CODE OF COMMERCE OF THE PHILIPPINES

COMMERCIAL CONTRACTS FOR TRANSPORTATION

ARTICLE 349.    A contract of transportation by land or water ways of any kind shall be considered commercial:

1.    When it has for its object merchandise or any article of commerce.

2.    When, whatever its object may be, the carrier is a merchant or is habitually engaged in transportation for the public.

ARTICLE 350.    The shipper as well as the carrier of merchandise or goods may mutually demand that a bill of lading be made, stating:

1.    The name, surname and residence of the shipper.

2.    The name, surname and residence of the carrier.

3.    The name, surname and residence of the person to whom or to whose order the goods are to be sent or whether they are to be delivered to the bearer of said bill.

4.    The description of the goods, with a statement of their kind, of their weight, and of the external marks or signs of the packages in which they are contained.

5.    The cost of transportation.
6.    The date on which shipment is made.

7.    The place of delivery to the carrier.

8.    The place and the time at which delivery to the consignee shall be made.

9.    The indemnity to be paid by the carrier in case of delay, if there should be any agreement on this matter.

ARTICLE 351.    In transportation made by railroads or other enterprises subject to regulation rate and time schedules, it shall be sufficient for the bills of lading or the declaration of shipment furnished by the shipper to refer, with respect to the cost, time and special conditions of the carriage, to the schedules and regulations the application of which he requests; and if the shipper does not determine the schedule, the carrier must apply the rate of those which appear to be the lowest, with the conditions inherent thereto, always including a statement or reference to in the bill of lading which he delivers to the shipper.

ARTICLE 352.    The bills of lading, or tickets in cases of transportation of passengers, may be diverse, some for persons and others for baggage; but all of them shall bear the name of the carrier, the date of shipment, the points of departure and arrival, the cost, and, with respect to the baggage, the number and weight of the packages, with such other manifestations which may be considered necessary for their easy identification.

ARTICLE 353.    The legal evidence of the contract between the shipper and the carrier shall be the bills of lading, by the contents of which the disputes which may arise regarding their execution and performance shall be decided, no exceptions being admissible other than those of falsity and material error in the drafting.
After the contract has been complied with, the bill of lading which the carrier has issued shall be returned to him, and by virtue of the exchange of this title with the thing transported, the respective obligations and actions shall be considered cancelled, unless in the same act the claim which the parties may wish to reserve be reduced to writing, with the exception of that provided for in Article 366.
In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by the carrier, because of its loss or of any other cause, he must give the latter a receipt for the goods delivered, this receipt producing the same effects as the return of the bill of lading.

ARTICLE 354.    In the absence of a bill of lading, disputes shall be determined by the legal proofs which the parties may present in support of their respective claims, according to the general provisions established in this Code for commercial contracts.

ARTICLE 355.    The responsibility of the carrier shall commence from the moment he receives the merchandise, personally or through a person charged for the purpose, at the place indicated for receiving them.

ARTICLE 356.    Carriers may refuse packages which appear unfit for transportation; and if the carriage is to be made by railway, and the shipment is insisted upon, the company shall transport them, being exempt from all responsibility if its objections, is made to appear in the bill of lading.

ARTICLE 357.    If by reason of well-founded suspicion of falsity in the declaration as to the contents of a package the carrier should decide to examine it, he shall proceed with his investigation in the presence of witnesses, with the shipper or consignee in attendance.
If the shipper or consignee who has to be cited does not attend, the examination shall be made before a notary, who shall prepare a memorandum of the result of the investigation, for such purposes as may be proper.
If the declaration of the shipper should be true, the expense occasioned by the examination and that of carefully repacking the packages shall be for the account of the carrier and in a contrary case for the account of the shipper.

ARTICLE 358.    If there is no period fixed for the delivery of the goods the carrier shall be bound to forward them in the first shipment of the same or similar goods which he may make point where he must deliver them; and should he not do so, the damages caused by the delay should be for his account.

ARTICLE 359.    If there is an agreement between the shipper and the carrier as to the road over which the conveyance is to be made, the carrier may not change the route, unless it be by reason of force majeure; and should he do so without this cause, he shall be liable for all the losses which the goods he transports may suffer from any other cause, beside paying the sum which may have been stipulated for such case.
When on account of said cause of force majeure, the carrier had to take another route which produced an increase in transportation charges, he shall be reimbursed for such increase upon formal proof thereof.

ARTICLE 360.    The shipper, without changing the place where the delivery is to be made, may change the consignment of the goods which he delivered to the carrier, provided that at the time of ordering the change of consignee the bill of lading signed by the carrier, if one has been issued, be returned to him, in exchange for another wherein the novation of the contract appears.
The expenses which this change of consignment occasions shall be for the account of the shipper.

ARTICLE 361.    [The merchandise shall be transported at the risk and venture of the shipper, if the contrary has not been expressly stipulated.
As a consequence, all the losses and deteriorations which the goods may suffer during the transportation by reason of fortuitous event, force majeure, or the inherent nature and defect of the goods, shall be for the account and risk of the shipper. cdta
Proof of these accidents is incumbent upon the carrier.]

ARTICLE 362.    Nevertheless, the carrier shall be liable for the losses and damages resulting from the causes mentioned in the preceding article if it is proved, as against him, that they arose through his negligence or by reason of his having failed to take the precautions which usage has established among careful persons, unless the shipper has committed fraud in the bill of lading, representing the goods to be of a kind or quality different from what they really were.
If, notwithstanding the precautions referred to in this article, the goods transported run the risk of being lost, on account of their nature or by reason of unavoidable accident, there being no time for their owners to dispose of them, the carrier may proceed to sell them, placing them for this purpose at the disposal of the judicial authority or of the officials designated by special provisions.

ARTICLE 363.    Outside of the cases mentioned in the second paragraph of Article 361, the carrier shall be obliged to deliver the goods shipped in the same condition in which, according to the bill of lading, they were found at the time they were received, without any damage or impairment, and failing to do so, to pay the value which those not delivered may have at the point and at the time at which their delivery should have been made.
If those not delivered form part of the goods transported, the consignee may refuse to receive the latter, when he proves that he cannot make use of them independently of the others.

ARTICLE 364.    If the effect of the damage referred to in Article 361 is merely a diminution in the value of the goods, the obligation of the carrier shall be reduced to the payment of the amount which, in the judgment of experts, constitutes such difference in value.

ARTICLE 365.    If, in consequence of the damage, the goods are rendered useless for sale and consumption for the purposes for which they are properly destined, the consignee shall not be bound to receive them, and he may have them in the hands of the carrier, demanding of the latter their value at the current price on that day.
If among the damaged goods there should be some pieces in good condition and without any defect, the foregoing provision shall be applicable with respect to those damaged and the consignee shall receive those which are sound, this segregation to be made by distinct and separate pieces and without dividing a single object, unless the consignee proves the impossibility of conveniently making use of them in this form.
The same rule shall be applied to merchandise in bales or packages, separating those parcels which appear sound.

ARTICLE 366.    Within the twenty-four hours following the receipt of the merchandise, the claim against the carrier for damage or average be found therein upon opening the packages, may be made, provided that the indications of the damage or average which gives rise to the claim cannot be ascertained from the outside part of such packages, in which case the claim shall be admitted only at the time of receipt.
After the periods mentioned have elapsed, or the transportation charges have been paid, no claim shall be admitted against the carrier with regard to the condition in which the goods transported were delivered.

ARTICLE 367.    If doubts and disputes should arise between the consignee and the carrier with respect to the condition of the goods transported at the time their delivery to the former is made, the goods shall be examined by experts appointed by the parties, and, in case of disagreement, by a third one appointed by the judicial authority, the results to be reduced to writing; and if the interested parties should not agree with the expert opinion and they do not settle their differences, the merchandise shall be deposited in a safe warehouse by order of the judicial authority, and they shall exercise their rights in the manner that may be proper.

ARTICLE 368.    The carrier must deliver to the consignee, without any delay or obstruction, the goods which he may have received, by the mere fact of being named in the bill of lading to receive them; and if he does not do so, he shall be liable for the damages which may be caused thereby.

ARTICLE 369.    If the consignee cannot be found at the residence indicated in the bill of lading, or if he refuses to pay the transportation charges and expenses, or if he refuses to receive the goods, the municipal judge, where there is none of the first instance, shall provide for their deposit at the disposal of the shipper, this deposit producing all the effects of delivery without prejudice to third parties with a better right.

ARTICLE 370.    If a period has been fixed for the delivery of the goods, it must be made within such time, and, for failure to do so, the carrier shall pay the indemnity stipulated in the bill of lading, neither the shipper nor the consignee being entitled to anything else.
If no indemnity has been stipulated and the delay exceeds the time fixed in the bill of lading, the carrier shall be liable for the damages which the delay may have caused.

ARTICLE 371.    In case of delay through the fault of the carrier, referred to in the preceding articles, the consignee may leave the goods transported in the hands of the former, advising him thereof in writing before their arrival at the point of destination.
When this abandonment takes place, the carrier shall pay the full value of the goods as if they had been lost or mislaid.
If the abandonment is not made, the indemnification for losses and damages by reason of the delay cannot exceed the current price which the goods transported would have had on the day and at the place in which they should have been delivered; this same rule is to be observed in all other cases in which this indemnity may be due.

ARTICLE 372.    The value of the goods which the carrier must pay in cases if loss or misplacement shall be determined in accordance with that declared in the bill of lading, the shipper not being allowed to present proof that among the goods declared therein there were articles of greater value and money.
Horses, vehicles, vessels, equipment and all other principal and accessory means of transportation shall be especially bound in favor of the shipper, although with respect to railroads said liability shall be subordinated to the provisions of the laws of concession with respect to the property, and to what this Code established as to the manner and form of effecting seizures and attachments against said companies.

ARTICLE 373.    The carrier who makes the delivery of the merchandise to the consignee by virtue of combined agreements or services with other carriers shall assume the obligations of those who preceded him in the conveyance, reserving his right to proceed against the latter if he was not the party directly responsible for the fault which gave rise to the claim of the shipper or consignee.
The carrier who makes the delivery shall likewise acquire all the actions and rights of those who preceded him in the conveyance.
The shipper and the consignee shall have an immediate right of action against the carrier who executed the transportation contract, or against the other carriers who may have received the goods transported without reservation.
However, the reservation made by the latter shall not relieve them from the responsibilities which they may have incurred by their own acts.

ARTICLE 374.    The consignees to whom the shipment was made may not defer the payment of the expenses and transportation charges of the goods they receive after the lapse of twenty-four hours following their delivery; and in case of delay in this payment, the carrier may demand the judicial sale of the goods transported in an amount necessary to cover the cost of transportation and the expenses incurred.

ARTICLE 375.    The goods transported shall be especially bound to answer for the cost of transportation and for the expenses and fees incurred for them during their conveyance and until the moment of their delivery.
This special right shall prescribe eight days after the delivery has been made, and once prescribed, the carrier shall have no other action than that corresponding to him as an ordinary creditor.

ARTICLE 376.    The preference of the carrier to the payment of what is owed him for the transportation and expenses of the goods delivered to the consignee shall not be cut off by the bankruptcy of the latter, provided it is claimed within the eight days mentioned in the preceding article.

ARTICLE 377.    The carrier shall be liable for all the consequences which may arise from his failure to comply with the formalities prescribed by the laws and regulations of the public administration, during the whole course of the trip and upon arrival at the point of destination, except when his failure arises from having been led into error by falsehood on the part of the shipper in the declaration of the merchandise. If the carrier has acted by virtue of a formal order of the shipper or consignee of the merchandise, both shall become responsible.

ARTICLE 378.    Agents for transportation shall be obliged to keep a special registry, with the formalities required by Article 36, in which all the goods the transportation of which is undertaken shall be entered in consecutive order of number and dates, with a statement of the circumstances required in Article 350 and others following for the respective bills of lading.

ARTICLE 379.    The provisions contained in Articles 349 and following shall be understood as equally applicable to those who, although they do not personally effect the transportation of the merchandise, contract to do so through others, either as contractors for a particular and definite operation, or as agents for transportations and conveyances.
In either case they shall be subrogated in the place of the carriers themselves, with respect to the obligations and responsibility of the latter, as well as with regard to their rights.

Add comment January 8th, 2010

Legal Forms: Answer (for Rossy)

ANSWER WITH SPECIAL AND AFFIRMATIVE DEFENSES AND COUNTERCLAIM

SAMPLE:

(Caption and Title)

ANSWER

COMES NOW, the defendant, through the undersigned counsel, in the above-entitled case and to this Honorable Court most respectfully alleges:

1.    Defendant admits averment in paragraphs 1,2 and 3 of the complaint;

2.    Defendant specifically denies the allegation in paragraph 4 of the complaint, the truth being that (fact being claimed by the defendant as the true state of facts or truth in the special and affirmative defenses herein set forth):

3.    Defendant has no knowledge or information to form a belief as to the truth of the averment in paragraphs 5, 6, 7 and 8 of the complaint

By way of special and affirmative defenses, the defendant avers:

1.    The obligation has been paid

2.    The cause of action has prescribed

By way of counterclaim, defendant alleges:

1.    That by virtue of this unwarranted and malicious act initiated by the plaintiff, the defendant was forced to engage the services of counsel in the sum of twenty-thousand pesos (P20,000).

PRAYER

WHEREFORE, it is respectfully prayed that the complaint be dismissed and defendant be awarded the amount of __________ pesos (P _________).

Other equitable reliefs are likewise prayed for.

Place and date.

Signature of Counsel

VERIFICATION

CERTIFICATION AGAINST FORUM SHOPPING

PROOF OF SERVICE

Add comment December 3rd, 2009

LUECK V SUNDSTRAND CORP (99-15961)

LUECK V SUNDSTRAND CORP (99-15961) -

Add comment November 10th, 2009

A.M. NO. 00-2-10-SC

AMENDMENT TO SECTION 4, RULE 7 AND SECTION 13, RULE 41 OF THE 1997 RULES OF CIVIL PROCEDURE.

The Court resolved to AMEND the following provisions in the 1997 Rules of Civil Procedure: (a) Section 4 of Rule 7; and (b) Section 13 of Rule 41, to read as follows:

RULE 7

SEC. 4. Verification. - Except when otherwise specifically required by law or rule, pleadings need not be under oath, verified or accompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his personal knowledge or based on authentic records.

A pleading required to be verified which contains a verification based on “information and belief,” or upon “knowledge, information and belief,” or lacks a proper verification, shall be treated as an unsigned pleading.(4a)

RULE 41

SEC. 13. Dismissal of appeal. - Prior to the transmittal of the original record or the record on appeal to the appellate court, the trial court may, motu proprio or on motion, dismiss the appeal for having been taken out of time or for non-payment of the docket and other lawful fees within the reglementary period. (13a)

The foregoing amendments shall take effect on May 1, 2000, following the publication of this Resolution in two (2) newspapers of general circulation not later than March 15, 2000.

(Sgd.) HILARIO G. DAVIDE, JR.
Chief Justice

(Sgd.) JOSUE N. BELLOSILLO (Sgd.) JOSE A. R. MELO
Associate Justice Associate Justice

(Sgd.) REYNATO S. PUNO (Sgd.) JOSE C. VITUG
Associate Justice Associate Justice

(Sgd.) SANTIAGO M. KAPUNAN (Sgd.) VICENTE V. MENDOZA
Associate Justice Associate Justice

(Sgd.) ARTEMIO V. PANGANIBAN (Sgd.) LEONARDO A. QUISUMBING
Associate Justice Associate Justice

(Sgd.) FIDEL P. PURISIMA (Sgd.) BERNARDO P. PARDO
Associate Justice Associate Justice

(Sgd.) ARTURO B. BUENA (Sgd.) MINERVA P. GONZAGA-REYES
Associate Justice Associate Justice

(Sgd.) CONSUELO YNARES-SANTIAGO (Sgd.) SABINO R. DE LEON, JR.
Associate Justice Associate Justice

Add comment November 5th, 2009

THE PSE EXPERIENCE

I began the first half of my summer internship program with the Philippine Stock Exchange (the “PSE”) last April 13, 2009.  While waiting for task assignment here at EMSAVVIL, I want to share my adventures and how I got in to the PSE.

Well, as planned, I distributed my resume all over Tektite and other law firms, outside Tektite, which I personally consider as good offices.  Luckily, I was invited for interview on prestigious law offices like the “Puno and Puno Law Office”, “Maceda and Maceda Law Office”, “VGS Law Firm”, and of course the PSE (Note: EMSAVVIL is another story).  I experienced the longest interview at the PSE.  I was there 7am for an 8am interview.  I had to fill up a long questionaire and an essay, which took me up to 10am to finish.  I then waited for the interview until 11am and finished with the interview by around 1:30pm.  Its good thing that it was a Monday and I had no work at the office that day.

And so I got accepted and began work.  At first, I have to admit I had a bad impression of the place because during my interview, I got to meet only one person from PSE, namely Atty. Banaag (who was very kind by the way).  The rest that I saw at that time are but ‘old chinese men walking in and out of the trading floor’, who I later learned were brokers.  So I had an impression that PSE people are old, boring, etc. (which I later proved to be wrong)

As the days passed by, I realized how lucky I am for being given the opportunity to get good training from a good office.  I also met there Sheelah, my co-intern in the Office of the General Counsel (”OGC”).  We were trained to do the practical side of the legal profession.  We made position papers, re-draft contracts, revised rules, etc.  We also met a lot of different people in the profession and even went to the Senate and Congress.

As Atty. Refran (our Supervising Attorney) told us, we could never get the same experience anywhere else.  PSE offers not just legal experience but even that of quasi-administrative powers.  And the most special moment at the PSE is of course our bonding moments with Atty. Refran, Atty. Varvs, Sir Dennis, Ate Mavel, and many other people who visits us at the floor.

I have personal favorites in the PSE experience too.  First is the visit to the Senate.  It was my first time to go to the Senate so it was very exciting and I enjoyed it very much.  And also, the drafting of a contract with PSE.  There is this specific contract between PSE and a broadcasting company and I handled the revision of the other party’s proposal contract until its finalization.  The biggest thing there is that they had the contract signing at my last day and it was a big event, I must say.  We had TV coverage for the signing and even the ringing of the bell in the trading floor (it was a symbolic act for traders).  Its like the fireworks for the end of my internship program.

As a summary, I super enjoyed my stay at the PSE and I miss them already.  Hope to see everyone soon at Sir Dennis’ treat for lunch.

Add comment May 4th, 2009

PRESS RELEASE: For the 2008 Philippine Bar Exams Result

April 3, 2009

1,310 Pass 2008 Bar Exams

A total of 1,310 out of the 6,364 examinees from 108 law schools nationwide passed the 2008 Bar examinations held on September 7, 14, 21, and 28 last year at the De La Salle University in Taft Avenue, Manila. Judy A. Lardizabal of San Sebastian College law school topped with a rating of 85.70% bar rating. Justice Dante O. Tinga chaired the 2008 Committee on Bar Examinations.

Justice Tinga said the number of those who passed represented 20.58% of the total examinees. The exams were administered through Deputy Clerk of Court and Bar Confidant Atty. Ma. Cristina B. Layusa.

The top 10 Bar passers are:

The list of successful Bar examinees is being shown on three LCD monitors set up at the Supreme Court lobby and can simultaneously be viewed at www.sc.judiciary.gov.ph, the official website of the Supreme Court.

Justice Tinga announced that the examiners are Atty. Juanito G. Arcilla (Political and International Law), Atty. Salvador A. Poquiz (Labor and Social Legislation), Atty. Cynthia R. Del Castillo (Civil Law), Atty. Victorino C. Mamalateo (Taxation), Justice Sixto C. Marella, Jr. (Mercantile Law), Justice Rodolfo G. Palattao (Criminal Law), Justice Lucas P. Bersamin (Remedial Law), and Justice Franciso P. Acosta (Legal Ethics and Practical Exercises).

Oathtaking of the successful bar candidates is set at 2 p.m. on April 28, 2009, at the Philippine International Convention Center.

The Bar passers may secure their clearances from the Office of the Bar Confidant during office hours, Monday to Friday, beginning April 7 to 27, 2009, from 8:30 a.m. to 11:00 a.m. and 2:00 p.m. to 4:00 p.m.

Justice Antonio Eduardo B. Nachura is the Chairperson of the 2009 Committee on Bar Examinations.

The Supreme Court annually conducts the Bar examinations pursuant to its constitutional mandate to promulgate rules governing, among others, the admission to the practice of law.

A total of 6,560 law graduates have filed their petitions to take the 2008 Bar exams; 6,533 were admitted.

The Rules of Court provide that “a candidate may be deemed to have passed his examination successfully if he has obtained a general average of 75% in all subjects without falling below 50% in any subject.” In determining the average, subjects in the examinations are given the following relative weights: Political and International Law, 15%; Labor and Social Legislation, 10%; Civil Law, 15%; Taxation, 10%; Mercantile Law, 15%; Criminal Law, 10%; Remedial Law, 20%; and Legal Ethics and Practical Exercises, 5%, for a total of 100%.

The following are the statistics on the Bar exams results for the past eight years:

1 comment April 4th, 2009

Top 10 in 2008 Philippine Bar Exams

Top 10 List:
1st Place - Lardizabal, Judy A. (San Sebastian College) 85.70%
2nd Place - Amerol-Macumbal, Mylene I. (Mindanao State University) 85.65%
3rd Place - Baclay, Jr., Oliver P. (Ateneo de Manila University) 85.60%
4th Place - Jala, Majesty Eve L. (Ateneo de Manila University) 85.55%
5th Place - Liceralde, Ma. Elizabeth L. (University of the Philippines) 85.40%
6th Place - Macapagal, Micael T. (University of the Philippines) 84.15%
7th Place - Dy, Denise S. Regis, April Love C. (Ateneo de Manila University) 84.00%
8th Place - Tan, Christine Joy K. (Ateneo de Manila University) 83.80%
9th Place - Jacob, Jihan A. Velasquez (San Beda College); Shirley G. (University of the Philippines) 83.75%
10th Place - Raymundo, Vanessa C. (San Beda College) 83.70%

Add comment April 3rd, 2009

September 2008 Bar Exams Result

April 3rd, 2009

(September 2008) Philippine Bar Exam Result

Philippine Bar Exam Trivia: Passing rate in recent Phillipine Bar Exams. Will this year be higher?

Below is the passing rate in the Philippine Bar Exam for the last 8 years…

* 2007 - 22.91% (1,289 passers of 5,626 examinees)
* 2006 - 30.60% (1,893 of 6,187)
* 2005 - 27.22% (1,526 of 5,607)
* 2004 - 31.61% (1,659 of 5,249)
* 2003 - 20.71% (1,108 of 5,349)
* 2002 - 19.68% (917 of 4,659)
* 2001 - 32.89% (1,266 of 3,849)
* 2000 - 20.84% (979 of 6,187)

The bar exam results for the Sept. 2008 bar was supposed to be released by mid of March and latest buzz is that it will be released today (April 1, 2009; April Fool’s Day).

Im sure that most aspiring lawyers who took the recent bar exam are now having butterflies in their stomach and are all excited (anxious?) for the release of the result.  Rest assured, i’ll keep you guys posted once the list is out.  Good luck to everyone!

Add comment April 1st, 2009

REVENUE REGULATION 13-98

Implementing Republic Act No. 8424

“An Act Amending the National Internal Revenue Code, as amended” Specifically Section 34 (H) Relative to the Deductibility of Contributions or Gifts Actually Paid or Made to Accredited Donee Institutions in Computing Taxable Income.

SECTION. 1. Definition of Terms

For purposes of these Regulations, the terms herein enumerated shall have the following meanings:

1. “Non-stock, non-profit corporation or organization” - shall refer to a corporation or association/organization referred to under Section 30 (E) and (G) of the Tax Code created or organized under Philippine laws exclusively for one or more of the following purposes:

1. religious;
2. charitable;
3. scientific;
4. athletic;
5. cultural;
6. rehabilitation of veterans; and
7. social welfare

2. “Non-government Organization (NGO)” - shall refer to a non-stock, non-profit domestic corporation or organization as defined under Section 34 (H)(2)(c) of the Tax Code organized and operated exclusively for scientific, research, educational, character-building and youth and sports development, health, social welfare, cultural or charitable purposes, or a combination thereof, no part of the net income of which inures to the benefit of any private individual.

1. Which, not later than the fifteenth (15th) day of the third month after the close of the NGO’s taxable year in which contributions are received, makes utilization directly for the active conduct of the activities constituting the purpose or function for which it is organized and operated, unless an extended period is granted by the Secretary of Finance, upon recommendation of the Commissioner;
2. The level of administrative expenses of which shall, on an annual basis, not exceed thirty percent (30%) of the total expenses for the taxable year; and
3. The assets of which, in the event of dissolution, would be distributed to another accredited NGO organized for similar purpose or purposes, or to the State for public purpose, or purposes, or to the state for public purpose, or would be distributed by a competent court of justice to another accredited NGO to be used in such manner as in the judgment of said court shall best accomplish the general purpose for which the dissolved organization was organized.

3. “Utilization” by an accredited NGO - shall refer to:

1. Any amount in cash or in kind, including administrative expenses, paid or utilized by an accredited NGO to accomplish one or more purposes for which it was created or organized; or
2. Any amount paid to acquire an asset used, or held for use, directly in carrying out one or more purposes for which the accredited NGO was created or organized; or
3. Any amount set aside for a specific project which comes within one or more purpose or purposes for which the accredited NGO was created, but only if at the time such amount is set aside, the accredited NGO has established to the satisfaction of the Commissioner of Internal Revenue that the amount will be utilized for a specific project within a period not to exceed five (5) years, and the project is the one which can be better accomplished by setting aside such amount than by immediate payments of funds: Provided, That, the utilization requirements prescribed under Sec. 5 of these Regulations shall be complied with; or
4. Any amount in cash or in kind invested in any activity related to the purpose for which it was created or organized.
5. Any amount in cash or in kind invested in capital sustaining and generating activities, such as but not limited to, endowment funds, trust funds, money market placements, shares of stock and similar instruments: Provided, That, any income derived from these investments shall be exclusively used in activities directly related to one or more purposes for which the accredited NGO was created or organized.

4. “Accrediting Entity” - shall refer to a non-stock, non-profit organization composed of NGO networks, duly designated by the Secretary of Finance to establish and operationalize a system of accreditation to determine the qualification of non-stock, non-profit corporations or organizations and NGOs for accreditation as qualified-donee institutions. The Secretary of Finance and the Commissioner of Internal Revenue shall oversee, monitor and coordinate with the Accrediting Entity to ensure that the provisions of these Regulations are complied with. In this connection, the Secretary of Finance or the Commissioner of Internal Revenue or their duly authorized representative shall sit as ex officio member of the Board of Trustees of the Accrediting entity with the right to vote. The Secretary of Finance may also designate an official of a concerned government agency, e.g. Department of Science and Technology, to assist the Board of Trustees in the accreditation of foundations.

The Secretary of Finance shall designate an entity as an Accrediting Entity provided it has a countrywide membership composed of (a) NGOs which belong to the sector that the Private Accrediting Entity intends to certify; (b) NGOs which have been in existence for at least five (5) years; and (c) NGOs not more than 50% of the members of which belong to other existing NGOs or Private Accrediting Agencies.

The Philippine Council for NGO Certification, Inc. (PCNC), a non-stock, non-profit corporation which was established by several NGO networks (e.g., Caucus of Development NGO Networks (CODE-NGO); Philippine Business for Social Progress (PBSP); Association of Foundations (AF); League of Corporate Foundations (LCF); Bishops-Businessmen’s Conference for Human Development (BBC); and the National Council for Social Development Foundation (NCSD)), has been duly designated by the Secretary of Finance as an Accrediting Entity pursuant to Memorandum of Agreement dated January 29, 1998 executed by and between the Secretary of Finance and PCNC’s Interim Chairman.

5. “Religious purpose” - shall refer to the promotion, propagation and accomplishment of any form of religion, creed or religious belief recognized by the Government of the Republic of the Philippines.

6. “Charitable activity” - shall refer to extending relief to the poor, distressed and underprivileged and shall include fighting against juvenile delinquency and community deterioration.

7. “Scientific and research purpose” - shall refer to undertaking or assisting in pure or basic, applied and scientific research in the field of agriculture, forestry, fisheries, industry, engineering, energy development, food and nutrition, medicine, environment and biological, physical and natural sciences for the public interest.

1. Basic research shall refer to an experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts without any particular application or use in view. It analyzes properties, structures or relationships with a view to formulating and testing hypothesis, theories or laws. The results of basic research are not generally sold but are usually published in scientific journals or circulars to interested colleagues.
2. Applied research shall refer to an original investigation undertaken in order to acquire new knowledge. It is directed primarily towards a specific practical aim or objective. It is undertaken either to determine possible uses for the findings of basic research or to determine new methods or ways of achieving some specific and predetermined objectives. It involves the consideration of the available knowledge and its extension in order to solve particular problems. Applied research develops ideas into operational form.
3. Scientific research will be regarded as carried on for public interest if the results of such research are made available to the public on a non-discriminatory basis; or if such research is performed for the Government of the Philippines or any of its agencies or political subdivisions; or if such research is directed to benefit the public.

8. “Character building and youth and sports development (or athletic) purposes” - shall refer to and include conducting basic and applied research on youth development, initiating and establishing youth organizations to promote and develop youth activities, including the establishment of summer camps or centers for leadership training, conducting a program on physical fitness and amateur sports development for the country; developing or maintaining recreational facilities, playgrounds and sports centers; and conducting training programs for the development of youth and athletes for national and international competitions.

9. “Cultural activity” - shall refer to and include undertaking and/or assisting in research activities on all aspects of history, social system, customs and traditions; developing, enriching and preserving Filipino arts and culture; developing and promoting the visual and performing arts; and participating in vigorous implementation of bilingual policy through translation and wider use of technical, scientific and creative publications, development of an adaptive technical dictionary and use of Filipino as the medium of instruction.

10. “Educational activity” - shall refer to and include the granting of scholarships to deserving students and professional chairs for the enhancement of professional courses, and instructing or training of individuals either through formal and informal methods, viz:

1. Formal method of instruction refers to the institutionalized, chronologically graded and hierarchically structured educational system at all levels of education;
2. Non-formal method of instruction refers to any deliberately organized, systematic educational activity carried on outside the framework of the formal system to provide selected types of learning to particular subgroups of the population, particularly out-of-school youths and adults, for the purpose of communicating ideas, developing skills, changing attitudes or modifying behavior to improve their character and to provide them with tools necessary for the achievement of a higher standard of living. For the purpose of this section, a certification from the Technical Education and Skills Development Authority (TESDA) is required for the accreditation of the non-formal educational program which is implemented or carried out by a non-stock, non-profit corporation, organization or an NGO.

It also includes upgrading of existing facilities to support the conduct of the above activities.

11. “Rehabilitation of veterans” - shall include services extended to Philippine veterans and members of their families because of financial difficulties and attendant problems; and services extended to disabled veterans towards productive life.

12. “Social welfare purposes” - shall refer to and include

1. undertaking and/or assisting in the amelioration of the living conditions of distressed citizens particularly those who are handicapped by reasons of poverty, youth, physical and mental disability, illness, old age, and natural disasters, including assistance to cultural minorities;
2. pursuing a program for the protection and development of children and youth, such as providing services for drop-outs, pre-school children of low-income working mothers, and physically handicapped children;
3. providing for the rehabilitation of the youth and disabled adults, released prisoners, drug addicts, alcoholics, mentally retarded, hansenites and similar cases; and
4. providing for services to squatter families and to displaced workers

13. “Health purposes” - shall refer to include the pursuit of any of the following:

1. control, prevention and treatment of communicable and degenerative diseases, accidents and other health disabilities;
2. family planning program designed to indicate knowledge and understanding of population, human growth and development of family life;
3. environment sanitation, such as, public sewerage system and sanitary toilets; and
4. nutrition, which aims to reduce the prevalence of malnutrition and increase the energy and protein intake among households.

SECTION 2. Accreditation of non-stock, non-profit corporations/NGOs by the Accrediting Entity

1. The Accrediting Entity shall examine, evaluate and accredit non-stock, non-profit corporations and NGOs as a pre-requisite for their registration with the BIR as qualified-donee institutions under Section 34 (H)(1) and (2)(c) of the Tax Code.

2. Newly-organized and existing non-stock, non-profit corporations and NGOs shall apply with the Accrediting Entity for accreditation and submit to a process of examination and evaluation. The application for accreditation shall be accompanied by the following documents:

1. Articles of Incorporation and By-laws;
2. Certificate of Registration with the Securities and Exchange Commission;
3. Affidavit of Modus Operandi showing:
1. the character of the organization;
2. the purpose for which it is organized;
3. the lists of projects/activities for the past two (2) years, or list of proposed projects/activities for the first two (2) years of operations for newly-organized non-stock, non-profit corporations/NGOs;
4. the source of income and the utilization thereof, or target fund sources for newly-organized non-stock, non-profit corporations/ NGOs; and
5. other facts relating to their operations which are relevant to their qualification as donee institutions;

4. Duly audited financial statements for the past two (2) years showing the assets, liabilities, receipts and disbursements of existing organizations, or financial projections for the first two (2) years for newly-organized non-stock, non-profit corporations/NGOs.

3. The Accrediting Entity shall evaluate and accredit non-stock, non-profit corporations/NGOs using the following major criteria:

1. Mission and Goals

The mission and goals of the non-stock, non-profit corporation/NGO should justify its existence. Statements of mission and goals shall serve as guideposts for its planning and operations and a framework for decision-making.

2. Resources

This criterion focuses on the adequacy of the resources and the effectiveness of the structure and systems of the non-stock, non-profit corporation/NGO. Areas that should be evaluated under this criterion include the organization structure, human, financial and physical resources. Evaluation shall take into account the names, positions and qualifications of the individuals or committee members who manage and make decisions for the non-stock, non-profit corporation/NGO, its source of funds and distribution of financial resources, and the following exhibits at the time of examination, among others:

1. Minutes of the Board meetings;
2. Table of organization;
3. Policy Manual, if any;
4. Personnel Manual, if any;
5. Budget for the past two (2) years, or proposed projects for the first two (2) years of operations for newly-organized non-stock, non-profit corporations/NGOs; and
6. Audited financial statements for the past two years for existing non-stock, non-profit corporations/NGOs.

3. Program Implementation and Evaluation

The non-stock, non-profit corporation/NGO must demonstrate that it is effectively using its resources to accomplish the purposes for which it was created. There should be clearly defined policies, priorities and guidelines for implementing the various programs and projects. Evaluation shall consider programs and projects implemented within the last two years; description of how its programs/projects/services are managed; how the following procedures are carried out; record keeping, monitoring, evaluating and contingency planning; programs/projects vis-à-vis the needs and priorities of its beneficiaries; the present documentation or results of evaluation and provisions for adequate training, people participation, development of leaders and eventual self-sufficiency.

4. Planning for the Future

The non-stock, non-profit corporation/NGO must provide evidence that it has the capability to plan, implement and monitor its programs and projects. Evaluation shall provide evidence that the non-profit corporation/NGO has mechanisms for planning, implementing and monitoring its programs and projects and for ensuring the continuity of programs/projects even when external funding has ceased. Evaluation shall also rely on the presentation of the following exhibits at the time of visit:

1. Organizational plan
2. Monitoring and evaluation tools

4. The Secretary of Finance, upon the recommendation of the Board of Trustees of the Accrediting Entity can waive the submission of duly audited financial statements for newly-organized non-stock, non-profit corporations/NGOs which have been organized to carry out programs of national significance, e.g. foundation to build the National Museum. They shall be eligible to apply for a three (3) -year probationary accreditation and registration as qualified donee institutions with the Accrediting Entity.

5. Existing non-stock, non-profit corporations/NGOs which have qualified as donee institutions under BIR-NEDA Regulations 1-81, as amended, shall have three (3) years beginning the effectivity of these rules and regulations within which to secure a Certificate of Accreditation from the Accrediting Entity . Failure by the said non-stock, non-profit corporations/NGOs to secure accreditation within the three-year period shall be a ground for the cancellation by the BIR of their Certificates of Registration as qualified-donee institutions: Provided, however, That donations and contributions to the said non-stock, non-profit corporations/NGOs during the three-year period shall still be allowed as deductible expense on the part of the donors subject to the provisions of Sec. 4 of these Regulations: Provided, further, That after the three-year period, only donations and contributions to non-stock, non-profit corporations/NGOs which have been accredited under these Regulations, shall be allowed as deductible expense on the part of the donors.

6. The Accrediting Entity shall issue a Certificate of Accreditation to a non-stock, non-profit corporation/NGO upon determination that it meets the criteria for accreditation; Provided, that the Certificate of Accreditation shall be valid for a maximum period of five (5) years for existing non-stock, non-profit corporations/NGOs and three (3) years for newly-organized non-stock, non-profit corporations/NGOs.

7. The Accrediting Entity shall deny the application of any non-stock, non-profit corporation/NGO which does not meet the criteria for accreditation. The Private Accrediting Entity shall notify the non-stock, non-profit corporation/NGO of the denial of the application, the reasons therefor, and the evaluators’ recommendation in order that the non-stock, non-profit corporation/NGO may meet the criteria for accreditation. A non-stock, non-profit corporation/NGO whose application for accreditation has been denied by the Private Accrediting Entity shall have one (1) year within which to implement the evaluator’s recommendations. After the one-year implementation period, the non-stock, non-profit corporation/NGO may re-apply for accreditation.

8. The Secretary of Finance and the Commissioner of Internal Revenue shall oversee, monitor and coordinate with the Accrediting Entity to ensure that the provisions of these Regulations are complied with.

SECTION 3. Donations to Accredited Non-stock, Non-profit Corporations/NGOs

Donations to accredited non-stock, non-profit corporations/ NGOs shall be entitled to the following benefits:

1. Limited Deductibility - Donations, contributions or gifts actually paid or made within the taxable year to accredited non-stock, non-profit corporations shall be allowed limited deductibility in an amount not in excess of ten percent (10%) for an individual donor, and five percent (5%) for a corporate donor, of the donor’s income derived from trade, business or profession as computed without the benefit of this deduction.

2. Full Deductibility - Donations, contributions or gifts actually paid or made within the taxable year to accredited NGOs shall be allowed full deductibility, subject to the following conditions:

1. The accredited NGO shall make utilization directly for the active conduct of the activities constituting the purpose or function for which it is organized and operated, not later than the fifteenth (15th) day of the third month after the close of the accredited NGOs taxable year in which contributions are received, unless an extended period is granted by the Secretary of Finance, upon recommendation of the Commissioner.

For this purpose, the term “utilization” shall have the meaning as defined under Sec. 1(c) of these Regulations.

2. The level of administrative expenses of the accredited NGO, shall, on an annual basis, not exceed thirty percent (30%) of the total expenses for the taxable year;

3. In the event of dissolution, the assets of the accredited NGO, would be distributed to another accredited NGO organized for similar purpose or purposes, or to the State for public purpose, or purposes, or to the state for public purpose, or would be distributed by a competent court of justice to another accredited NGO to be used in such manner as in the judgment of said court shall best accomplished the general purpose for which the dissolved organization was organized.

4. The amount of any charitable contribution of property other than money shall be based on the acquisition cost of said property.

5. All the members of the Board of Trustees of the non-stock, non-profit corporation, organization or NGO do not receive compensation or remuneration for their service to the aforementioned organization.

3. Exemption from Donor’s Tax - Donations and gifts made in favor of accredited non-stock, non-profit corporations/NGOs shall be exempt from the donor’s tax: Provided, however, That not more than thirty percent (30%) of the said donations and gifts for the taxable year shall be used by such accredited non-stock, non-profit corporations/NGOs institutions qualified-donee institution for administration purposes pursuant to the provisions of Section 101 (A)(3) and (B)(2) of the Tax Code.

SECTION 4. Utilization Requirements

Amounts set aside or to be set aside for a specific project must have the prior approval of the Commissioner in writing: Provided, however, That a certification issued by the Accrediting Entity that the accredited NGO’s specific project is one which can be better accomplished by setting aside the funds, shall be sufficient basis for the Commissioner to grant his/her approval.

The application for the Commissioner’s prior approval must contain the following:

1. the nature and purpose of the specific project and the amount programmed therefor;

2. a detailed description of the project, including estimated costs, sources of any future funds expected to be used for completion of the project, and the location or locations (general or specific) of any physical facility to be acquired or constructed as part of the project; and

3. a statement by an authorized official of the organization that the amount to be set aside will actually be disbursed for the specific project within five (5) years from the date of approval by the Commissioner, unless the nature of the project is such that the five-year period is impracticable.

Amounts set aside shall be evidenced by book entries and documents showing evidence of deposits or investments, including investment of the funds so set aside, or other documents that the Commissioner may require.

SECTION 5. Certificate of Donations

All accredited non-stock, non-profit corporation/NGO are required to issue a certificate of donation in such form as prescribed by the BIR, on every donation or gift they receive. Such certificate shall be accomplished by the said accredited non-stock, non-profit corporation/NGO in triplicate and distributed within thirty (30) days after the receipt of the donation, as follows:

1. Original copy - Donor
2. Duplicate copy - BIR
3. Triplicate copy - Donee

SECTION 6. Notice of Donations

The donor, on the other hand, should give a notice for every donation worth over One Million pesos (P 1,000,000) to the Revenue District Officer where his place of business is located within thirty (30) days after the receipt of the Certificate of Donation attaching to the said notice the copy of the Certificate of Donation issued to him by the accredited non-stock, non-profit corporation/NGO.

SECTION 7. Date and Place of Filing Returns

1. Time of Filing - Claims for limited or full deductibility of donations and contributions by the donors shall be filed by the donors at the time of filing their income tax returns.

On the other hand, the accredited non-stock, non-profit corporation/ NGO shall file its annual information return not later than the fifteenth (15th) day of the fourth month after the close of its taxable year in order to maintain its status as an accredited non-stock, non-profit corporation/NGO.

2. Place of Filing - The income tax return and/or the annual information return of the donor or of the accredited non-stock, non-profit corporation/NGO shall be filed in the Revenue District Office where the place of business of the donor or the donee, as the case may be, is located.

SECTION 8. Substantiation Requirements

1. For Donors - Donors claiming donations and contributions to accredited non-stock, non-profit corporation/NGO as deductions from their taxable business income should submit evidences or proofs to the BIR by showing the Certificate/s of Donation and indicating therein the following:

1. Actual receipt by the accredited non-stock, non profit corporation/ NGO of the donation or contribution and the date of receipt thereof; and
2. The amount of the charitable donation or contribution, if in cash; if property, whether real or personal, the acquisition cost of the said property.

On the other hand, donors claiming exemption from donor’s tax on their donations and contributions to accredited non-stock, non-profit corporations/NGOs should submit evidences or proofs showing the amount of donation, if in cash; if real property, the zonal value thereof at the time of donation; and if personal property, the acquisition cost thereof, but if said personal property had already been used at the time of donation, the depreciated or book value thereof.

2. For Accredited Non-stock, Non-profit Corporations/ NGOs - Accredited non-stock, non-profit corporations/NGOs shall, upon filing their income tax returns/annual information returns, furnish the Revenue District Officer of the place where the said accredited non-stock, non-profit corporation/ NGO is located, the following:

1. A list of the donations and income received during the year, showing the name and address of the donors; the sources of income; the amount or market value of each donation and items of income and the disposition thereof;

2. A list of the activities and/or projects undertaken by the institution and the cost of each undertaking indicating in particular where and how the donations has been utilized;

3. A list of projects, their corresponding costs; the amount “set aside” and the status of funds balances at the end of the year;

4. A declaration that the utilization requirements under Sections 2(c) and 8 of these Regulations have been sufficiently complied with;

5. A declaration that no part of the net income of the accredited non-stock, non-profit corporation/NGO inures to the benefit of any private stockholder or individual; and

6. A declaration of the status of project implementation.

SECTION 9. Monitoring and Verification of Annual Information Return

Pursuant to the last paragraph of Section 235 of the Tax Code, any provision of existing general or special law to the contrary notwithstanding, the books of accounts and other pertinent records, as well as the operations, of accredited non-stock, non-profit corporations/NGOs may be examined by the BIR annually for purposes of ascertaining compliance with the conditions under which they have been granted tax exemptions or tax incentives, and their tax liability, if any. Compliance by the accredited non-stock, non-profit corporation/NGO with the conditions set forth in the grant of incentives under Sec. 4 of these Regulations shall be strictly monitored to ascertain whether or not they have met the requirements for maintaining the status as an accredited qualified-donee institution.

SECTION 10. Prohibited Transactions

Any accredited non-stock, non-profit corporation/NGO enjoying the benefits provided for under Sec. 4 of these Regulations is prohibited from undertaking any of the following transactions:

1. Lending any part of its income or property without adequate security and/or a reasonable rate of interest unless the institution has a formal micro-credit or micro-finance program as approved by their Board of Trustees;

2. Purchasing any security and/or property for more than an adequate consideration in money or money’s worth;

3. Selling any part of the security or other property for less than adequate consideration in money or money’s worth;

4. Diverting its income or transferring its property by way of lease or sale to any member of its Board of Trustees, founder/s or principal officers or any member of their families or to any corporation controlled directly or indirectly by the aforesaid individuals or their families in accordance with the attribution of stock ownership under Section 73 (A) and (B) of the Tax Code;

5. Using any part of its property, income or seed capital for any purpose other than that for which the corporation was created or organized; or

6. Engaging in any activity which is contrary to law, public order or public policy.

SECTION 11. Withdrawal of Certificate of Accreditation and Revocation of the Certificate of Registration

1. The Accrediting Entity shall have the authority to withdraw the Certificate of Accreditation which it issued to a non-stock, non-profit corporation/NGO upon a determination that the latter no longer meets the criteria for accreditation under Sec. 2 (c) of these Regulations. The Private Accrediting Entity concerned shall inform the Legal Service of the National Office or the concerned division of the Regional Offices of the withdrawal of the Certificate of Accreditation and recommend to the BIR the revocation of the Certificate of Registration of the non-stock, non-profit corporation/NGO concerned.

2. The Accrediting Entity which issued the Certificate of Accreditation shall report to the Legal Service of the National Office or to the concerned division of the Regional Offices any violation of any provision of these Regulations by the accredited non-stock, non-profit corporation/NGO. Violation of any provision of these Regulations shall constitute a ground for the withdrawal by the Private Accrediting Entity concerned of the Certificate of Accreditation and the revocation by the BIR of the Certificate of Registration.

3. Any donor found to have participated in or consented to the violation of these Regulations shall be deprived of the benefits provided under Sec. 4 of these Regulations implementing Sections 34 (H)(1), (2)(c) and 101(A)(3), (B)(2) of the Tax Code. Thus, the limited or full deductibility of donations and contributions shall be disallowed and the corresponding donor’s tax due on the donation, including statutory increments or penalties thereto provided in the Tax Code, shall be assessed and collected. The said penalties shall be in addition to any administrative or criminal penalty provided for by laws or regulations.

SECTION 12. Repealing Clause

All internal revenue issuances, rules and regulations, or parts thereof, which are contrary to or inconsistent with these Regulations are hereby repealed, amended or modified accordingly.

SECTION 13. Effectivity

These Regulations shall take effect fifteen (15) days after publication in the Official Gazette or any newspaper of general circulation in the Philippines.

Add comment March 25th, 2009