BIR Ruling No. 174-13

May 17, 2013 BIR RULING NO. 174-13 Section 101 (A) (2) of the Tax Code of 1997; PD No. 1216; BIR Ruling No. 283-12; BIR Ruling No. 206-11 City of Las Pias 2/F Cityland Condominium 10 Tower I, 156 H.V. dela Costa Street, Makati City Attention: Atty. Glenda C. Lucena City Legal Officer Gentlemen : This refers to your letters dated November 19, 2012 and January 28, 2013, requesting clarification as to the proper venue for the filing and payment of donor's tax and/or confirmation on the exemption of Donor's Tax relative to the Deed of Donation made by BF Homes, Inc. to the City of Las Pias pursuant to Section 101 (A) (2) of the Tax Code of 1997, as amended. acCITS Documents submitted show that BF Homes, Inc. (hereinafter referred to as "Donor") with Taxpayer's Identification No. (TIN) 000-745-059-000, is a corporation organized and existing under Philippine laws and represented by its Vice Presidents, Engr. Fernando E. Javier and Mrs. Mary Lou A. Vasquez, who were duly authorized by the Board of Directors of the corporation to execute the Deed of Donation; that the Donee, City of Las Pias , is a highly-urbanized city created under Republic Act No. 8251, and is represented by its City Mayor, Hon. Vergel A. Aguilar; that the Donor is the registered owner of fifteen (15) parcels of road lots more particularly described and bounded as follows: 1. Road Lot No. 1, Pcs-04-000638 covered by T.D. No. E-007-05702 issued by the City Assessor Las Pias, consisting of SEVEN THOUSAND NINE HUNDRED THIRTY (7,930) SQ. M. more or less; 2. Road Lot No. 2, Pcs-04-000638 covered by T.D. No. E-007-05703 issued by the City Assessor of Las Pias, consisting of EIGHT HUNDRED FORTY-SIX (846) SQ. M. more or less; 3. Road Lot No. 2, Pcs-04-000638 covered by T.D. No. E-007-05704 issued by the City Assessor of Las Pias, consisting of NINE HUNDRED FIFTEEN (915) SQ. M. more or less; 4. Road Lot No. 4, Pcs-04-000638 covered by T.D. No. E-007-05705 issued by the City Assessor of Las Pias, consisting of ONE THOUSAND TWENTY-FIVE (1,025) SQ. M. more or less; 5. Road Lot No. 5, Pcs-04-000638 covered by T.D. No. E-007-05706 issued by the City Assessor of Las Pias, consisting of EIGHT THOUSAND THREE HUNDRED FOURTEEN (8,314) SQ. M. more or less; 6. Road Lot No. 6, Pcs-04-000638 covered by T.D. No. E-007-05707 issued by the City Assessor of Las Pias, consisting of ONE THOUSAND TWO (1,002) SQ. M. more or less; 7. Road Lot No. 1, Pcs-04-000694 covered by TCT No. T-20404-A issued by the Registry of Deeds of Las Pias City, consisting of FOUR THOUSAND FOUR HUNDRED NINETY-NINE (4,499) SQ. M. more or less; 8. Road Lot No. 2, Pcs-04-000694 covered by TCT No. T-20405-A issued by the Registry of Deeds of Las Pias City, consisting of NINE HUNDRED SIXTEEN (916) SQ. M. more or less; ITScAE 9. Road Lot No. 3, Pcs-04-000694 covered by TCT No. T-20406-A issued by the Registry of Deeds of Las Pias City, consisting of NINE HUNDRED SIXTEEN (916) SQ. M. more or less; 10. Road Lot No. 4, Pcs-04-000694 covered by TCT No. T-20407-A issued by the Registry of Deeds of Las Pias City, consisting of SIX THOUSAND ONE HUNDRED TWENTY THREE (6,123) SQ. M. more or less; 11. Road Lot No. 2, Pcs-04-000793 covered by TCT No. T-20418-A issued by the Registry of Deeds of Las Pias City, consisting of TWO THOUSAND TWO HUNDRED NINETY-SIX (2,296) SQ. M. more or less; 12. Road Lot No. 4, Pcs-04-000793 covered by TCT No. T-20420-A issued by the Registry of Deeds of Las Pias City, consisting of THREE THOUSAND THREE HUNDRED NINETY-FIVE (3,395) SQ. M. more or less; 13. Road Lot No. 5, Pcs-04-000793 covered by TCT No. T-20421-A issued by the Registry of Deeds of Las Pias City, consisting of THREE THOUSAND FIVE HUNDRED TWO (3,502) SQ. M. more or less; 14. Road Lot No. 5-B, Pcs-04-314105 covered by TCT No. T-33288-A issued by the Registry of Deeds of Las Pias City, consisting of ONE THOUSAND FOUR HUNDRED SEVENTY-FOUR & FIFTY (1,474.50) SQ. M. more or less; 15. Road Lot No. 5-c-2, Plan 397382 covered by TCT No. T-005-2012001763 issued by the Registry of Deeds of Las Pias City, consisting of ONE THOUSAND TWO HUNDRED FIFTY-FIVE (1,255) SQ. M. more or less. located at BF Homes Paraaque Phase VII, Barrio Tungtong, Barangay Manuyo Dos, Las Pias City; that on December 12, 2012, a Deed of Donation was executed by and between BF Homes, Inc. and City of Las Pias over the afore-mentioned Fifteen (15) parcels of road lots; that the Donor facilitated the donation of Road Lots 4 & 5 Pcs-04-000793 for the benefit and welfare of motorists traversing said roads in compliance with the January 12, 1984 letter-request of then Municipal Mayor of Las Pias Dr. Felimon C. Aguilar; and that in conformity with the intention of the then Municipal Mayor of Las Pias, the Donor has offered to donate the road lots above-mentioned and the Donee has accepted the offer; and that the Donee accepted the donation under the conditions set forth as embodied in the Deed of Donation dated December 12, 2012. EATCcI In reply, please be informed that Section 101 (A) (2) of the Tax Code of 1997, as amended, provides: "SEC. 101. Exemption of Certain Gifts. The following gifts or donations shall be exempt from the tax provided for in this chapter: (A) In the Case of Gifts Made by a Resident. xxx xxx xxx (2) Gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government; and xxx xxx xxx." According to the above, donations made for the use of the National Government or any entity created by any of its agencies which is not conducted for profit or to any political subdivision of the said Government shall be exempt from the donor's tax. Considering that the donation of road lots was made by BF Homes, Inc. in favor of the City of Las Pias, a political subdivision of the National Government, said donation is exempt from donor's tax. (BIR Ruling No. 206-11 dated July 1, 2011) Likewise, Section 2 of Presidential Decree No. 1216 provides that: Section 2. Section 31 of Presidential Decree No. 957 is hereby amended to read as follows: "Section 31. Roads, Alleys, Sidewalks and Open Spaces. The owner as developer of a subdivision shall provide adequate roads, alleys and sidewalks." xxx xxx xxx "Upon their completion as certified to by the Authority, the roads, alleys, sidewalks and playgrounds shall be donated by the owner or developer to the City or municipality and it shall be mandatory for the local governments to accept provided, however, that the parks and playgrounds may be donated to the Homeowners Association of the project with the consent of the city or municipality concerned. No portion of the parks and playgrounds donated thereafter shall be converted to any other purpose or purposes." xxx xxx xxx Moreover, the aforesaid Deed of Donation is not subject to documentary stamp tax under Section 196 of the Tax Code of 1997, as amended, but only to the documentary stamp tax of P15.00 on certification under Section 188 of the same Code. (BIR Ruling No. 283-2012 dated April 25, 2012) CAHaST Since the Donor is a VAT-registered taxpayer under the Large Taxpayer Division Makati, the corresponding donor's tax return should be filed in the aforementioned Office. It is understood that this ruling is never intended and shall not be construed as giving authority to the Register of Deeds of Las Pias City to effect transfer of the land titles in the name of the donee without the necessary certificate of authority to register issued by this Bureau. In this regard, this ruling shall be presented to the LTDO-Makati in order for the latter to issue the Certificate Authorizing Registration (CAR). The CAR shall only be issued after the submission of the requirements provided under RMO 15-2003. 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