BIR Ruling No. 374-15

October 29, 2015 BIR RULING NO. 374-15 Section 101 (A) (3) of the Tax Code of 1997; BIR Ruling No. 309-14; BIR Ruling No. 221-14 The Coordinator, Sisters of Social Service of Los Angeles, Philippine House, Inc. 138 Medicion 1-A, Imus City, Cavite 4103 Attention: Sister Marilena Narvaez, SSS Coordinator Madam : This refers to your letter dated March 12, 2015, requesting for the issuance of a Certificate of Tax Exemption from the payment of donor's tax on the donation of a portion of a parcel of land executed in favor of THE COORDINATOR, SISTERS OF SOCIAL SERVICE OF LOS ANGELES, PHILIPPINE HOUSE, INC. pursuant to Section 101 (A) (3) of the Tax Code of 1997, as amended. Documents submitted show that HERMANAS DE SERVICIO SOCIAL DE LAS FILIPINAS, INC. (TIN 006-342-338-000) is the registered owner (hereinafter referred to as "Donor") of a parcel of land covered by Transfer Certificate of Title (TCT) No. T-20606 issued by the Register of Deeds, Tagaytay City, more particularly described and bounded as follows: Beginning at a point marked "1" of Lot 2103, Cad-482-D; being N. 65-27 E., 2634.26 m. from BLLM #1, Cad-482-D, Amadeo Cadastre; thence S. 16-08 E., 81.74 m. to point 2; S. 74-09 W., 91.55 m. to point 3; N. 21-05 W., 32-21 m. to point 4; M. 21-05 W. 54.01 m. to point 5; N. 21-38 W., 35-61 m. to point 6; N. 69-34 E., 101.50 m. to point 7; S. 17-30 E. 47.68 m. to point 1; point of beginning, containing an area of TWELVE THOUSAND ONE HUNDRED FORTY ONE (12,141) SQ. M. All points are indicate on the plan and marked on the ground by PS cyl. Conc. Mons. Bounded on the NE, along line 1-2 by Lot 2102, Cad-482-D; on the SE., along line 2-3 by Lot 8713, Cad-482-D; on the SW, along line 3-4 by Lot 8716, Cad-492-D; along line 4-5 by lot 8717, Cad-482-D; and along line 5-6 by lot 8718, Cad-482-D; on the NW., along line 6-7 by Lot 1935; & on the NE., along line 7-1 by Lot 21-04, Cad-482-D. that the aforesaid property is situated at Brgy. Minantoc East, Amadeo, Cavite; that a Deed Donation was executed on February 20, 2015 whereby HERMANAS DE SERVICIO SOCIAL DE LAS FILIPINAS, INC. represented by its Board Chair Sister Michele Eileen Walsh, SSS, donated TEN THOUSAND FOUR HUNDRED NINE (10,409) SQUARE METERS portion of the subject property together with all the improvements found thereon in favor of THE COORDINATOR, SISTERS OF SOCIAL SERVICE OF LOS ANGELES, PHILIPPINE HOUSE, INC. with Taxpayer's Identification No. (TIN) 008-698-034-000, a non-stock, non-profit religious organization (corporation sole) registered with the Securities and Exchange Commission (SEC) under Company Registration No. CN201401434 dated January 23, 2014; and that THE COORDINATOR, SISTERS OF SOCIAL SERVICE OF LOS ANGELES, PHILIPPINE HOUSE, INC. was represented by Yolanda a.k.a. Sister Marilena Narvaez, SSS and has accepted the donation as embodied in the Deed of Donation dated February 20, 2015. In reply, please be informed that Sec. 101 (A) (3) of the Tax Code of 1997, as amended provides: ITAaHc "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 (3) Gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited non-governmental organization, trust or philanthropic, organization or research institution or organization: Provided, however, that not more than thirty percent (30%) of said gifts shall be used by such donee for administrative purposes. . ." xxx xxx xxx Inasmuch as the THE COORDINATOR, SISTERS OF SOCIAL SERVICE OF LOS ANGELES, PHILIPPINE HOUSE, INC. is a religious organization (corporation sole), any donation to it is exempt from the payment of 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. In case of donation of real property, the Register of Deeds shall annotate this condition at the back of the title because failure to comply with the said condition shall subject the donation to donor's tax. Section 185 of Regulations No. 26, otherwise known as the Revised Documentary Stamp Tax Regulations, implementing Title VII of the NIRC, 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 of 1997, but only to the documentary stamp tax of P15.00 imposed under Section 188 of the same Tax Code. (BIR Ruling Nos. 309-14 dated August 4, 2014 and 221-14 dated June 20, 2014) 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 COORDINATOR, SISTERS OF SOCIAL SERVICE OF LOS ANGELES, PHILIPPINE HOUSE, INC. donates the same property donated to it to non-exempt donee, then it shall be liable for donor's tax pursuant to Section 98 of the Tax Code of 1997, as amended. 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