Mr. Ernesto V. Suratos

December 28, 2007 BIR RULING [DA-703-07] 101 (A) (3) DA-058-2004; DA-531-2006; DA-516-2007 Mr. Ernesto V. Suratos No. 1 Central Avenue, New Era Quezon City S i r : This refers to your letter dated June 14, 2006 requesting for confirmation of your opinion that the donation you made to the Iglesia ni Cristo is exempt from donor's tax. CAcEaS It is represented that you donated two (2) parcels of land covered by Transfer Certificates of Title No. 396458 and 396459 located in Barangay Pag-asa, Bamban, Tarlac, with an area of One Thousand Fifty Two (1,052) square meters and Eight Hundred Fifty Nine (859) square meters, respectively, in favor of IGLESIA NI CRISTO, represented by Mr. Erao G. Manalo, as corporation sole, duly organized and existing pursuant to the laws of the Republic of the Philippines; and that said donation is intended for the construction of chapel and minister's residential house and its appurtenant structures. In reply, please be informed that Section 101 (A) (3) of the Tax Code of 1997, as amended, provides that the following gifts or donations made by a resident, among others, shall be exempt from donor's tax: (3) Gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited nongovernment organization, trust or philanthrophic organization or research institution or organization: Provided, however, That not more than thirty percent (30%) of said gifts shall be used by such donee for administration purposes. For the purpose of the exemption, a 'non-profit educational and/or charitable corporation, institution, accredited nongovernment organization, trust or philanthrophic organization and/or research institution or organization' is a school, college or university and/or charitable corporation, accredited nongovernment organization, trust or philanthrophic organization and/or research institution or organization, incorporated as a nonstock entity, paying no dividends, governed by trustees who receive no compensation, and devoting all its income, whether students' fees or gifts, donation, subsidies or other forms of philanthrophy, to the accomplishment and promotion of the purposes enumerated in its Articles of Incorporation. [emphasis supplied] EAHcCT Considering that Iglesia ni Cristo, the donee, is a religious institution, the aforesaid donation 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 said donation or gift shall be used by Iglesia ni Cristo for administration purposes. (BIR Ruling Nos. DA-058-2004 dated February 9, 2004 and DA-531-2006 dated September 4, 2006) Moreover, the Deed of Donation executed for the purpose is not subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended. 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) 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. TacADE Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service