BIR Ruling [DA-262-98]

June 22, 1998 BIR RULING [DA-262-98] U.P. Foundation, Inc. University of the Philippines Diliman, Quezon City Quezon City Attention: Mr . Socorro L . Villalobos Asst . Executive Director Gentlemen : This refers to your letter dated March 10, 1998 requesting that the donations made to you by Landvil Development Corporation be exempt from the payment of donor's tax and that the same be fully deductible from the gross income of the said donor. prll It is represented that the UP Foundation, Inc. (UPF, Inc.) is a non-stock, non-profit foundation duly organized and existing under the laws of the Republic of the Philippines; that it is committed to the support of higher education, research, creative work and public service; that the said Foundation has been accredited by the Department of Science and Technology (DOST) as a Science Foundation (Certificate No. 94-FR-21) whose funds are dedicated to scientific pursuit; and that it is registered by the Bureau of Internal Revenue (BIR) as a Donee Institution on January 19, 1983; and that recently, the Foundation became the Landvil Development Corporation for the establishment of Dr. Mamerta V. Andaya Professorial Chair in Obstetrics-Gynecology for the College of Medicine, University of the Philippines, Manila. That in support of your request, you have attached the following documents: 1) BIR Certificate of Registration as donee institution; 2) DOST Certification of Accreditation of the U.P. Foundation, Inc.; 3) Excerpt from the Minutes of the 116th meeting of the U.P. Board of Regents; 4) The Deed of Donation and Acceptance by and between the Landvil Development Corp. and the U.P. Foundation, Inc.; 5) BIR Certificate of Registration of the U.P. Foundation, Inc.; 6) Certificate Authorizing Transfer/Registration issued to Landvil Development Corp. for its previous donation of P300,000.00 dated February 4, 1994 issued by the Regional Director BR8; 7) SEC Registration of UPF, Inc.; 8) Articles of Incorporation and By-laws of UPF, Incorporated. In reply, please be informed that Section 101 (A)(3) of the Tax Code of 1997 provides that donations in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited non-government organization, trust or philanthropic organization or research institution or organization are exempt from the payment of donor's tax subject to the condition that not more than 30% of the amount of the gift, if in cash, shall be used by it for administration purposes. Such being the case, if not more than 30% of the cash gift made by Landvil Development Corporation to you shall be used by the UP Foundation, Inc. for administration purposes, then the amount donated by Landvil Development Corporation to U.P. Foundation, Inc. shall be exempt from donor's tax. Furthermore, Section 34 (H)(2)(c) of the Tax Code of 1997 [then Sec. 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 BIR-NEDA No. 1-82 and Revenue Regulations No. 10-82] provides that donations to a non-government organization which means 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 provided that the conditions of utilization and level of administrative expense requirements set forth under Sec. 34(H)(2)(c) of the Tax Code of 1997, among others, are complied with. Accordingly, this Office is of the opinion as it hereby holds that for income tax purposes, the cash donation of Landvil Development Corporation in the amount of P400,000.00 to U.P. Foundation, Inc. is deductible in full from the gross income of the former if the conditions set forth under the said Section of the Tax Code are complied with. LLpr This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. (BIR Ruling No. S-26-85-97 dated October 2, 1997; BIR Ruling No. 51 7-A-93 dated December 12, 1993) Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)