BIR Ruling [DA-128-02]

July 25, 2002 BIR RULING [DA-128-02] 21 (e); 196; 056-88 Intramuros Administration 5th Floor, Palacio del Gobernador Corner General Luna & Aduana Streets Intramuros, Manila Attention: Dominador Ferrer, Jr. Administrator Gentlemen : This refers to your letter dated May 16, 2001, as indorsed by the office of Director James H. Roldan of the Department of Finance on July 31, 2001 relative to your request for exemption from payment of the capital gains and documentary stamp taxes on the sale of a parcel of land in favor of the Intramuros Administration by Strategic Investment Development Corporation (SIDC) formerly Human Settlements Development Corporation, an attached agency of the defunct Ministry of Human Settlements. It is represented that on December 20, 1990, a Deed of Transfer was executed by SIDC in your favor involving a parcel of land situated at the corner of Anda, Real and Arsobispo Streets, Intramuros, Manila and covered by TCT No. 145197 of the Registry of Deeds for the City of Manila; that SIDC is now in the process of transferring the title to the said property to the Intramuros Administration; that it is provided in Section 18 of the Rules and Regulations Governing the Development of Intramuros which implements P.D. 1616, the law creating the Intramuros Administration, as amended, and which became effective on April 10, 1979, that: "Section 18. Eminent Domain. The Administration shall be exempt from the payment of documentary stamp tax, registration fees and other taxes, dues and fees incidental to the issuance of title to it of property acquired by it through sale or expropriation." hence, this request for exemption from payment of the capital gains and documentary stamp taxes. In reply thereto, please be informed that P.D. 1931, which was issued on June 11, 1984, withdrew all exemptions from the payment of duties, taxes, fees, imposts and other charges granted in favor of government-owned or -controlled corporations, including their subsidiaries. Moreover, Executive Order No. 93, which took effect on March 10, 1987, withdrew all the tax and duty incentives granted to government and private entities. ( BIR Ruling No. 056-88 dated February 24, 1988 ) However, some of these withdrawn incentives had been restored on a case to case basis by the Fiscal and Incentive Review Board (FIRB), an agency tasked to review and restore tax and duty incentives. In the case of the Intramuros Administration, there has been no such restoration of tax incentives from that time to this date. Such being the case, the aforementioned sale of a parcel of land by SIDC in favor of the Intramuros administration is subject to the capital gains and documentary stamp taxes. Considering the delay in the presentation of the sales document, the rules on the kind of tax, rate of tax, zonal or fair market value obtaining at the date of notarization shall be applied, but the penalties for late filing of return and payment of tax shall be imposed. There is a delay in the presentation of sales document when the taxpayer submits said document to the BIR after 30 days from date of notarization. The delay could be in terms of days, months or even years. For this purpose, the Intramuros Administration has the burden of proving through the submission of other documents, such as cancelled checks, official receipts, contract to sell, or certification of the archive official in order to show that there is no ante-dating of public instrument. However, if the Administration cannot present additional receipts or documents to establish a bona fide transaction, then the rules applicable at the time of presentation of the document shall be applied, but no penalty shall be imposed. ( RMC 34-91 dated April 8, 1991 ) 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, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal & Inspection Group