BIR Ruling No. 478-11

December 5, 2011 BIR RULING NO. 478-11 Sec. 101 (A) (2) of the Tax Code of 1997; BIR Ruling No. [DA-(DT-016) 321-08] PNOC Alternative Fuels Corporation (Wholly Owned Subsidiary of the Philippine National Oil Company) 2263 Lapanday Center P. Tamo Ext., Makati City Attention: Mr. Romeo P. Tolentino President & CEO Gentlemen : This refers to your letter dated October 28, 2010 stating that the PNOC Petrochemical Development Corporation (PPDC) is a wholly-owned subsidiary of the Philippine National Oil Company (PNOC), with office address at 11th Floor, B.A. Lepanto Building, 8747 Paseo de Roxas, 1200 Makati City with TIN 002-499-132-000; that on the other hand, the Department of Environment and Natural Resources (DENR) is a government agency created and existing by virtue of Executive Order (EO) No. 192, series of 1987 with office address at DENR Building, Visayas Avenue, Diliman, Quezon City with TIN 000-535-643-018; that on September 22, 1998, a Waiver of Rights and Acceptance was executed by PPDC, as the Grantor, and DENR, as the Grantee, that pursuant to Proclamation No. 322 dated July 25, 1956, excluded from the operation of EO 48, series of 1919 which established the Lamao Horticulture Experiment Station in Lamao, Limay, Bataan, an area of 10.8441 hectares and declared the same as Lamao Barrio Site; that Proclamation Nos. 361 and 630 dated March 6, 1968 and November 29, 1969, respectively, reserved several parcels of land in Lamao, Limay, Bataan, including the area covered by Proclamation No. 322 for industrial purposes; that Presidential Decree (PD) No. 949 dated June 17, 1976, transferred the ownership of the land covered by Proclamation Nos. 361 and 630 in favour of the Philippine National Oil Company; that pursuant to PD No. 949, Special Patent No. 3382 and Original Certificate of Title No. 3 was issued to PNOC on March 18, 1977 and subsequently Transfer Certificate of Title (TCT) No. 67687 containing an area of 3,813,161 square meters; that PNOC transferred the ownership of the entire property to its subsidiary, the Petrochemical Development Corporation and TCT No. 167629 was issued to PNOC-PDC; that Proclamation No. 2478 dated January 22, 1986, declared the 10.8441 hectares reserved under Proclamation No. 322, as alienable and disposable, open for disposition under C.A. No. 141, otherwise known as the Public Land Act; that the Grantor, the registered owner and holder of TCT No. 167629 has offered to waive, convey and transfer its right over an area of 10.8441 hectares, a portion of the land covered by TCT No. 167629; that the Grantee is the government agency primarily responsible for the management and disposition of public lands disposable under the provisions of the Public Land Act and patrimonial properties of the government disposable under the provisions of Act No. 3038; that the Grantee accepted the parcel of land covered by Proclamation No. 2478 containing an area of 10.8441 hectares, which is a portion of the land covered by TCT No. 167629 (Lot 1, SWO-03-000028) located in Lamao, Limay, Bataan; that the Grantee shall segregate the said area and cause the transfer of the title in the name of the Republic of the Philippines (DENR); and that the disposition in favour of the actual occupants and all other persons having rights thereon shall be undertaken by the Grantee pursuant to the provisions of Act No. 3038. Based on the foregoing representations, you now request for a ruling that the aforementioned transfer, of a parcel of land containing an area of 10.8441 hectares, in the form of Waiver of Rights and Acceptance by PPDC in favour of the DENR is exempt from the payment of donor's tax pursuant to Section 101 (A) (2) of the Tax Code of 1997. In reply thereto, please be informed that since the donee, DENR, is a government agency, the donation is EXEMPT from the payment of donor's tax pursuant to Section 101 of the National Internal Revenue Code of 1997, as amended, which provides as follows: "Section 101. Exemption of Certain Gifts. . . . (A) In the Case of Gifts Made by a Resident. xxx xxx xxx (2) 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." Moreover, the aforesaid Deed of Donation is not subject to the documentary stamp tax under Section 196 of the Tax Code of 1997, as amended, but only to the documentary stamp tax of P15.00 on certification under Section 188 of the same Code. EICSDT 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 as null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue