Philippines Central Conference of the United Methodist Church

October 30, 2009 BIR RULING [DA-(DT-060) 636-09] Section 30; BIR Ruling No. DA-408-04 & DA-601-06 Philippines Central Conference of the United Methodist Church UMC Building, 900 United Nations Avenue Manila Attention: Ms. Rose Beverly R. Jerusalem Treasurer Gentlemen : This refers to your letter dated October 6, 2009 requesting for exemption from the payment of donor's tax on the donation made by Bishop Daniel C. Arichea, Jr. in your favor. TIDHCc Documents show that on September 25, 2009, Bishop Daniel C. Arichea, Jr. executed a Deed of Donation in your favor over a condominium unit in a condominium project known as the "Baguio Green Valley Village" covered by Condominium Certificate of Title (CCT) No. C-5381, situated in Green Valley Village, Phase II, Sto. Tomas, Baguio City, consisting of 100.25 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 nongovernment 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 you are a religious organization, any donation to you 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 you 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). 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 you donate the same property donated to you to a nonexempt donee, you 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. HIcTDE Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service