E.M. Cruz & Associates

February 20, 2008 BIR RULING [DA-102-08] Section 30 E.M. Cruz & Associates Rm. 7, 2/F Japitana Bldg., Champaca St. San Vicente, Tarlac City Attention: Atty. Eliseo M. Cruz Gentlemen : This refers to your letter dated January 23, 2008 requesting on behalf of Sps. Rodolfo P. Aglibot and Fideliza J. Aglibot for exemption from the payment of donor's tax on the transfer of their real properties in favor of Bestcap Colleges, Inc. As represented, Bestcap Career College, Inc. is a non-stock, non-profit educational institution registered with the Securities and Exchange Commission (SEC) under SEC Registration No. A199912914. The primary purpose for which it was organized is " (t)o establish and operate an educational institution or learning center which shall provide courses of study in Pre-elementary, Primary, Elementary, High School and College Education and Post Graduate Studies subject to the laws of the Philippines ." On January 23, 2008, Sps. Rodolfo P. Aglibot and Fideliza J. Aglibot with address at Malacampa, Camiling, Tarlac executed a Deed of Donation transferring in favor of Bestcap Career College, Inc. certain parcels of land owned by them situated in Malacampa, Camiling, Tarlac and covered by Transfer Certificates of Title (TCT) No. 311083, 325122, 310323 and 312908, each containing an area of 1,200 square meters. cSICHD In reply, please be informed that donation to educational institutions is exempt from the payment of donor's tax pursuant to Section 101 (A) (3) of the Tax Code of 1997, as amended subject to the condition that not more than thirty percent (30%) of said gift shall be used for administration purposes. 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, 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 non-exempt donee, the donor shall be liable for donor's tax pursuant to Section 98. EIaDHS 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 his ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service