April 4, 2013

BIR RULING NO. 128-13

Sec. 101 (A) (3) of the Tax Code of 1997;

BIR Ruling No. 300-2011

Atty. Geraldine E. Jorda

Sto. Niño Pilgrim Center
Osmeña Blvd. cor. Burgos St.
Cebu City

Ma'am :

This refers to your letter dated 16 August 2011 indorsed to this Of ce by

Revenue Region No. XIII, Cebu City on September 1, 2011, requesting exemption from
donor's tax on the donation of four (4) parcels of land executed by Fr. Jerome P.
Mesina ("Donor") in favor of the Prior Provincial of the Augustinian Province of Santo
Niño de Cebu-Philippines, Inc. ("Donee").
Documents submitted show that on 16 June 2011, the Donor, with Tax
Identi cation No. (TIN) 232-292-311, executed a Deed of Donation in favor of the
Donee, a non-stock, non-pro t religious corporation sole, with TIN 000-655-179,
represented by Fr. Eusebio B. Berdon, OSA, over four (4) parcels of land located at
Tolotolo, Consolacion, Cebu, particularly described as follows:
1. A parcel of residential land, described as Lot No. 12000, Cad 545-D
(New), containing an area of 10,747 sq.m., more or less, covered by
Original Certificate of Title (OCT) No. OP-56634;
2. A parcel of residential land, described as Lot No. 7623, Cad 545-D
(New), containing an area of 10,845 sq.m., more or less, covered by
Original Certificate of Title (OCT) No. OP-56635;
3. A parcel of residential land, described as Lot No. 7636, Cad 545-D
(New), containing an area of 25,882 sq.m., more or less, covered by
Original Certificate of Title (OCT) No. OP-56707; and
DCASIT

4. A parcel of residential land, described as Lot No. 7942, Cad 545-D

(New), containing an area of 4,349 sq.m., more or less, covered by
Original Certificate of Title (OCT) No. OP-56708.
that while the above described properties are registered in the name of the Donor, the
true and bene cial owner thereof is the Donee; that as an act of liberality in order to
formalize the ownership of the said properties, the Donor voluntarily and freely
conveyed by way of donation unto the Donee the said four (4) parcels of land.
In support of the request, the following documents were submitted:
1. Letter request for exemption;
2. Certi ed True Copy of the Certi cate of Registration with the
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 Securities and Exchange Commission (SEC) and Articles of
Incorporation of the Donee;
3. Duplicate Original of the Deed of Donation;
4. Certified True Copy of the donor's tax return;
5. Certi ed True Copy of the Original Certi cates of Title of the donated
lots;
6. Certified True Copy of the Tax Declarations of the donated lots; and
7. Certified True Copy of BIR Certificate of Registration of the Donee.
In reply, please be informed that 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
is exempt from the payment of the donor's tax pursuant to Section 101 (A) (3) of the
Tax Code of 1997, as amended, subject to the condition that not more than 30% of said
gift shall be used by the donee for administration purposes.
Inasmuch as the Prior Provincial of the Augustinian Province of Santo Niño de
Cebu-Philippines, Inc. is a religious corporation sole, 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 donation 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 TCT/OCT because
failure to comply with the said condition shall be a ground for the revocation of the
exemption from the payment of the donor's tax.
Section 185 of Revenue 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 aforesaid 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. 300-2011 dated August 12, 2011)
Furthermore, if the donor is a VAT-registered person and the donation is an
ordinary asset, the donation is subject to VAT pursuant to Section 4.106-7 of Revenue
Regulations (RR) No. 16-2005, as amended, the same being considered a transaction
deemed sale. But, if the donor is not a VAT-registered person, the donation is exempt
from VAT. THIcCA

It is to be noted that if the same property acquired by donation 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 RR No. 2-98, as amended. If Prior Provincial of the Augustinian Province of
Santo Niño de Cebu-Philippines, Inc. donates the same property 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.
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 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

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