BIR Ruling No. 67-2018

RI,P L] BL] C OII -iHi:, PHILIP]]iNES DEPAF:I'i\4E.NT ()Ir FINANCF BUREAU GF INTERNAI RE\tsNUE Quezon Cig Section 101 (AX2) of the Tax Code of 1997 " BIR RulingNo. i74-13; BiR Ruling No. 231- l2: IIIR Ruiins No. 499-11 noSz-niB IjAVAO CITY WATER. DTSTRTCT F.rn 5" .lose P. Laurei Avenue. Baiada. Darac City 8{)U0 Afiention : Mr. Edwim V. Regalado, MPA al r g :A c / i ri (j e ne: r Jv{cna g r: [jentlenren: T'iris leiers to y':ur letter dated Januarl' 8,2A73. requesting for ihe issirarrce of a []erli1l;ate r:f Tax Exemption of donor's tax reiative to the Deed of Donation made by Afsq)ns i]er,eloprnenf anri dnvestrnenf Corponation {al,DEVIN{lO) to ilavao CifS Vtdten flistnict (DCWD) pursuani to Seciion l0l (A)(2) of the Tax Code of 1997" as amcndeci. Docunrents submitted shovi that ALDITVI}{CO (hereinafLer referred to as "l-)orioi'') with Taxpa)/er's ldentification No. (fIN) rs a corporatron organized and existing under Phiiippine lav;s and representpd bf its Execrutive Vice Presiderit. Ms. Rosvida A. Dominguez, wha v.'as ciuly authorized by the Board of llii'er-tor,s of the oorpcration to execute the Deed of Donation; that the donee, L-rCV/D is aJcrcal \'v'al.erciistriclcreatedandorganizedhy vinueofPresidentialDecreeNo. i98.as amendecl: tl:iat it is a government-orr,'ned or conlrolled corporation with original charter pursuaill to tlie ruling in tire case entitled Davuo ('i4 worn, District, et crl, y. CSC. et al. GR itto. 92:37-38 dctted Septemher 13, 1991, that the donor is the developer of Davao l'lola'r'e honies - a socialized housing pro.ject in Barangay Indangan. Buirangur District. l)ar.'ao Citi' on which the proper-ty donated is located; that the donor is the registered cwner of a parcel of land covered by Transfer Certificate of Title (TCT) lio. 'I-306iti4 issttecl by the Register of Deeds, City of Dar,ao, more particulariy described and bounded as fbllows: 1. A pctrcel of land o./'the consolidation and subCivision project (Lot Block Pc,s- o.f the consolidation ctnd subclivisiun plan of Loi,r Pscl- being ttpprit'tir;iz Psd- f'.s'd- Ps'd- situated al Iiarangot ln,:lartgurt, Cin' o.i Dcvurt. containing an area cs"{ TI|/O HU\|DRED Fi!:'l"i t'250t :rO(;,,[RE METERS. morc cr les,s \}J

Davoo Cirv Water Disrrict tDuunv;tnrlJc ) ni ? lhat a Deeci of I)on:itiou v,,as executed on Augusl 2-2()i2 r'.drereb,v* AI-DE\,'fi'l'.-)., :',..,,,,:'- the aforernentioned propeily in fa.,,or oi DC'\VD reflresented b;,' its llcri;i,. ,,,--.,. Itlanbger. it4r. Eci-*,in r/. ReEaiaclo; rtrat the p;:operty donated shall be utiilzerl ;:.'',r...;- r '.: ii:l:'.,,: f-or the donee's 'yva.ier: expansion pr'ojects. arrrj tliai the dcnee acceples the .:r ,, tire conditiors set foriir as embodied in the Deei of Donation. In replv. piease be intornied that Section 10i (At(2) of the Ta>; Cc':i',- .,- amencletl. prorrides: "^ErEC" 1{,t}. Exerryttiun af Ce,rtain Gi;1s.- The follot'ting gift,s or dL\natiot'ts shall h,: exeirt'p! -iront iJ.re iax orot,lded ib,' ir tJtis t-'it:.;tt!::r' (li in the Cs^ve of Gi/is hlari*'h..,, a R.csident.- )::x:d (2) {-iiiis wtatie to or.J'or tlzr: r::;r:,t/ tlzc Neiionci Governmcni Or Qn.i't'tli't1, treaicci 43'L:nl'o/ii.t alcncie,c v'hicLi i,y tioi conrlur-:iyr"i..lor nrci)t. /)r io {;ti,'j) ,politir::ti subdivisiot: o.f. ihe :; tl i u' (i r t let' t : nt!it !,' tii i'-i I tr According tc the aLrove. donaii<;r:s macle ibr iht: use of thel"Iatiolei '.1,-'-,"::-':r*'-' ol an)'en1it),created political sunilivisiun b.,,ar,),of its ii-gencieri uznich is -ntlceteorio:enrdnuptctiirodmf,clrthue.rit:ii',,:.':1r)ir:'"":,,r, :-r',' rlf the :raid Crovernillcut s;iiali ,,. - Consideringlhati.hedorrirtionof?,pe.rcrluiiaiidviE-snrade h"r':AI-L-)EYi.l'{Ca,',t:-; ,...,: . DC't'iiff . a go\i errulient-owi'red or con'ir'irli,;i cntiLl,' iloi. orgardzed for profit" s:ri,:. ,,1: ,.-,-. 'r isexempiii"omdonor'star:. (BtRll*lin'"1/rr i'i,4-l.idaiedt\,4r:.u!7,iiti3,i Moi'ioveL, tire aforesaicJ Ljr-eil of l..rl,ni,iiol ir; ncl srrrb.iect to docum:i,rii:ir' !--ri,.- iax under 5lr:ction I95 of the Tax []ocle af lWi. es an:icn.ied, buI oni]'to the dc,::i-rr,.::::::,'.' stamo tax of,Pi5.00 on certificati.in under Sectiorr 188 of the salne Co'de, r,l.-.1' -;-,',:": N"o. 232-l{il2 clated Aiarch 29, 2t)l:) The Conation is" howeu*t. slb,ject iJ vaiue-rrcidc,cj tax iVA.I) sirrc..l 'rn3 vat-registereci i"eal esiate deveioper ancl the donarcd pr"openies are cieeilr,::rj ASSEtS. In BIR P.nling No. 199-lt)i l "11'the cioneir ir, a \i aiue-A.dde,J Tax ( \iA i') regisiereil person aiid the dcinaLior is an licinar)'asser. ihe donation is subject to VAT' pursuani to Secticn 4JA6-7 of Revenile FLes'uriatic.ns (R-R.) No. 16-20()-5. tiie s;in'ie being considereri a transaciion cleemecl sale. but the input \/A'i atrributed to rhe: VAT roriion of tire cosr of the cionation shouid be deducreri fiom accumuLateci innui \/,liT oi'ti1c donor'. if the cicnor i:: nci a VAT regisiereij person, tlie donation is ex^empt iron-: \iAT " i \t /

Davoo City Water District t'Uc/*,-U i{i Page 3 of 3 1"*atuaj1& If tire same properties acquired b.v girt are subseqllentiy conve)'ed b)' 'way of sale or exchanse. the sale wiil be subject to corporate inccme iax on the gain realized r,v'hich is detennined b1' deductins frcm the gross seiling price the hisrorical cost or the adjusted basis thereof. as it wotiid be in the hands of the donor. pursuant ro Seciion 27 in r"elation to Section lOi. both of the Tax Code af 1991. as amencieci, and consequentll' to the creciirable exparrcied'withhoiding tax under Section 2.57.2 of RRNo. 2-98. as amencied. li DCWD cionates the same properiies iionaied to it to a non-exempi donee" it shall be liable for donor's tax pursuant to Section 98 of the Tax Code of 1997, as amended. It is understcicrd thar this rr-rlins is never intended and shali not be construed as gi.",ing autiroritl' to tlie Register of Deecis of Davao City' to effect transibr of the land tities in the narlle oi'the <ionee '"vithout tire necessary certificate of authority ro register issued b,l'this Buleau. in tiris regard. this ruling sirali be presented to the R-evenue District Office No. 132-East. Davao Citi' in order fbr ther lattel to issue the Cecificare Authorizing Registration (CAR;. T'iie CAR shall oniy be issued after the submission of the requirements pro'r,ided unCer .RIIO 15-2003. T'his ruling is being issued on the basis crf the foregoing facts as represented. Florve'ier" if rrpol investigaticn. it will be disclosed that the fzrcts are difr'brent. then this n"llinq shall lre considered null arrd void. VeiY truiy ]/ours, *z/\,^;:-d)<\c,--\- \:hfl^'- \,/ CANISAR. R.. I}LTN,AV Commissioner of ig1l'*H'flLfflf o ll- l-.li\C