BIR Ruling [DA-026-06]

January 31, 2006 BIR RULING [DA-026-06] 101 (A) (2); DA-331-99 Philippine National Oil Company PNOC Building VI, Energy Center Merritt Road, Fort Bonifacio Taguig City Attention: Atty. Bernadette B. Jugan Manager, Legal Department Gentlemen : This refers to your letter dated September 12, 2005 requesting for a ruling on the exemption from the payment of donor's tax on the donation of 18 hectares of land for socialized housing purposes made by PNOC Petrochemical Development Corporation (PPDC) in favor of the Municipality of Mariveles, Province of Bataan. It appears that on December 9, 1994, a Memorandum of Agreement was entered into between PPDC and the Municipality of Mariveles, Province of Bataan, concerning the PPDC Relocation Site Housing Project, Batangas II, Mariveles, Bataan [pursuant to PPDC Board Resolution Nos. 030-Series of 1998, 049-Series of 1997, 040-Series of 1996, and 009-Series of 1996]. It contained PPDC's commitment to develop the said land into a relocation site for the families of informal dwellers in the area. Thereafter, by virtue of Sangguniang Bayan Resolution Nos. 497 and 492, series of 1998, a Deed of Donation and Acceptance was executed by PPDC in favor of the Municipality of Mariveles, Province of Bataan. In reply, please be informed that the aforesaid donation made by PPDC in favor of the Municipality of Mariveles, Bataan is exempt from the donor's tax pursuant to Section 101(A)(2) of the Tax Code of 1997, which provides that 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 shall be exempt from donor's tax. DHcSIT The Register of Deeds shall, however, annotate this condition at the back of Transfer Certificate of Title because failure to comply with the said condition shall be a ground for the revocation of the donation pursuant to Article 764 of the New Civil Code. (BIR Ruling DA-331-99 dated May 31, 1999) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be ascertained that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service