BIR Ruling

December 28, 1971 Messrs. Quasha, Asperilla, Blanco Zafra & Tayag P. O. Box 3372, Manila Gentlemen : This refers to your letter dated August 14, 1971 requesting information as to whether or not the proposed donation of two parcels of land covered by Transfer Certificate of Title No. 3999 situated at Mabini and Quiamson Sts., Sangitan, Cabanatuan City, with an area of 751 square meters; and Transfer Certificate of Title No. 4002 also situated at Mabini and Quiamson Sts., Sangitan, Cabanatuan City, with an area of 249 square meters, respectively, by the Board of Missions of the United Methodist Church Incorporated under the laws of New York, in favor of the Philippine Wesleyan College is exempt from the payment of the donor's and donee's gift taxes. It is represented that the donee, Philippine Wesleyan College is a non-stock, non-profit educational corporation organized under the laws of the Philippines; that the purposes for which the corporation is formed are: to establish, conduct and maintain an institution of learning devoted to the cause of Christian education, to strengthen democratic institutions and to develop Christian character; to provide courses of study from the kindergarten, elementary, to university grade for professional or business life or for general culture and education; to establish classical, mathematical, or scientific, business, vocational, technical, and general courses of study, and home classes; to provide for the holding and giving of lectures, exhibitions, public meetings, convocations and conferences adopted directly or indirectly to advance the calling of education; to secure, print and publish books and courses of study of the corporation; and to grant certificates and diplomas; titles and degrees, as may be authorized by the Government; to purchase, build, lease, construct or otherwise acquire such land and buildings, dormitories and offices as may be necessary or useful to carry out the objects and purposes of the corporation; that the chairman and members of the Board of Trustees of the corporation do not receive any compensation for acting as such; and that all income of the school is used for accomplishing the purposes for which it has been formed. cdt In reply thereto, I have the honor to inform you that the total amount of the gifts received by a non-profit educational and/or charitable corporation, institution, foundation, trust or philanthropic organization and/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. 6610. Inasmuch as the Philippine Wesleyan College is a non-profit and non-stock educational corporation, the above gifts to be made in favor of, and received by the said corporation 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 said gifts shall be used by the donee for administration purposes. However, it shall be the duty of the person or persons in charge of the educational corporation 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 gifts received during the year which shall be subject to verification by the Commissioner." (Sec. 110, Tax Code, as amended) Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue