BIR Ruling No. 498-11

December 15, 2011 BIR RULING NO. 498-11 Sections 101 (A) (2), 196 & 198 of the Tax Code of 1997; BIR Ruling No. 175-11 Hon. Genaro M. Mendoza Office of the City Mayor City of Tarlac Gentlemen : This refers to your letter dated January 27, 2009, requesting for exemption from the payment of donor's tax under Section 101 of the Tax Code of 1997. Documents submitted disclosed that the Philippine National Oil Company (PNOC), a government-owned and controlled corporation duly organized and existing under and by virtue of Presidential Decree No. 334, with principal business address at Bldg. 6, Energy Complex, Meritt Road, Fort Bonifacio, Metro Manila, is the owner of a property located at Barangay Salapungan, City of Tarlac described as Lot 5 of the subdivision plan Psd-03-164168 being a portion of lot Psu-72859 with a total area of Two Hundred Forty Seven (247) sq. m.; that a chapel constructed in 1952 on Lot No. 5 has become by tradition the place of worship of the local residents and said lot is one of the six (6) subdivided from lot Psu-72859 for sale to six informal dwellers; that the City of Tarlac, through its Mayor, has endorsed to the PNOC President the letter request of the Barangay Chairman of Salapungan regarding the possible donation of the PNOC-owned lot to the said barangay since neither the Pastoral Council of Salapungan nor the local government of Tarlac is able to provide funds for the purchase of the same; that PNOC, as part of its corporate social responsibility, donates in favor of the City of Tarlac, Lot No. 5 consisting of 247 sq.m. with a fair market value of Six Hundred Ninety One Thousand Six Hundred Pesos (P691,600.00) covered by TCT No. 261227 of the Registry of Deeds of Tarlac, more particularly described as follows: "TCT No. 261227 A parcel of land (Lot No. 5 of the subdivision plan Psd-03-164168, situated in Barangay Salapungan, bounded on the N., alongside 1-2 by lot 6; along line 2-3 by lot 7 both of the subd. Plan; on the E., along line 3-4 by Prop. of J. Espinosa; on the S., along line 4-5 by lot 4 of the subd. Plan; on the W., & NW., along line 5-6-1 by Tarlac Gerona Prov. Rd. Beginning at a point marked "1" on plan being N.13 deg. 08'E., 1690.93 m. from BLLM.2, Tarlac Cad. thence S. 85 deg. 34'E., 14.74 m. to point 2; thence S. 85 deg 39'E., 5.13 m. to point 3; thence S. 00 deg. 19'W., 11.54 m. to point 4; thence N. 85 deg. 03'W., 22.23 m. to point 5; thence N. 03 deg. 04'E., 7.15 m. to point 6; thence N. 26 deg. 36'E., 4.50 m. to point of beginning; containing an area of TWO HUNDRED FORTY SEVEN (247) square meters more or less. All points referred to are indicated on the plan and are marked on the ground by PS cyl. Conc. Mons. 15x40cms. Bearings True." In reply, please be informed that Section 101 (A) (2) of the Tax Code of 1997 provides, viz. : "Sec. 101. Exemption of Certain Gifts. The following gifts or donations shall be exempt from the tax provided for in the Chapter: TIADCc (A) In the Case of Gifts Made by a Resident. (1) . . . (2) Gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government; and xxx xxx xxx" Considering that the above donation was made by PNOC in favor of the City of Tarlac, a political subdivision of the National Government, said donation, therefore, is exempt from donor's tax. (BIR Ruling No. 175-11 dated May 27, 2011) Moreover, the Deed of Donation is not subject to the documentary stamp tax as prescribed by Section 196 of the Tax Code of 1997. However, the acknowledgment of the Deed of Donation before a notary public is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the same Code. 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 as null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue