BIR Ruling [DA-586-06]

October 3, 2006 BIR RULING [DA-586-06] DA 261-99 Mr. Danilo R. Garcia No. 15 Amapola Street Barangay Maysan Valenzuela City S i r : This refers to your letter dated September 15, 2006 requesting, on behalf of Spouses Jaime Domingo and Meriana Domingo and Jean Domingo (Domingo Family), confirmation of your opinion that the proposed donation of a parcel of land covered by TCT No. T-20882 issued by the Registry of Deeds for Laoag City in favor of Northwestern University, a proprietary educational institution, is exempt from the payment of donor's tax. It is represented that the Domingo Family are the absolute and registered owners of a parcel of land located in Laoag City covered by TCT No. T-20882 issued by the Registry of Deeds for Laoag City containing an area of 7,091 square meters; that on the other hand, Northwestern University is a proprietary educational institution; that a Deed of Donation will be executed by the Domingo Family in favor of Northwestern University whereby the former will transfer a portion of the above-mentioned property or 5,335 square meters in favor of the latter; and that the aforesaid parcel of land shall be used exclusively for educational institution. In reply thereto, please be informed that Section 4(4), Article XIV of the 1987 Philippine Constitution provides that "Subject to conditions prescribed by law, all grants, endowments, donations or contributions used actually, directly and exclusively for educational purposes shall be exempt from tax." Inasmuch as the donee is an educational institution, the aforementioned donation is exempt from the payment of donor's tax pursuant to Section 4(4), Article XIV of the 1987 Philippine Constitution in relation to Section 101(A)(3) of the Tax Code of 1997, subject to the condition that not more than 30% of the said gifts shall be used by the donee for administration purposes. caADIC Moreover, the aforesaid Deed of Donation is subject only to the documentary stamp tax of P15.00 imposed under Section 188, supra . 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