BIR Ruling

May 27, 1976 Valenzuela Community School 89 Jasmin, Valenzuela B u l a c a n Attention: Rev . Father Rolando E . Bacani Principal Gentlemen : This refers to your letter dated December 4, 1975 requesting a ruling on whether or not gifts received by you from various donors are subject to the donor's gift tax. It is represented that the Valenzuela Community School, is a non-stock, non-profit elementary school duly registered with the Securities and Exchange Commission, that it is governed by a Board of Trustees of five members who, do not receive any compensation; that the School is now buying a one hectare piece of land for the purpose of expanding her educational facilities, using for the purpose money it obtained from various Protestant Churches and individual friends from the United States since 1973 which were sympathetic to the mission and cause of the School; and that there were no expenses for school administration whatsoever. In reply, I have the honor to inform you that pursuant to Section 112(a)(3) of the Tax Code, gifts in favor of a non-profit educational institution are exempt from the donor's gift tax provided that not more than 30% of said gifts shall be used by the donee for administration purposes. For purposes of this exemption, a non-profit educational institution is a school, college or university incorporated as a non-stock entity, paying no dividends, governed by trustees who receive no compensation, and devoting all its income whether students' fees, gifts, donations, subsidies or other forms of philanthropy to the accomplishment and promotion of the purposes enumerated in its articles of incorporations. From your representations, it appears that the gifts in your favor meet the requirements for exemption prescribed by Section 112(a)(3) of the Tax Code. Accordingly, said gifts are exempt from the donor's gift tax. Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3