BIR Ruling No. 671-2017

REPUBLIC OF THE PHHLIPPINES

DEPARTMENT OF FINANGE BUREAU OF INTERNAL REVENUE

R.A. No. 8525 Section 34(H)(2),Tax Code of (997 BIR Ruling No. 292-2016

: 671-2017 12-20-2017

329 Bonifacio St., Davao City ALSONS DEVELOPMENT & INVESTMENT CORPORATION

Attention: AMADO C. BERNARDINO

AGM-Management Services Group

Gentlemen:

Development and Investment Corporation ("Alsons") for the availment of the exemption from donor's tax and deductibility of the donation of one (1) Technology and Livelihood Education (TLE) Building to Pilar P. Rodriguez Elementary School in Tigatto, Buhangin, Davao City, in accordance with Republic Act (R.A.) No. 8525. otherwise known as the "Adopt-A-School Act of 1998." This refers to your letter dated October 4, 2013, requesting on behalf of Alsons

Commission (SEC) under SEC Registration No. entered into Memorandum of Agreement (MOA) with the Department of Education is a domestic corporation duly registered with the Securities and Exchange Based on the documents submitted, it is shown that Alsons (TIN: : that on August 3, 2012. Aisons

School in Tigatto, Buhangin, Davao City; that on December 3, 2012, Alsons executed a Deed of Donation in favor of Pilar P. Rodriguez Elementary School whereby the former donated to the latter one (1) Classroom Building measuring 7 meter by 9 meter Rodriguez Eiementary School executed a Deed of Acceptance for the donated property: and that Br. Armin A. Luistro FSC, Secretary of the DepEd, indorsed the application for tax incentives of Alsons relative to the above-donation, 100% of which amounts to amount of Buiiding measuring 7 meter by 9 meter dimension with one (1) 1.6 meter by 1.2 meter toilet attached or a total area of 64.92 square meters for Pilar P. Rodriguez Elementary dimension with one (1) 1.6 meter by 1.2 meter toilet: that on Junc 6, 2013. Pilar P (DepEd), whereby Alsons has proposed to DepEd the construction of one (1) Classroom lus an additionat 50% thereof amounting to : for a total

1.671-2017 12-30-2017

Alsons Development and Investment Corporation Page 2 of 3

In reply, please be informed that under Section 34 (H) (2) (a) of the Tax 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:

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

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

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

Agreement with a public school, shall be entitled to the following tax inccntives: Entity. "SECTION 3. Tax Incentives Accruing to the Adopting Private - A pre-qualified adopting private entity, which enters into an

percent (50%) of such contribution/donation subject to the following for 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 contribution/donation that were actually, directly and exclusively incurred conditions: a Deduction from the gross income of the amount of

(1) That the deduction shall be availed of in the taxable year in which the expenses have been paid or incurred; (2) That the taxpayer can substantiate the deduction with sufficient evidence, such as official receipts or delivery receipt and other adequate records -

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

School'Program. The adopting private entity shall "also the cost of each undertaking. indicating in particular where and how the assistance has been utilized as supported by the Agreement: and the adopting private entity's participation in the Adopt-a- provide a list of projects and/or activities undertaken and (2.2) The direct connection or relation of the expenses to

Page 3 of 3 Alsons Development and Investment Corporation 3+672017 12-20-2017

contributed/donated property by the recipient public (2.3) Proof .or acknowledgment of receipt of the school. (3) That the application, together with the approved Agreement of business of the donor/adopting private entity, copy furnished the RDO" having"jurisdiction over " the "property,"if "the contribution/donation is in the form of rcal property. endorsed by the National Secretariat, shall be filed with the Revenue District Office (RDO) having jurisdiction over the place

(b) Exemption of the Assistance made by the donor from payment of donor's tax pursuant to Sections 101 (A)(2) and (B)(1) of the Tax Code of 1997."

compliant with the requirements set forth under Section 3 of RR 10-2003, the amount it actually, directly and exclusively incurred in the construction of the classroom building amounting to additional deduction equivalent to fifty percent (50%) thereof in the amount of dated June 27. 2016) Accordingly. since Alsons Development and Investment Corporation is or a total deductible amount of is fully deductible from its gross income, plus an BIR Ruling No. 292-2016

pursuant to R.A. No. 8525, as implemented by RR No. 10-2003, and Section 101 (A) (2) of the Tax Code of 1997, as amended. (BIR Ruling No. 292-2016 dated June 27. 2016) Lastly, the above donation is likewise exempt from the payment of donor's tax

However, 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.

Very truly yours, Aay

K- Commissioner of Internal Revenue CAESAR R. DULAY 011954