BIR Ruling No. 108-84

June 19, 1984 BIR RULING NO. 108-84 123 (a) (3)-130-82-108-84 Gentlemen : This refers to your letter dated August 26, 1983 stating that La Protection de la Infancia, Inc., known for its charitable and philanthropic work under the name of "Gota de Leche" is a tax-exempt corporation under Section 27(e) of the National Internal Revenue Code; that said corporation is registered as a donee institution in accordance with the provisions of BIR-NEDA Regulations No. 1-81 as amended by BIR-NEDA Regulations No. 1-82 implementing paragraph (h) of Section 30 of the Tax Code, as amended by Batas Pambansa Blg. 45; that you are presently running the Manila Children's and Lying-Inn Hospital; that the Shell Company of the Philippines, Ltd., intends to donate a 437.8 sq. meters of land for purposes of the expansion of your hospital. In connection therewith, you request a ruling on the following: 1. The donation of the lot to your firm is exempt from the donor's tax and the corresponding deductions from the donor's taxable income shall be the value appearing in the assessor's latest tax declaration; and 2. The difference between acquisition cost and current value of the property as determined by the assessor will not be treated as income to the prospective donor and therefor exempt from income tax. In reply, please be informed as follows: 1. Since you are a charitable-religious institution, donations made in your favor are exempt from the payment of donor's gift tax pursuant to Section 123(a)(3) of the Tax Code as amended. However, the exemption from donor's gift tax is subject to the condition that not more than 30% of the donation shall be used by the donee for administration purposes. Moreover, since your institution/corporation is registered with this Office as a qualified donee institution under Certificate of Registration No. 0124 dated August 1, 1983, donations and/or contributions made in your favor are deductible in full in computing the taxable net income of the donor-contributor pursuant to Section 30(h) of the Tax Code as amended by Batas Pambansa Blg. 45 and implemented by BIR-NEDA Regulations No. 1-81 as amended by Revenue Regulations No. 1-82 and 10-82. With regard to valuation of the aforementioned gifts, Section 124 of the Tax Code as amended provides that the valuation of real property given as gifts shall be either (a) the correct and fair market value as shown in the schedule of values fixed by the Provincial and City Assessor or (b) the fair market value as determined by the Commissioner of Internal Revenue, whichever is higher. 2. Considering that the donor will not derive any income as a result of the aforesaid donation, the donor is not therefore subject to any income tax. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner