Taxability of the Proposed Donation

November 20, 1989 BIR RULING NO. 231-89 94 (a) (3) 067-89 231-89 Gentlemen : This refers to your letter dated September 26, 1989 requesting a ruling on the taxability of the proposed donation by Parents for Education Foundation, Inc. (PAREF) in favor of PAREF-Southridge School, Inc. consisting of three (3) parcels of land located at Barrio Cupang, Greenfield Subdivision, Muntinlupa, Rizal, together with the improvements thereon, with the condition that the donee would assume the mortgage constituted on said property in favor of BPI-Family Bank. cdt It is represented that PAREF-Southridge School, Inc. is a non-stock, non-profit corporation as expressly provided for in its Articles of Incorporation, viz: "That this Corporation shall have no shares or corporate stocks, and no dividend or pecuniary profit whatsoever shall ever be declared or paid to any member or trustee; that all fees, charges, contributions, bequests, or donations collected or received shall be spent solely for such purposes as may enable the Corporation to carry out the objectives for which it is established; and that the Trustees shall receive no remuneration or compensation absolutely but shall serve as an act of benevolence and civic duty." That the purposes for which the corporation is formed are, among others; to establish, maintain, operate and administer a school/s for boys of any nationality, providing therein instruction in the primary, intermediate and high school levels, as well as other allied cultural, vocational and human development courses as may contribute to the well-rounded formation and development of the students; to promote the training of qualified young men for assistance in the development of self-help community projects; to finance the scholarship of highly deserving students and/or establish and maintain professional chairs in such fields of sciences as may be necessary or essential to Philippine development; to help finance such community development and educational research programs as would address themselves to meeting specific human needs, with the end in view of promoting and improving the living conditions of the people, etc. In reply, please be informed that gifts made in favor of a non-stock and non-profit educational institution within the contemplation of Section 94(a)(3) of the Tax Code, as amended, are exempt from the donor's tax provided that not more than thirty per centum of said gifts shall be used by such donee for administration purposes. Considering that the donee, PAREF-Southridge School, Inc. is a non-stock, and non-profit educational institution, the aforementioned donation is exempt from the payment of the donor's tax. Very truly yours, (SGD.) VICTOR A. DEOFERIO, JR. Deputy Commissioner