BIR Ruling

March 18, 1976 Padilla Law Office 6th Floor, Shurdut Bldg. Muralla, Manila Attention: Atty . Sabino Padilla, Jr . Gentlemen : This refers to your letter dated February 26, 1976 requesting a ruling as to the tax consequence of the proposed transactions between your clients, the Our Lady of Loreto College, Inc. (hereinafter referred to as the School) and the Franciscan Missionaries of Mary described hereunder as follows: cdta "1. The Franciscan Missionaries of Mary is a corporation sole whose incumbent is the Superior Provincial in the Philippines of a religious congregation known as the Franciscan Missionaries of Mary, and as such exists to carry out the non-profit religious, charitable and educational activities of the Congregation. "2. Our Lady of Loreto College (formerly known as Sampaloc Parochial School) is a non-stock, non-profit educational corporation organized in 1923 by the Superior and members of the Franciscan Missionaries of Mary. "3. Our Lady of Loreto College is situated at Legarda St., Sampaloc, Manila. The land on which its buildings and facilities are erected belongs to the Franciscan Missionaries of Mary. The buildings and other facilities belong to Our Lady of Loreto College. "4. In view of (a) the impending expropriation of a substantial portion of the physical plant and facilities of Our Lady of Loreto College in order to make way for a street or highway leading to Nagtahan Bridge, (b) the desire of the Congregation to re-direct its activities to social action in poor communities in urban and rural areas, and (c) the authorization granted by the Department of Education and Culture for Our Lady of Loreto College to phase out its educational activities, the Trustees and members of this educational corporation are considering: (a) the surrender of the corporation's use of the land owned by the Franciscan Missionaries of Mary, (b) the transfer, by law of donation to the Franciscan Missionaries of Mary, of the improvements erected on said parcel of land and of the other assets of the Corporation, in order to assist the religious, charitable and educational activities of the Franciscan Missionaries of Mary, and (c) upon accomplishment of the foregoing steps, the dissolution of the Corporation." In reply thereto, I have the honor to inform you that the return of the land used by the School to the Franciscan Missionaries of Mary shall not be subject to any tax. The proposed donation by the School of the improvements consisting of buildings and facilities erected on said land and of its other assets to the Franciscan Missionaries of Mary, a religious organization, is not subject to the donor's gift tax provided that not more than 30% of said gifts shall be used by the donee for administration purposes. (Sec. 112(a)(3), Tax Code, as amended by P.D. 69). Neither is the gift includible in gross income subject to income tax. (Sec. 29(b)(3), Tax Code) aisadc Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."