1. "Act" - refers to Republic Act No. 8525, otherwise known as the "Adopt-a-School Act of 1998."

2. "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.

3. "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.

4. "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.

5. "Assistance" - shall refer to the aid/help/contribution/donation provided by an adopting private entity to a public school. Assistance may be in the form of, 2 but not limited to, infrastructure, teaching and skills development, learning support, computer and science laboratories, and food and nutrition.

6. "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.

7. "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.

8. "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.

1. In the case of foreign donation, the VAT and excise tax, if any, on the importation of goods shall be assumed by the DepEd, or CHED, or TESDA, as the case may be, being the consignee 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.

2. In the case of local donation considered as a "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 available 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.

1. 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.

2. Assistance/contribution or donation other than money. -

   1. Personal property. - If the contribution or donation is in the form of personal property, the amount of the 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 shall take into consideration the depreciated value of the property.

   2. 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.

   3. Services. - If the assistance is in the form of services, the amount of the contribution or 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.

   4. Real Property. - If the 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(É) 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.

1. 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:

   1. duly notarized/approved Agreement,

   2. duly notarized Deed of Donation,

   3. Official receipts or any document showing the actual value of the contribution/donation;

   4. Certificate of Title and Tax Declaration, if the donation is in the form of real property; and

   5. 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.

2. 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.