BIR Ruling No. 098-13

March 20, 2013 BIR RULING NO. 098-13 Section 101 (A) (3) of the Tax Code of 1997; Ruling No. 387-11; BIR Ruling No. 300-11 Institute of the Sisters of Reparation, Inc. Mary Immaculate Parish, #3 Pioneer Street Moonwalk Subdivision, Las Pias City Attention: Sr. Monica Ma In Jahtu Gentlemen : This refers to your letter dated October 3, 2011 requesting for the exemption from payment of donor's tax on the donation of a parcel of land by INSTITUTE OF THE SISTERS OF REPARATION, INC.,a non-stock, non-profit religious organization, to SOURE DELLA RIPARAZIONE-PHILIPPINES, INC.,another non-stock, non-profit religious organization. CASTDI It is represented that INSTITUTE OF THE SISTERS OF REPARATION, INC.,with Taxpayer's Identification Number (TIN) 005-587-680, is a non-stock, non-profit religious organization duly organized under the laws of the Philippines, registered with the Securities and Exchange Commission (SEC) under Registration No. CN200419541 dated December 31, 2004; that it is the registered owner of parcel of land situated in the Bo. of Pamplona, Municipality of Las Pias, Province of Rizal, with an area of One Hundred and Eighty (180) square meters, more or less, and evidenced by Transfer of Certificate of Title No. T-108796 of the Registry of Deeds of Las Pias; that a Deed of Donation dated February 6, 2011 was executed between INSTITUTE OF THE SISTERS OF REPARATION, INC. as donor and SOURE DELLA RIPARAZIONE-PHILIPPINES, INC. as donee, wherein the donor cedes, transfers and conveys by way of donation unto the donee the aforementioned parcel of land; and that the donee, with TIN 007-923-578, is also a non-stock, non-profit religious organization duly organized under the laws of the Philippines and registered with the SEC under Registration No. CN201018584 dated November 15, 2010. Based on the foregoing, you now request that the donation made by INSTITUTE OF THE SISTERS OF REPARATION, INC. to SOURE DELLA RIPARAZIONE-PHILIPPINES, INC. be exempted from donor's tax. In support of its request, INSTITUTE OF THE SISTERS OF REPARATION, INC. has submitted the following documents: 1) Letter application for donor's tax exemption; 2) Original copy of Deed of Donation dated February 6, 2011; 3) Certified true electronic copy of Transfer of Certificate of Title No. T-108796; 4) Donor's Tax Return; 5) Certified true copy of Tax Declaration of TCT T-108796; 6) Certified true copy of the SEC Certificate of Incorporation of INSTITUTE OF THE SISTERS OF REPARATION, INC.; 7) Certified true copy of the Articles of Incorporation of INSTITUTE OF THE SISTERS OF REPARATION, INC.; 8) Certified true copy of the By-Laws of INSTITUTE OF THE SISTERS OF REPARATION, INC.; DAaIHT 9) Certified true copy of the 2011 General Information Sheet of INSTITUTE OF THE SISTERS OF REPARATION, INC.; 10) Original copy of the Board Resolution dated February 6, 2011 INSTITUTE OF THE SISTERS OF REPARATION, INC.; 11) Copy of the SEC Certificate of Incorporation of SOURE DELLA RIPARAZIONE-PHILIPPINES, INC.;and 12) Copy of Articles of Incorporation of SOURE DELLA RIPARAZIONE-PHILIPPINES, INC. 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 are exempt from the payment of the donor's tax pursuant to Section 101 (A) (3) 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. ( BIR Ruling No. 387-11 dated October 18, 2011 and BIR Ruling No. 300-11 dated May 12, 2011 ) Inasmuch as SOURE DELLA RIPARAZIONE-PHILIPPINES, 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 to comply with the said condition shall subject the donation of the above mentioned real property to donor's tax. 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. 387-11 dated October 18, 2011 and BIR Ruling No. 300-11 dated May 12, 2011 ) HESIcT However, if the same property acquired by gift is subsequently conveyed by way of sale or exchange, the sale by SOURE DELLA RIPARAZIONE-PHILIPPINES, INC. of the donated property is subject to capital gains tax based on the gross selling price or current fair market value as determined in accordance with Section 6 (E) of the Tax Code of 1997, as amended, whichever is higher, of such land and/or buildings pursuant to Section 27 (D) (5) of the same Code (Section 4 (c) (i), Revenue Regulations No. 7-2003). Moreover, the Deed of Absolute Sale of said real property shall be subject to documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended. If SOURE DELLA RIPARAZIONE-PHILIPPINES, INC. donates the same property donated to it to a non-exempt donee, then it 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, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue