Amount of Zonal Values of Real Properties to Be Donated Can Be Deducted by the Donors from Their Gross Income

April 14, 1998 BIR RULING NO. 044-98 24 (a) RAMO 1-86 000-00 44-98 Sycip Salazar Hernandez & Gatmaitan Attorneys-at-Law Sycip Law, All Asia Capital Center 105 Paseo de Roxas 1200 City of Makati Metro Manila Attention: Attys . Cirilo T . Tolosa and Ernesto S . Taio Gentlemen : This refers to your letter dated December 23, 1996 requesting confirmation of your opinion that the amount of zonal values of the real properties to be donated by Laguna Estates Development Corporation, West Concourse Industrial Development Corporation and South Industrial Facilities, Inc. (the "First Parties") to De La Salle University, Inc. ("DLSU") can be deducted by the said donors from their gross income in the year of donation. It is represented that "First Parties" are domestic corporations engaged in the business of holding real properties; that "DLSU" was registered as a qualified donee institution under BIR-NEDA Regulations No. 1-81, as amended in relation to Section 29(h)(2)(C) of the Tax Code, as amended, pursuant to BIR Ruling No. DA-194-96 dated June 10, 1996; that under the aforesaid ruling the Bureau of Internal Revenue ruled that: (a) donations in favor of "DLSU" shall be exempt from the payment of the donor's tax pursuant to Section 94(a)(3) of the Tax Code, provided that not more than 30% of said donation shall be used by "DLSU" for administrative purposes, and (b) for income tax purposes, contributions and donations in favor of "DLSU" by individual donors/contributors shall not be deductible from their gross income; that the contributions and donations in "DLSU's" favor by corporate donors/contributors shall be deductible in full from their gross income; that the "First Parties" intend to donate to "DLSU" Three Hundred Fifty Thousand (350,000) square meters ("the Property") consisting of several parcels of land (all without improvements) owned by "First Parties" located in Barangay Bian and Barangay Malamig, Municipality of Bian, Province of Laguna, for the establishment of a campus of an educational institution which shall carry the name "De La Salle", and for residential, institutional, and recreational uses exclusively for the members of the faculty, staff, and enrolled students of "DLSU"; that "the Property", though still undeveloped is a proposed industrial site with the following market values as shown in the Declaration of Real Property General Revision 1994, viz: cdll Owner Tax Declaration Amount No. TCT No. (MV) Laguna Estate Dev. Corp. 00038 82840 P1,933,920 -do- 00039 82841 3,768,885 -do- 00040 82842 13,700,745 West Concourse Ind'l Dev. Corp. 00047 110753 1,800,000 South Ind'l Facilities Inc. 00023 110970 1,800,000 and that the zonal values of the aforesaid "Property" have already been determined and established under Department Order No. 18-96. In reply, please be informed that since the zonal values of "the Property" have already been determined, the same shall be the basis in determining the value of the gifts/donation that shall be deducted by the aforementioned donors in computing their taxable income under Section 24(a) of the Tax Code, as amended, in the year of donation. 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 null and void. LexLib Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue