Manila Theological College

August 10, 2007 BIR RULING [DA-454-07] 101 (A) (3), 105; VAT Ruling No. 056-02 Manila Theological College 4427 Old Sta. Mesa Manila Attention: Rev. Dr. Choi Chang-Hoan Founder/President Gentlemen : This refers to your letters dated September 22, 2005 and October 20, 2005 requesting for tax exemption on the donation made by missionary sponsors from Korea to the Manila Theological College (MTC), a non-stock and non-profit theological institution duly recognized by the Philippine government and who gives free education to Filipino students. The aforesaid missionary sponsors from Korea are going to buy a car from Mitsubishi Motors Company here in the Philippines and will grant the said vehicle to MTC where the latter will use it as its school service and for its pastor's missionary works. In reply, please be informed that inasmuch as the donee is a charitable institution, donations received by the same are 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 said gift shall be used by the donee for administration purposes. However, the notarial acknowledgment on said deed is subject to the documentary stamp tax of P15.00 imposed under Section 188 of the Tax Code of 1997. (BIR Ruling No. DA-481-98 dated November 9, 1998) AIDTSE Regarding value-added tax (VAT) exemption, we regret to inform you that the same cannot be granted for lack of legal basis. The transfer of the above-stated vehicle is not among those provided under Section 109 of the 1997 Tax Code, as amended, as VAT-exempt. The VAT is a tax on the person who sells, barters, exchanges, leases goods or properties, renders services, and on any person who imports goods pursuant to Section 105 of the same Tax Code, as amended. It is an indirect tax which may be passed on or shifted to the buyer. Accordingly, Mitsubishi Motors Company, a VAT-registered taxpayer, may pass on the 10% VAT on its sale of automobile to the missionary sponsors who will later donate the subject automobile to MTC. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. SHEIDC Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service