Follosco Morallos & Herce

September 9, 2009 BIR RULING [DA-(DT-048) 523-09] Sec. 101 (A) (3); DA-078-2003 dtd 3/15/03 Follosco Morallos & Herce Attorneys At Law Suite 2500, 25th Floor, 88 Corporate Center 141 Valero Street corner Sedeno Street Salcedo Village, Makati City Attention: Rachel P. Follosco Gentlemen : This refers to your letter dated November 9, 2008, in behalf of your client, San Sebastian College Recoletos, Inc., requesting a confirmation of your opinion that the donation and grant of usufructuary rights without pecuniary consideration is exempt from donor' tax prescribed under Section 98 of the Tax Code of 1997, in view of the provisions of Section 101 of the same Tax Code. It is represented that San Sebastian College Recoletos, Inc. (SSCRI) is a non-stock non-profit educational corporation duly organized under Philippine laws; that Superior de la Corporation Filipina de Padres Agustinos Recoletos, Inc. (Recoletos, Inc.) likewise a domestic corporation, decided to constitute separate entity to own and operate San Sebastian College-Recoletos (SSC) and thereafter executed a Deed of Donation dated November 3, 2003, to transfer all the assets pertaining to SSC to SSCRI, the newly incorporated entity; that the Deed of Donation was based on the inventory made of the properties on April 30, 2002; that after the execution of the Deed of Donation dated November 3, 2003, and while in the process of and until the actual transfer of the properties by SSC to SSCRI on April 30, 2004, certain assets were acquired as well as liabilities were incurred by Recoletos, Inc. in the ordinary course of business of SSC; that in order to fully implement its decision to constitute a separate entity to own and operate SSC, Recoletos Inc. has executed a Supplementary Deed of Donation to transfer such assets and liabilities; that pursuant to such Supplemental Deed, Recoletos, Inc. donated the assets acquired and transferred liabilities incurred in the ordinary course of business of SSC during the period between April 30, 2002 and April 30, 2004. Hence, your request. In reply, please be informed that inasmuch as the donee is an educational institution, the aforementioned 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 gift shall be used for administration purposes. TaDIHc 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. (BIR Ruling No. DA-18-98 dated January 29, 1998) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that 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