Municipal Government of Kalayaan Laguna

April 2, 2008 BIR RULING [DA-217-08] 101 (A) (2); DA-481-98 Municipal Government of Kalayaan Laguna Real St., San Juan, Kalayaan Laguna Attention: Mr. Emmanuel C. Magana Municipal Mayor Gentlemen : This refers to your letter dated October 13, 2006, requesting for exemption from the payment of donor's tax under Section 101 of the Tax Code of 1997. Documents submitted disclosed that the Philippine National Oil Company (PNOC),a government owned and controlled corporation is the owner of a property located at Sitio Lunao, Bgy. Longos, Kalayaan, Laguna, specifically Lot No. 3521 of Longos Cadastre with a total area of 41,185 sq.m. and more particularly described in TCT No. T-6907 of the Land Registry, to wit: "A parcel of land (Lot 3521 of the Cadastral Survey of Longos),with the improvements thereon, situated in the Municipality of Longos. Bounded on the N. by Lot Nos. 3522, 3873 & 3876; on the E. by Lot Nos. 3877, 3901 & 3521; and on the W. by a road and Lot No. 3519". that a 4-meter wide municipal road has traversed the PNOC Kalayaan Property, which has affected an area of 630.78 sq.m. and separated 4,309.66 sq.m. portion from the whole property; that the 630.78 sq.m. portion has long been utilized as a barangay road, which lot forms part of the municipal road network of Kalayaan, Laguna; that the existing road serves as a farm to market road for a population of 5,000 residents who thrive on farming and agriculture as their basic source of livelihood; that the Municipality of Kalayaan (Donee),through its Sangguniang Bayan Resolution No. 107, T'2003, has requested the PNOC to donate to the local government of Kalayaan, Laguna the 630.78 sq.m. portion of the Kalayaan Property in favor of the Donee; that the Donee shall be responsible for the conduct of survey of the affected portion and payment of fees/taxes and other fees/charges that may be incurred for the deed of donation of said portion; and that PNOC, duly authorized by its approving officer/s donates in favor of the Municipality of Kalayaan, Province of Laguna, 630.78 sq.m. portion of the PNOC Kalayaan property under the condition that the donee shall undertake to exclusively utilize the lot as a municipal road. CSTDIE In reply, please be informed that inasmuch as the donee is a political subdivision of the National Government and the real property subject of said donation shall be exclusively utilized as a municipal road, the aforesaid donation is exempt from the payment of donor's tax pursuant to Section 101 (A) (2) of the Tax Code of 1997. Moreover, the Deed of Donation executed for the purpose is not subject to the documentary stamp tax. However, the notarial acknowledgment on said deed is subject to the documentary stamp tax of P15.00 imposed under Section 188 of the Tax Code of 1997. (BIR Ruling No. DA-481-98 dated November 9, 1998) Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service