TITLE III money or money’s worth.
SEC. 101. Exemption of Certain Gifts. - The
CHAPTER II
DONOR'S TAX
*Font in red are those marked as “xxx” in R.A.
10963
SEC. 98. Imposition of Tax. -
(A) There shall be levied, assessed, collected and
paid upon the transfer by any person, resident or
nonresident, of the property by gift, a tax,
computed as provided in Section 99.
(B) The tax shall apply whether the transfer is in
trust or otherwise, whether the gift is direct or
indirect, and whether the property is real or
personal, tangible or intangible.
SEC. 99. Rates of Tax Payable by Donor. -
A) In General.— The tax for each calendar year
shall be six percent (6%) computed on the basis of
the total gifts in excess of Two hundred fifty
thousand pesos (₱250,000) exempt gift made
during the calendar year.
*No more provision on Tax Payable by Donor if
Donee is a Stranger
(B) Any contribution in cash or in kind to any
candidate, political party or coalition of parties for
campaign purposes shall be governed by the
Election Code, as amended.
SEC. 100. Transfer for Less Than Adequate and
Full Consideration. - Where property, other than
real property referred to in Section 24(D), is
transferred for less than an adequate and full
consideration in money or money’s worth, then
the amount by which the fair market value of the
property exceeded the value of the consideration
shall, for the purpose of the tax imposed by this
Chapter, be deemed a gift, and shall be included in
computing the amount of gifts made during the
calendar year: Provided, however, That a sale,
exchange, or other transfer of property made in
the ordinary course of business (a transaction
which is a bona fide, at arm’s length, and free
from any donative intent), will be considered as
made for an adequate and full consideration in
following gifts or donations shall be exempt from
the tax provided for in this Chapter:
(A) In the Case of Gifts Made by a Resident. -
(1) Gifts made to or for the use of the National
Government or any entity created by any of its
agencies which is not conducted for profit, or to
any political subdivision of the said Government;
and
(2) Gifts in favor of an educational and/or
charitable, religious, cultural or social welfare
corporation, institution, accredited nongovernment
organization, trust or philanthropic organization or
research institution or organization:
Provided, however, That not more than thirty
percent (30%) of said gifts shall be used by such
donee for administration purposes. For the
purpose of this exemption, a ‘non-profit
educational and/or charitable corporation,
institution, accredited nongovernment
organization, trust or philanthropic organization
and/or research institution or organization’ is a
school, college or university and/or charitable
corporation, accredited nongovernment
organization, trust or philanthropic organization
and/ or research institution or organization,
incorporated as a nonstock entity, paying no
dividends, governed by trustees who receive no
compensation, and devoting all its income,
whether students’ fees or gifts, donation, subsidies
or other forms of philanthropy, to the
accomplishment and promotion of the purposes
enumerated in its Articles of Incorporation.
(3) Gifts in favor of an educational and/or
charitable, religious, cultural or social welfare
corporation, institution, accredited nongovernment
organization, trust or philanthropic organization or
research institution or organization: Provided,
however, That not more than thirty percent (30%)
of said gifts shall be used by such donee for
administration purposes. For the purpose of the
exemption, a 'non-profit educational and/or
charitable corporation, institution, accredited
nongovernment organization, trust or
philanthropic organization and/or research
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institution or organization' is a school, college or
university and/or charitable corporation,
accredited nongovernment organization, trust or
philanthropic organization and/or research
institution or organization, incorporated as a
nonstock entity, paying no dividends, governed by
trustees who receive no compensation, and
devoting all its income, whether students' fees or
gifts, donation, subsidies or other forms of
philanthropy, to the accomplishment and
promotion of the purposes enumerated in its
Articles of Incorporation.
(B) In the Case of Gifts Made by a Nonresident
Not a Citizen of the Philippines. -
(1) Gifts made to or for the use of the National
Government or any entity created by any of its
agencies which is not conducted for profit, or to
any political subdivision of the said Government.
(2) Gifts in favor of an educational and/or
charitable, religious, cultural or social welfare
corporation, institution, foundation, trust or
philanthropic organization or research institution
or organization: Provided, however, That not
more than thirty percent (30%) of said gifts shall
be used by such donee for administration
purposes.
(C) Tax Credit for Donor's Taxes Paid to a
Foreign Country. -
(1) In General. - The tax imposed by this Title
upon a donor who was a citizen or a resident at the
time of donation shall be credited with the amount
of any donor's tax of any character and description
imposed by the authority of a foreign country.
(2) Limitations on Credit. - The amount of the
credit taken under this Section shall be subject to
each of the following limitations:
(a) The amount of the credit in respect to the tax
paid to any country shall not exceed the same
proportion of the tax against which such credit is
taken, which the net gifts situated within such
country taxable under this Title bears to his entire
net gifts; and
(b) The total amount of the credit shall not exceed
the same proportion of the tax against which such
credit is taken, which the donor's net gifts situated
outside the Philippines taxable under this title
bears to his entire net gifts.
SEC. 102. Valuation of Gifts Made in Property. -
If the gift is made in property, the fair market
value thereof at the time of the gift shall be
considered the amount of the gift. In case of real
property, the provisions of Section 88(B) shall
apply to the valuation thereof.
SEC. 103. Filing of Return and Payment of Tax.
-
(A) Requirements.- any individual who makes
any transfer by gift (except those which, under
Section 101, are exempt from the tax provided for
in this Chapter) shall, for the purpose of the said
tax, make a return under oath in duplicate. The
return shall se forth:
(1) Each gift made during the calendar year
which is to be included in computing net gifts;
(2) The deductions claimed and allowable;
(3) Any previous net gifts made during the same
calendar year;
(4) The name of the donee; and
(5) Such further information as may be required
by rules and regulations made pursuant to law.
(B) Time and Place of Filing and Payment. -
The return of the donor required in this Section
shall be filed within thirty (30) days after the date
the gift is made and the tax due thereon shall be
paid at the time of filing. Except in cases where
the Commissioner otherwise permits, the return
shall be filed and the tax paid to an authorized
agent bank, the Revenue District Officer, Revenue
Collection Officer or duly authorized Treasurer of
the city or municipality where the donor was
domiciled at the time of the transfer, or if there be
no legal residence in the Philippines, with the
Office of the Commissioner. In the case of gifts
made by a nonresident, the return may be filed
with the Philippine Embassy or Consulate in the
country where he is domiciled at the time of the
transfer, or directly with the Office of the
Commissioner.
SEC. 104. Definitions. - For purposes of this
Title, the terms "gross estate"and "gifts" include
real and personal property, whether tangible or
intangible, or mixed, wherever situated: Provided,
however, That where the decedent or donor was a
nonresident alien at the time of his death or
donation, as the case may be, his real and personal
property so transferred but which are situated
outside the Philippines shall not be included as
part of his "gross estate" or "gross gift":
Edited by Cid Benedict D. Pabalan 2
Provided, further, That franchise which must be
exercised in the Philippines; shares, obligations or
bonds issued by any corporation or sociedad
anonima organized or constituted in the
Philippines in accordance with its laws; shares,
obligations or bonds by any foreign corporation
eighty-five percent (85%) of the business of which
is located in the Philippines; shares, obligations or
bonds issued by any foreign corporation if such
shares, obligations or bonds have acquired a
business situs in the Philippines; shares or rights
in any partnership, business or industry
established in the Philippines, shall be considered
as situated in the Philippines: Provided, still
further, that no tax shall be collected under this
Title in respect of intangible personal property: (a)
if the decedent at the time of his death or the
donor at the time of the donation was a citizen and
resident of a foreign country which at the time of
his death or donation did not impose a transfer tax
of any character, in respect of intangible personal
property of citizens of the Philippines not residing
in that foreign country, or (b) if the laws of the
foreign country of which the decedent or donor
was a citizen and resident at the time of his death
or donation allows a similar exemption from
transfer or death taxes of every character or
description in respect of intangible personal
property owned by citizens of the Philippines not
residing in that foreign country.

The term "deficiency" means: (a) the amount by

which tax imposed by this Chapter exceeds the
amount shown as the tax by the donor upon his
return; but the amount so shown on the return
shall first be increased by the amount previously
assessed (or collected without assessment) as a
deficiency, and decreased by the amounts
previously abated, refunded or otherwise repaid in
respect of such tax, or (b) if no amount is shown
as the tax by the donor, then the amount by which
the tax exceeds the amounts previously assessed,
(or collected without assessment) as a deficiency,
but such amounts previously assessed, or collected
without assessment, shall first be decreased by the
amount previously abated, refunded or otherwise
repaid in respect of such tax.
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Edited by Cid Benedict D. Pabalan 3