BIR Ruling [DA-194-96]

June 10, 1996 BIR RULING [DA-194-96] De La Salle University, Inc. 2401 Taft Avenue, Manila Attention: Bro . Andrew Gonzales, FSC President Gentlemen : This refers to the application for registration of the De La Salle University Incorporated (DLSU) as a donee institution under BIR-NEDA Regulations No. 1-81 as amended in relation to Section 29(h) (2) (C) of the Tax Code, as amended. Documentary evidence submitted disclosed that the DLSU is a non-stock, non-profit educational institution, organized and registered with the Securities and Exchange Commission for the following purposes: "To establish and conduct a university, opening and maintaining the necessary schools, colleges and institutions, and offering therein elementary, secondary, collegiate and post graduate courses of study, as well as technical, vocational and special courses, as the Board of Trustees may determine, the primary intention being to form the whole man through the integration of a liberal Christian education with professional competence for needed leadership in Philippine development, provide advanced instruction in literature, philosophy, the sciences and arts, and to give professional and technical training and for such purpose to establish, maintain, administer and operate an institution of learning." that in furtherance of the aforementioned purposes, DLSU shall have the power to "(1) Grant and offer certificates, diplomas, titles and degrees, including honorary ones, in accordance with law and pertinent rules and regulations; (2) Found and maintain experimental stations, laboratories, printing press, radio and television stations, science centers, athletic plants, dormitories and restaurants and other structures, works, and facilities as may carry out or aid in the accomplishment of its educational mission exclusively; and to secure, establish and make available all and any materials and facilities as are necessary or convenient for the advancement of its research and studies as well as its basic educational objectives; 3. To acquire, purchase, own, hold, operate, develop, lease, mortgage, pledge, exchange, sell, transfer, or otherwise invest, trade or deal in any manner permitted by law, in real and personal property of every kind and description or any interest therein; 4. To receive and accept gifts and donations of real and personal property of all kinds, subsidies or other forms of philanthropy, and to administer the same for the benefit of the Corporation and/or in accordance with the direction or instructions of the donor; 5. To raise money for any of the purposes of the corporation and from time to time without limit as to amount, to draw, make, accept, endorse, execute, and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment thereof and of the interest thereon by mortgage or pledge, conveyance or assignment in trust of, the whole or any part of the assets of the Corporation, real, personal, or mixed, including contract rights whether at the time owned or thereafter acquired and to sell, pledge or otherwise dispose of such securities or other obligations of the Corporation for its purposes; 6. To make guaranty respecting securities, indebtedness, interest, contracts or other obligations so far as the same may be permitted to be done under the laws of the Philippines ; xxx xxx xxx In reply, please be informed that under Section 29(h) (2) (C) of the Tax Code, as amended by Batas Pambansa Blg. 45, as implemented by BIR-NEDA Regulations No. 1-81, as amended by Revenue Regulation Nos. 1-82 and 10-82, donations to a non-profit domestic corporation organized and operated exclusively for scientific, research, educational, character building and youth and sports development, health, social welfare, cultural or charitable purposes or a combination thereof, no part of the net income of which inures to the benefit of any private individual shall be deductible in full from the taxable business income of the donor. Under Section 29 of the Tax Code, as amended, by Republic Act No. 7496 (An Act Adopting the Simplified Net Income Taxation Scheme [SNITS] for the Self-Employed and Professionals Engaged in the Practice of their Profession), and as implemented by Revenue Regulations No. 2-93, effective July 28, 1992, individuals engaged in business or practice of profession shall only be allowed as deduction from gross income, among others, contributions made to the Government and accredited relief organizations for the rehabilitation of calamity-stricken areas declared by the President . Pure compensation income earners are allowed to deduct from their gross compensation income only their personal and additional exemptions (Sec. 29, Tax Code) Donations in favor of DLSU shall be exempt from the donor's tax pursuant to Section 94(a) (3) of the Tax Code, provided, however, that not more than thirty (30%) per centum of said donation shall be used by the donee, DLSU, for administration purposes. In view thereof, this Office is of the opinion as it hereby, holds that for income tax purposes, contributions and donations in favor of the De La Salle University Incorporated by individual donors/contributors shall not be deductible from their gross income; and that as a private corporation organized and operated for educational and social welfare purposes, contributions and donations in its favor shall be deductible in full from the gross income of the corporate donors/contributors. (BIR Ruling No. 517-A-93 dated December 23, 1993) cd Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)