Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City
Metropolitan Manila

FIFTEENTH CONGRESS
First Regular Session

House Bill No: 184

Introduced by Hon. Joseph Gilbert F. Violago

EXPLANATORY NOTE

Besides police power, the power of taxation is certainly one
of the more potent powers exercised by the State over its
citizens. While the former may be said to be potent only in
emergency situations; the latter, without a doubt, rules our daily
lives regardless of the times.

And to safeguard against its abuse, the 1987 Constitution
clearly mandates that the law on taxation must be both uniform and
equitable. And if I may add, it must also be flexible and
constantly attuned to the times. Hence, this bill.

Certainly, one of the principal reasons why owners of lands
and buildings are not enticed to sell their real properties to the
government lies in the fact that under our present laws, these
transactions are subject to the payment of capital gains tax on
gains realized from said transactions.

Therefore, in order to encourage private owners to sell their
real properties to the government; and for the government to
utilize them as offices in the case of buildings, or for the
construction of schools, hospitals, and other infrastructure
projects in the case of lands, this representation proposes to
exempt any person, natural or juridical, who sells any real
property to the government or any of its political subdivisions or
instrumentalities, from the payment of capital gains tax.

With this tax incentive in place, hopefully, the government’s
perpetual need for suitable lands and/or buildings to carry out
its mandate of providing infrastructure projects to the people
will be addressed.

CP en*

JOSEPH GILBERT F. VIOLAGO


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City
Metropolitan Manila

FIFTEENTH CONGRESS
First Regular Session

181

House Bill No.

Introduced by Hon. Joseph Gilbert F. Violago

AN ACT
EXEMPTING ANY PERSON WHO SELLS ANY REAL PROPERTY
TO THE GOVERNMENT OR ANY OF ITS POLITICAL SUBDIVISIONS
OR INSTRUMENTALITIES FROM THE PAYMENT OF CAPITAL GAINS
TAX AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of
the Congress of the Republic of the Philippines in session
assembled:

Section 1. Section 24 (D) (1) of Republic Act No. 8424,
otherwise known as the “National Internal Revenue Code of 1997” is
hereby amended to read as follows:

“(1) In General. - The provisions of Section 39(B)
notwithstanding, a final tax of six percent (6%) based on the
gross selling price or current fair market value as determined
in accordance with Section 6(E) of this Code, whichever is
higher, is hereby imposed upon capital gains presumed to have
been realized from the sale, exchange, or other disposition
of real property located in the Philippines, classified as

capital asset, including pacto de retro sales and
other forms of conditional sales, by individuals,
including estates and trusts: Provided, That [the tax

liability, if any, on gains from sales or other dispositions]
ANY SALE of real property to the government or any of its

political subdivisions or agencies or to government-owned
or-controlled corporations shall be EXEMPT FROM THE PAYMENT OF
CAPITAL GAINS TAX [determined either under Section 24(A)or

under this Subsection, at the option of the taxpayer]:”

Sec. 2. Section 27 (D) (5) of Republic Act No. 8424,
otherwise known as the “National Internal Revenue Code of 1997” is
hereby amended to read as follows:


“(5) Capital Gains Realized from the Sale, Exchange or
Disposition of Lands and/or Buildings. - A final tax of six
percent (6%) is hereby imposed on the gain presumed to
have been realized on the sale, exchange or disposition of
lands and/or buildings which are not actually used in
the business of a corporation and are treated as capital
assets, based on the gross selling price or fair market value as
determined in accordance with Section 6(E) of this Code,
whichever is higher, of such lands and/or buildings[.]: PROVIDED,
THAT ANY SALE OF REAL PROPERTY TO THE GOVERNMENT OR ANY OF ITS
POLITICAL SUBDIVISIONS OR AGENCIES OR TO GOVERNMENT-OWNED
OR -CONTROLLED CORPORATIONS SHALL BE EXEMPT FROM THE
PAYMENT OF CAPITAL GAINS TAX WHETHER OR NOT SUCH REAL PROPERTY
ARE ACTUALLY USED IN THE BUSINESS.”

Sec. 3. The Department of Finance shall issue the necessary
rules and regulations to implement the provisions of this Act.

Sec. 4. All laws, presidential decrees, executive issuance,
rules and regulations, or parts thereof, found inconsistent with
this Act are hereby expressly repealed or modified accordingly.

Sec. 5. If, for any reason whatsoever, any provision of this
Act is declared unconstitutional, the same shall not affect the
validity of the other provisions not declared as such.

Sec. 6. This Act shall take effect upon its approval and

fifteen (15) days following its publication in at least two (2)
newspapers of general circulation.

Approved,