Exemption from the Payment of Taxes Relative to the Transfer of Ownership of the Real Properties of the Abolished Tobacco Agencies

December 19, 1988 BIR RULING NO. 591-88 24 (c) 000-00 591-88 Gentlemen : This refers to your letter dated November 17, 1988 requesting exemption from the payment of taxes relative to the transfer of ownership of the real properties of the abolished tobacco agencies in your name. cdt It is represented that the real properties of these abolished agencies are located in different regions of the country; that your request for exemption is based on the following grounds: (1) that the President of the Philippines, on January 30, 1987, issued Executive Order No. 116 reorganizing the then Ministry of Agriculture and Food (now Department of Agriculture) including its units, and integrating all offices and agencies like the several tobacco agencies whose functions relate to agriculture; (2) that Section 20(a) thereof merged/consolidated the various tobacco agencies into what is now known as the National Tobacco Administration (NTA): and (3) that there was no transaction in real estate that took place as in the manner of sales, mortgage, etc.; that by virtue of Executive Order No. 116, you are of the opinion that there was in effect only an absorption, by operation of law, of the assets (including real estate properties) of the abolished tobacco agencies which perforce requires a change of name of the ownership thereof to that of the NTA; that similarly situated is the case of the defunct Philippine Tobacco Administration (PTA), one of the merged/consolidated tobacco agencies, which, under its charter, R.A. No. 1135, specifically Article VIII, Section 15 thereof, provided for the following capitalization, to wit: "ARTICLE VIII FUNDS Sec. 15. Capitalization xxx xxx xxx "There shall be added to the capital of this PTA all the funds, assets and properties still available belonging (SIC) to the defunct National Tobacco Corporation." that the defunct NATOCO was the forerunner of the recently abolished PTA, whose real properties are, for unexplained reasons, still with the Board of Liquidators and had not been transferred in the name of the defunct PTA to form part of the assets to be acquired by you; that you will, in due time, negotiate with the Board of Liquidators for the acquisition of said properties; and that presently, you are in the process of transition in your reorganization and, among others, you have undertaken the task of taking inventories and transferring in your name, the real and personal properties of the abolished tobacco agencies. In reply, please be informed that Sections 20(a), 22 and 22(e) of Executive Order No. 116 provide, viz: "Sec. 20. Merger . In order to promote efficiency and effectiveness in the delivery of public services, the following offices, corporations or agencies are hereby merged as follows: (a) The Philippine Virginia Tobacco Administration, Philippine Tobacco Administration, Philippine Virginia Tobacco Board, Philippine Tobacco Board, Virginia Tobacco Fuelwood Corporation, Philippine Tobacco Research and Training Center, Virginia Flue-Curing Board, and National Tobacco Classification Council are hereby merged into the National Tobacco Administration, in accordance with Section 22(e); "Sec. 22. T ransitory Provisions . In accomplishing the acts of reorganization herein prescribed, the following transitory provisions shall be complied with, unless otherwise, provided elsewhere in this Executive Order: (e) In case of merger or consolidation of government units the new or surviving unit shall exercise the functions (subject to the reorganization herein prescribed and the laws, rules and regulations pertinent to the exercise of such functions) and shall acquire the appropriations, funds, records, equipment, facilities, choses in action, rights, other assets, liabilities if any, and personal, (sic) as may be necessary, of (1) the units that compose the merged unit or (2) the absorbed unit, as the case may be. . . ." Such being the case, and since there was no sale, exchange or other disposition of real property that took place, this Office is of the opinion that no taxes are due from you relative to the transfer of the title of the real estate properties of the abolished tobacco agencies in you because under the aforecited provisions of Executive Order No. 116 in case of Merger or Consolidation of government units, the new or surviving unit shall, among others, acquire the assets (including real estate properties) of the units that compose the merged unit or the absorbed unit which necessitates the transfer of title of the real estate properties of the abolished unit to that of the new or surviving unit. This will, therefore, serve as an authority for the Register of Deeds concerned to register the transfer of title to real property of the aforementioned abolished tobacco agencies in the name of the National Tobacco Administration. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner