Office of the Solicitor General

May 26, 2010 BIR RULING [DA-(DT-011) 076-10] Section 101 (A) (2); BIR Ruling No. 003-01 Office of the Solicitor General OSG Building, 134 Amorsolo Street Legaspi Village, Makati City Attention: Karl B. Miranda Assistant Solicitor General Gentlemen : This refers to your letter dated November 24, 2009 requesting the exemption of a donation of real property in favor of the Philippine Tourism Authority (PTA), now succeeded by the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) from donor's tax. Documents submitted to this Office show that on October 13, 2000, a Deed of Donation over a five-hectare parcel of land located in Barrio Indahag, Cagayan de Oro City, was executed by Suzette Magtajas-Daba and Anita G. Magtajas, both residents of Cagayan City, in favor of the PTA. PTA is an attached agency of the Department of Tourism created under Presidential Decree (PD) No. 564 mandated to implement certain tourism projects. Under the terms of the Deed of Donation, the said five-hectare parcel of land is to be taken from Magtaja-Daba's 47,872-square meter parcel of land and Magtajas' 42,242-square meter parcel of land. The donated parcel of land has already been segregated in 2008 and is now covered by Transfer Certificate of Title (TCT) Nos. T-195706 and T-197189. In August 2009, by virtue of Republic Act No. 9593, otherwise known as The Tourism Act of 2009, TIEZA replaced the PTA. As successor of PTA, TIEZA is mandated to continue the functions previously exercised by the PTA under PD 564. TIEZA is also mandated to regulate and supervise tourism economic zones and is deemed as a government infrastructure corporation under the provisions of Executive Order No. 292. SDAcaT The certificates of title to the donated parcel of land are still registered in the names of the donors. Under the Deed of Donation, it is provided that PTA, now TIEZA, shall shoulder all expenses related to the transfer of the donated properties, including payment of donor's tax. Hence, this request for exemption. In reply, please be informed that Section 101 (A) (2) of the Tax Code of 1997 as amended, provides: "SEC. 101. Exemption of Certain Gifts. The following gifts or donations shall be exempt from the tax provided for in this Chapter: (A) In the Case of Gifts Made by a Resident. xxx xxx xxx (2) 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 to any political subdivision of the said Government; and xxx xxx xxx" In accordance with the above, and since the donee, PTA, is an entity created under PD 564, attached to a government agency, the Department of Tourism, and is not conducted for profit, donations made to PTA are exempt from the payment of donor's tax. (BIR Ruling No. 003-2001, dated February 5, 2001 and BIR Ruling No. DA-191-2001, dated October 17, 2001) Since PTA has effectively been abolished and is already succeeded by TIEZA by virtue of RA 9593, the assets of PTA, including its rights and interests over the donated parcel of land, are deemed transferred to TIEZA. Considering that the transfer of PTA's rights and interests over the donated property is made pursuant to and in compliance with the provisions of RA 9593, the same shall not give rise to any taxable event. Further, the donation continues to be tax-exempt inasmuch as donations to TIEZA are considered as donations made to the National Government since TIEZA, like its predecessor, is an government entity attached to the Department of Tourism and not conducted for profit but organized to develop, manage and supervise tourism infrastructure projects. Finally, the aforesaid Deed of Donation is not subject to the documentary stamp tax under Section 196 of the Tax Code of 1997, as amended, but only to the documentary stamp tax of P15.00 on certification under Section 188 of the same Code. This will serve as the authority for the Revenue District Officer concerned to process the application for issuance of the Certificate Authorizing Registration (CAR) over the donated property to TIEZA. 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 as null and void. CHDTEA Very truly yours, (SGD.) MARISSA O. CABREROS OIC-Assistant Commissioner Legal Service