Section 30 NIRC

Charitable institutions
Consti and LGC – churches, convents, charitable institutions…
- Lands, buildings, improvements,
- Actually, directly and exclusively used for:
o Charitable, educational, and religious purposes
- Shall be exempt to tax (RPT only) (if not ADE, may RPT) –

NIRC (30(e) ) – related to income tax

- “Income as such.” For exemption from income tax
- If income from an activity conducted for profit – taxable (section 30 last par)
o Regardless of disposition!

Donor's tax and estate tax

- Income tax? – no – because excluded in sec 32
- Donor's tax or estate tax? – (sec 87 and 101) NO, if
o Not more than 30% of the gift used for admin purposes
- As allowable deduction of the donor? (34 (H) )
o If donor is an individual
▪ PCIE – no
▪ Professional or mixed income – up 10% of the taxable income prior to donation
o If donor is corporation
▪ Up to 5% of the taxable income prior to the donation

Religious (same rules with charitable)

Consti and LGC – churches, convents, charitable institution…
- Lands, buildings, improvements,
- Actually, directly and exclusively used for:
o Charitable, educational, and religious purposes
- Shall be exempt to tax (RPT only) (if not ADE, may RPT) –

NIRC (30(e) ) – related to income tax

- “Income as such.” For exemption from income tax
- If income from an activity conducted for profit – taxable (section 30 last par)
o Regardless of disposition!

Donors tax and estate tax

- Income tax? – no – because excluded in sec 32
- Donors tax or estate tax? – (sec 87 and 101) NO, if
o Not more than 30% of the gift used for admin purposes
- As allowable deduction of the donor? (34 (H) )
o If donor is an individual
▪ PCIE – no
▪ Professional or mixed income – up 10% of the taxable income prior to donation
 o If donor is corporation
▪ Up to 5% of the taxable income prior to the donation

Educational insitutions
Nonstock nonprofit
Consti – all revenue and assets
- ADE for educational purposes
- Exempt from taxes and duties (exempt from RPT, all internal revenue taxes, tariff and custom
duties)

Income tax
- For examples:
o Tuition fee
▪ Consti - ADE + use – exempt (CONSTI)
▪ Sec 30 – exempt (“as such”)
o Rentals commercial spaces –
▪ Consti - ADE + use – exempt (CONSTI)
▪ Sec 30 – not exempt (not as such)
o Interest from bank deposit
▪ Consti - ADE + use – exempt (CONSTI)
▪ Sec 30 last par – not exempt (because activity for income)
DLSU case clarified the conflict:
- We apply the rule in CONSTI
o All income is exempt
o Check disposition (PROVE THIS!)
▪ Should be ADE + use
- Declared sec 30 as to nonstock nonprofit educ insti as UNCONSTITUTIONAL

Donors tax and estate tax

- Income tax? – no – because excluded in sec 32
- Donors tax or estate tax? – (sec 87 and 101) NO, if
o Not more than 30% of the gift used for admin purposes
- As allowable deduction of the donor? (34 (H) )
o If donor is an individual
▪ PCIE – no
▪ Professional or mixed income – up 10% of the taxable income prior to donation
o If donor is corporation
▪ Up to 5% of the taxable income prior to the donation

Proprietary educational institution

RPT – ADE + use – exempt – LGC sec 234

Income tax (sec 27(B) of NIRC)

 - If the income from unrelated trade or activity does not exceed 50% of the its total income – use
pref rate 10%
o If exceeds – normal income tax 30%
Example:
- Tuition – “related trade or activity”
- Rentals – “unrelated trade or activity”

Donor's tax and estate tax

- Income tax? – no – because excluded in sec 32
- Donor's tax or estate tax? – (sec 87 and 101) NO, if
o Not more than 30% of the gift used for admin purposes
- As allowable deduction of the donor? (34 (H) )
o If donor is an individual
▪ PCIE – no
▪ Professional or mixed income – up 10% of the taxable income prior to donation
o If donor is corporation
▪ Up to 5% of the taxable income prior to the donation

Government educational institution

RPT – no RPT (LGC sec 234)

- Not because ADE
o “real properties owned by the Gov or any of its instrumentalities
▪ Except when the beneficial use pertains to a non- exempt entity

Income tax – sec 30 tax code (par I) – “as such” rule

- “Income as such.” For exemption from income tax
- If income from an activity conducted for profit – taxable (section 30 last par)
o Regardless of disposition!

Donors tax and estate tax

- Income tax? – no
- Donors or estate tax – NO! (No more 30% rule) sec 86 and sec 101 NIRC “transfer for public use”
- As allowable deduction of the donor?
o If donor is an individual
▪ PCIE – no
▪ Professional or mixed income –
● If declared as priority project of the GOV – deductible in FULL
● If not priority project - up 10% of the taxable income prior to donation
o If donor is corporation
● If declared as priority project of the GOV – deductible in FULL
● If not priority project - up 5% of the taxable income prior to donation
HOSPITALS

Charitable Hospitals
Same rules as charitable institution

Consti and LGC –

- Lands, buildings, improvements,
- Actually, directly and exclusively used for:
o Charitable purposes
- Shall be exempt to tax (RPT only) (if not ADE, may RPT) –

NIRC (30(e) ) – related to income tax

- “Income as such.” For exemption from income tax
- If income from an activity conducted for profit – taxable (section 30 last par)
o Regardless of disposition!

Donors tax and estate tax

- Income tax? – no – because excluded in sec 32
- Donors tax or estate tax? – (sec 87 and 101) NO, if
o Not more than 30% of the gift used for admin purposes
- As allowable deduction of the donor? (34 (H) )
o If donor is an individual
▪ PCIE – no
▪ Professional or mixed income – up 10% of the taxable income prior to donation
o If donor is corporation
▪ Up to 5% of the taxable income prior to the donation

Proprietary Hospital
(Same rules as proprietary educational institution)

RPT – ADE + use – exempt – LGC sec 234

Income tax (sec 27(B) of NIRC)

- If the income from unrelated trade or activity does not exceed 50% of the its total income – use
pref rate 10%
o If exceeds – normal income tax 30%

Donors tax and estate tax

- Income tax? – no – because excluded in sec 32
- Donors tax or estate tax? – (sec 87 and 101) NO, if
o Not more than 30% of the gift used for admin purposes
- As allowable deduction of the donor? (34 (H) )
o If donor is an individual
 ▪ PCIE – no
▪ Professional or mixed income – up 10% of the taxable income prior to donation
o If donor is corporation
▪ Up to 5% of the taxable income prior to the donation

Government
GR – cannot tax itself
Specific rules: (same rule with GOCCs)
1. Income of governmental agencies in performance of governmental function is NOT subject to
tax (sec 32 (B)(7) )
2. Income of governmental agencies in performance of PROPRIETARY function is SUBJECT TO tax

RPT - LGC – exempt from RPT

- Except if beneficial use pertains to a non exempt entity

Donors tax and estate tax

- Income tax? – no
- Donors or estate tax – NO! (No more 30% rule) sec 86 and sec 101 NIRC “transfer for public use”
- As allowable deduction of the donor?
o If donor is an individual
▪ PCIE – no
▪ Professional or mixed income –
● If declared as priority project of the GOV – deductible in FULL
● If not priority project - up 10% of the taxable income prior to donation
o If donor is corporation
● If declared as priority project of the GOV – deductible in FULL
● If not priority project - up 5% of the taxable income prior to donation