Donations from Abroad to a Non-stock Non-profit Educational Institution are Exempt from Compensating Tax

October 29, 1987 BIR RULING NO. 330-87 169 237-87 330-87 Gentlemen : This refers to your letter dated October 22, 1987, in effect, requesting that the following donations from abroad in your favor: "1) Various laboratory equipment, supplies and books from the Christian Brothers of St. Paul and Minneapolis District and by the University of Cincinnati; and "2) Eighty boxes of books from the Brothers of Saint Mary's College." be exempt from compensating tax. Documentary evidence submitted show that you are a non-stock, non-profit educational institution; and that the shipment of the articles described under B/L 009906 and B/L 91638 consists of laboratory equipment, supplies and assorted books, which, as represented, will be used actually, directly and exclusively for educational purposes. In reply, please be informed that pursuant to paragraph 3, Section 4, Article XIV of the 1987 Constitution reading: "(3) All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties. . . ." the aforementioned donations from abroad shall be exempt from compensating tax prescribed under Section 169 of the Tax Code, as amended. This serves as a certification authorizing you to secure their release from custom's custody without the payment of compensating tax. However, in case any of the aforesaid articles are subsequently sold, transferred or exchanged in the Philippines to non-exempt persons or entities, the purchasers or recipients shall be considered the importers thereof, in which case, they shall be liable for the compensating tax on such importation. (last paragraph, Sec. 169, Tax Code as amended by Executive Order No. 36) With respect to your inquiry as to the exemption from duties of the above shipments/donations, the same should be referred to the Bureau of Customs which has jurisdiction on the matter. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner