II. No.

7971
S. No. 1827

Republic of the Philippines

CONGRESS OF THE PHILIPPINES
Metro Manila

Tenth Congress.

Third Regular Session

________

Begun and held in Metro Manila, on

Monday, the twenty-eight day
of July, nineteen hundred and ninety seven.

[REPUBLIC ACT NO. 8525]

AN ACT ESTABLISHING AN “ADOPT-A- SCHOOL PROGRAM”

PROVIDING INCENTIVES THEREFOR, AND FOR OTHER
PURPOSES

Be enacted by the Senate and House of Representatives of the

Philippines in Congress assembled.

SECTION 1. Title. – This Act shall be known and cited as the

“Adopt-a-School Act of 1998.”

SEC. 2. Declaration of Policy. – It is the policy of the State to

provide quality and relevant education to the Filipino youth and to
encourage private initiative to support public education. Towards this
end, the State shall institute programs to encourage private companies
and enterprises to help in the country, particularly those in poverty-
stricken provinces.
 SEC. 3. Adopt-a-School Program. – there is hereby established the
“Adopt-a-School Program” which will allow private entities to assist a
public school, whether elementary, secondary, or tertiary, preferably
located in any of the twenty (20) poorest provinces identified by the
Presidential Council for Countryside Development or any other
government agency tasked with identifying the poorest provinces in, but
not limited to, the following areas: staff and faculty development for
training and further education, construction facilities, upgrading of
existing facilities, provision of books, publications and other
instructional materials; and modernization of instructional technologies.

A Memorandum of Agreement (MOA) specifying the details of

the adoption shall be entered into between the adopting entity and the
head of the school concerned: Provided, that such MOA shall be subject
to review and approval of the Superintendent of Schools of the province
or district concerned: Provided, further, That the agreement shall last for
at least two (2) years with the possibility of extension: Provided, finally,
That such period may be shortened only in cases where the adopting
entity is dissolved before the end of such period unless otherwise earlier
terminated in accordance with the succeeding section.

SEC. 4. Periodic Review. – A review of the adoption shall be

undertaken by the local school board of the province or city where the
school is located. The standards and guidelines for the review shall be
formulated by the Coordinating Council created under Section 7 hereof.
The results of the review shall be taken into consideration in the
assessment of the application for tax credits by the adopting entity. The
school board may, after an appropriate review, recommend to the
Coordinating Council the termination of the adoption. The adopting
entity may appeal the assessment to the Coordinating Council whose
decision shall be final and unappealable.

SEC. 5. Additional Deduction of Expenses Incurred for the

Adoption. – Provision of existing laws to the contrary notwithstanding,
expenses incurred by the adopting entity for the “Adopt-a-School
Program” shall be allowed an additional deduction from the gross
income equivalent to fifty percent (50%) of such expenses. Valuation of
assistance other than money shall be based on the acquisition cost of the
property. Such valuation shall take into consideration the depreciated
value of the property in case said property has already been used.

SEC. 6. Additional incentives. – The adopting company or

enterprise, in addition to the incentive provided in the preceding section
shall be entitled to have its name emblazoned beneath the name of the
school after words indicating that the school is under the “Adopt-a-
School Program”. Moreover, the adopting entity shall be represented in
the local school board of the municipality where the adopted elementary
or high school is located.

SEC. 7. Coordinating Council. – A Coordinating Council,

hereinafter referred to as the Council, is hereby created to coordinate and
monitor the implementation of this Act. The Council shall be composed
of the Secretary of the Department of Education, Culture and Sports
(DECS) as chairperson; the Chairman of the Commission on Higher
Education (CHED) and the Director-General of Technical Education and
Skills Development Authority (TESDA), as co-chairpersons; and the
chairperson of the Presidential Council for Countryside Development
(PCCD), and the representative from the National Federation of
Chambers of Commerce and Industry (NFCCI) to be appointed by the
President of the Philippines, as members.
The Council shall meet once every three (3) months. The
chairpersons and members shall not receive compensation but shall be
entitled to reimbursements for reasonable expenses related to the
Council’s activities.

The DECS, CHED, and TESDA, through a mutual agreement,

shall each make provisions for the Secretariat of the Council.

SEC. 8. Rules and Regulations. – The DECS, CHED and TESDA,

in consultation with the Department of Finance, shall formulate the rules
and regulations to implement this Act.
SEC. 9. Separability Clause. – In the event that any provision of
this Act is declared unconstitutional, the validity of the other provisions
shall not be affected by such declaration.
 SEC. 10. Repealing Clause. – All laws, decrees, orders, rules and
regulations or parts thereof inconsistent with this Act are hereby
repealed or modified accordingly.

SEC. 11. Effectivity. – This Act shall take effect fifteen (15) days
after its publication in two (2) national newspapers of general
circulation.

Approved.

(SGD.) NEPTALI A. GONZALES

President of the Senate

(SGD.) JOSE DE VENECIA JR.

Speaker of the House of
Representatives

This Act which originated in the House of Representatives was

finally passed by the House of Representatives and the Senate on
February 6, 1998.

(SGD.) HEZEL P. GACUTAN

Secretary of the Senate

(SGD.) ROBERTO P. NAZARENO

Secretary General
House of Representatives

Approved:
Feb. 14, 1998

(SGD.) FIDEL V. RAMOS

President of the Philippines
 REPUBLIC OF THE PHILIPPINES
DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE
Quezon City

January 27, 2003

REVENUE REGULATIONS NO. 10-2003

SUBJECT: Implementing the Tax Incentives Provisions of

Republic Act No. 8525, Otherwise Known as the
“Adopt-a-School Act of 1998”

TO : All Internal Revenue Officers and Others

Concerned

SECTION I. SCOPE. – Pursuant to Sections 4 and 244 of the

National Internal Revenue Code (Tax Code) of 1997, the following
Regulations are hereby promulgated to implement the tax provisions of
R.A. No. 8525, otherwise known as the “Adopt-a-School Act of 1998.”

SEC. 2. DEFINITION OF TERMS. – For purposes of these

Regulations, the following terms are operationally defined as follows:

(a) “Act”-refers to Republic Act No. 8525, otherwise known as the

“Adopt-a-School Act of 1998.”

(b) “Adopt-a-School Program” – or “Program” shall refer to a

program which allows private entities to assist a public school in a
particular aspect of its educational program within an agreed period.
(c)“Public school” – shall refer to a government school, whether
elementary, secondary , post-secondary or tertiary , which enters into
an Agreement with an adopting private entity concerning assistance
referred to under paragraph (e) hereof.

(d) “Private entity” – shall refer to an individual engaged in trade or

business or engaged in the practice of his profession or other business
organizations, like a partnership, corporation or cooperative, either
resident or non-resident, who/which teams up with the Department of
Education (DepEd), or with the Commission on Higher Education
(CHED), or with the Technical Education and Skills Development
Authority (TESDA), towards providing much needed assistance and
service to public schools. It shall be known hereafter as the adopting
private entity.

(e) “Assistance” – shall refer to the aid/help/ contribution/donation

provided by an adopting private entity to a public school. Assistance
may in the form of but not limited to, in infrastructure, teaching and
skills development, learning support, computer and science
laboratories, and food and nutrition.

(f) “Agreement” – shall refer to a Memorandum of Agreement

(MOA) or Agreement/Deed of Donation entered into by and between
the adopting private entity and the public school specifying the terms
and conditions of the adoption, including the tasks and
responsibilities of the contracting parties.

(g) “National Secretariat” – shall refer to the office composed of

representatives of the three education agencies, namely the DepEd,
CHED, and TESDA, which will provide overall management and
coordination of the Program.

(h) “Application for tax incentives or tax exemption” – shall refer to

the application for tax credit by the adopting private entity referred to
under Section 4 of the Act, which means application for additional
deduction in arriving at the net taxable income.
SEC. 3. TAX INCENTIVES ACCRUING TO THE ADOPTING
PRIVATE ENTITY. – A pre-qualified adopting private entity,.
which enters into an Agreement with a public school, shall be
entitled to the following tax incentives:

(a) Deduction from the gross income of the amount of

contribution/donation that were actually, directly and exclusively
incurred for the Program, subject to limitations, conditions and rules set
forth in Section 34(H) of the Tax Code plus and additional amount
equivalent to fifty percent (50%) of such contribution/donation subject
to the following conditions:

(1) That the deduction shall be availed of in the taxable year in

which the expenses have been paid or incurred;

(2) That the taxpayer can substantiate the deduction with

sufficient evidence, such as official receipts or delivery receipts and
other adequate records-

(2.1) The amount of expenses being claimed as deduction;

(2.2) The direct connection or relation of the expenses to the

adopting private entity’s participation in the Adopt-a-School Program.
The adopting entity shall also provide a list of subjects and/or activities
undertaken and the cost of each undertaking, indicating in particular
where and how the assistance has been utilized as supported by the
Agreement; and

(2.3) Proof or acknowledgement of receipt of the

contributed/donated property by the recipient public school.

(3) That the application, together with the approved Agreement

endorsed by the National Secretariat, shall be filed with the Revenue
District Office (RDO) having jurisdiction over the place of business of
the donor/adopting private entity, copy furnished the RDO having
jurisdiction over the property, if the contribution/donation is in the form
of real property
 (b) Exemption of the Assistance made by the donor from
payment of donor’s tax pursuant to Sections 101 (A)(2) and
(B)(1) of the Tax Code of 1997.

SEC. 4. OTHER TAX CONSE- QUENCES OF THE

ASSISTANCE TO THE PUBLIC SCHOOL.

(a) In the case of foreign donation, the VAT and excise tax, if any, on
the importation of goods shall be assumed by the DepEd, CHED, or the
importer thereof, except in cases where the importation is exempt from
VAT under Section 109 of the Tax Code. In this connection, VAT on
importation payable by the concerned national government agency
namely, (DepEd, CHED, or TESDA) to the National Government
arising from the subject foreign donation is deemed automatically
appropriated and shall be considered as expenditure of the government
pursuant to the provisions of Section 13 of the Government
Appropriation Act (GAA) as determined by the Congress on an annual
basis.

(b) In the case of local donation considered as “transaction deemed

sale” of goods or properties originally intended for sale by the adopting
private entity, the same shall be subject to VAT on the transfer of the
said goods or properties under Section 106 (B)(1) of the Tax Code. The
said donor/adopting private entity, however, is entitled to claim the
availment input tax subject to the rules on allocation among taxable
sales, zero-rated sales and exempt sales. On the other hand, the donee-
public school, shall be deemed as the final consumer/end user, and
therefore, not entitled to any input VAT.
If the local donation is not considered as a “transaction deemed
sale”, then the transfer of the goods or properties to the public school
shall be exempt from VAT.

SEC. 5. VALUATION OF THE ASSISTANCE/

CONTRIBUTION OR DONATION.
(a)Cash assistance/contribution or donation.- The amount of
assistance /contribution or donation shall be based on the actual
 amount contributed/donated appearing in the official receipt issued by
the donee.

(b)Assistance/contribution or donation other than money.

(i) Personal property. – If the contribution or donation is in the form of

personal property, the amount of contribution or donation shall be based
on the acquisition cost of the said assistance or contribution. However, if
the said property had already been used, then such valuation such take
into consideration the depreciated value of the property.

(ii) Consumable goods.– If the assistance is in the form of consumable

goods, the amount of the contribution or donation shall be based on the
acquisition cost by the donor or the actual cost thereof at the time of the
donation, whichever is lower.

(iii) Services. – If the assistance is in the form of services, the amount of

the contribution of donation shall be based on the value of the
services rendered as agreed upon by the donor and the service provider
and the public school as fixed in the Memorandum of Agreement, or the
actual expenses incurred by the donor, whichever is lower.

(iv) Real property. – If these assistance is in the form of real property,

the amount of the contribution or donation shall be the fair market value
of the property at the time of the contribution/donation, as determined
pursuant to Section 6(E) of the Tax Code or the book value/depreciated
value of the property, whichever is lower. Appraisal increase or
appreciation in the value of the asset recorded in the books of account
should not be considered in computing the book value of the asset.

SEC. 6. PROCEDURES FOR THE AVAILMENT OF TAX

INCENTIVES UNDER THE PROGRAM BY THE ADOPTING
ENTITY. – In order to avail of the tax incentives provided for under
these Regulations, the following procedures and requirements should be
complied with, viz:
(a) National Secretariat shall endorse to the RDO of the Bureau of
Internal Revenue (BIR) having jurisdiction over the place of business of
the adopting private entity, copy furnished the RDO having jurisdiction
over the property if the donation or contribution is in the form of real
property, the following:

(i) duly notarized/approved Agreement;

(ii) duly notarized Deed of Donation;

(iii) Official receipts or any document showing the actual value of the
contribution/donation;

(iv) Certificate of Title and Tax declaration, if the donation is in the

form of real property; and

(v) other adequate records showing the direct connection or relation of

the expenses being claimed as deduction/donation to the adopting
private entity’s participation in the program, as well as showing or
proving receipt of the donated property.

(b) Adopting private entity shall submit application for

entitlement to the additional 50% special deduction from the
gross income, and for exemption from donor’s tax to the RDO
having jurisdiction over the place of business of the adopting
private entity, copy furnished the RDO having jurisdiction
over the donated real property.

SEC. 7. REPEALING CLAUSE. – All revenue rules and

regulations, and other revenue issuances or parts thereof, which are
inconsistent with these Regulations are hereby repealed or modified
accordingly.

SEC. 8. EFFECTIVITY. – These regulations shall take effect

fifteen (15) days after publication in the Official Gazette or in a
newspaper of general circulation, whichever comes first.
(SGD.) JOSE ISIDRO N. CAMACHO
Secretary of Finance

Recommending approval:

(SGD.) GUILLERMO L. PARAYNO, JR.

Commissioner of Internal Revenue
 PROCEDURES FOR PARTICIPATION IN THE ADOPT-A-
SCHOOL PROGRAM

Who can help?

Any private individual, group, organization or institution can

become partners in education.

How will recipient schools be selected?

The adopting private entity has the prerogative of identifying the

school of its choice, as well as the area and geographic location where it
wishes to place its support. In case the adopting private entity has no
particular school in mind, a list of priority schools and their identified
needs is available at the Adopt-a-School Program Secretariat.

The Adoption Procedures

The Adopt-a-School Secretariat shall facilitate the linkage between

the adopting entity and the target school. It will provide the entity with
different adoption packages and the list of prospective schools with their
corresponding needs.

A Memorandum of Agreement (for donation with time frame) or

Deed of Donation (for one time donation) is executed between the
Department of Education and the private entity. The Memorandum of
Agreement (MOA) shall specify the terms and conditions of the
adoption including the tasks and responsibilities of the private entity and
the school.

The parties involved in the signing of the MOA shall will be the
adopting entity and the head of school concerned. In cases where the
adopting entity adopts multiple schools in a particular region/division, a
MOA shall be facilitated between the adopting entity and the
corresponding DepEd official. For a school located within a division, the
Schools Division Superintendent will be the official signatory; for
regional project coverage, the Regional Director; and for projects that
are national in scope, the Secretary of Education.

The MOA will be subject for review and approval by the Adopt-a-
School Secretariat. The Agreement shall last at least two years with the
possibility of extension.

What assistance can be provided?

The program carries a menu of options called packages that the

stakeholder can select from. Packages include the building of new
schoolbuildings, library, laboratory or computer room, staff
development, nutrition program and the provision of learning kits and
instructional materials. Another package carries an added option of
coming-up with the viable self-styled packages on the part of the donor.
This way, the school’s needs is met in accordance with the private
sector’s capacity and thrusts.

Which schools need assistance?

Any government school, whether elementary, secondary, post-

secondary or tertiary preferably located in any of the current poorest
provinces/municipalities can avail of the donations under the Program.
Priority shall be given to schools located in the poorest provinces, low
income municipalities and other schools with undernourished learners,
poor but high performing learners, severe classroom shortage,
insufficient budget or funds and/or deficient in number of textbooks and
instructional materials..

What are the benefits for adopting entities?

-deductions from the gross income of the amount of

contribution/donation that was actually, directly and exclusively incurred
for the program plus an additional amount equivalent to fifty percent of
such donation
-exemption of the assistance made by the adopting entity from payment
of donor’s tax