Donation by Virtue of a Will Not Covered by PD 507

August 30, 1976 BIR RULING NO. 005-76 Donation by virtue of a will not covered by PD 507 . This refers to your letters dated April 10, 1975 and November 11, 1975 requesting a ruling on the tax consequence of the donation by will of cash and shares of stock by your client, the late Cardinal Rufino Santos, in favor of the Archdiocese of Manila, the Administrator of which has guaranteed unequivocally that the beneficiary is the Catholic Charities of the Archdiocese, an institution allegedly qualified under Presidential Decree No. 507. cdta In reply thereto, I have the honor to inform you that the donation of cash and shares of stock by your client is a legacy because it is a gift of personal property by virtue of a will. (Art. 782, New Civil Code) As said donation is a donation mortis causa , which means that the donation will take effect after the death of your client (Art. 783, Ibid), it is not the kind of donation contemplated in Section 108 of the Tax Code. It has been held that a gift tax is an excise tax imposed on the transfer of property by way of gift inter vivos . (Lladoc vs. Commissioner, G.R. No. L-19201, June 16, 1965) The donation in question not being a gift inter vivos, the tax exemption provisions of Section 112(a)(3) of the Tax Code does not apply thereto. Since the donation takes effect after your client's death, the donated properties shall be considered part of the gross estate of your client for estate tax purposes. (Sec. 88(b), Tax Code), and therefore, subject to the estate tax prescribed by Section 85 of the same Code, as amended by Presidential Decree No. 69. Even assuming that the donee (Archdiocese of Manila) has guaranteed unequivocally that the beneficiary of the donation is the Catholic Charities of the Archdiocese, the fact remains that the Archdiocese is still the donee, a religious institution which is not a qualified donee or legatee within the purview of Presidential Decree No. 507, and therefore, it cannot avail of the exemption provided for in the aforesaid decree. cd