BIR Ruling [DA-069-99]

February 5, 1999 BIR RULING [DA-069-99] Ms. Erlinda V. Garcia Barangay Solivan Baliwag, Bulacan M a d a m : This refers to your letter dated January 7, 1999 requesting for a ruling as to whether or not the sale of agricultural land by the Land Bank of the Philippines (LBP) under R.A. No. 6657, otherwise known as the "Comprehensive Agrarian Reform Law" is exempt from the payment of the capital gains tax and the documentary stamp tax. It appears that the agricultural land covered by TCT No. RT-54450(T-182153) of the Registry of Deeds for the Province of Bulacan, situated at Tilapayong, Solivan, Baliwag, Bulacan is in the name of LBP; that it was acquired though the agrarian reform program of the government; that on March 23, 1988, a Deed of Absolute Sale was executed by LBP conveying the agricultural land in favor of Ms. Purification G. Villafuerte, the beneficiary of the said agrarian reform program. In reply, please be informed that pursuant to Section 66 of Republic Act No. 6657, reading "SEC. 66. Exemption from Taxes and Fees of Land Transfers . Transactions under this Act involving transfer of ownership, whether from natural or juridical persons, shall be exempted from taxes arising from capital gains tax . These transactions shall also be exempted from the payment of registration fees, and all other taxes and fees for the conveyance or transfer thereof : Provided, That all arrearages in real property taxes, without penalty and interest shall be deductible from the compensation to which the owner may be entitled." (Emphasis supplied the transaction involving transfer of ownership is exempt from capital gains tax and also from "other taxes". Said phrase "other taxes" includes documentary stamp tax imposed under Section 196 of the Tax Code of 1997, because documentary stamp tax is substantially a tax on the transaction rather than on the document. (Op. No. 177, S. of 1939, Secretary of Justice) (BIR Ruling No. DA-568-98 dated December 21, 1998) This ruling is issued on the basis of the foregoing representations. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be declared null and void. LexLib Very truly yours, Commissioners of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)