BIR Ruling No. 375-2020

REPUBLICOF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Quezon City

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

DT-0375-2020

JUL 0 3 2020

Langkaan, Dasmarinas, Cavite 4114 HOCHENG PHILIPPINES CORPORATION Lot 2, Blk 4, Phase 3, First Cavite Industrial Estate,

Attention Vice President for Operation JUDY G.GEREGALE

Gentlemen:

PHILIPPINES CORPORATION ("HPC for brevity) for the availment of the exemption Education (DepEd), in accordance with Republic Act (R.A.) No. 8525, otherwise known as the from donor's tax and deductibility of a total donation of p "Adopt-A-School Act of 1998." This refers to your letter dated March 27, 2017, requesting on behalf of HOCHENG to the Department of

Background:

ANHS"for brevity), KALUBKOB ELEMENTARY SCHOOL(KES" for brevity) KAHOY CERCA ELEMENTARY SCHOOL("MKCESfor brevity) are public schools under the Department of Education. corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. MARAGONDON NATIONAL HIGH SCHOOL ("MNHS for brevity), and MAHABANG HPC, with Taxpayer Identification Number (TIN) .On the other hand.ALFONSO NATIONAL HIGH SCHOOL D, is a domestic

executed two Deeds of Donation, dated October 06, 2016 and October 07, 2017. in favor of Pursuant to the said MOA, HPC, through its Vice-President for Operation, Judy G. Geregale, ANHS and MNHS, in which the former proposed to the latter a Water Closet Donation. ANHS and MNHS, whereby the former donated to the latter a total amount of P On October 01, 2016, HPC entered into two Memorandum of Agreement (MOA) with and

2 respectively.

2016, in favor of KES, whereby the former donated to the latter a total amount of P proposed to the latter a Water Closet Donation. Pursuant to said MOA, HPC, through its Vice- President for Operation, Judy G. Geregale, executed Deed of Donation, dated December 16 On December 14, 2016, HPC and KES entered into a MOA, in which the former also

December 20, 2016, in favor of MKCES, whereby the former donated to the latter a total its Vice-President for Operation, Judy G. Geregale, executed Deed of Donation, dated former proposed to the latter a Water Closet Donation. Pursuant to said MOA, HPC, through] amount ofP Also, on December 16,2016,HPC and MKCES entered into a MOA,in which the

indorsed the application for tax incentives of HPC relative to the above-donations. 100% of which amounts to P Leonor Magtolis Briones, Secretary of the DepEd, Chairperson, Coordinating Council, lus an additional 50% thereof amounting to p for a

O

HOCHENG PHILIPPINES CORPORATION PAGE20F3 DT-0375-2 JUL 0 3 2020

National Economic and Development Authority (NEDA), the Adopt-A-School Program is considered a Priority Project in the National Priority Plan of the Government for the year 2016. total amount of P Hence, this request. and that per Certification dated February 01, 2016 issued by the

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. In reply, please be informed that under Section 34 (H) (2) (a) of the National Internal

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

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.

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

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

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

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

(50%) of such contribution/donation subject to the following conditions: 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

(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 -

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

(2.2) The direct connection or relation of the expenses to the adopting private entity's participation in the Adopt- a-School Program. The adopting private entity shall also provide a list of projects and/or activities

undertaken and the cost of each undertaking, indicating in particular where and how the assistance has been

utilized as supported by the Agreement; and

HOCHENG PHILIPPINES CORPORATION PAGE 3OF3 DT-0375-202 JUL 0 3 2020

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

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

additional deduction equivalent to fifty percent (50%) thereof in the amount of Section 3 of RR 10-2003, the amount it actually, directly, and exclusively incurred for the DepEd donations amounting to P In view of the foregoing, since HPC is compliant with the requirements set forth under is fully deductible from its gross income, plus an or

a total deductible amount of P BIR Ruling No. 292-2016 dated June 27, 2016)

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

provides that:

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

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

(1) 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.

Thus, pursuant to the above quoted provision, the donation made by HPC to DepEd is

also exempt from the payment of donor's tax. (BIR Ruling No. 292-2016 dated June 27, 2016)

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.

Very truly yours, taegamwea

K-1-JAC Commissioner of Internal Revenue CAESAR R. DULAY 035473 G

1 Renumbered by RA No. 10963 or the TRAIN Law.