Taxability of Donations, Bequests, or Gifts Made to the La Infanta Filipina Galleon Project

February 8, 1990 BIR RULING NO. 015-90 94 (a) (3) 29 (b) (2) (c) 222-89 015-90 Gentlemen : This refers to your letter dated January 23, 1990 in effect, requesting a ruling on the taxability of donations, bequests, or gifts made to the La Infanta Filipina Galleon Project of the Manila Galleon Commemorative Foundation. You represented that the Manila Galleon Commemorative Foundation has been authorized under Presidential Proclamation No. 513, signed by Pres. Corazon Aquino on January 8, 1990, to conduct a nationwide educational membership and fund raising campaign up to August 31, 1992; that the Foundation will launch the Infanta Filipina Galleon Project on April 1, 1990 which would promote Philippine products and serve as the country's future trade, tourism and cultural pavilion at the World Expo '92 in Seville, Spain; that pursuant to Pres. Proc. No. 513 all donations, bequests, gifts received by the Manila Galleon Commemorative Foundation, Inc. for the implementation of its programs and activities shall be free from all forms of taxes and shall be deductible in full from the income of the donor for purposes of computing his income tax liability, subject to the pertinent provisions of Section 94 (a)(3) and (b)(3) and 29(h) (2)(c)(i) of the National Internal Revenue Code, as amended; that the Manila Galleon Commemorative Foundation, Inc. has been established as a private non-profit, non-governmental organization to promote Philippine trade and culture, among other things. In reply, please be informed that gifts made in favor of a non-stock and non-profit cultural foundation within the contemplation of Section 94(a)(3) and (b)(2) of the Tax Code as amended, are exempt from the donor's tax provided that not more than thirty per centum (30%) of said gifts shall be used by the donee for administration purposes. Considering that the donee, Manila Galleon Commemorative Foundation, is a non-stock and non-profit cultural foundation, then the donations, bequests, or gifts made in its favor are exempt from the payment of donor's tax. As regards the deductibility of the donations for income tax purposes, pursuant to Section 29(h)(2)(C)(i) of the Tax Code as amended, donations shall be deductible in full from the donor's income when made in favor of a private foundation 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. Manila Galleon Commemorative Foundation, is a non-profit private foundation within the contemplation of Section 29(R) (2) (C) (i) of the Tax Code as amended; thus, the donations made in its favor are deductible in full from the income of the donor for purposes of computing his income tax liability: Provided, that not later than the 15th day of the third month after the close of the foundation's taxable year in which contributions are received, it makes utilization directly for the active conduct of the activities constituting the purpose or function for which it is organized and operated, unless an extended period is granted, and that the level of administrative expense shall in no case exceed thirty percent (30%) of total expenses. Provided, further , that the assets of the foundation shall, in case of dissolution, be distributed to another non-profit domestic corporation organized for similar purpose or purposes or to the state for public purpose [Section 29(h)(2)(C)(ii) & (iii)]. Very truly yours, (SGD.) JOSE U. ONG Commissioner