Dr. Floro Noza Brosas Foundation, Inc.

June 17, 2008 BIR RULING [DA-366-08] Sec. 101 (A) (3), 188; BIR Ruling No. DA-422-04; DA-531-06 Dr. Floro Noza Brosas Foundation, Inc. Gat Tayaw St., Liliw, Laguna Attention: Dr. Bryan M. Brosas President Gentlemen : This refers to your letter dated June 5, 2008 requesting for confirmation of your opinion that donations made in favor of Dr. Floro Noza Brosas Foundation, Inc. (the "Foundation") are exempt from donor's tax and documentary stamp tax under Sections 101 (A) (3) and 196 of the Tax Code of 1997, as amended. It is represented that the Foundation is a non-stock, non-profit charitable and social welfare corporation for the purpose of conceptualizing, promoting and operating appropriate projects and endeavors which shall enhance the spiritual, physical, mental, social and economic well being of people, particularly the residents of Liliw, Laguna and other places in the Philippines; that the Foundation is a duly registered donee-institution in accordance with the provisions of BIR-NEDA Regulations No. 1-81 under Certificate of Registration No. 1020; that the Foundation's funding comes from gifts, donations and other contributions since the Foundation will not be engaged in activities for profit; that the Foundation will not pay any dividends; that Foundation's trustees will receive no compensation; and that no part of the Foundation's income and increments shall inure to the benefit of any member, trustee, officer or any juridical or natural person whatsoever. You now request for confirmation of your opinions that: 1. Gifts, donations and other contributions made by residents and/or non-residents to the Foundation in the form of cash, real and/or personal properties, are exempt from donor's tax; and 2. Deed of Donation or Contribution of Capital wherein real properties are donated to the Foundation is not subject to DST under Section 196 of the Tax Code, as amended. However, the acknowledgment on the deed is subject to DST of P15.00 imposed under Section 188 of the same Code. In reply, please be informed that in BIR Ruling No. DA-422-04 dated August 4, 2004, this Office opined that: "Donation to educational and charitable institutions is exempt from the payment of 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 the said gift shall be used for administration purposes. Moreover, the deed of donation is not subject to documentary stamp tax prescribed under Section 196 of the Tax Code of 1997, but only to the documentary stamp tax of P15.00 imposed under Section 188 of the same Code." Furthermore, in BIR Ruling No. DA-379-06 dated June 20, 2006, this Office also ruled that "Inasmuch as the donee, the BSP, is a corporation organized for religious, charitable, scientific, athletic or cultural purposes, operated exclusively for the promotion or social welfare and for other non-profitable purposes, donation to it is 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. Section 185 of Regulations No. 26, otherwise known as the Revised Documentary Stamp Tax Regulations, implementing Title VII of the Tax Code, provides that conveyances of realties not in connection with a sale, to trustees or other persons without consideration are not taxable. Accordingly, the Deed of Donation is not subject to the documentary stamp tax (DST) prescribed under Section 196 of the Tax Code of 1997, as amended, but only to the DST of P15.00 imposed under Section 188 of the same Code. On the other hand, donation in cash coming from a non-resident shall not be subject to any Philippine tax since non-residents are beyond the taxing jurisdiction of the Philippine Government (cited in BIR Ruling No. 115-99 dated August 6, 1999). In this connection, it may be stated that should such donation materialize, a non-resident donor is required to submit to this Office a copy of the Deed of Donation covering the aforesaid gift with the signature of the authorized representative of the non-resident donor, notarial commission and signature of the Notary Public acknowledging the instrument of donation duly authenticated by the Philippine Consulate General of the donor's residence. (BIR Ruling No. DA-048-2006 dated February 15, 2006)" Based on the foregoing, this Office hereby confirms your aforementioned opinions with a provision that in case of donations from non-resident citizens, they are required to submit to this Office the notarized Deed of Donation duly authenticated by the Philippine Consul General of the donor's residence. This ruling is being issued on the basis of the foregoing facts as represented. If upon investigation, however, it is 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