BIR Ruling

March 19, 1974 The Lutheran Church-Missouri Synod 4461 Old Sta. Mesa, Sampaloc Manila and The Lutheran Church in the Philippines 4461 Old Sta. Mesa, Sampaloc Manila Gentlemen : This refers to your letters dated February 18 and October 6, 1972 jointly requesting exemption of the donation of several parcels of land from the payment of donors and donee's gift taxes. acd It is represented that the donor, the Lutheran Church Missouri-Synod, is a religious corporation organized and existing in accordance with the laws of the state of Missouri, U.S.A., and duly authorized to transact business in the Philippines with principal place of business at 4461 Old Sta. Mesa, Sampaloc, Manila; that the donee, the Lutheran Church in the Philippines, Inc., and a domestic religious corporation, duly organized and existing in accordance with the laws of the Philippines with principal office at 4461 Old Sta. Mesa, Sampaloc Manila; that on May 12, 1971 the donor and the donee executed twenty-one (21) deeds of donation covering real properties of the donor. The consideration of the donation is the help and aid extended to the donor by the donee, of the faithful services the latter has rendered in the past to the former, and in consideration of the fact that both the donor and the donee have the same objects for their existence. The condition of the donation is that the donee shall use and apply the properties subject matter of the donation to the uses and purposes for which the same were applied and intended by the donor, and for no purpose other than religious, educational, charitable or to fulfill the objects for which the donee was created; and that on the failure of the said donee to comply with these conditions, the said properties shall revert to the donor as if the aforesaid donation has not been executed. In reply thereto, I have the honor to inform you that donative intent must be present in the transfer of property in order that the gift taxes can be assessed and collected. (F-H Federal Gift Tax (1956), par. 125,010). In the aforesaid donation, the donative intent is wanting. The Lutheran Church in the Philippines assumed an obligation to administer the properties transferred to it for religious purposes only the same religious for which the donor was created. The donee received nothing of material value which could possibly be reached by gift taxation. The transfer of the abovementioned properties from the donor to the donee were in name only, and merely to enable the latter to better perform its obligation to administer the properties in question for religious purposes only. Moreover, the Lutheran Church in the Philippines is a sister-church of the Lutheran Church-Missouri Synod. Accordingly, the herein transfer of properties is not subject to tax within the purview of the gift tax statute. (The Christian and Missionary Alliance Churches of the Philippines vs. Collector of Internal Revenue CTA Case No. 668 August 21, 1964; BIR Ruling No. 72-015 dated May 18, 1972). In view thereof, this Office is of the opinion and so holds that the aforesaid donations of several parcels of land by the Lutheran Church-Missouri-Synod in favor of the Lutheran Church in the Philippines is exempt from the payment of donor's and donee's gift taxes. aisa dc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5