BIR Ruling No. 388-15

October 29, 2015 BIR RULING NO. 388-15 Sec. 101 (A) (3) of the Tax Code of 1997; BIR Ruling No. 221-14 Davao Mission of Seventh-Day Adventist Church, Inc. 5 Palm Drive, Bajada, Davao City Attention: Pastor Jerry C. Patalinghug President-Davao Mission Gentlemen : This refers to your letter dated January 6, 2015 requesting exemption from donor's tax relative to the donation of a parcel of land executed to the Davao Mission of Seventh-Day Adventist Church, Inc. Documents submitted show that Liliosa Bariarcal and Marvalito Bariarcal married to Edna Bariarcal (hereinafter referred to as Landowners) are the registered owners of a parcel of land, identified as Lot 15-A, Psd-11-117336 being a portion of Lot 15, Pcs-11-005248 covered by Transfer Certificate of Title (TCT) No. 142-2012006358 issued by the Registry of Deeds for Province of Davao del Norte. The aforesaid property is situated at Brgy. Poblacion, Maragusan, Compostela Valley with an area of Five Thousand square meters (5,000 sq.m.), more or less. And has no improvement thereon. Davao Mission of Seventh-Day Adventist Church, Inc. (TIN 001-378-221-000), on the other hand, is a religious corporation duly registered with the SEC with Company Registration No. CN201231373 dated September 4, 2012, principally for the purpose of administering the Seventh-Day Adventist Church's temporalities and the management of its properties and estates only. The Treasurer of Davao Mission of Seventh-Day Adventist Church, Inc. has certified that its trustees do not receive any compensation or remuneration in their capacity as such. On March 3, 2014, the landowners, executed a Deed of Donation in favor of the Davao Mission of Seventh-Day Adventist Church, Inc. over the above-mentioned parcel of land, subject to the condition that the donated property shall be used exclusively for the establishment of Church and religious building/s of the Donee or any other institution/facility of the Seventh-Day Adventist Church, educational and medical institutions, socio-civic and other religious and educational purposes by the Davao Mission of Seventh-Day Adventist Church, Inc. In support of its request, Davao Mission of Seventh-Day Adventist Church, Inc., has completely submitted on January 8, 2015 the following documents: 1) Letter application for tax exemption; 2) Original copy of the Deed of Donation; 3) Certified true copy of the Certificate of Registration with the SEC; 4) Certified true copy of the Articles of Incorporation; 5) Certified true copy of the By-Laws; 6) Certified true copy of the TCT No. 142-2012006358; 7) Copy of the Tax Declaration No. 11-05-0001-05512 A; 8) Certification of No improvement from the Municipal Assessor; 9) Verification and Affidavit of Non-Forum Shopping; 10) Board Resolution authorizing Lawrence Lamera to represent the Donee; TAIaHE 11) Donor's Tax Return; 12) Affidavit of Undertaking; 13) Certification from the Davao Mission Treasurer stating that its trustees do not receive any compensation or remuneration in their capacity as such. In reply, please be informed that Section 101 (A) (3) 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 (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 nongovernment 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 administration purposes. For the purpose of this exemption, a 'non-profit educational and/or charitable corporation, institution, accredited nongovernment organization, trust or philanthropic organization and/or research institution or organization' is a school, college or university and/or charitable corporation, accredited nongovernment organization, trust or philanthropic organization and/or research institution or organization, incorporated as a non-stock entity, paying no dividends, governed by trustees who receive no compensation, and devoting all its income, whether student's fees or gifts, donation, subsidies or other forms of philanthropy, to the accomplishment and promotion of the purposes enumerated in its Articles of Incorporation. ICHDca xxx xxx xxx In view of the foregoing, since the donation is made to or for the use of Davao Mission of Seventh-Day Adventist Church, Inc., a religious corporation, which pays no dividends, and governed by trustees who do not receive any compensation, the aforementioned donation by Liliosa Bariarcal and Marvalito Bariarcal married to Edna Bariarcal of a parcel of land without improvement covered by TCT No. 142-2012006358, situated in Brgy. Poblacion, Maragusan, Compostela Valley is exempt from the payment of donor's tax pursuant to Section 101 (A) (3) of the Tax Code of 1997, as amended, provided, however, that not more than 30% of the gifts shall be used by the donee for administration purposes. (BIR Ruling No. 221-2014 dated June 20, 2014) 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. 221-2014 dated June 20, 2014) 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