Naga Harvest Baptist Church, Inc.

February 4, 2009 BIR RULING [DA-(DT-004) 052-09] Section 30; BIR Ruling No. S-30-096-99 Naga Harvest Baptist Church, Inc. Capilihan Road Calauag, Naga City Attention: Pastor Remy S. Mayang Gentlemen : This refers to your letters dated October 23, 2002 and August 7, 2008 indorsed to this Office by OIC-Regional Director Diosdado R. Mendoza of Revenue Region No. 10, Legaspi City, requesting for exemption from the payment of donor's tax on the donation of a parcel of land with improvements thereon by Elbert B. Apura in favor of Naga Harvest Baptist Church, Inc., Calauag, Naga City. TAHIED As represented, Elbert B. Apura is a former Pastor of Naga Harvest Baptist Church, Calauag, Naga City. On the other hand, Naga Harvest Baptist Church, Inc. is a non-profit religious corporation, affiliated to the Association of Fundamental Baptist Churches in the Philippines, and registered with the Securities and Exchange Commission (SEC) under SEC Registration No. I1999-00192 dated June 16, 1999. The purpose for which it was organized is to "to glorify God by conducting a Baptist Church in accordance with the Word of God, the articles of faith, the covenant and the constitution of this local church, promoting the worship of our God, edifying believers, teaching the whole counsel of God, administering the ordinances and Biblical discipline, seeking to win the lost to Christ through personal witnessing and the preaching of the gospel, carrying on a vigorous missionary program around the world, establishing other Baptist churches, defending the faith, and maintaining a good testimony for Christ in our community by godliness and good works." On October 23, 2002, Elbert B. Apura executed a Deed of Donation, which was notarized on February 22, 2003, in favor of Naga Harvest Baptist Church, Inc., over a parcel of land with improvements thereon, and covered by Transfer Certificate of Title No. 33363, situated in Brgy. Calauag, Naga City containing 562 square meters. In reply, please be informed that gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited non-government organization, trust or philanthropic organization or research institution or organization is exempt from the payment of the donor's tax pursuant to Section 101 (A) (3) and (B) (2) 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. Inasmuch as Naga Harvest Baptist Church, Inc. is a religious organization, any donation to it is exempt from the payment of donor's tax pursuant to the above provisions of the Tax Code subject to the condition that not more than thirty percent (30%) of said gift shall be used by the donee for administration purposes. In case of donation of real property, the Register of Deeds shall annotate this condition at the back of the Transfer Certificate of Title because failure to comply with the said condition shall be a ground for the revocation of the donation pursuant to Article 764 of the New Civil Code. 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, likewise, not subject to the documentary stamp tax prescribed under Section 196 of the Tax Code, as amended, but only to the documentary stamp tax of P15.00 imposed under Section 188 of the same Code (BIR Ruling No. DA-28-98 dated January 29, 1998). SDTIaE However, if the same property acquired by gift is subsequently conveyed by way of sale or exchange, the sale will be subject to corporate income tax on the gain realized which is determined by deducting from the gross selling price the historical cost or the adjusted basis thereof, as it would be in the hands of the donor, pursuant to Section 27 in relation to Section 101, both of the Tax Code of 1997, as amended, and consequently to the creditable expanded withholding tax under Revenue Regulations No. 2.57.2 of Revenue Regulations No. 2-98, as amended. If Naga Harvest Baptist Church, Inc. donates the same property donated to it to a nonexempt donee, Naga Harvest Baptist Church, Inc. shall be liable for donor's tax pursuant to Section 98 of the Tax Code of 1997, as amended. 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service