BIR Ruling [DA-192-03]

June 19, 2003 BIR RULING [DA-192-03] 27 (D) (5); 98; 196 BIR Ruling No. 398-93 (dated October 11, 1993) Pinatubo Project Management Office Bldg. 5413, Kudiaro corner L. Rivera Street, Clark Special Economic Zone, Clark Field Pampanga Attention: Ms. Flordelita I. Arrozal Deputy Executive Director and Director for Operations Gentlemen : This refers to your letter dated November 19, 2002 requesting for exemption from the payment of capital gains and documentary stamp taxes in order to facilitate the transfer of Land Titles which are still under the name of the Mt. Pinatubo Commission to the beneficiaries of the Resettlement Program for the victims of the Mt. Pinatubo eruption and its aftermath, as decreed by the President to be given free to the said beneficiaries. In reply, please be informed that capital gains tax is imposed on every gain presumed to have been realized on the sale, exchange, or disposition of lands and/or buildings which are not actually used in the business of a corporation and are treated as capital assets, based on the gross selling price or fair market value as determined in accordance with Section 6(E) of the Tax Code of 1997, whichever is higher, of such lands and/or buildings. [ Section 27(D)(5), Tax Code of 1997 ) However, considering that the transfer by Mt. Pinatubo Commission of the aforesaid lots to the victims-beneficiaries of the Mt. Pinatubo eruption was decreed by the President to be given free to the beneficiaries in order to facilitate their relocation and therefore alleviate their condition in accordance with the declared national policy of the state, 1 this Office hereby rules that the distribution by the Mt. Pinatubo Commission of the aforesaid lots to the qualified beneficiaries of the Resettlement Program of the Mt. Pinatubo eruption is exempt from capital gains tax imposed under Section 27(D)(5) of the Tax Code of 1997. Likewise, since the transfer of the aforesaid lots to the qualified beneficiaries is without monetary consideration the same is exempt from documentary stamp tax imposed under Section 196 of the same Tax Code. ( BIR Ruling No. 398-93 dated October 11, 1993 ) 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. ECaTAI Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group Footnotes 1. Sec. 9, Article II, The 1987 Philippine Constitution.