Mr. Pablo Q. De Leon

June 13, 2008 BIR RULING [DA-358-08] Section 30; BIR Ruling No. S-30-096-99 Mr. Pablo Q. De Leon No. 2 Redeemer St. Milton Hills Subd., New Era Quezon City S i r : This refers to your letter dated March 20, 2008 requesting for exemption from the payment of donor's and documentary stamp taxes on your donation of a parcel of land in favor of Iglesia ni Cristo. Documents show that you are the absolute and registered owner of a parcel of land situated in Poblacion, Calumpit, Bulacan covered by Transfer Certificate of Title No. T-248692 and containing an area of 1,321 square meters, more or less. On February 5, 2008, you executed Deed of Donation over the above-described real property in favor of Iglesia ni Cristo. In reply, please be informed that gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited non-government organization, trust or philanthropic organization or research institution or organization is exempt from the payment of the donor's tax pursuant to Section 101 (A) (3) and (B) (2) 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. IaECcH The aforesaid donation of real property is not subject to capital gains tax because when the donor parts with his/its property, he/it did not realize a taxable gain. Moreover, the Deed of Donation 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 PhP15.00 on certification under Section 188 of the same Code (BIR Ruling No. DA-123-2001 dated July 18, 2001). However, if the same property acquired by gift is subsequently conveyed by way of sale or exchange, the sale will be subject to corporate income tax on the gain realized which is determined by deducting from the gross selling price the historical cost or the adjusted basis thereof, as it would be in the hands of the donor, pursuant to Section 27 in relation to Section 101, both of the Tax Code, and consequently to the creditable expanded withholding tax under Revenue Regulations No. 2.57.2 of Revenue Regulations No. 2-98, as amended. If it is donated to a nonexempt donee, the donor shall be liable for donor's tax pursuant to Section 98 in relation to Section 91 (B) of the Tax 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service