BIR Ruling No. 333-11

September 2, 2011 BIR RULING NO. 333-11 RA No. 95; RA 10072; BIR Ruling No. DA-392-2006 The Philippine National Red Cross National Headquarters, Bonifacio Drive Port Area, P.O. Box 280 Manila 1803 Attention: Gwendolyn T. Pang Secretary General Gentlemen : This refers to your letter, dated April 12, 2010, requesting for a confirmatory ruling that the donation of a parcel of land containing an area of six thousand (6,000) square meters made by S.C. Johnson & Son, Inc. in favor of the Philippine National Red Cross ("PNRC" for brevity) is exempt from the Donor's Tax. It is represented that the PNRC, which was chartered and organized in 1947 through Republic Act (RA) No. 95 , is the premiere humanitarian organization in the country, the main objective of which is to alleviate human suffering; that during wartime, the PNRC assumes a neutral, non-combative posture to attend to those wounded in battle, or to non-combatants adversely affected by war, and during peacetime, the PNRC provides aid to victims of natural or man-made calamities; and that the PNRC's charter provides that all donations made to the PNRC are exempt from Donor's Tax. It is further represented that on February 13, 1976, S.C. Johnson & Son, Inc. donated, in favor of the PNRC, a parcel of land located at Estrella St. Guadalupe Viejo, Makati City, consisting of a total area of 6,000 square meters and covered by Transfer Certificate of Title (TCT) No. 75862. Expressly excluded from the donation, however, were the buildings and improvements, machinery, equipment and movables found thereon, which continue to belong to S.C. Johnson & Son, Inc. In reply, please be informed that Section 4 of RA No. 95 , as amended by Presidential Decree (PD) 1294, clearly exempts from Donor's Tax all donations made to the PNRC, to wit: "Section 4. In furtherance of the purposes mentioned in the preceding sub-paragraphs, the Philippine National Red Cross shall: xxx xxx xxx b. Be exempt from payment of all duties, taxes, fees, and other charges of all kinds on all importations and purchases for its exclusive use, on donations for its disaster relief work and other Red Cross services, and in its benefits and fund raising drives all provisions of law to the contrary notwithstanding." (Emphasis supplied) aHSAIT It is worthy to note that while Executive Order (EO) No. 93 dated March 10, 1987, revoked the tax and duty exemption privileges of government and private entities, this Office, in BIR Ruling No. DA-392-2006 dated June 26, 2006, citing BIR Ruling No. 014-99 dated February 1, 1999, ruled that such revocation did not apply to tax exemption privileges of PNRC. Thus: ". . . the withdrawal of all tax and duty incentives granted to private entities refers to private entities which are engaged in trade or business or an economic activity. It does not therefore apply to PNRC which is a non-profit and charitable organization." "Such being the case, the tax exemption privileges of PNRC under Section 4 of Presidential Decree No. 1264 still subsists and has not been withdrawn by Executive Order No. 93." emphasis supplied Moreover, the tax exemption privileges of PNRC have been reiterated with the enactment of Republic Act (RA) 10072, which took effect on June 8, 2010. Section 5 of the said law provides, viz. : ". . . all donations, legacies and gifts made to the Philippine National Red Cross to support its purposes and objectives shall be exempt from the donor's tax and shall be deductible from the gross income of the donor for income tax purposes or from the computation of the donor-decedent's net estate as a transfer for public use for estate tax purposes xxx xxx xxx" (emphasis supplied) 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. ASTcaE Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue