BIR Ruling [DA-177-97]

April 16, 1997 BIR RULING [DA-177-97] Unlad Resources Development Corporation No. 1665 Taft Avenue, Malate Manila Attention: Mr. Oscar F. Tirona Chairman Gentlemen : This refers to your letter requesting in effect for a ruling that the donation of two (2) parcels of land in favor of the Philippine Women's University is exempt from the payment of donor's tax under Section 94 (a) (3) of the Tax Code, as amended; and that for income tax purposes, said donations are deductible in full from the gross income of the donor under Section 29 (h) (2) (C) of the same Code. It is represented that Philippine Women's University, is a non-stock, non-profit educational institution, organized and existing under the laws of the Philippines; that it has been issued a Certificate of Registration by the BIR as a donee institution under Registration No. 1121 dated July 1, 1987; that the donor, Unlad Resources Development Corporation is a corporation organized and existing under and by virtue of the laws of the Philippines; that it is the absolute and registered owners of two (2) parcels of land situated in Manila, herein described as follows: TCT No. Area Location 99147 1,141.84 sq. m. Manila 99150 699.88 sq. m. Manila that it was the intention of the founders/organizers of both donor and donee that the above-described properties together with the buildings and improvements thereon should belong to and be for the use of the donee; that the title to the above-described properties together with the buildings and improvements thereon were reposed in the name of the donor, but the physical and actual use thereof had since the beginning been with the donee; that to give full effect to the founders/organizers wishes the donor on December 23, 1969 executed a Deed of Donation with conditions; that under the circumstances prevailing at the time it was not prudent to transfer the above-described real property, the deed executed covered only the buildings and improvements thereon; that on February 7, 1994 and March 15, 1993 respectively, the parties hereto in order to carry out and give full effect to their founders/organizers wishes have agreed to transfer by way of donation in favor of the donee, its successors and assigns all its rights, interests which the donor has over the above-described properties and that the donee has accepted and received the donated properties exclusively for educational purposes. acEHSI In reply, please be informed that pursuant to Section 94 (a) (3) of the Tax Code, as amended, 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 shall be exempt from the donor's tax, provided, however, that not more than thirty per centum (30) of said gifts shall be used by such donee for administration purposes. Such being the case, since the donee is a non-stock, non-profit educational institution organized for educational purposes, the donation made in its favor by the Company is exempt from the payment of donor's tax pursuant to Section 94 (a) (3) of the Tax Code, as amended, provided that not more than thirty per centum (30%) of said gifts shall be used by the donee for administration purposes. Section 29 (h) (2) (C) of the Tax Code, as amended by Batas Pambansa Blg. 45, and as implemented by BIR-NEDA Regulations No. 1-81, as amended provides that donations to a private foundation which means a non-profit domestic corporation organized and operated exclusively for scientific, research, educational, character building and youth and sports development, health, social welfare, cultural or charitable purposes or a combination thereof, no part of the net income of which inures to the benefit of any private individual shall be deductible in full from the taxable business income of the donor. Accordingly, for income tax purposes, the donation of the aforementioned parcels of land in favor of the Philippine Women's University shall be deductible in full from the taxable business income of the corporate donor, Unlad Resources Development Corporation. (BIR Ruling No. S-26-362-94; UN055-95 dated February 8, 1995; UN023-95 dated January 11, 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. aDSHCc Very truly yours, ALICIA P. CLEMENO Assistant Commissioner Legal Service By: (SGD.) ALICIA L. TOMACRUZ Head Revenue Executive Assistant Legal Service