BIR Ruling

September 20, 1967 Atty. Sabino Padilla, Jr. Padilla Law Office 600-604 Shurdut Building Muralla, Manila S i r : This refers to your letter dated June 15, 1967 requesting cancellation of the assessments for donor's and donee's gift taxes issued by this Office against the estate of the late Doa Bonifacia Sales y Alonso and the Roman Catholic Archbishop of Manila, respectively, pursuant to Sections 109 and 110 of the Tax Code, as amended. llcd You contended that the donee corporation is not only a non-profit religious institution but also educational institution, and hence, a donations made in its favor, exclusively for educational purposes, are exempt from the donor's and donee's gift taxes. In reply, I have the honor to inform you that in enacting Republic Act No. 3140, which amended Sections 109 and 110 of the Tax Code, Congress intended to exempt from donor's and donee's gift taxes donations made in favor of an educational institution, foundation, trust and/or the Jose Rizal National Centennial Commission subject, however, to the condition that for the donation to be exempt from the donee's gift tax, not more than thirty percentum (30%) of the gift shall be used by the donee for administrative purposes. cdtech For purposes of the donor's and donee's gift taxes, a non-profit educational institution, foundation, trust or philanthropic organization and/or research institution or organization is a school, college or university foundation, trust or philanthropic organization and/or research institution or organization incorporated as a non-stock entity, without stockholders, paying no dividends, governed by trustees who receive no compensation, and devoting all its incomes whether student's fees or gifts, donations, subsidies or other forms of philanthropy, to the accomplishment and promotion of the purpose or purposes enumerated in its articles of incorporation. (See BIR Gen. Cir. No. V-344, August 21, 1961) Undoubtedly, The Roman Catholic Archbishop of Manila is not the kind of educational institution contemplated by Sections 109 and 110 of the Tax Code, as amended, because its educational activities are merely incidental to the accomplishment of the real purpose for which the corporation was organized. In other words, the donee corporation is a non-profit religious institution rather than a non-profit education institution. Such being the case, this Office believes and so holds that the estate of the late Doa Bonifacia Sales y Alonso and The Roman Catholic Church of Manila are, respectively, subject to donor's and donee's gift taxes pursuant to Sections 109 and 110 of the Tax Code, as amended. In view of the foregoing, it will be greatly appreciated if you can urge your client to pay to this Office or to our Collection Agent, Office of the Regional Director, Revenue Region No. 8, South Manila, the sums of P3,300.00 and P7,500.00 as donor's and donee's gift taxes due and collectible from the estate of the late Doa Bonifacia Sales y Alonso and the Roman Catholic Archbishop of Manila in order that the case may be closed. LibLex Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue