BIR Ruling No. 376-12

June 6, 2012 BIR RULING NO. 376-12 Section 101 (A) (3) of the Tax Code of 1997; BIR Ruling No. 387-11; BIR Ruling No. 300-11; BIR Ruling No. 241-11 Central Luzon Conference Corporation of Seventh-Day Adventist Church 20 Governor Pascual Avenue Potrero, Malabon City Attention: Pastor June J. Canosa Legal/PARL Director Gentlemen : This refers to your letter dated August 2, 2011 requesting for tax exemption of the donation of a parcel of land to CENTRAL LUZON CONFERENCE CORPORATION OF SEVENTH-DAY ADVENTIST CHURCH. It is represented that CENTRAL LUZON CONFERENCE CORPORATION OF SEVENTH-DAY ADVENTIST CHURCH with Taxpayer's Identification Number (TIN) 026-001-096-205, is a religious organization duly organized under the laws of the Philippines, registered with the Securities and Exchange Commission (SEC) under Registration No. ANO91199519 dated December 23, 1991; that Ramolito Abat Guinomma, with TIN 101-713-675, is the registered owner of a parcel of land designated as Lot 4-A situated in Brgy. of Upper Bicutan, City of Taguig, Metro Manila as evidenced by Transfer of Certificate of Title No. T-11266 with an area of Seventy Six Square Meters and Twenty Nine Square Decimeters (76.29) more or less of the Registry of Deeds of Taguig City; and that a Deed of Donation dated July 29, 2011 was executed between Ramolito Abat Guinomma as donor and CENTRAL LUZON CONFERENCE CORPORATION OF SEVENTH-DAY ADVENTIST CHURCH, as represented by Pastor June J. Canosa, as donee, wherein the donor transfers and conveys by way of donation the said parcel of land to the donee, who in turn, accepts the donation. In support of its request, CENTRAL LUZON CONFERENCE CORPORATION OF SEVENTH-DAY ADVENTIST CHURCH has submitted the following documents: 1) Letter application for donor's tax exemption; 2) Original duplicate copy of Deed of Donation dated July 29, 2011; 3) Original electronic copy of Transfer of Certificate of Title No. T-11266; 4) Certified true copy of Tax Declaration of by Transfer of Certificate of Title No. T-11266; 5) Original copies of the Certificate of Incorporation and By-laws; 6) Copy of BIR Certificate of Registration. In reply, please be informed that gifts in favor of educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited non-government organization, trust or philanthropic organization or research institution or organization is exempt from the payment of the donor's tax pursuant to Section 101 (A) (3) of the NIRC of 1997, as amended, subject to the condition that not more than thirty percent (30%) of said gift shall be used by the donee for administration purposes. (BIR Ruling No. 241-11 dated July 22, 2011) Inasmuch as the CENTRAL LUZON CONFERENCE CORPORATION OF SEVENTH-DAY ADVENTIST 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 corporate income tax on the gain realized which is determined by deducting from the gross selling price the historical cost or the adjusted basis thereof, as it would be in the hands of the donor, pursuant to Section 27 in relation to Section 101, both of the Tax Code of 1997, as amended, and consequently to the creditable expanded withholding tax under Section 2.57.2 of Revenue Regulations No. 2-98, as amended. If the CENTRAL LUZON CONFERENCE CORPORATION OF SEVENTH-DAY ADVENTIST 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. 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