Bureau of Local Government Finance Opinion

March 25, 2002 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Romulo, Mabanta, Buenaventura, Sayoc and De Los Angeles Attorneys at Law 30th Floor, Citibank Tower 8741 Paseo de Roxas Makati City Attention: Atty. Joseph Anthony M. Alejandro Gentlemen : This refers to your letter dated August 21, 2001 requesting in behalf of Embassy of the Russian Federation (Russian Federation) exemption from transfer taxes, real estate taxes and other local taxes pursuant to the Vienna Convention on Diplomatic Relations which was forwarded to this Office under a 1st Indorsement dated September 21, 2001. Representations are made that the Russian Federation is the absolute owner of a parcel of land consisting of 4,223 square meters, more or less, including any and all buildings and improvements thereon, at 10 Narra Place, South Forbes, Makati City. However, the Russian Federation was never able to utilize the Forbes Park Property since the Forbes Park Association, Inc. objected to the establishment of the former's consular offices within the vicinity. Considering that the Forbes Park Property has remained idle, the Russian Federation found no use in keeping the said property any longer and has decided to sell the same by virtue of, and pursuant to Order No. 731-P dated May 28, 2001 issued by the Russian Federation Government. Said decree likewise authorizes the Russian Federation to acquire another property to operate as the embassy's new quarters. acTDCI That Office opined that the proposed sale of the Forbes Park Property is exempt from the payment not only of taxes under the National Internal Revenue Code of 1997 such as capital gains tax and documentary stamp tax but as well as transfer and other municipal taxes imposed by the concerned local government unit pursuant to the Vienna Convention on Diplomatic Relations of 1964, of which both the Philippines and the Russian Federation are members and signatories. 1. The sending State and the head of the mission shall be exempt from all national, regional or municipal dues and taxes in respect of the premises of the mission, whether owned or leased, other than such as represent payment for specific services rendered. 2. The exemption from taxation referred to in this Article shall not apply to such dues and taxes payable under the law of the receiving State by persons contracting with the sending State or the head of the mission. It is clear from the aforequoted provisions of the Convention that the Russian Federation is exempt from the payment of the transfer tax, real estate tax and other local taxes on the sale of its property in the Philippines. We hope that this will help clarify matters. CHATcE Very truly yours, (SGD.) JUANITA D. AMATONG Undersecretary and Officer-in-Charge, BLGF <www.blgf.gov.ph/downloads/opinion/localtax/2002/a2001-1015.pdf> last visited January 14, 2014.