De Guzman Celis & Dionisio Law Offices

February 1, 2008 BIR RULING [DA-067-08] Section 101 (A) (3) De Guzman Celis & Dionisio Law Offices Suite C, 15th Floor, Strata 2000 Building F. Ortigas Jr. Road Ortigas Center, Pasig City Attention: Ms. Amalia E. Dionisio Gentlemen : This refers to your letter dated January 16, 2008 requesting on behalf of your client, The Philippine Foundation of Blessed Mary Mother of the Poor, Inc. ("PFBMMP" for brevity) for confirmation of your opinion that the donation to be made by Anzal Realty Corporation ("ARC" for brevity) in favor of PFBMMP is exempt from donor's tax. As represented, PFBMMP is a non-stock, non-profit foundation registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200700325 dated September 3, 2007 with principal office located at No. 22 Don Ramon Santos Street, Phase 6-A BF Homes, Paraaque City. It is an organization of Catholic religious and lay persons founded by Father Fernando Suarez and recognized by the Archdiocese of Lipa through His Excellency, Archbishop Ramon Arguelles, and dedicated to the Mission of seeking holiness in evangelizing and working with the poor through the intercession of the Blessed Virgin Mary with the following objectives: "1. To relieve poverty by providing food and other basic supplies to persons of low income, by establishing, operating and maintaining shelters for the homeless, and by providing counseling and other similar programs to relieve poverty; aIHSEc 2. To coordinate health care and social services for people with debilitating diseases, illnesses and conditions including aging; 3. To advance and teach religious tenets, doctrines, observances and culture associated with the Roman Catholic faith; 4. To provide supervised programs intended to help the youth develop their talents and become goods citizens; 5. To respond to the cry of the poor, to provide food to hungry Christ, to provide water to thirsty Christ, to provide clothes to naked Christ, being mindful of the sick and lonely in our society today and responding to their needs within its limited resources with healing ministry within and outside the Archdiocese of Lipa when invited." On the other hand, ARC is a corporation organized under Philippine laws with office address at 802 Sanggumay Street, Ayala Alabang, Muntinlupa City. ARC will donate two (2) parcels of land covered by Transfer Certificates of Title Nos. T-202845 and T-202844 of the Registry of Deeds of Manila with a total fair market value of PhP10,489,414.00 and total zonal value of PhP10,362,820.00, together with improvements thereon, covered by Tax Declaration Nos. C-067-00042 and 00043 with a total fair market value of PhP590,400.00. ADaEIH In reply, please be informed that gifts in favor of educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited nongovernment organization, trust or philanthropic organization or research institution or organization is exempt from the payment of the donor's tax pursuant to Section 101 (A) (3) and (B) (2) of the Tax Code of 1997, subject to the condition that not more than 30% of said gift shall be used by the donee for administration purposes. Since the donee is a religious organization, the aforementioned donation of two (2) parcels of land is exempt from the payment of donor's tax pursuant to Section 101 (A) (3) of the Tax Code of 1997. Moreover, the Deed of Donation is not subject to the documentary stamp tax under Section 196 of the Tax Code of 1997 but only to the documentary stamp tax of PhP15.00 on certification under Section 188 of the same Code (BIR Ruling No. DA-123-2001 dated July 18, 2001). However, if the same property acquired by gift is subsequently conveyed by way of sale or exchange, the sale will be subject to corporate income tax on the gain realized which is determined by deducting from the gross selling price the historical cost or the adjusted basis thereof, as it would be in the hands of the donor, pursuant to Section 27 in relation to Section 101, both of the Tax Code, as amended and consequently to the creditable expanded withholding tax under Revenue Regulations No. 2.57.2 of Revenue Regulations No. 2-98, as amended. If it is donated to a nonexempt donee, the donor shall be liable for donor's tax pursuant to Section 98 in relation to Section 91 (B) of the Tax Code. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service