Tax Exemption of the Transfer of a Motor Vehicle by Way of Donation

December 28, 1992 BIR RULING NO. 376-92 94 (a) (b) 252-92 376-92 Office of Protocol Department of Foreign Affairs Manila Attention: Ms . Ana Maria A . Morales Director of Protocol For Immunities and Privileges Gentlemen : This refers to Note No. 651 of the Embassy of the United States of America informing the Department of Foreign Affairs that International Catholic Migration Commission (ICMC), a non-profit international organization, which is an affiliated agency of the U.S. Mission under the Refugee Program and with office address at the 11th Floor, Ermita Center Building, 1350 Roxas Blvd., Ermita, Manila has donated a government-owned motor vehicle, a 1989 white ford fiera with Serial/Engine No. SUG5 5K-96609, to International Catholic Migration/Special Program, a Catholic Chaplaincy, with Office address at the 18th Floor, Victoria Building, 429 U.N. Avenue, Ermita, Manila, and undertaking charitable and religious activities/functions, pursuant to a Deed of Donation executed by and between ICMC/ESLCO and ICMC/Special Program on August 29, 1991. LexLib In reply, please be informed that in the case of "The Christian Missionary Alliance Churches of the Philippines vs. Collector of Internal Revenue", C.T.A. Case No. 668, promulgated August 21, 1964, the Court held that the transfer of property from one corporation to another corporation which is connected with, subordinate to and a district of local organization or branch of the transferor corporation is not subject to the gift taxes because wanting in donative intent, such transfer of property is in name only, and merely to enable the transferee corporation to better perform its obligation to administer, apply and use the said property for the same purposes for which the transferor was created. Considering that the proposed transferee is merely a Special Program of International Catholic Migration Commission, the transfer of property (ford fiera in this case is, in the light of the decision in the case of the Christian Missionary Alliance Churches of the Philippines, just "a transfer from the right hand to the left hand". Taxwise, the transfer of property by the Mother Association is not by gift which is subject to tax within the purview of the gift tax statute. In other words, the property donated would be used for the same purpose for which the mother organization was founded. In view thereof, the transfer of the ford fiera by way of donation by ICMC in favor of ICMC/special program is a transfer from the right hand to the left hand in which case, the same is exempt from donor's tax. This will serve as the authority for the Catholic Chaplaincy or the International Catholic Migration Commission/Special Program to transfer the registration certificate of the said motor vehicle in its name. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue