BIR Ruling

January 3, 1972 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 by the Women's Foreign Missionary Society, a non-stock and non-profit institution organized under the laws of New York, of three (3) parcels of land described as follows: (1) A property covered by Original Certificate of Title No. 6961 located at Calle Moraga, Tondo, Manila, containing an area of 439.8 square meters; (2) A property covered by Transfer Certificate of Title No. 35845 situated at Quesada St., Tondo, Manila, with an area of 2,502.2 square meters; and (3) A property covered by Transfer Certificate of Title No. 35456 situated at Sta. Maria st. Tondo, Manila containing an area of 413.3 square meters. in favor of the Mary Johnston Hospital, Inc., is exempt from the payment of the donor's and donee's gift taxes. It is represented that the donee, Mary Johnston Hospital, Inc. is a non-stock, non-profit domestic corporation organized for the purpose of serving the Kingdom of God and the cause of Jesus Christ, the Great Physician, in the Philippines through the ministry of healing; that in pursuance of the said objective the donee will establish, equip, operate and maintain on a non-stock, non-profit basis, a Christian, benevolent, charitable and scientific hospital which shall give medical, surgical, physical, and spiritual case to the sick, diseased and disabled persons, relieve suffering and prevent or cure diseases subject to the condition that purely professional, medical or surgical services in connection therewith shall be performed by duly qualified physicians or surgeons who may or may not be connected with the corporation and who shall be freely and individually contracted by patients; provide a center of health education for the community as well as graduate work in the general practice of medicine and for the clinical teaching of nurses of the Mary Johnston School of Nursing and in such specialties as the facilities and resources of the corporation may make possible; establish rules and regulations consistent with the highest professional ethics, governing the admission and discharge of patients, staff and personnel discipline, fiscal operations and hospital management, as well as the employment of modern scientific methods and procedure in the treatment of diseases; and purchase, lease and otherwise acquire, hold, mortgage, convey or dispose of all kinds of property both real and personal, stocks, bonds, securities and other assets, and generally to perform all acts which may be deemed necessary or expedient for the proper and successful prosecution of the objects and purposes for which the corporation is created; that the Chairman and other members of the Board of Trustees do not receive any compensation from the donee corporation for acting as such; and that all income of the donee corporation is used for the accomplishment of the purposes for which it has been formed. 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 Section 109 and 110 of the Tax Code as amended by Republic Act No. 6610. Inasmuch as the Mary Johnston Hospital Inc., is a non-profit and non-stock charitable 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 charitable 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