BIR Ruling

April 19, 1968 Mr. Galo B. Ocampo Director, National Museum Herran St., Manila S i r : This refers to your letter dated April 15, 1968 requesting reconsideration of the ruling of this Office dated April 5, 1968 to the effect that the contemplated donations of P25,000.00 by the Columbian Rope Company to the Marine Science and Archaeology Foundation, Inc. cannot be allowed as a deduction from the donor's gross income under Section 13 of Republic Act No. 4846. In reply thereto, I have the honor to inform you that after a careful restudy of the statute and principles of law applicable to the instant case, this Office is constrained to reverse its stand. A close perusal of the explanatory note to Republic Act No. 4846 shows that the legislative intent behind the enactment of the Act is to preserve and protect the cultural treasures of this country. To encourage and attract private individuals and institutions to support the scientific and cultural projects of the Foundation, the Act grants tax exemption benefit to persons and entities who invest funds to the Foundation for the purposes specified under Section 13 of the Act. As represented, the contemplated donation is intended to support the various projects of the Foundation particularly that of excavating sunken habitation sites and retrieving relics and artifacts from sunken ships and galleons. That the proposed donor is not motivated by any monetary gain but by pure generosity to support the projects of the Foundation to conserve historical relics which will ultimately become the property of the Government. On the basis thereof, this Office logically concludes that if a person who invests funds to support the various expeditions of the Foundation could legally claim deduction from his income tax returns of the amount invested, with more reason should one who out of genuine liberality contributes for the support of its worthy projects. Evidently, to rule otherwise is contrary to the objective sought by the legislators in passing Republic Act 4846. It may further be stated that while the general rule is that tax exemptions must be strictly construed against the taxpayer and in favor of the Government, in cases of exemptions covering public property and those granted to charitable and educational property or institution, the exemption is liberally construed in favor of the taxpayer. (Cooley's Taxation, 4th Ed. pp. 1414-1415) cdta In view of the foregoing considerations, this Office believes and so holds that the contemplated donation by the Columbian Rope Company to the Marine Science and Archaeology Foundation, Inc. is an allowable deduction from the donor's gross income under Section 13 of Republic Act No. 4846. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue