through the strengthening of
a broad range of organizations, programs and initiatives that facilitate social welfare,
people's participation and national development. In furtherance of these policies, the
State shall provide a mechanism that empowers its citizens to directly contribute
Public funds towards priority development programs and the strengthening of a
vibrant civil society sector in the Philippines

Section 3. Definition of terms. -

a, “Individual Tax Payer” - refers to any individual citizen subject to tax on
income as provided by the Tax Reform Act (Republic Act No, 8424);


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b. “Charitable or Civil Society Organizations” - refers to charitable
institutions and other non-profit and non-government organizations,
including foundations, civic organizations, people's organizations,
community organizations, sectoral organizations, cooperatives, micro-
finance institutions and social enterprises, duly registered with the
Securities and Exchange Commission (SEC), the Cooperative
Development Authority (CDA), Department of Labor and Employment,
Housing and Land Use Regulatory Board (HLURB) or formal accrediting
bodies approved for the purposes of this law;

Section 4. Allocation of Funds from Income Tax-

‘a. Individual tax payers shall have the option to allocate five percent (5%) of their
annual income tax to support a charitable or civil society organizations (CSO) that
the tax payer shall select from a list of eligible organizations. An inter-agency
committee to be led by the Department of Budget and Management (DBM) shall
provide this list

b. The Bureau of Internal Revenue (BIR) shall establish the mechanism for an individual
tax payer to allocate five percent (5%) of income tax yearly to the selected
charitable institution or CSO as part of the process of filing annual income tax

returns.

c. Should an individual tax payer decide not to allocate for any of the listed eligible
organizations, the whole amount of the individual's income tax will go to the
government's general fund

d. It is prohibited for any individual tax payer to allocate funds to any eligible
organization if he or she is a founder, officer, member or employee of that
organization or if he or she is related to any of its founders, officers, members or
‘employees up to the fourth degree of consanguinity or affinity

e, Funds received by the benefitting organizations as provided by this Act shall be
exempt from Donor’s tax or any other taxes.

Section 5. Eligibility Requirements and Conditions. — An inter-agency committee
to be led by DBM shall be established to determine the qualifications and
requirements for a charitable institution or CSO to be eligible for the five percent
(5%) allocation, and to finalize the list of eligible organizations to be submitted to BIR


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each year. The inter-agency committee shall also set the conditions, guidelines,
processes and reporting requirements for the receipt and use of funds in accordance
with the government's development priorities and to ensure full transparency and
accountability

Section 6. Implementing Rules and Regulations. - The Department of Budget
and Management (DBM) and the Bureau of Internal Revenue (BIR) shall promulgate
not later than sixty (60) days upon the effectivity of this Act the necessary rules and
regulations for its effective implementation; these shall include the eligibility
requirements, conditions, guidelines, processes and reporting requirements provided
for in Section 5 hereof

Section 7. Separability Clause — if any provision of this Act is subsequently
declared invalid or unconstitutional, other provisions hereof which are not affected
thereby shall remain in full force and effect.

Section 8. Repealing Clause. — All laws, acts, presidential decrees, executive
orders, issuances, presidential proclamations, rules and regulations or parts thereof
which are contrary to or inconsistent with any provision of this Act are hereby
repealed, amended or modified accordingly.

Section 9. Effectivity - This Act shall take effect fifteen (15) days after its complete
publication either in the Official Gazette or in at least two (2) newspapers of general

circulation,

Adopted