Tax Imposed on the Donations Made to Religious Institutions

January 5, 1959 BIR RULING NO. 004-59 The Regional Director Regional District No. 10 Davao City S i r : There is returned to you the docket of the donor's and donee's tax case of Dakudao & Sons, Inc. and Mons. Julio Rosales, Archbishop of the Province and City of Cebu, relative to the donation made by the aforenamed corporation of two parcels of land in favor of the latter as such archbishop. cdpr In B.T.A. Case No. 53 (The Right Rev. Manuel Mascarinas vs. The Collector of Internal Revenue, July 12, 1952), the defunct Board of Tax Appeals held, in view of the provisions of Section 22(3). Article VI of the Philippine Constitution, exempting from taxation all lands, buildings, and improvements used exclusively for religious purposes, that the parcels of land and building donated mortis causa by Rev. Gelacio Ramirez (who died less than a month after execution of the deed of donation) in favor of the Catholic Diocese of Bohol were exempt from the estate and inheritance taxes. In view thereof, you now request information whether or not, pursuant to the principle of pari materia , the ruling in said case should be applied to the donation involved in the instant case. While the statutes imposing the gift and transfer taxes are in pari materia , nevertheless, this Office does not intend to follow the decision in the Mascarinas case in deciding cases similar to it. Said decision is not a Supreme Court decision and, therefore, does not have a binding effect. At most, it is merely persuasive. Moreover, we do not subscribe to the soundness of said decision. As a matter of fact, we maintain, as we had maintained in the Mascarinas case, that the exempting provisions of Section 22(3), Article VI of the Constitution embrace only direct, ad valorem and/or property taxes of lands and buildings used exclusively for religious charitable or educational purposes, and do not include the estate and inheritance taxes which are essentially excise and not property taxes. Such being the case, and considering that the gift taxes are supplementary to the transfer taxes, the former reaching transfers which escape the latter, this Office is of the opinion and so holds that, like the transfer taxes, the gift taxes are not embraced within the exempting provisions in question. (See: Federal Estate & Gift Taxation by Randolph E. Paul, Vol. II, Sec. 17. 01, pp. 1126-1127) In view of all the foregoing, this Office holds that donations to religious institutions, even for exclusively religious purposes, are subject to the gift taxes, notwithstanding the Mascarinas case. prcd Please be guided accordingly. Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue