St. Francis Learning Center Foundation, Inc.

April 21, 2008 BIR RULING [DA-263-08] CARP Law St. Francis Learning Center Foundation, Inc. Nibangon, Mangan-Vaca, Subic, Zambales Attention: Sister Mary Francis Borje, SFIC Gentlemen : This refers to your letter dated December 28, 2007 requesting in effect, that the capital gains tax (CGT) paid by the sellers Mateo Panganiban and Edilberto Panganiban for the piece of land they sold to St. Francis Learning Center Foundation, Inc. and St. Joseph's College, Inc. be applied to the revised Deed of Absolute Sale of the same property to individual persons, Sister Josephini Ambatali and Sister Esperanza Vistro. As represented, the aforesaid sellers sold the piece of land because they were in need of money for the medication of Mateo's wife who had a stroke and also, for Mateo himself who was sick with cancer of the liver. Mateo died last October 09, 2007. During the processing of the Transfer Certificate of Title No. CLOA-T-720 from the Panganibans to St. Francis Learning Center Foundation, Inc. and St. Joseph's College, Inc., the Department of Agrarian Reform (DAR) office denied the endorsement for the issuance of clearance because the subject property is under Certificate of Land Ownership Award (CLOA) and the same cannot be validly transferred to a foundation. The DAR office further recommended that the transfer should be made to a natural person and not a juridical person by virtue of Comprehensive Agrarian Reform Program (CARP). Thus, the revision of the Deed of Absolute Sale of the same property from the Panganibans to Sister Josephini Ambatali and Sister Esperanza Vistro was made. The piece of land is at present being used by St. Francis Learning Center Foundation, Inc., a school for the Aetas of Zambales. In reply, please be informed that pursuant to the Memorandum of the Department of Agrarian Reform (DAR), Region III, Provincial Agrarian Reform Office, in an action to transfer a parcel of land, a transferee/s should be a natural person and not a juridical person. Such being the case, since the vendees in the previous Deed of Sale were St. Francis Learning Center Foundation, Inc. and St. Joseph's College, Inc., and considering that pursuant to the above-cited Memorandum, only a natural person is allowed to be a transferee of a parcel of land under DAR Administrative Order No. 08, series of 1995, as amended by Administrative Order No. 06, series of 1996, there was a mistake in the designation of the vendees. Hence, the previous payment of capital gains tax on the first Deed of Sale to the said schools shall be applied to the revised Deed of Sale of the same property to natural persons, and there shall be no further imposition of capital gains tax. 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service