BIR Ruling No. 205-11

July 1, 2011 BIR RULING NO. 205-11 Article 725 of the New Civil Code; Bromley vs. McCaughn, 280 U.S. 124 WWF-Philippines JBD Plaza, # 65 Mindanao Avenue Bagong Pag-asa, Quezon City Attention: Jose Maria Lorezo Tan CEO and Vice Chairman Gentlemen : This refers to your letter dated 11 March 2011, requesting for a confirmation of your opinion that WWF-Philippines may not issue a certificate of donation to Cebu Air, Inc., operating as Cebu Pacific Air. The antecedent facts as represented are as follows: Cebu Pacific Air has a program where they encourage their passengers to fly responsibly and make voluntary donations to the WWF's climate adaptation programs in Mindoro and Palawan. The amount donated is commensurate to the carbon miles each individual passenger generates from their air travel. Cebu Pacific Air accumulates these voluntary donations from their passengers, and remits a monthly amount to WWF-Philippines based on what has been donated. In reply, please be informed that Article 725 of the New Civil Code, in defining the act of donation, provides, viz.: Article 725. Donation is an act of liberality whereby a person (donor) disposes gratuitously of a thing or right in favor of another (donee). In the case of Bromley vs. McCaughn, 280 U.S. 124 , the nature of Donor's Tax or Gift Tax was defined not as a property tax but as an excise tax on the privilege of the owner to give. ISHaCD In the case of the amounts donated to the WWF's climate adaptation programs in Mindoro and Palawan, the ownership and the act of gratuitous disposal thereof in favor of WWF-Philippines, pertains to and is exercised by the individual passengers of Cebu Pacific Air. The individual passengers therefore are the donors as defined by Article 725 of the New Civil Code. Cebu Pacific Air is merely the medium upon which the donations from its individual passengers are channeled, and therefore not entitled to a certificate of donation. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue