BIR Ruling

December 23, 1969 Dr. Jose A. Yap Administrative Secretary National Council of Churches in the Philippines 941 E. De Los Santos Avenue Quezon City S i r : In reply to your letter dated October 30, 1969, I have the honor to inform you that donations by the Protestant Mission Boards of their properties in the Philippines to their churches in the Philippines are subject to the donor's and donee's gift taxes pursuant to Section 122 of the Tax Code in relation to Sections 109 and 110 of the same Code. The weight of authorities is to the effect that a gift tax is not within the embrace of the exemption provision of Section 22 (3), Article VI of the Constitution. It is not an assessment on the properties themselves. It does not rest upon general ownership. Rather, it is an excise upon the use made of the properties, upon the exercise of the privilege of receiving the properties (Phipps v. Commissioner of Internal Revenue, 91 F (2d) 627; see also Roman Catholic Archbishop of Cebu vs. the Commissioner of Internal Revenue, CTA Case No. 637, July 15, 1960, Rev. Fr. Casimiro Lladoc vs. Commissioner of Internal Revenue & C.T.A., G.R. No. L-19201, June 16, 1965). Moreover, both the donors and donees adverted to in your inquiry are not by any law or regulation entitled to any tax exemption. It is a rule that exemption from taxation are highly disfavored in law, and the party claiming tax exemption must justify his claim by a clear, positive or express grant of such privilege by law. (Collector v. Manila Jockey Club, G.R. No. L-8755, March 23, 1956; the Roman Catholic Apostolic Church of the Philippines v. Hastings et. al., 5 Phil. 701, 703; City of St. Louis v. Ry. Co., 210 U.S. 266, 28 Sup. Ct. 630, 52 L. Ed. 1054; Gov't of P.I. vs. Monte de Piedad, 51 Phil. 352.) Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue