BIR Ruling No. 435-12

June 27, 2012 BIR RULING NO. 435-12 Section 101 (A) (3), 1997 NIRC; BIR Ruling No. 254-2012; BIR Ruling No. 003-01 Home Baptist Temple of Sampaloc, Inc. 617 M. dela Fuente St. Sampaloc, Manila Attention: Bishop Francisco L. Diendo, Jr. Gentlemen : This refers to your letter dated March 6, 2012 which was indorsed to this Office by the Regional Director of Revenue Region No. 8, Makati City, requesting for exemption from the payment of donor's tax on the donation by Philippine Baptist S.B.C., Inc. of two (2) parcels of land with improvements thereon to Home Baptist Temple of Sampaloc Inc. Documents submitted show that Philippine Baptist S.B.C., Inc. (TIN 002-563-757-000) is the registered owner of 2 parcels of land located at Sampaloc, Manila described as Lots 13 and 8 of consolidation-subdivision plan (LRC) Pcs-3833 both with an area of one hundred twenty (120) sq.m. and evidenced by Transfer Certificates of Title (TCT) Nos. 119779 and 119780, respectively. On February 27, 2012, a Deed of Donation was notarized whereby Philippine Baptist S.B.C., Inc. donates the afore-mentioned properties in favor of Home Baptist Temple of Sampaloc, Inc. (TIN 007-795-373-000), a religious organization registered with the Securities and Exchange Commission (SEC) under SEC Company Registration No. CN201009383. The Articles of Incorporation of Home Baptist Temple of Sampaloc, Inc. states that no part of its net income shall inure to the benefit of any of its members; that the trustees do not receive any compensation; and that in case of dissolution, assets of the corporation shall belong to similar institution or to the government. In reply, please be informed that gifts in favor of educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited nongovernment organization, trust or philanthropic organization or research institution or organization is exempt from the payment of the donor's tax pursuant to Sec. 101 (A) (3) of the Tax Code 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. 254-2012 dated April 20, 2012) CEDScA Inasmuch as Home Baptist Temple of Sampaloc, Inc. is a religious corporation, 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 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 result in subjecting the donation to donors tax. Sec. 185 of Regulations No. 26, otherwise known as the Revised Documentary Stamp Tax Regulations, implementing Title VII of the Tax Code, provides that a conveyance of realty not in connection with a sale, to trustees or other persons without consideration is not taxable. Hence, the above-stated deed is likewise not subject to the documentary stamp tax prescribed under Sec. 196 of the 1997 Tax Code, as amended, but only to the documentary stamp tax of P15.00 imposed under Sec. 188 of the same Code. It is to be noted that if the same properties acquired by gift are 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 RR No. 2-98, as amended. If Home Baptist Temple of Sampaloc, Inc. donates the same properties donated to it to a non-exempt donee, 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