Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

THIRTEENTH CONGRESS
FIRST REGULAR SESSION

HOUSE BILL NO,___- 13

EXPLANATORY NOTE

Statistics from the Department of Education (DepEd) show that the cohort survival rate
for school year 2001-2002 for elementary and high school levels are 67.13% and 73.16%,
respectively. This means that out of every one hundred (100) students who enter Grade 1
only seven (7) finish Grade 6. And of these seven (7), only five (5) graduate from high school.

Despite government's provision for free tuition in the public schools, parents can still
hardly shoulder their children’s other educational expenses, As a consequence, close to 5
million or 15% of Filipino youth aged 7-18 are out of school.

‘The soaring cost of living (P538.00 in Metro Manila) has constricted the family budget
for education. Thus, there has been a marked increase in enrollment in the less expensive
public schools. Enrollment in public elementary schools nationwide rose from 11,832,611 in the
school year 2000-2001 to 11,916,686 In the school year 2001-2002 or an increase of 84,075
‘students. On the other hand, enrollment in private elementary schools fell from 927,289 in the
School year 2000-2001 to 909,532 in the school year 2001-2002 or a decrease of 17,757
students.

The rising costs of education amid the declining value of real wages weigh heavily on
the shoulders of Filipino parents. One efficacious way of easing the burden of education on
poor families is through scholarship grants. However, government, non-government
organizations or foundations are hard-pressed to raise scholarship funds. The total number of
government scholars in AY 2001-2002 decreased to 40,294 from 44,876 in AY 2000-2001.

In AY 2001-2002, a total of P374,842,000.00 was allocated for the scholarship/study
grant/loan programs of the Commission on Higher Education (CHED). Of this amount
P69,347,990.00 was sourced from the General Appropriations Act (GAA) and P305,494,210.00
from the Higher Education Development Fund (HEDF). This amount benefited only 38,644
scholars and is far from sufficient to meet the growing need for scholarship by poor but
deserving students. Thus, it is imperative for the private sector to complement the scholarship
programs of the government. Private Individuals, corporations, partnerships or
instrumentalities must also be encouraged to donate to scholarship foundations.

As an incentive to donors to scholarship foundations, this bill seeks to exempt any
individual, corporation, partnership or instrumentality donating to a scholarship foundation
from paying donor's tax. It further provides that the total amount or sum of the amounts
donated shall be deducted from the personal or corporate tax Imposed on the donor.

In support of the constitutional mandate for the State to “establish and maintain a

system of scholarship grants... to deserving students in both public and private schools,
especially to the underprivileged,” immediate approval of this measure is earnestly sought.

EDCEL C. _


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

THIRTEENTH CONGRESS
FIRST REGULAR SESSION

House Briino__13

Introduced by HONORABLE EDCEL C. LAGMAN

AN ACT
GRANTING TAX BENEFITS TO PRIVATE INDIVIDUALS, CORPORATIONS,
PARTNERSHIPS OR INSTRUMENTALITIES DONATING TO A SCHOLARSHIP
FOUNDATION AMENDING FOR THE PURPOSE THE TAX REFORM ACT OF 1997.

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

SECTION 1. Section 101 of Republic Act No. 8424 othe4rwise known as the “Tax
Reform Act of 1997” is hereby 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) In the Case of gifts Made by a Resident. -
“a x x x
"Q x xX xX

“(3) Gifts in favor of an educational and/or charitable, religious , cultural and social
welfare corporation, institution, accredited nongovernment organization, trust or philantropic
organization, SCHOLARSHIP FOUNDATION or research institution or organization:
Provided, however, ‘That not more than thirty percent (30%) of said gifts shall be used by
such donee for administration purposes. For the purpose of this exemption, ‘a non-profit
educational and/or charitable corporation, institution, accredited nongovernment
organization, trust or pl tropic organization, SCHOLARSHIP FOUNDATION
and/or research institution or organization’ is a school, college or university and/or
charitable corporation, accredited nongovernment, trust or philantropic organization,
SCHOLARSHIP FOUNDATION and/or research institution or organization, incorporated as a
nonstock entity, paying no dividends, governed by trustees who received no compensation,
and devoting all its income, whether student's fees or gifts, donations, subsidies or other forms
of philantropy, to the accomplishment and promotion of the purposes enumerated in the
Articles of Incorporation: PROVIDED, FURTHER, THAT THE TOTAL AMOUNT OR THE SUM
OF THE AMOUNTS DONATED BY ANY INDIVIDUAL, CORPORATION, PARTNERSHIP
OR INSTRUMENTALITY TO A SCHOLARSHIP FOUNDATION SHALL BE DEDUCTED
FROM THE AMOUNT OF PERSONAL OR CORPORATE TAX IMPOSED ON THE DONOR.

x x x
Sec. 2. This Act shall take effect upon its approval.

Approved.