BIR Ruling [DA-690-99]

December 14, 1999 BIR RULING [DA-690-99] 101 (A) (2) DA-28-98 DA-690-99 Community Resource Strategists, Inc . Suite 5C Unioil Center Acacia corner Commerce Avenue Madrigal Business Park, Alabang Muntinlupa City Attention: Ms . Cheryl R. Chua Vice President Gentlemen : This refers to your letter dated November 3, 1999 requesting for an exemption from the payment of donor's tax prescribed under Section 101(A)(2) of the Tax Code of 1997 on the donation made by Community Resource Strategists, Inc. in favor of the Leyte Metropolitan Water District. It appears from the documents submitted that the donor, Community Resources Strategists, Inc., a domestic corporation duly organized and existing under and by virtue of the laws of the Philippines is developing a socialized and low-cost housing project called the Kassel City Subdivision in Tacloban City; that the project which consists of 1,090 units and started in 1997 is within the area of jurisdiction of the Leyte Metropolitan Water District; that the latter which is the donee, is a quasi-public corporation created pursuant to P.D. 198 as amended, in charge of maintaining, installing and operating water supply and distribution system within its area of jurisdiction in the Leyte Province including Tacloban City; that sometime in 1997, Leyte Metropolitan Water District and Community Resource Strategists, Inc. agreed to construct a cistern tank and elevated reservoir with pumping system to enhance the water distribution for the homeowners in the subdivision; that the construction of the water system was finished this year; that it was agreed that the water system, including the lot (200 square meters) on which it was constructed, shall be donated to Leyte Metropolitan Water District which will handle all administrative maintenance control of the water system. cdll In reply, please be informed that Section 101(A)(2) of the Tax Code of 1997 provides that gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or any political subdivision of the said Government shall be exempt from donor's tax. Such being the case, the donation by Community Resource Strategists, Inc. in favor of the Leyte Metropolitan Water District is exempt from the payment of donor's tax pursuant to the aforecited provision. Moreover, the aforesaid 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. 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.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)