BIR Ruling No. 153-83

September 5, 1983 BIR RULING NO. 153-83 Gentlemen : This refers to your letter dated November 24, 1982 requesting exemption from donor's tax of the donations of several parcels of land made by your clients, the Pepsi-Cola Bottling Company of the Philippines, Inc. and Pepsi-Cola Far East Trade Development Co., Inc. in favor of the National Development Company (NDC) and that the donations be deductible as a business expenses for income tax purposes. It is represented that on June 17, 1975, a Deed of Donation was executed by Pepsi-Cola Bottling Company of the Philippines, Inc. in favor of the NDC covering six (6) parcels of land excluding the improvements thereon covered by TCT Nos. 41268, 43173, 53941-R, 19914 and 7751 of the Registry of Deeds of Rizal, Pampanga and Tarlac respectively; that the valuation of said parcels of land shall be used by NDC to pay for its subscription of shares representing sixty percent (60%) of the authorized capital stock of the Pepsi-Cola Realty Corporation, a corporation organized and existing under the laws of the Philippines; that likewise on June 17, 1975, Pepsi Cola Far East Trade Development Company, Inc. executed a Deed of Donation in favor of NDC covering one (1) parcel of land excluding the improvements thereon to the extent of 60% of the fair market value thereof; that the valuation of said parcel of land shall be used by NDC to pay a portion of its subscription of shares representing sixty percent (60%) of the authorized capital stock of the Pepsi-Cola Realty Corporation; and that the aforesaid donations were made expressly for the purpose of availing of the incentives provided for by Presidential Decrees Nos. 697 and 698. In reply thereto, I have the honor to inform you that pursuant to Presidential Decree No. 698, irrevocable donations to NDC of American-owned private lands acquired under the Laurel-Langley Agreement shall be exempt from all kinds of gift taxes. Moreover, said donations shall be recognized as a deductible business expense items for income tax purposes, provided that the donor shall expressly indicate in the donation proposal the period not exceeding four (4) years, including the year of donation, over which the expense deductions shall be taken in equal increments. Such being the case, and since Pepsi-Cola Bottling Company of the Philippines, Inc., and Pepsi-Cola Far East Trade Development Co., Inc. have expressly indicated in their donation proposal that they shall claim the donation as expense deductions for a period of four (4) years from 1975 up to and including 1978, said donations are exempt from the payment of donor's tax and also deductible as business expense for income tax purposes for the years 1975 to 1978 inclusive. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue