Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
FIFTEENTH CONGRESS
First Regular Session

House Bilt No.__ 4487

Introduced by TUCP Party-List Representative
HON. RAYMOND DEMOCRITO C. MENDOZA_

EXPLANATORY NOTE

In order to foster the formation of strong labor unions and labor organizations, Article
242 of the Labor Code of the Philippines granted to legitimate labor organizations tax
exemptions from their income and properties. Under Article 242 of the Labor Code,
the tax exemption was provided that the income, including grants, endowments, git,
donations and contributions, and the property, which are actually, directly and
exclusively used for the purposes for which the organization was created.

In the year 1991, the Local Government Code was enacted. ‘The said law granted
local governments the authority to collect real property taxes. Further, Section 193 of
the said law revoked all real property tax exemptions, except those enumerated under
Section 234 thereof. Unfortunately, the enumeration of real property tax exempt
establishments or entities under said Section 234 did not include real property owned
by legitimate labor organizations.

It should be noted that the Local Government Code is not a special law, and Sections
193 and 234 did not expressly repeal Article 242 of the Labor Code. However, local
governments deemed that the tax exemptions of labor organizations has been
repealed, arguing that the Local Government Code is the later law and invoking the
rule that tax exemptions should be strictly construed against the applicant. Thus, labor
organizations have been ordered to pay real property taxes on their land and other real
properties.

The payment of these local taxes by legitimate labor organizations is not merely
unreasonable it also defeats the Constitutional policy of protection to the rights of
workers and promotion of their welfare.

This bill would seek to reinstate the tax exempt status of labor organizations, with

respect to their real property, on which taxes are imposed by local governments.



Labor organizations are not created to generate income. Such an imposition would
discourage its formation and perpetuation. In view of the foregoing, the immediate
passage of the bill is earnestly sought,

HON. RAYMOND DEMOCRITO C. MENDOZA
TUCP Party-List Representative


Republic of the Philippines
HOUSE OF REPRESENTATIVES
= Quezon City

FIFTEENTH CONGRESS
First Regular Session

House Bill No,__ 4487

Introduced by TUCP Partylist Representative
HON. RAYMOND DEMOCRITO C. MENDOZA

AN ACT
RESTORING THE TAX EXEMPTION ON REAL PROPERTY
OWNED BY LABOR ORGANIZ, DING FOR THE
PURPOSE
o1 WISE KNOWN AS THE LABOR CODE OF TH
PHILIPPIN| S 193 AND 234 OF REPUBLIC ACT
NO. 6715, OTHERWISE KNOWN AS THE LOCAL GOVERNMENT
CODE, AS AMENDED, AND FOR OTHER PURPOSES

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

‘CTION 1. Short Title. ~ This Act shall be known as the “Real Property Tax

Exemption for Labor Organizations Act of 2011”.

TION 2. Declaration of Poticy. ~ \t shall be the policy of the State to protect the
welfare and interest of the working men. The State shall promote free trade unionism
and foster the formation of strong labor organizations. a

SECTION 3. Reinstatement of Tax Exemption for Real Property Owned by Labor

Organizations under the Labor Code. — Article 242 of Presidential Decree No. 442,


otherwise known as the Labor Code of the Philippines, is hereby amended, to read as
follows:

"ARTICLE 242. Rights of Legitimate Labor Organizations. ~

XXX

"Notwithstanding any provision of a general or special law to the

contrary, the income, and the propertiés of legitimate labor

organizations, including grants, endowments, gifts, donations and
contributions they may receive from fraternal and similar
organizations, local or foreign, which are actually, directly and
exclusively used for their lawful purposes, shall be free from ALL.
taxes, duties and other assessments, INCLUDING REAL.
PROPERTY TAXES IMPOSED BY — LOCAL
GOVERNMENTS. ‘The exemptions provided herein may be
withdrawn only by a special law expressly repealing this provision."
XXX
SECTION 4. Reinstatement of Tax Exemption for Real Property Owned by Labor
Organizations under Section 193 of the Local Government Code. — Section 193 of
Republic Act No. 7160, otherwise known as the Local Government Code, is hereby

amended, to read as follow:

“SECTION 193. Withdrawal of Tax Exemption Privileges. —
Unless otherwise provided in this Code, tax exemptions of incentives
granted to, or presently enjoyed by all persons, whether natural or

ical, including government-owned or -controlled corporations,



except. LEGITIMATE LABOR ORGANIZATIONS UNDER

ARTICLE 242 OF PRESIDENTIAL, DECREE NO. 442,

OTHERWISE KNOWN AS THE LABOR CODE OF THE

PHILIP!

}, local water district

s, cooperatives duly registered
under R.A. No. 6938, non-stock and non-profit hospitals and

s, are hereby w

ihdrawn upon the effectivity of

further amended, to read as follows:

SECTION 234, Exemptions from Real Property Tax. — Vhe
following are exempted from payment of the real property tax:
XXX

(d) All real. property owned by LEC

IMATE LABOR

ORGANIZATIONS — UNDER ARTICLE 242, OF

PRESIDENTIAL DECREE NO. 442, OTHERWISE KNOWN

AS

E LABOR CODE OF THE PHILIPPINES, AND duly
registered cooperatives as provided for under R.A. No. 6938; and
(@) XXX.

SECTION 6. Separability Clause. - If any provision of this Act, or any parts thereof,

is declared unconsti

tional, the same shall not affect the validity and effectivity of

the other portions.


SECTION 7. Repealing Clause. - All laws, executive orders, presidential decrees,
proclamations, rules, regulations, issuances and enactments of parts thereof

inconsistent with this Act are hereby repealed or modified accordingly.

SECTION 8. Effectivity. - This Act shall take effect fifteen (15) days from its
complete publication in the Official Gazette of in a newspaper of general circulation
in the Philippines, whichever comes earlier.

APPROVED.