Tax Consequence of a Proposed Donation

July 4, 1989 BIR RULING NO. 135-89 98 025-89 135-89 Gentlemen : This refers to your letter dated May 30, 1989 requesting confirmation of your opinion to the effect that the proposed donation to be made by Mrs. Consuelo Zobel Alger, an American citizen residing in the State of Hawaii U.S.A., of her 1,000 shares (Class "B") of the capital stock of Ayala Corporation in favor of a US registered non-profit and non-stock foundation duly organized for humanitarian and charitable purposes is not subject to donor's tax. In reply thereto, please be informed that under Section 98 of the Tax Code, as amended, where the donor was a non-resident alien at the time of the donation, his real and personal property so transferred but which are situated outside the Philippines shall not be included as part of his gross gift. Shares issued by a domestic corporation shall be considered as situated in the Philippines. Accordingly, since the contemplated donation would consist of shares of stock of Ayala Corporation, a domestic corporation, it is, therefore, subject to the donor's tax. However, no donor's tax shall be imposed and collected on the donation of intangible personal property, like the domestic shares adverted to in your inquiry, if the donor at the time of the donation was a citizen and resident of a foreign country which at the time of his donation did not impose a transfer tax of any character in respect of intangible personal property of citizens of the Philippines not residing in that foreign country, or if the laws of the foreign country of which the donor was a citizen and resident at the time of his donation allow a similar exemption from transfer taxes of every character or description in respect of intangible personal property owned by citizens of the Philippines not residing in that foreign country. cd Very truly yours, (SGD.) JOSE U. ONG Commissioner