BIR Ruling

July 13, 1970 Messrs. Quasha, Asperilla, Blanco Zafra and Tayag P.O. Box 3372 Manila D-405 Gentlemen : This refers to your letter dated July 6, 1970 requesting a ruling as to whether or not donation of real and personal properties to be made by the Christian Children's Fund, Inc. of Richmond, Virginia, U.S.A. in favor of the proposed Children's Garden of the Philippines, Barrio Dolores, Taytay, Rizal, is exempt from the payment of the donor's and donee's gift taxes. It is represented that the Christian Children's Fund, Inc., is a foreign corporation duly licensed to do business in the Philippines; that it intends to donate to the proposed Children's Garden of the Philippines, stocks, bonds and securities in the amount of P143,000.00 and real properties covered by Transfer Certificate of Title Nos. 53196 and 83135 and Original Certificate of Title No. 110 containing a total area of approximately 55,000 square meters located in Taytay, Rizal; and that the proposed Children's Garden of the Philippines a non-stock and non-profit organization shall be incorporated as an affiliate of the Christian Children's Fund, Inc. of the Richmond, Virginia, U.S.A. cd A perusal of the Articles of the Incorporation of the proposed Children's Garden of the Philippines disclosed that the formation of the corporation is motivated by a deep concern for child welfare work in the Philippines and awareness of the serious responsibilities involved in the care and nurture of deprived orphans and abandoned and neglected children; that its purposes are to provide a home for children, who through circumstances beyond their control, are deprived of their heritage of a decent home and wholesome family life; to restore dispossessed children to their God-given heritage of human dignity by means of love, honor and respect to which every child of God is entitled; to train said children to develop christian character and wholesome attitude and to develop well-rounded personalities so that they may grow "in wisdom and in statute and in the knowledge of God and man"; to help said children posses sound mental health, adjusted to the demands of modern living amply prepared to meet the duties of an upright and dutiful christian citizens; to undertake such similar or other activities related to those above enumerated and; to purchase, own, hold, acquired, or otherwise accept such property, real or personal, as may be necessary, convenient or appropriate for any of the purposes herein expressed. The corporation, shall be maintained by contributions and donations from religious and civic groups, government agencies, business firms and individuals in the Philippines and abroad. In reply thereto, I have the honor to inform you that gifts made in favor of, and received by, an educational and/or charitable corporation, institution, foundation, trust or philanthropic organization or research institution or organization shall be exempt from the payment of the donor's and donee's gift taxes under Sections 109 and 110 of the Tax Code, as amended by Republic Act No. 6110. The proposed Children's Garden of the Philippines, under the purposes mentioned above is, undoubtedly, a charitable organization. Hence, the gifts to be made in favor of, and received by, said organization shall be exempt from the payment of the donor's and donee's gift taxes. However, pursuant to Section 110 of the Tax Code, the exemption from the donee's gift tax is subject to the condition that not more than 30% of the gifts shall be used by the donee for the administration purposes. Finally, it shall be the duty of the person or persons in charge of the charitable organization receiving the gifts "to submit within ninety days after the end of each calendar year a report to the Commissioner of Internal Revenue on the use and disposition of the gift received during the year which shall be subject to verification by said Commissioner". (Sec. 110, Tax Code, as amended). cdt Very truly yours, MISAEL P . VERA Commissioner of Internal Revenue