Tax Consequence of the Donation of a Parcel of Land by Fortune Tobacco Corporation to the Municipal Government of Marikina Which in Turn Donated the Same to the Occupants of the Said Lot

February 21, 1996 BIR RULING NO. 021-96 91, 92, 94 000-00 Mr. Robert Flores #755 Lot 2, Apitong St. Marikina Heights Marikina, Metro Manila S i r : This refers to your letter dated September 19, 1995 requesting in effect for a ruling on the donation of a parcel of land by Fortune Tobacco Corporation to the Municipal Government of Marikina which in turn donated the same to the occupants of the said lot. Documents submitted show that Fortune Tobacco Corporation bought a parcel of land situated at Apitong Street, Marikina Heights, covered by Transfer Certificate of Title No. 251890 and donated the same to the Municipal Government of Marikina for the sole purpose of devoting the said land as a relocation site for less fortunate constituents of the municipality; that in accordance with the purpose for which it was donated, the Municipal Government of Marikina issued to the occupants/beneficiaries Certificates of Award giving to them the respective areas where their houses are erected; that you are one of the awardees; and that the Municipal Government of Marikina through Ordinance No. 62, Series of 1988, had ordained that the lots awarded to the awardees/donees be finally transferred and donated to them. THADEI In reply, please be informed that the donation by Fortune Tobacco Corporation to the Municipal Government of Marikina is exempt from donor's tax in view of Section 94(a)(2) of the Tax Code, as amended, which provides that gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government shall be exempt from tax. However, the donation by the Municipal Government of Marikina to the occupants of the said land is subject to the donor's tax of ten percent (10%) of the net gifts pursuant to Section 91(a) and 92(b) of the Tax Code, as amended. Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue