BIR Ruling [DA-178-00]

March 27, 2000 BIR RULING [DA-178-00] S101 (A) (3) 011-94 DA-178-2000 F.E. Maravilla & Co. No. 4 Locsin St., BF Homes Quezon City Attention: Ms . Gloria Maravilla-Jalbuena Managing Partner Gentlemen : This refers to your letter dated December 16, 1999 requesting in behalf of your client, Mercedes R. Lichauco for an exemption from the payment of donor's tax on her donation of a parcel of land including all improvements thereon, in favor of E.R.L. Foundation Inc . pursuant to Section 101(A)(3) of the Tax Code of 1997. It is represented that E.R.L. Foundation Inc . (formerly known as ERL Foundation, Inc.) is a non-stock, non-profit domestic corporation duly registered with the Securities and Exchange Commission under SEC Registration No. 109729 dated January 28, 1983; that it is also registered with the BIR as a Donee Institution under Certificate of Registration No. 0085 dated May 17, 1983; that on November 10, 1999, Mercedes R. Lichauco donated her one-half () pro-indiviso share in a parcel of land with all improvements thereon located at No. 2319 Morado, Dasmarias Village, Makati City and covered by TCT No. S-49749 issued by the Registry of Deeds for Metro Manila, District IV; that the foregoing property has the following zonal/market value: Property (TCT No.) Tax Decl. No. Zonal Valuation Lot located in Dasmarias Village, Makati City S-49749 (566.5 sq. m.) 2-004-00282 P19,827,500.00 Improvements on Lot w/ TCT No. S-49749 2-004-00283 331,030.00 TOTAL P20,158,530.00 and that in support of your request, you submitted to this Office the following documents: 1. Deed of Donation 2. Articles of Incorporation al By-Laws of E.R.L. Foundation, Inc.; 3. Transfer Certificate of Title; 4. Tax Declaration; 5. Certification of the zonal valuation of the property; 6. Special Meeting of the members authorizing the Board of Trustees to accept donation; 7. Application for Registration as Donee Institution/Certificate of Registration; 8. Financial Statements of E.R.L. Foundation, Inc. as of Dec. 31, 1998; and 9. General Information Sheet filed with SEC in 1999. In reply thereto, please be informed that pursuant to Section 3(3) of Revenue Regulations No. 13-98, donations and gifts made in favor of accredited non-stock non profit corporations/NGOs shall be exempt from the donor's tax: Provided, however, That not more than 30% of the said donations and gifts for the taxable year shall be used by such accredited non-stock, non-profit corporations/NGO's institutions/qualified-donee institutions for administration purposes pursuant to the provisions of Section 101 (A)(3) and (B)(2) of the Tax Code of 1997. For purposes of exemption from the donor's tax, donee institutions are certified NGOs and domestic non-stock, non-profit corporations and associations organized and operated exclusively for religious, charitable, scientific, youth and sports development, cultural or educational purposes, or for rehabilitation of veterans no part of the net income of which inures to the benefit of any private individual. However, existing non-stock, non-profit corporations/NGOs which have qualified as donee institutions or are registered as Donee Institutions pursuant to the provisions of Batas Pambansa Blg. 45, as implemented by BIR-NEDA Regulations No, 1-81, as amended, may continue to enjoy such status for three (3) years after the effectivity of Revenue Regulations No. 13-98 on January 1, 1999, after which time the status of said non-stock, non-profit corporations as donee institutions shall be revoked unless said entities shall apply to and be accredited by the PCNC for registration with this Office. Based on the foregoing, the donation by your client, Mercedes R. Lichauco , to E.R.L. Foundation, Inc., a registered donee institution pursuant to the provisions of Batas Pambansa Blg. 45, as implemented by BIR-NEDA Regulations No, 1-81, as amended, is exempt from the payment of donor's tax pursuant to Section 101 (A)(3) of the Tax Code of 1997, provided, however, that all the conditions set forth in Revenue Regulations No. 13-98 are duly complied with. Moreover, the Deed of Donation is not subject to documentary stamp tax prescribed under Section 196 of the Tax Code of 1997, but only to the documentary stamp tax of P15.00 imposed under Section 188 of the same 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, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)