BIR Ruling No. 203-14

June 18, 2014 BIR RULING NO. 203-14 EO 292; PD 1445; Sec. 101 (A) (2) of the National Internal Revenue Code of 1997, as amended Office of the Provincial Governor Province of Lanao del Norte Gov. Arsenio A. Quibranza Provincial Government Center Tubod, Lanao del Norte Attention: Mohamad Khalid Q. Dimaporo Provincial Governor Gentlemen : This refers to your letter dated 10 August 2010 forwarded by Revenue Region No. 6 Manila, through 1st Indorsement dated 14 June 2013, relative to the request for exemption from payment of donor's tax on the transfer (without cost) made by the DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH) to THE PROVINCIAL GOVERNMENT OF LANAO DEL NORTE. It is represented that DPWH is the declared owner of 77.8 hectares of agricultural land covered by Tax Declaration No. 10-2233 located at Poblacion, Bosque, Magoong, Samburon and Napo, all in the Municipality of Linamon, Lanao del Norte; that the said property is not yet registered and titled in the name of DPWH and/or THE PROVINCIAL GOVERNMENT OF LANAO DEL NORTE per Certification of the Register of Deeds of Lanao del Norte dated 8 July 2010; that the said property was previously identified as the site for the Linamon Airport but this airport project has long been abandoned and the DPWH no longer has plans to develop the site; that in order to attain sustainable economic development of THE PROVINCIAL GOVERNMENT OF LANAO DEL NORTE, a Deed of Transfer dated 17 April 2000 was executed wherein DPWH, as represented by then Secretary Gregorio R. Vigilar, manifested its desire to transfer such property to THE PROVINCIAL GOVERNMENT OF LANAO DEL NORTE without cost, provided that it shall be used for the development of Metro Iligan Regional Agri-Industrial Center; that the transfer of ownership of the said 77.8 hectares is accepted by THE PROVINCIAL GOVERNMENT OF LANAO DEL NORTE, as represented by then Governor Imelda Quibranza-Dimaporo, who was authorized by the Sangguniang Panlalawigan of Lanao del Norte through its Resolution No. 44-2000 dated 28 March 2000 to accept the transfer and to enter into and sign the Deed of Transfer; and that in the event the land donated by DPWH is no longer needed by THE PROVINCIAL GOVERNMENT OF LANAO DEL NORTE in its operations, the ownership of the same shall revert to DPWH. CHDaAE In reply, please be informed that Section 48, Chapter 12, Book I of Executive Order No. 292 and Section 76 of Presidential Decree No. 1445 provide, viz. : "Chapter 12 Public Contracts and Conveyances xxx xxx xxx Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following: 1. For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the authority therefore is expressly vested by law in another officer. 2. For the property belonging to the Republic of the Philippines but titled in the name of any political subdivision or any corporate agency or instrumentality, by the executive head of the agency or instrumentality." xxx xxx xxx "Sec. 76. Transfer of Property between Government Agencies. Any government property that is no longer serviceable or needed by the agency to which it belongs may be transferred without cost , or at an appraised value, to other agencies of the government upon authority of the respective head of agencies in the national government, or of the governing bodies of government-owned or controlled corporation, other self-governing boards or commissions or the government, or of the local legislative bodies for local government units concerned." (emphasis supplied) DTcACa Applying the foregoing, then DPWH Secretary Gregorio R. Vigilar was authorized to transfer or donate the subject property (77.8 hectares) belonging to the Republic of the Philippines, of which DPWH is the declared owner under Tax Declaration No. 10-2233, in favor of THE PROVINCIAL GOVERNMENT OF LANAO DEL NORTE. Accordingly, 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 are exempt from the donor's tax under Section 101 (A) (2) of the Tax Code of 1997, as amended. Considering that the subject donation was made by DPWH for the use of THE PROVINCIAL GOVERNMENT OF LANAO DEL NORTE, a political subdivision of the government, the said donation is therefore exempt from donor's tax. The Register of Deeds shall annotate the Deed of Transfer dated 17 April 2000 executed by DPWH and THE PROVINCIAL GOVERNMENT OF LANAO DEL NORTE at the back of the Transfer Certificate of Title because the failure to comply with particular terms therein shall be a ground for the revocation of the donation pursuant to Article 764 of the New Civil Code. The foregoing notwithstanding, this ruling shall not have the effect of confirming the validity of the transfer of the property through the Deed of Transfer dated 17 April 2000 which is governed by the pertinent provisions of Executive Order No. 292 or the Administrative Code of 1987, Presidential Decree No. 1445 or the Government Auditing Code of the Philippines, and other applicable laws and regulations. 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. IESTcD Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue