BIR Ruling No. 101-13

March 20, 2013 BIR RULING NO. 101-13 Section 101 (A) (3), NIRC of 1997; BIR Ruling No. 429-11 Aquende Ralla & Associates U/302 King's Building 1, Penaranda St. Legazpi City Attention: Atty. Emerson B. Aquende Supervising Attorney Gentlemen : This refers to your letter dated 13 December 2012 requesting for the issuance of a Certificate of Tax Exemption from Donor's Tax on the donations of real properties made by Spouses Eumeriano A. Aquende and Pilar B. Aquende (the "Spouses") in favor of your client, FORBES COLLEGE, INC. pursuant to Section 101 (A) (3) of the National Internal Revenue Code of 1997, as amended. Documents submitted disclosed that the Spouses are the registered owners of the real properties described below: Nature of Location Area Registered Owner/Donor Property TCT No. Brgy. City (sq.m.) 1 Eumeriano and Pilar Aquende Land T-39966 Pigcale Legaspi 620 2 Eumeriano and Pilar Aquende Building T-39966 Pigcale Legaspi 617.88 that FORBES COLLEGE, INC. (TIN: 000-617-718) is a non-stock and non-profit educational institution organized in accordance with the law and registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200730498; that the Donee, FORBES COLLEGE, INC., has been issued BIR Ruling No. 189-2011 dated June 23, 2011 qualifying the same as a non-stock, non-profit educational institution under Section 30 (H) which is exempt from taxes on its revenues and assets used actually, directly and exclusively for educational purposes pursuant to paragraph 3, Section 4, Article XIV of the 1987 Constitution; that for and in consideration of the Donors' desire to help in the advancement of the cause of the Donee, a Deed of Donation over the above-described real properties was executed on 12 December 2012 donating the above-described properties to the Donee; and that in support of your request, the following documents were submitted: DcTaEH 1. Original of the Deed of Donation of Real Property; 2. Certified true copy of the Forbes College, Inc. SEC Certificate of Registration; 3. SEC certified true copy of Forbes College, Inc. Amended Articles of Incorporation containing the following provisions: a.) That it is incorporated as a non-stock non-profit corporation; and b.) That no part of Forbes' net income shall inure to the benefit of any private individual, member or trustee; 4. Forbes College, Inc. By-Laws; 5. Forbes College, Inc. BIR Certificate of Registration; 6. Audited Financial Statements for the immediately preceding taxable year (2011) and the corresponding Annual Income Tax Return; 7. Certificate under oath that the trustees of Forbes College, Inc., the donee-entity, do not receive any compensation or remuneration; 8. Affidavit of Undertaking that not more than thirty percent (30%) of the donated property or value thereof shall be used by the donee for administration purposes; 9. Certified true copy of the Transfer Certificate of Title of the donated properties; 10. Certified true copies of the latest Tax Declarations of the donated properties (land and building); 11. Verification and Affidavit of Non-Forum Shopping; 12. Special Power of Attorney authorizing Aquende Ralla & Associates to process the application for BIR Certification; and 13. Copy of BIR Ruling No. 189-2011 dated June 23, 2011. HAcaCS In reply, please be informed that gifts in favor of 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) of the Tax Code of 1997, as amended, subject to the condition that not more than thirty percent (30%) of said gift shall be used by the donee for administration purposes. (BIR Ruling No. 429-11 dated November 4, 2011) Inasmuch as FORBES COLLEGE, INC. is a non-stock non-profit educational institution, 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. Since these are donations of real properties, the Register of Deeds shall annotate this condition at the back of the titles 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. (BIR Ruling No. 429-11 dated November 4, 2011) Moreover, 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. 429-11 dated November 4, 2011) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. HSIDTE Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue