BIR Ruling No. 232-12

March 29, 2012 BIR RULING NO. 232-12 Section 101 (A) (2) of the Tax Code of 1997, as amended; BIR Ruling No. 048-2010 Metro Naga Water District Magsaysay Avenue Naga City Attention: Rey C. Reyes General Manager Gentlemen : This refers to your letter dated July 18, 2011, received by this Office on August 16, 2011 by way of 1st Indorsement dated August 8, 2011, Revenue Region No. 10, Legazpi City, requesting for exemption from the payment of donor's tax on the donation of a parcel of land executed by the Fil-Estate Development, Inc. in favor of the Metro Naga Water District. It is represented that Metro Naga Water District is a non-stock, non-profit government owned and controlled corporation with original charter, created pursuant to the provisions of Presidential Decree (PD) No. 198, as amended, otherwise known as, the "Provincial Water Utilities Act of 1973"; that on July 14, 2011, the Fil-Estate Development, Inc., executed a Deed of Donation, in favor of the Metro Naga Water District, over a parcel of land covered by Transfer Certificate of Title (TCT) No. 28008 of the Registry of Deeds for the City of Naga, located in Lot 2, Block 3, Monte Cielo de Naga Subdivision, Concepcion Grande, Naga City, and containing an area of Three Hundred Seventy Nine (379) square meters; and that one of the pumping stations of the Metro Naga Water District is situated at the donated property and will be utilized as one of the water sources to augment the water supply to Metro Naga Water District's service area. DTAaCE In reply, please be informed that Section 101 (A) (2) of the Tax Code of 1997, as amended, provides that: "SEC. 101. Exemption of Certain Gifts. The following gifts or donations shall be exempt from the tax provided for in this Chapter: 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; xxx xxx xxx" It is worthy to note that Metro Naga Water District, being a non-stock, non-profit government owned and controlled corporation, falls within the purview of the above-cited provision as government. Accordingly, since the donation is made to or for the use of the government, the aforementioned donation of a parcel of land is exempt from the payment of donor's tax pursuant to Section 101 (A) (2) of the Tax Code of 1997, as amended. 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 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. 048-2010 dated September 1, 2010) 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. ATCEIc Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue