BIR Ruling

April 30, 1973 Rev. Sister Clareth, Ssps. Convent of the Holy Spirit P. O. Box 3553, Manila M a d a m : This refers to your letter dated December 9, 1972 requesting opinion on the tax consequence of the donations to be given by the West German Government to the Our Lady of Lourdes Hospital, Inc. (hereinafter referred to as the Hospital) a non-stock, non-profit, Christian, benevolent, charitable, educational and scientific organization, owned and operated by the Missionary Sister Servants of the Holy Ghost, also a non-stock, non-profit, religious and charitable and educational corporation. In reply, I have the honor to inform you as follows: 1. The monetary donation for the construction of the new hospital building and the equipment for the medical services to be given by the West German Government to the Our Lady of Lourdes Hospital, are exempt from the donor's gift tax under Section 112 of the Tax Code, as amended by Presidential Decree No. 69. This is subject to the condition that not more than 30% of the monetary donation shall be used by the donee for administration purposes. 2. As soon as the monetary donation and equipment are received by the donee, the same shall be reported to this Office so that necessary verification can be conducted. 3. The medical equipment to be donated by the West German Government to the Hospital are subject to compensating tax under Section 190 of the Tax Code. The tax exemption previously granted under Republic Act 1916 on imported articles donated into the Philippines and consigned to a duly incorporated or established international civic organizations, religious or charitable society or institution like the Our Lady of Lourdes Hospital for civic, religious or charitable purposes has already been withdrawn by the amendment of Section 190 of the Tax Code by Presidential Decree No. 69, dated November 24, 1972 which took effect on January 1, 1973. 4. The hospitals and schools operated by the Missionary Sisters Servants of the Holy Ghost, for charitable and/or educational purposes under Section 27(e) of the Tax Code, are not required to file quarterly tax returns since their income are exempt from income tax. However, if they derive income from any of their properties, real or personal, or from any activities conducted for profit, regardless of the disposition made of such income, such hospitals and schools are required to file quarterly declarations and any the taxes due thereon. cdta Very truly yours, (SGD.) CONRADO P. DIAZ Deputy Commissioner of Internal Revenue