BIR Ruling No. 612-12

November 8, 2012 BIR RULING NO. 612-12 Sections 101 (A) (2) and 196; BIR Ruling No. 381-2011; BIR Ruling No. 206-2011; BIR Ruling No. 175-2011 City Government of Malabon City Legal Department Malabon City Attention: Elvin R. Cruz City Legal Officer Gentlemen : This refers to your letters dated August 25, 2011 and May 2, 2012 requesting for an opinion as to whether the Deed of Donation between De La Salle-Araneta University, Inc. and the CITY GOVERNMENT OF MALABON is subject to donor's tax. HIcTDE It is represented that De La Salle-Araneta University, Inc. (formerly Gregorio Araneta University Foundation, Inc.) with Taxpayer's Identification Number (TIN) 000-907-882-000, is a non-stock and non-profit corporation duly organized under the laws of the Philippines, registered with the Securities and Exchange Commission (SEC) under Registration No. 28678 dated February 11, 1966 with the purpose "to establish and conduct a Catholic institution of learning in order to provide the youth of the land a complete, general, liberal, technical and nationalistic education within the framework of the catholic faith in all levels of education and in any all the vocations or professions, including a Special Education Program in the Basic Education Department". It is further represented that De La Salle-Araneta University, Inc. is the registered owner of a parcel of land covered by Transfer Certificate of Title No. T-128537 of the Registry of Deeds for Caloocan City, containing an area of Eight Thousand Nine Hundred Twenty Three Square Meters (8,923) sq.m.,more or less. On 17 June 2011, a Deed of Donation was executed whereby De La Salle-Araneta University, Inc. voluntarily cedes, transfers and conveys by way of donation the above-mentioned subject property in favour of the CITY GOVERNMENT OF MALABON "in recognition of the need of the occupants of its property for land to be occupied and cognizant of the policy of the law to give access to land and housing by the underprivileged and homeless citizens, the DONOR has decided to donate the Subject Property to the actual occupants thereof, under a socialized housing program to be administered by the CITY OF MALABON". In support of its request, the CITY GOVERNMENT OF MALABON has completely submitted on July 4, 2012 the following documents: 1) Duplicate original copy of Deed of Donation dated June 17, 2011; 2) Certified true copy of the Transfer Certificate of Title No. T-128537; 3) Certified true copy of City Resolution No. 103-2011 dated July 19, 2011; 4) Certified machine copy of the SEC Amended Articles of Incorporation; and 5) Certified machine copy of the SEC 2011 General Information Sheet. In reply, please be informed that Section 101 (A) (2) of the Tax Code of 1997, as amended, provides: "Section 101. Exemption of Certain Gifts . The following gifts or donations, shall be exempt from the tax ...: (A) In the Case of Gifts Made by a Resident. xxx xxx xxx (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." Applying the foregoing provision, this Office confirms your opinion that the donation by De La Salle-Araneta University, Inc. to the CITY GOVERNMENT OF MALABON, as a political subdivision of the Government, is exempt from donor's tax in view of Section 101 (A) (2),which provides that 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 shall be exempt from tax. (BIR Ruling No. 381-11 dated October 20, 2011; BIR Ruling No. 206-11 dated July 1, 2011; and BIR Ruling No. 175-11 dated May 27, 2011) Moreover, the aforesaid Deed of Donation is not subject to documentary stamp tax under Section 196 of the Tax Code of 1997 but only to the documentary stamp tax of P15.00 on certification under Section 188 of the same Code. However, the Revenue District Office having jurisdiction over De La Salle-Araneta University, Inc. is not precluded from investigating the donor, to verify if the property herein donated formed part of the assets reported on its books of accounts and financial statements. 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. HESCcA Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue