BIR Ruling [DA-229-04]

April 29, 2004 BIR RULING [DA-229-04] Section 101 (A) (3); BIR Ruling No. 108-94 & DA-28-98 Missionary Sisters of St. Charles (Scalabrinians Sisters), Inc. #1 Omega Corner Timex Sts. West Fairview, Quezon City Attention: Sr. Marciana Zambiasi Local Superior Gentlemen : This refers to your request for exemption from the payment of taxes for the goods/foodstuff shipped from Canada intended for children beneficiaries of your religious and charitable institution indorsed to this Office by Department of the Interior and Local Government Secretary Jose D. Lina, Jr. on September 11, 2003. aSAHCE Documents show that Missionary Sisters of St. Charles (Scalabrinians Sisters), Inc. is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. 150508 issued on April 21, 1988; that the purpose of which the corporation is formed is to provide evangelical and missionary service to the migrants, especially the poor ones and those in need; that this mission is realized through catechesis, Christian education, pastoral care of the sick and social service; that the corporation shall be maintained through grants, donations, and that no part of its net income shall inure to the benefit of any private individual or member; that it is also registered with the Department of Social Welfare and Development (DSWD) under DSWD Registration Certificate No. NCR-2003-R-157; that it is exempt from income tax under unnumbered BIR ruling dated June 16, 1997; and that on August 14, 2003, Canadian Food for Children (La Nourriture du Canada pour les Enfants), a corporation organized and existing under and by virtue of the laws of The Province of Ontario, with principal office at 40 King Georges Rd. Toronto Canada, executed a Deed of Donation in favor of Sr. Marciana Zambiasi, Missionary Sisters of St. Charles Scalabrinians donating "charitable relief foods" consisting of the following: 45 bags of split peas, 30 bags of wheat flour, 72 cases of cereal, 75 pails of dried cereal, 1 large bag of soap powder, 8 cases of vegetable oil, 319 cases of biscuits, 53 cases of food sauce, 12 boxes of toys, 15 boxes of school supplies, 8 walkers, 4 wheelchairs and 4 bicycles amounting to Canadian $1,986.00. In reply, please be informed that inasmuch as the donee is a religious and charitable institution, the aforementioned donation is exempt from the payment of the donor's tax pursuant to Section 101 (A) (3) 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. However, the aforesaid Deed of Conditional Donation is subject to the documentary stamp tax of P15.00 imposed under Section 188 of the Tax Code of 1997 (BIR Ruling No. 108-94 dated May 30, 1994 and BIR Ruling No. DA-28-98 dated January 29, 1998). Finally, Section 4.101-1 of Revenue Regulations No. 7-95 provides that "the VAT is imposed on goods and properties brought into the Philippines, whether for use in business or not. The tax shall be based on the total value, used by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise tax, if any, and other charges prior to the release of the goods or properties from customs custody such as postage, commissions, and other similar charges. . . ." (VAT Ruling No. 057-98 dated November 18, 1998). Accordingly, the donation of goods/foodstuff shipped from Canada intended for children beneficiaries of your religious and charitable institution is subject to value-added tax. 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.) MILAGROS V. REGALADO Assistant Commissioner Legal Service