Atty. Francisco I. Naputo, CPA

May 30, 2008 BIR RULING [DA-329-08] 101 (A) (3); DA-677-2006 Atty. Francisco I. Naputo, CPA 73 Apacible St., Philam Village Las Pias City S i r : This refers to your letter dated April 08, 2008 requesting on behalf of your client, North Philippine Union Mission Corporation of Seventh-Day Adventists Church ("NPUM" for brevity ), for exemption from the payment of donor's tax on its proposed donation to Naga View Adventist College, Inc. ("NVAC" for brevity) . It appears that North Philippine Union Mission Corporation of Seventh-Day Adventists Church (NPUM) is a non-stock, non-profit religious corporation which operate a number of schools in the country as in the case of Philippine Union College-Naga View Campus, Panicuason, Naga City; that the said school was duly accredited and recognized by the Department of Education Culture and Sports under Government Recognition No. B-0012 series of 1988, authorized to operate First Year to Fourth Year Curriculum Course leading to the Degree of Bachelor of Arts (A.B. I-IV) affective June 1988; that recently, however, the aforesaid school decided to have a corporate life of its own, thereby adopting a new name Naga View Adventist College, Inc. ("NVAC" for brevity); that it was duly registered with the Securities and Exchange Commission under SEC Registration No. 34811 dated December 05, 2007; that it bears stressing though that NPUMs's officers are invariably ex-officio members of NVAC whereby its Chairman of the Board of Trustees is the President of NPUM, the same set up applied to the rest of the schools under NPUM umbrella; that NPUM is proposing to donate NVAC its property, particularly the land encompassing the entire NVAC campus covered by TCT No. 171 issued by the Registry of Deeds for the City of Naga containing an area of approximately One Million Sixty One Thousand and Four square meters; and that apart from the parcel of land, included in the proposed donation by NPUM to NVAC are the buildings and improvements thereon. In reply, please be informed that inasmuch as the donee is an educational institution, donations to it are exempt from the payment of donor's tax pursuant to Section 101 (A) (3) of the Tax Code of 1997, as amended, subject to the condition that not more than 30% of said gift shall be used by the donee for administration purposes. The Register of Deeds shall, however, annotate this condition at the back of the Transfer Certificate of Title because failure to comply with the said condition shall be a ground for the revocation of the donation pursuant to Article 764 of the New Civil Code. Moreover, the proposed Deed of Donation that will be executed for the purpose is not subject to documentary stamp tax. However, the acknowledgment on said deed is subject to the documentary stamp tax of P15.00 imposed under Section 188 of the Tax Code of 1997, as amended. 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, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service