BIR Ruling No. 309-14

August 4, 2014 BIR RULING NO. 309-14 Section 101 (A) (3) of Tax Code of 1997; BIR Ruling No. 387-11; BIR Ruling No. 300-11 Trinidad Baptist Church JB 132 Pico, Km 4, La Trinidad Benguet, Province 2601 Attention: Ptr. Vicente G. Pelico Chairman of the Board Gentlemen : This refers to your letter dated May 24, 2012 duly indorsed by Revenue Region No. 2-Baguio City requesting for exemption from the payment of donor's tax on the donation of land in favor of the Trinidad Baptist Church . It is represented that Vincent Bulasao, Susana Bulasao and Juliet Bulasao are the registered owners of a parcel of land covered by Transfer Certificate of Title (TCT) No. T-28172 designated as Lot B-1, Psd-CAR-000898 being a portion of a lot B, Psd-3099, Patent No. 4179, (Act No. 926), situated at Barangay Pico, Municipality of La Trinidad, Province of Benguet, Island of Luzon, containing an area of SEVEN HUNDRED (700) square meters; that TCT No. T-28172 was a transfer from TCT No. T-26779 which was cancelled insofar as the above-described 700 sq.m. property is concerned. On the other hand, Trinidad Baptist Church , is a religious corporation sole, the purpose of which is for the administration of its affairs, temporalities and to acquire real and personal properties. On February 14, 1991, a Deed of Donation of Real Property was executed whereby Vincent Bulasao, Susana Bulasao and Juliet Bulasao transferred and conveyed by way of donation unto Trinidad Baptist Church , his heirs and assigns, a portion of Transfer Certificate Title No. T-26779, consisting of 700 square meters and now covered by TCT No. T-28172. AIcECS 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 Trinidad Baptist Church 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 failure 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) However, if the same property acquired by gift is subsequently conveyed by way of sale or exchange, the sale will be 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, whichever is higher, of such land and/or building. (Revenue Memorandum Circular No. 007-12) . If the Trinidad Baptist Church 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. cAHIST 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