BIR Ruling [DA-302-03]

September 16, 2003 BIR RULING [DA-302-03] 101 (A) (2) DA-135-2001 Moldex Realty Inc. Moldex Bldg., Ligaya St. cor. West Avenue Quezon City Attention: Mr. Maurito C. Tarobal AVP-Finance Gentlemen : This refers to your letter dated July 24, 2003 requesting for a confirmation of your opinion that the donation by Moldex Realty, Inc. ("MRI" for brevity) of several parcels of land to the Tagaytay City Water District ("TCWD" for brevity), a government entity duly organized and existing under and by virtue of Presidential Decree No. 198, as amended, is not subject to the donor's tax pursuant to Section 101(A)(2) of the Tax Code of 1997. It is represented that TCWD is a government entity duly organized and existing under and by virtue of Presidential Decree No. 198, as amended, with office address at TCWD Bldg., Aguinaldo Highway, Maharlika Hi-way West, Tagaytay City; that for purposes of providing and/or facilitating the efficient water storage, and/or water distribution for the residents of Tagaytay Southridge Estate Subdivision ("TSES"), MRI will donate to TCWD two parcels of land covered by TCT Nos. T-39280 and T-45375; that TCWD as the donee shall take over, operate and maintain the water facilities within the subdivision with the obligation of distributing and providing continuous, adequate and affordable water to the homeowners within said subdivision, being equipped with the technology and expertise to run and manage a water distribution facility; that such parcels of land shall forever be used primarily to house the water facilities of TSES and that any devotion thereof to any use other than that for which it is originally intended shall be deemed a violation of the donation; and that in such event, the donation shall be automatically rescinded and become null and void and ownership thereof shall revert to MRI. In reply, please be informed that since the donee, Tagaytay City Water District, is an agency of the Government which is not conducted for profit, the aforementioned donation of two (2) parcels of land is exempt from the payment of donor's tax pursuant to Section 101(A)(2) of the Tax Code of 1997. (BIR Ruling No. DA-135-2001 dated August 8, 2001) IHcTDA Moreover, the Deed of Donation to be executed by MRI in favor of TCWD is not subject to the documentary stamp tax under Section 196 of the Tax Code of 1997 but only to the documentary stamp tax of P15.00 on certification under Section 188 of the same Code. (BIR Ruling No. DA-195-97 dated April 28, 1997) 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 as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service