Donations to the BIR of Information Technology-Related Materials

September 20, 2001 BIR RULING [DA-169-01] MEMORANDUM FOR : Lilia C. Guillermo Deputy Commissioner Information Systems Group FROM : Edmundo P. Guevara Deputy Commissioner Legal and Inspection Group SUBJECT : Donations to the BIR of Information Technology-Related Materials DATE : July 31, 2001 This refers to your Memorandum dated July 25, 2001 requesting for clarification on the following issues: I. Validity of the deeds of donation of Symantec and Microsoft; II. Validity of the draft Deed of Donation for Sun Microsystems Philippines, Inc.; and III. Possibility of drafting a standard Deed of Donation. Please be informed of the following: Re: Validity of the Document of Donation by Symantec Corporation and Microsoft, Inc. Article 748 of the New Civil Code, provides: "The donation of a movable property may be made orally or in writing. An oral donation requires the simultaneous delivery of the thing or of the document representing the right donated. If the value of the personal property donated exceeds five thousand pesos, the donation and the acceptance shall be made in writing. Otherwise, the donation shall be void." Under Article 748 of the New Civil Code, a donation of personal property exceeding P5,000.00 in value and the acceptance thereof must always be in writing. However, the document of donation as well as the acceptance thereof need not be in public documents but may simply be in private documents. Without such written documents, the donation of personal property exceeding P5,000.00 in value would be void even if there is simultaneous delivery of the thing. When the value of the donation does not exceed P5,000.00, it may be made orally or in writing. If the donation is made orally, there must be simultaneous delivery of the thing. If there is no simultaneous delivery, the donation is void, unless it is made in writing. The law, however, does not require that when the donation is made in writing, the acceptance thereof should also be in writing. In the opinion of Arturo M. Tolentino, the omission of this requirement, which was imposed under the old Code, permits a tacit acceptance or one that is not written (Commentaries and Jurisprudence on the Civil Code of the Philippines, Volume II, p. 555). The donation of the Norton Anti-Virus Corporate Edition by Symantec Corporation to the BIR is in a written document. Further, the records show that the value of the property donated is only P1,630.50. Therefore, the acceptance of the donation by the BIR need not be in writing because when the donation of a personal property valued at less than P5,000.00 is in writing, the acceptance thereof need not be in writing. The law allows tacit acceptance or one that is not written. In view of this, it is the considered opinion of this Office that the donation is valid and binding despite the fact that the acceptance of the donation was not made by the Commissioner of Internal Revenue as required under Section E, Article II of Revenue Memorandum Order No. 28-99 dated March 16, 1999, "Prescribing the Procedure in the Acceptance of Property Donations to the Bureau of Internal Revenue". To date, the Commissioner of Internal Revenue has not repudiated the acceptance of the donation made by an Assistant Commissioner of the BIR. This is tantamount to a tacit acceptance of the donation. Nonetheless, we suggest that this procedure in RMO 28-99 be followed. Thus, there must be a written deed of donation signed by the Commissioner. Microsoft, Inc.'s donation to the BIR of two (2) Windows 2000 Advanced Server is void if it is not made in writing and the acceptance is also not in writing. The value of the property donated being more than P5,000.00, the acceptance thereof shall be in writing. There is nothing in Annex "B" to show that the BIR had accepted the donation in writing as required by law. We suggest that the requirements of the law and RMO 28-99 also be followed. This legal infirmity may be remedied by the execution of a Deed of Donation between Microsoft, Inc. and the BIR covering the two Windows 2000 Advanced Server or the BIR may write to Microsoft, Inc. accepting the said donation. Re: Validity of the Draft Deed of Donation Involving Sun Microsystems The draft Deed of Donation involving Sun Microsystems is a valid document of donation considering that the property to be donated is personal property. However, the third paragraph of the Deed of Donation may be reworded and categorically state therein that the BIR accepts the donation. Re: Possibility of Drafting a Standard Deed of Donation We are attaching herewith two (2) draft Deeds of Donation one for donation of personal property and one for donation of real property. (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group