Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO._1089

Introduced by Representatives
HORACIO P. SUANSING, JR. and ESTRELLITA B, SUANSING

AN ACT
PROVIDING FOR TAX RELIEF IN TIMES OF CALAMITY

EXPLANATORY NOTE

The Philippines is exposed to natural hazards such as typhoons, earthquakes, landslides,
tsunamis and volcanic eruptions. Since 1990, 565 natural disaster events affected our country
which claimed the lives of nearly 70,000 Filipinos and caused an estimated USD 23 billion in
damages.' In 2016, the Philippines ranked third in the World Risk Index of most disaster-
prone countries in the world.’ A report from the Geneva-based United Nations Office for
Disaster Risk Reduction (UNISDR) also revealed that the Philippines is among the top ten
countries with the most number of people affected by calamities. Given our country's
vulnerability to natural disasters, the government needs to strengthen its disaster prevention
and response program, and at the same time enact measures that would expedite the flow of
relief and the recovery of calamity victims. A law that would provide for tax relief in times of
calamity can be one of such measures,

‘As a rule, one who claims exemption from tax must show proof that exemptions apply by
express mandate of the law. Under our current tax system, tax relief is given only to
individuals and corporations that incur casualty losses on properties that are actually used in
business, to the extent that these are not compensated for by insurance or other forms of
indemnity. Generally, under the Local Government Code, only the following are exempt
from payment of real property tax: government properties; religious, charitable, and
educational institutions; local water utilities machinery and equipment; registered
cooperatives; and machinery and equipment used for pollution control and environmental
protection. This proposed measure intends to mandate a two (2) year real property tax
exemption to calamity victims from the date of the declaration of a State of Calamity by the
proper local Sanggunian, This measure aims to facilitate the recovery and rehabilitation of
calamity victims by relieving them of substantial tax liabilities.

Further, during times of calamity, most notably in the wake of Typhoon Ondoy and Typhoon
Yolanda, foreign and local government and private entities have been generously giving large
sums to aid calamity victims. According to the records of the Foreign Aid Transparency Hub
(FAITH), in the wake of Typhoon Yolanda, the Philippines received a total of USD 386.2
million in foreign aid, 86 percent of which or USD 330.8 million were coursed through non-

' Global Facility for Disaster Reduction and Recovery. Retrieved from https://www. gfdrr.org/en/philippines
2 Emergencies. Retrieved from https://philippines.unfpa.org/en/node/15308


government organizations and multilateral agencies. Further, out of the total USD 386.2
million, about USD 26.9 million in cash and USD 28.5 million in non-cash donations were
received by the National Government.

Regrettably, some bureaucratic roadblocks have impeded the flow of these donations.
Multinationals and some individuals who intended to donate huge sums had to face paying a
substantial donor's tax. Under the law, donations from local and foreign entities may be
exempted from taxes and import duties, but only if these are channeled through certain
government offices, such as the Department of Social Welfare and Development (DSWD)
and the National Disaster Risk Reduction and Management Council (NDRRMC), and state-
accredited organizations. However, these exemptions are not given automatically — in order
for these donations to be tax-exempt, at the minimum, the donor would still need to obtain a
BIR Ruling confirming that the donation is exempted from donor's tax. Obtaining the said
BIR approval would entail the submission of documents substantiating the donation, which
can prove burdensome to the donor. This issue is further compounded by the fact that not all
organizations that are involved with relief operations are accredited by the State, and thus,
donations coursed through these channels would be subjected to donor's tax. This bill aims to
address these impediments by allowing for automatic exemption from donor's tax, provided
that not more than 10% of the donation will be used by the donee organization for
administrative purposes. Once enacted, donors would no longer need to pay donor's tax nor
undergo the required accreditation before exemption is applied.

Taxation is the lifeblood of the government. However, the government must also promote the
welfare of the victims of calamities and create measures to alleviate their serious economic
dislocations.

In view of the foregoing, the immediate approval of this bill is earnestly sought.>

HORACIGYZSUANSING, JR. ESTRELLITA B, SUANBING
2 Distri€t of Sultan Kudarat I* District of Nueva Egija

» This bill was originally filed by Senator Miriam Defensor Santiago during the 14th Congress and the 16%
Congress, and was refiled by Rep. Horacio P. Suansing, Jr. and Rep. Estrellita B. Suansing during the 17
Congress.

Note: This bill is based on the response of the United States Congress in granting similar tax treatments in the
wake of Hurricane Katrina


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS,
First Regular Session

HOUSE BILL No, 1089

Introduced by Representatives
HORACIO P. SUANSING, JR. and ESTRELLITA B. SUANSING

AN ACT
PROVIDING FOR TAX RELIEF IN TIMES OF CALAMITY

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

SECTION 1. Calamity defined. — For the purposes of this Act, “Calamity” shall be defined
as a state of extreme distress or misfortune, produced by some adverse circumstance or event
or any great misfortune or cause or loss or misery caused by natural forces.

SECTION 2. Effect of Declaration of Calamity. — A declaration of a state of calamity by the
proper local Sanggunian shall make effective the following tax relief:

A) The real property tax in the affected area shall not be assessed and collected for
two fiscal years, starting from the date of the declaration of a state of calamity;

B) Any donation in the name of any organization that declares that the funds donated
shall be in favor of the victims of the calamity shall be exempt from donor’s tax.
This exemption from the donor's tax shall automatically apply and the Bureau of
Internal Revenue shall not require any accreditation requirements: Provided,
however, that not more than 10% of the said gifts shall be used by donee
organization for administrative purposes.

SECTION 3. Implementing Rules and Regulations. ~ The Bureau of Internal Revenue
(BIR) shall within thirty (30) days from the effectivity of this Act, promulgate the rules and
regulations necessary for the effective implementation of this Act.

SECTION 4, Separability Clause. — If any provision of this Act is subsequently declared
invalid or unconstitutional, the same shall not affect the validity and effectivity of the other
provisions hereof.

SECTION 5. Repealing Clause. — All other laws, presidential decrees, executive orders and
issuances, or portions thereof, which are inconsistent with the provisions of this Act, are
hereby repealed, amended or modified accordingly.

SECTION 6. Effectivity Clause. — This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,