BIR Ruling No. 012-10

June 10, 2010 BIR RULING NO. 012-10 RA 9245; RR 13-98 & RR 2-03; 000-00 Philippine National Ear Institute National Institutes of Health-University of the Philippines Manila 2nd Floor Central Block, Philippine General Hospital Taft Avenue, Ermita, Manila 1000 Attention: Mr. Generoso T. Abes, MD, MPH Director Gentlemen : This refers to your letter dated November 11, 2009 requesting for a ruling that donations to Philippine National Ear Institute ("PNEI") are deductible in full from the taxable business income of your donors. Documents show that on February 19, 2004, Republic Act (RA) No. 9245, otherwise known as "An Act Creating the Philippine National Ear Institute within the University of the Philippines System, Defining its Powers and Functions, Providing Funds Therefor and for Other Purposes," was signed by President Gloria Macapagal-Arroyo. It created PNEI within the National Institutes of Health, University of the Philippines. PNEI shall basically be involved in research activities. Its training, teaching and service activities are only complementary functions and must be carried out in the pursuit of research. In reply, please be informed that Section 9 of RA 9245 provides "Sec. 9. Exemptions from Taxes . Any provision of existing law to the contrary notwithstanding, all donations, contributions, endowments, subsidies or financial aids shall be exempt from income and gift taxes and shall constitute allowable deduction in full from the income of the donors. DCASIT xxx xxx xxx" Based on the foregoing, this Office is of the opinion as it hereby holds that contributions and donations in favor of PNEI shall be deductible in full from the taxable business income of its donors. However, pure compensation income earners are allowed to deduct from their gross compensation income only their personal and additional exemptions as well as their premium payments on health and/or hospitalization insurance pursuant to Sections 34 and 34 (M) of the Tax Code of 1997, respectively (BIR Ruling No. S-30-054-97 dated June 24, 1997). Such being the case, for income tax purposes, contributions and donations in favor of PNEI by individual donors/contributors earning fixed compensation income shall not be deductible from their gross income. For every donation or gift it receives, the donee shall issue in triplicate the proper Certificate of Donation (COD) within thirty (30) days after the receipt of the donation. The donee shall furnish the donor and the Revenue District Office (RDO) having jurisdiction over it (donee) one copy each of the COD and keep the last copy for itself. On the part of the donor and for purposes of full deductibility from his/its taxable business income, the donor should notify within thirty (30) days from receipt of the COD, the RDO where his/its place of business is located, of donations worth Fifty Thousand Pesos (P50,000) which he/it made. 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. cSTHaE Very truly yours, (SGD.) JOEL L. TAN-TORRES Commissioner of Internal Revenue