BIR Ruling [DA-182-01]

October 08, 2001 BIR RULING [DA-182-01] 2nd Indorsement September 25, 2001 Referred back to Mr. Jaime B. Santiago, CESO V, Regional Director, Revenue Region No. 13, Cebu City, Attention: Iluminado Q. Cainta, Revenue District Officer, Revenue District Office No. 82, the entire docket of the International Corporate Bank, with the information that the capital gains tax under Section 34(h) of the NIRC of 1977, as amended by Batas Pambansa Bilang 37 and implemented by Revenue Regulations No. 8-79, applies only to individual taxpayers, estates and trusts and not to corporations. Accordingly, the International Corporate Bank, a duly organized corporation, is not required to pay said tax on the transfer of its three parcels of land to the National Development Company. The prohibition in Section 1 of Batas Pambansa Bilang 37 that no document transferring real property shall be registered unless the capital gains tax imposed therein is paid applies only to transfers of property by individuals, estates and trusts and not to corporations. Section 5 (a) of Revenue Memorandum Circular No. 41-86 categorically provides: "5. BIR Clearance . Batas Pambansa Bilang 37 provides "no registration of any document transferring real property shall be effected by the Register of Deeds unless the Commissioner of Internal Revenue or his duly authorized representative has certified that such transaction has been reported and the tax herein imposed, if any has been paid. (a) The said clearance is required only if the vendor/transferor is an individual, estate or a trust. Accordingly, such clearance is not required if the vendor/transferor is a corporation, regardless of whether or not the real property was a capital asset in the hands of said corporation." The capital gains tax provided under Section 27(D)(5) of the NIRC of 1997 cannot be imposed on the said transfer as it is well-settled that laws do not have retroactive application. However, the Revenue District Officer who has jurisdiction over the International Corporate Bank shall be directed to conduct the necessary factual investigation to ascertain whether or not the income tax due on the transfer had been paid by the International Corporate Bank. This, however, is without prejudice to the registration of the properties under consideration in the name of the National Development Authority. (SGD.) MILAGROS V. REGALADO Acting Assistant Commissioner Legal Service