Harmonizing Incentives for the Conservation and Protection of Philippine Cultural Heritage

Senate Office of the Secretarg TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES First Regular Session SENATE RECEIVED BY. S. No. _ 2091 Introduced by Senator MARK VILLAR AN ACT HARMONIZING INCENTIVES FOR THE CONSERVATION AND PROTECTION OF PHILIPPINE CULTURAL HERITAGE, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 10066, OR THE "NATIONAL CULTURAL HERITAGE ACT OF 2009" EXPLANATORY NOTE Article XIV, Section 14 of the Constitution mandates the protection and conservation of arts and culture, and it fosters the preservation, enrichment, and dynamic evolution of a Filipino national culture. To breathe life to this State policy, several laws were enacted such as Republic Act No. 10066 or the National Cultural Heritage Act of 2009, Republic Act No. 11333 or the National Museum of the Philippines Act, and Republic Act No. 11961, or the Cultural Mapping Law. Despite the passage of these laws, conservation remains fraught with challenges including chronic underfunding, limited government support, the constant threat of natural disasters, and a general lack of public awareness. In addition, since most heritage buildings and ancestral houses are privately owned, there is little that the government can directly undertake for their preservation. Thus, there needs to be robust incentive mechanisms that would encourage these private property owners to conserve heritage structure and avoid being compelled to sell or to seek income from properties that are often idle and heavily burdened by taxes. Through this framework shift, heritage conservation would soon become less cumbersome and more appealing to accomplish.

This bill seeks to establish incentive mechanisms that harmonize heritage preservation with economic viability, calibrated according to the Grade classification of cultural properties. Under Rule IV, Section 7 of the Implementing Rules and Regulations of R.A. No. 10066, Grade I properties include: (a) World Heritage Sites; (b) National Cultural Treasures; (c) National Historical Landmarks; (d) National Historical Shrines; and (e) National Historical Monuments. Grade II properties encompass important cultural assets such as works by a Manlilikha ng Bayan, works by a National Artist, archaeological and traditional ethnographic materials, works of national heroes, marked structures, structures at least fifty (50) years old, and archival materials or documents of similar age, unless otherwise declared by the appropriate cultural agency. All other cultural properties listed in the Registry that are not classified as Grade I or Grade II shall be deemed Grade III Important Cultural Properties, unless otherwise desisted. Specifically, the proposed measure provides tax credits for ownership transfers and restoration of Grade I and II structures, real property tax exemptions for Grade I and II, with local governments authorized to extend exemptions to Grade Ill. Additional benefits include exemptions from income tax, import duties, and VAT for qualified conservation activities. By providing tax incentives, fiscal relief, and other financial support, the measure reduces the pressure to sell or demolish heritage properties, while encouraging owners to conserve and adapt them for sustainable use. In doing so, it transforms heritage conservation from a perceived burden into a shared opportunity, one that benefits communities, strengthens cultural tourism, and reinforces national identity. In view of the foregoing, the passage of this measure is earnestly sought. MARK VILLAR

Senate Office of the Secretary TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES ) First Regular Session ) MAY - 4g P6:10 SENATE 2091 RECEIVED BY: S. No. - Introduced by Senator MARK VILLAR AN ACT HARMONIZING INCENTIVES FOR THE CONSERVATION AND PROTECTION OF PHILIPPINE CULTURAL HERITAGE, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 10066, OR THE "NATIONAL CULTURAL HERITAGE ACT OF 2009" Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Republic Act No. 10066, otherwise known as the "National Cultural

2 Heritage Act of 2009", is hereby amended to read as follows: XXX "ARTICLE IX CULTURAL PROPERTY INCENTIVES PROGRAM "SEC. XX. TAX BENEFITS FOR GRADE I AND II LEVEL CULTURAL PROPERTIES. - GRADE I AND II LEVEL CULTURAL PROPERTIES SHALL BE ENTITLED TO THE FOLLOWING: 1. GRADE I AND II LEVEL CULTURAL PROPERTIES SHALL BE EXEMPT FROM ALL TAXES ARISING FROM, OR INCIDENTAL TO, TRANSFERS OR CHANGES IN OWNERSHIP, SUCH AS BUT NOT LIMITED TO: A. ESTATE TAXATION; B. CAPITAL GAINS TAXATION; C. DOCUMENTARY STAMP TAXES; AND

D. VALUE ADDED TAXES; 2. GRADE I AND II LEVEL CULTURAL PROPERTIES AND THE PARCEL OF LAND ON WHICH THE PROPERTIES STAND SHALL BE EXEMPT FROM REAL PROPERTY TAXES. IN THE EVENT THAT THE PARCEL OF LAND IS GROSSLY DISPROPORTIONAL TO THE SIZE OF THE CULTURAL PROPERTY, AND IS NOT ITSELF PART OF THE SCOPE OF THE CULTURAL PROPERTY, THE LAND EXEMPT FROM TAXATION SHALL BE LIMITED TO THE BUILDING FOOTPRINT AND A REASONABLE BUFFER ZONE AROUND THE PROPERTY TO PROTECT BOTH ITS STRUCTURAL INTEGRITY AND ITS HISTORICAL OR CULTURAL CONTEXT, AS MAY BE DELIMITED BY THE COMMISSION 3. GRADE III LEVEL CULTURAL PROPERTIES MAY BE EXEMPTED FROM REAL PROPERTY TAXES BY A CITY OR MUNICIPALITY ADOPTING AN ORDINANCE GRANTING SUCH AN EXEMPTION, WHETHER FOR A SPECIFIC SITE OR FOR ALL CULTURAL PROPERTIES WITHIN THEIR TERRITORIAL JURISDICTION. 4. INCOME DERIVED BY OPERATING A BUSINESS ESTABLISHMENT WITHIN GRADE I AND II LEVEL CULTURAL PROPERTIES SHALL BE SUBJECTED TO THE FOLLOWING: A. A GROSS INCOME TAX RATE OF FIVE PERCENT (5%) PROVIDED THAT THE BUSINESS OPERATIONS ARE LIMITED SOLELY TO ONE OR MORE GRADE I AND II LEVEL CULTURAL PROPERTIES; AND B. A DOUBLE DEDUCTION OF EXPENSES ACTUALLY INCURRED FROM THE REPAIR, MAINTENANCE, RESTORATION, MANAGEMENT OR RECONSTRUCTION OF COVERED PROPERTY, REGARDLESS OF WHETHER THE OWNER IS A NATURAL OR JURIDICAL PERSON, OR WHETHER ONLY PART OF ITS BUSINESS OPERATIONS ARE LOCATED IN ONE OR MORE COVERED PROPERTIES;

5. INCOME DERIVED BY THIRD PARTIES SPECIFICALLY FROM THE REPAIR MAINTENANCE, RESTORATION, MANAGEMENT OR RECONSTRUCTION OF GRADE I AND II LEVEL CULTURAL PROPERTIES SHALL BE EXEMPT FROM INCOME TAXATION; AND 6. THE IMPORTATION OF MATERIALS SPECIFICALLY IDENTIFIED BY THE COMMISSION AS ESSENTIAL FOR THE REPAIR, MAINTENANCE, RESTORATION, MANAGEMENT OR RECONSTRUCTION OF COVERED PROPERTY SHALL BE EXEMPT FROM BOTH IMPORT DUTIES AND VALUE-ADDED TAXATION. SEC. XX. TAX CREDITS FOR THE RESTORATION OF GRADE I AND II LEVEL CULTURAL PROPERTIES. - EXPENSES RELATED TO THE RESTORATION OF GRADE I AND II LEVEL CULTURAL PROPERTIES MAY BE CLAIMED AS TAX CREDITS, IN ACCORDANCE WITH THE PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, PROVIDED THE WORK IS APPROVED BY THE COMMISSION." SEC. XX. ELIGIBILITY FOR INCENTIVES. - THE FOLLOWING SHALL BE ENTITLED TO INCENTIVES AND OTHER BENEFITS PROVIDED IN THIS ACT FOR GRADE I AND II LEVEL CULTURAL PROPERTIES, EXCEPT OTHERWISE PROVIDED: 1. THE APPLICANT. - THE APPLICANT, EXCEPT OTHERWISE PROVIDED, SHALL BE ANY OF THE FOLLOWING: A. THE OWNER OF THE CULTURAL PROPERTY; B. A PERSON DESIGNATED AS THE ADMINISTRATOR OF THE CULTURAL PROPERTY, HOLDING RELEVANT AND APPLICABLE AUTHORIZATION IN RELATION TO THE PROPERTY; C. A TRUSTEE FOR AND ON BEHALF OF THE OWNERS OF THE CULTURAL PROPERTY, AS HEREINAFTER PROVIDED;

D. A THIRD PARTY CONDUCTING BUSINESS IN THE CULTURAL PROPERTY, PROVIDED IT IS DULY AUTHORIZED BY THE OWNER, ADMINISTRATOR, OR TRUSTEE TO APPLY FOR THE BENEFITS AND INCENTIVES; AND E. A THIRD PARTY DONATING FOR, OR CHARGED WITH, THE REPAIR, MAINTENANCE, RESTORATION, MANAGEMENT OR RECONSTRUCTION OF THE CULTURAL PROPERTY. 2. HERITAGE TRUSTEE. - THE FOLLOWING SHALL GOVERN THE DESIGNATION OF A HERITAGE TRUSTEE: A. IN THE EVENT THAT THE APPLICANT IS UNABLE TO ESTABLISH CLEAR AND FULL OWNERSHIP OVER THE CULTURAL PROPERTY DUE TO THE LACK OF FULL AND PROPER DOCUMENTATION, SUCH AS, BUT NOT LIMITED TO: I. THE FAILURE TO PROPERLY DOCUMENT THE TRANSFER OF THE PROPERTY THROUGH ESTATE PROCEEDINGS; II. THE INABILITY TO OBTAIN FULL CONSENT FROM ALL CO-OWNERS OF THE PROPERTY; AND III. THE NON-REGISTRATION UNDER THE TORRENS SYSTEM OF THE LAND ON WHICH THE PROPERTY IS LOCATED, THE APPLICANT, IN A VERIFIED APPLICATION FILED IN THE COURT HAVING JURISDICTION OVER THE COVERED PROPERTY, MAY ESTABLISH HIS OR HER CLAIM OVER THE PROPERTY BY AFFIDAVITS AND COLLATERAL EVIDENCE, AND AFTER PUBLICATION AND IN A SUMMARY PROCEEDING, THE COURT MAY DESIGNATE THE APPLICANT AS A TRUSTEE IN FAVOR OF ALL OTHER POSSIBLE RIGHTS HOLDERS TO THE PROPERTY; AND NET INCOME OF THE PROPERTY FOR THE BENEFIT OF SUCH OTHER RIGHTS HOLDERS.

B. THE COURT SHALL FURTHER REQUIRE THAT THE APPLICANT DEPOSIT IN A TRUST FUND A PORTION OF THE NET INCOME OF THE PROPERTY FOR THE BENEFIT OF SUCH OTHER RIGHTS HOLDERS." "ARTICLE XIII PENAL PROVISIONS 6 SEC. xx. Prohibited Acts. - To the extent that the offense is not punishable by a 7 higher punishment under another provision of law, violations of this Act may be made 8 by whoever intentionally: a. Destroys, demolishes, mutilates, or damages any [world heritage site, national cultural treasures, important cultural property and archeological and anthropological sites;] GRADE I OR GRADE II LEVEL CULTURAL PROPERTY, OR PRESUMED IMPORTANT CULTURAL PROPERTY, WITHOUT THE PRIOR WRITTEN PERMISSION FROM THE COMMISSION; b. Modifies, alters, or destroys the original features of or undertakes construction or real estate development in any monument, landmark and other historic offices, and structures, declared, classified, and marked by the national historicalInstitute as such] GRADE I OR GRADE II LEVEL CULTURAL PROPERTY, AND PRESUMED IMPORTANT CULTURAL PROPERTY without the prior written permission from the Commission. This includes the designated security or buffer zone extending five (5) meters from the visible perimeter of the monument or site; c. Explores, excavates or undertakes diggings for the purpose of obtaining materials of cultural historical value without prior written authority from the [ National Museum] COMMISSION. No excavation or diggings shall be permitted without the supervision of a certified archeologist; d. Appropriates excavation finds contrary to the provisions of the New Civil Code and other pertinent laws;

e. Imports, sells, distributes, procures, acquires, or exports cultural property stolen, or otherwise lost against the will of the lawful owner; f. Illicitly exports cultural property listed in the Philippine Registry of [Cultural Property] HERITAGE or those that may be categorized as such upon visitation or incorrectly declares the same during transit; and g. Deals in cultural property without proper registration and license issued by the [cultural agency concerned] COMMISSION.

Sec. 2. Implementing Rules and Regulations. — Within sixty (60) days from the

9 effectivity of this Act, the Commission shall, in coordination with concerned agencies 10 of the government, promulgate the necessary rules and regulations for the proper implementation of this Act.

Sec. 3. Separability Clause. - Should any portion or provision of this Act be

declared unconstitutional, the same shall not affect the validity and effectivity of the other portions or provisions hereof not affected thereby.

Sec. 4. Repealing Clause. - All other laws, presidential decrees, executive

orders, and rules and regulations inconsistent with the provisions of this Act are hereby repealed or modified accordingly.

Sec. 5. Effectivity. — This Act shall take effect after fifteen (15) days following

the completion of its publication in the Official gazette or in a newspaper of general circulation. Approved,