BIR Ruling No. 494-2020

HE

KE REPUBLICOF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Quezon City

RA No.8525;Section 34(H)(2) of 1997, as amended BIR Ruling No. 292-2016 National Internal Revenue Code

T-0494-2020 SEP 0 8 2020

Langkaan, Dasmarinas, Cavite 4114 HOCHENG PHILIPPINES CORPORATION Lot 2. Blk. 4, Phase III, First Cavite Industrial Estate

Attention: MORNALIZA A. BELARDO

OIC for Operations

Gentlemen:

particularly (Caritas Bukid Kabataan Elementary School, Hugo Perez Elementary School, otherwise known as the Adopt-A-School Act of 1998. PHILIPPINES CORPORATION for the avaiiment of the exemption from donor's tax and Southville Elementary School and Tropical Village Elementary School) under the Department of Education, herein referred to as DepEd, in accordance with Republic Act (R.A.) No. 8525, deductibility of the total donation of This refers to your letter dated April 23, 2018, requesting on behalf of HOCHENG to various Public Schools in Cavite

(MOA) with various Public Schools in Cavite, under DepEd, to wit; Identification Number (TIN) the Securities and Exchange Commission (SEC) under SEC Registration No. HOCHENG PHILIPPINES CORPORATION entered into a Memorandum of Agreement It is represented that HOCHENG PHILIPPINES CORPORATION, with Taxpayer is a domestic corporation duly registered with : that

Hugo Perez Elementary Caritas Bukid Kabataan Southville Elementary Elementary School Elementary School Tropical Village Public Schools Schooi School July 12,2017 July 03, 2017 July 13,2017 July 05,2017 Date of MOA TOTAL Date of Deed July 25, 2017 July 27,2017 July 21;2017 Aug.8,2017 of Donation of Acceptance Aug. 15,2017 Date of Deed July 25,2017 July 27,2017 July 28, 2017 Donation Closet Water Acquisition Cost

dated February 06, 2017 issued by the National Economic and Development Authority (NEDA), the Adopt-A-School Program.is considered a Priority Project in the National Priority that pursuant to said MOA, HOCHENG PHILIPPINES CORPORATION, represented by DepEd whereby the former donated to the latter Water Closets with a total cost of that Leonor Magtolis Briones, Secretary of the DepEd, Chairperson, Coordinating Council indorsed the application for tax incentives of HOCHENG PHILIPPINES CORPORATION relative to the above-donation. Plan of the Government for the year 2017. its Vice President for Operations, Judy G. Geregale, executed a Deed of Donation. in favor of thereof amounting to for a total amount of of which amounts to and that per Certification plus an additional

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In reply, please be informed that under Section 34 (H) (2) (a) of the National Internal Revenue Code of 1997, as amended, donations to the Government, its agencies or political subdivisions are deductible in full from the gross income of the donor. However, donations not in accordance with the National Priority Plan are subject to limited deductibility or deductions

to an amount not exceeding 10% in the case of an individual and 5% in the case of a corporation of the taxpayer's taxable net income as computed without the benefit of this deduction.

Moreover, Section 5 of RA No. 8525 provides for an additional deduction from the gross income of the adopting entity equivalent to fifty percent (50%) of the expenses incurred for the project, to wit:

additional deduction from the gross income equivalent to fifty percent (50%) of Provisions of existing laws to the contrary notwithstanding, expenses incurred by the adopting entity for the 'Adopt-a-School Program' shall be allowed an Such expenses. "SECTION.5. Additional Deduction for Expenses Incurred for the Adoption.

of the property. . . Valuation of assistance other than money shall be based on the acquisition cost

provides for the guidelines in the availment of the additional deduction for the expenses incurred by the adopting entity: The above provision is implemented by Revenue Regulations (RR) No. 10-2003 which

qualified adopting private entity, which enters into an Agreement with a public SECTION 3. Tax Incentives Accruing to the Adopting Private Entity.-A pre-

school, shall be entitled to the following tax incentives:

contribution/donation that were actually, directly and exclusively incurred for (a) Deduction from the gross income of the amount of

the Program, subject to limitations, conditions and rules set forth in Section 34(H) of the Tax Code, plus an additional amount equivalent to fifty percent (50%) of such contribution/donation subject to the following conditions:

which the expenses have been paid or incurred; (1) That the deduction shall be availed of in the taxable year in

(2) That the taxpayer can substantiate the deduction with sufficient evidence, such as official receipts or delivery receipt and other adeguate records -

(2.1) The amount of expenses being claimed as deduction;

(2.2) The direct connection or relation of the expenses to

a-School Program. The adopting private entity shall the adopting private entity's participation in the Adopt- also providea list of projectsand/or activities

undertaken and the cost of each undertaking, indicating

utilized as supported by the Agreement; and in particular where and how the assistance has been

contributed/donated property by the recipient public school. (2.3) Proof or acknowledgment of receipt of the

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the RDO having jurisdiction over the property, if the Revenue District Office (RDO) having jurisdiction over the place contribution/donation is in the form of real property. ' endorsed by the National Secretariat, shall be filed with the of business of the donor/adopting private entity, copy furnished (3) That the application, together with the approved Agreement

compliant with the requirements set forth under Section 3 of RR 10-2003, the amount it fully deductible from its gross income, plus an additional deduction equivalent to fifty percent Ruling No. 292-2016 dated June 27, 2016) actually, directly, and exclusively incurred for the Water Closet amounting to thereof in the amount of In view of the foregoing, since HOCHENG PHILIPPINES CORPORATION is or a total deductible amount of (BIR is

provides that: Lastly, Section 101(A)(1)' of the National Internal Revenue Code of 1997, as amended,

shall be exempt from the tax provided for in this Chapter: "SECTION 101. Exemption of Certain Gifts. - The following gifts or donations

(A) In the Case of Gifts Made by a Resident. -

xxxXxx xxx

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. (1) Gifts made to :or for the use of the National

PHILIPPINES CORPORATION to DepEd is also exempt from the payment of donor's tax. (BIR Ruling No. 292-2016 dated June 27, 2016) Thus, pursuant to the above quoted provision, the donation made by HOCHENG

if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoing facts as represented. However.

Very truly yours,

asm1y

Commissioner of Internal Revenue CAESAR R.DULAY G 036580

K-1-JAC

1 Renumbered by Republic Act No. 10963.