BIR Ruling [DA-144-96]

April 10, 1996 BIR RULING [DA-144-96] China Banking Corporation Paseo de Roxas cor. Villar St., Makati City Attention: Mr. Peter S. Dee President & CEO Gentlemen : This refers to your letter dated December 6, 1995 requesting for a ruling that the intended donation of a parcel of land to the City Government of Pasig, is exempt from the payment of donor's tax pursuant to Section 94 (a) (2) of the Tax Code, as amended and that donation to it shall be deductible from the gross income of the intended donor based on the assessed value of P2,500.00 per square meter pursuant to Section 29 (h) (1) of the same Code. It is represented that China Banking Corporation (CBC), a corporation organized and existing under the laws of the Philippines, is the absolute owner of a parcel of land classified as road lot situated in Carlaville Subdivision, Santolan, Pasig City, with an area of 2,597 square meters and covered by TCT No. 46970, T-235/170 of the Registry of Deeds of Pasig; that CBC will transfer and convey the above-mentioned road lot to the City Government of Pasig by way of donation; and that the donee will assume all the expenses necessary for the transfer of title over the said road lot. In reply, please be informed that pursuant to Section 39 (h) (1) of the Tax Code, as amended, contributions or gifts actually paid or made within the taxable year to, or for the use of the Government of the Philippines or any of its agencies or any political subdivision thereof for exclusively public purposes, shall be deductible from the gross income of the donor to the extent of 3% of its taxable income derived from business as computed without the benefit of this and other deductions. Accordingly, this Office hereby confirms your opinion that donation to the City Government of Pasig being a donation to a political subdivision, is deductible from the gross income of China Banking Corporation to the extent of 3% of its taxable income as computed without the benefit of this and other deductions. ACcHIa Moreover, the said intended donation being a donation by a resident in favor of the Government, the same is exempt from the donor's tax imposed under Section 91 of the Tax Code pursuant to Section 94 (a) (2) of the same Code. (BIR Ruling No. 239-94 dated August 12, 1994; UN328-95 dated September 12, 1995) 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, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: (SGD.) ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)