BIR Ruling No. 035-64

May 12, 1964 BIR RULING NO. 035-64 Mr. Irineo S. J. Carlos Rm. 302 LUZCO Bldg. Cor. David & Dasmarias Manila S i r : In reply to your letter dated January 22, 1964, requesting information as to the taxability of the proceeds from sale of urban land to the Land Tenure Administration under Republic Act No. 1162 as amended by Republic Act Nos. 1599, 1990 and 2342, I have the honor to inform you as follows: Republic Act No. 1162, as amended, which provides for the expropriation of landed estates or haciendas or lands which formed part thereof in the City of Manila, Quezon City and its suburbs, their subdivision into small lots, and the sale of such lots at cost or their lease on reasonable terms to tenants, or occupants of said lots, does not contain a provision specifically exempting from income tax the purchase price paid by the Government unlike that of Republic Act No. 1400 which provides for such exemption. 'The acquisition by the Government of private properties through the exercise of the power of eminent domain, said properties being justly compensated, is embraced within the meaning of the term "sale" or "disposition of property", and the definition of gross income laid down by Section 29 of the National Internal Revenue Code.' (Blas Gutierrez & Maria Morales vs. CTA and the Collector of Internal Revenue, G.R. No. L-9738 & G.R. No. L-9771, May 31, 1957). Consequently, in the absence of any statutory provisions exempting such transfer of property to the Land Tenure Administration, said acquisition of the land in question, for taxation purposes, is a 'sale' and therefore the gains derived therefrom constitute taxable income. The fact that the purchase price of the urban lands in question are paid for by funds appropriated under Republic Act No. 1400 will not alter the taxable character of the transaction. LLjur Very truly yours, (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue