BIR Ruling [DA-257-06]

April 12, 2006 BIR RULING [DA-257-06] RR 13-98 & RR 2-03 Philippine Council for NGO Certification 6/F, SCC Building, CFA-MA Compound 4427 Interior Old Sta. Mesa Road Sta. Mesa, Manila Attention: Ms. Fely Soledad Executive Director Gentlemen : This refers to your letter dated August 15, 2005 requesting on behalf of De La Salle University Science Foundation, Inc . (DLSU-SFI) for a clarificatory ruling on how DLSU-SFI should report donations it receives. As represented, receiving/stamping of Certificate of Donations (CODs) in RDO No. 33 (BIR-Manila) for the various donations received by DLSU-SFI was refused due to the RDO No. 33's policy that CODs should be reported to or be stamped at Donor's nearest RDO of his/its stated address. DLSU-SFI is having a hard time locating the respective RDOs of some Donors with provincial address not to mention the excruciating travel to and from these places that it has to go through. The same goes with its donations coming from abroad. In reply, please be informed that Section 13(C) of Revenue Regulations (Rev. Regs.) No. 2-2003 otherwise known as the "Consolidated Revenue Regulations on Estate Tax and Donor's Tax Incorporating the Amendments Introduced by RA 8424, the Tax Reform Act of 1997", provides, viz: "(C) Notice of donation by a donor engaged in business. In order to be exempt from donor's tax and claim full deduction of the donation given to qualified donee institutions duly accredited by the Philippine Council for NGO Certification, Inc. (PCNC), the donor engaged in business shall give notice of donation on every donation worth at least Fifty Thousand Pesos (P50,000) to the Revenue District Office (RDO) which has jurisdiction over his place of business within thirty (30) days after receipts of the qualified donee institution's duly issued Certificate of Donation, which shall be attached to the said Notice of Donation, stating that not more than thirty percent (30%) of the said donation/gifts for the taxable year shall be used by such accredited non-stock, non-profit corporation/NGO institution (qualified-donee institution) for administration purposes pursuant to the provisions of Section 101(A)(3) and (B)(2) of the Code." DCISAE In relation to the above regulations, Sections 5 and 6 of Rev. Regs. No. 13-98 implementing RA No. 8424 specifically, Section 34(H) thereof relative to the deductibility of contributions or gifts actually paid or made to accredited donee institutions in computing taxable income, states that "SEC. 5. Certificate of Donations . All accredited non-stock, non-profit corporation/NGO are required to issue a certificate of donation in such form as prescribed by the BIR, on every donation or gift they receive. Such certificate shall be accomplished by the said accredited non-stock, non-profit corporation/NGO in triplicate and distributed within thirty (30) days after the receipt of the donation, as follows: (a) Original copy - Donor (b) Duplicate copy - BIR (c) Triplicate copy - Donee SEC. 6. Notice of Donations . The donor, on the other hand, should give a notice for every donation worth over One Million pesos (P1,000,000) to the Revenue District Officer where his place of business is located within thirty (30) days after the receipt of the Certificate of Donation attaching to the said notice the copy of the Certificate of Donation issued to him by the accredited non-stock, non-profit corporation/NGO." It is clear from the foregoing that the only obligation of DLSU-SFI for every donation or gift it receives is to issue in triplicate the proper COD within thirty (30) days after the receipt of the donation. It should furnish the donor and RDO having jurisdiction over it (donee) one copy each of the COD and keep the last copy for itself. On the part of the donor and for purposes of full deductibility from his/its taxable business income, the donor should be the one to notify within thirty (30) days from receipt of the COD, the RDO where his place of business is located, of donations worth Fifty Thousand Pesos (P50,000) which he/it made. It is, therefore, not DLSU-SFI's concern to notify the donor's RDO of the donation (this is the donor's obligation in order to claim the benefit of Section 34(H) of the Tax Code of 1997) nor is it its obligation to have the COD stamped at the RDO which has jurisdiction over the donor. AICEDc Please be guided accordingly. Very truly yours, (SGD.) PABLO M. BASTES, JR. OIC-Head Revenue Executive Assistant Legal Service