BIR Ruling [DA-429-98]

September 21, 1998 BIR RULING [DA-429-98] Lopez Arguelles Development Corporation 1534 Lopez Rizal Street Mandaluyong City Attention: Ms . Narcisa C . Torres Treasurer Gentlemen : This refers to your letter dated June 29, 1998 requesting for exemption from the capital gains tax and documentary stamp tax on the conveyance of six (6) parcels of agricultural land, all located at Barangay Tuntungin, Los Baos, Laguna. cdta It is represented that you are the owner of the six (6) parcels of agricultural land all located at Barangay Tuntungin, Los Baos, Laguna covered by TCT Nos. T-363151, T-363154, T-363155, T-363156, T-363152 and T-363153; that these six (6) parcels of agricultural land were conveyed to three claimants, namely: 1) Mr. Simon Parducho for TCT Nos. T-363151, T-363154, T-363155 and T-363156; 2) Mr. Rufino Alcantara for TCT No. T-363152; and 3) Mr. Victor Marza for TCT No. T-363153; that the conveyance of these parcels of land was made in compliance with the Resolution rendered by the Department of Agrarian Reform Adjudication Board (DARAB), Diliman, Quezon City dated April 1, 1998 in DARAB Case No. 17765; that the said Resolution was based on the approved Compromise Agreement between you and the claimants (transferees); that the conveyance involved no valuable consideration as it was made in compliance with the adjudication; and that you received no payment whatsoever for the conveyance of these parcels of land and conversely, the three claimants likewise paid nothing for acquiring those parcels of land. In reply, please be informed that Section 66 of Republic Act No. 6657, otherwise known as the ''Comprehensive Agrarian Reform Law of 1988" provides as follows, viz: "SEC. 66. Exemptions 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 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." Such being the case, since the above transfer falls under the very purpose of the Comprehensive Agrarian Reform Program envisioned under the Comprehensive Agrarian Reform Law, the provision of Section 66 thereof, which grants tax exemptions on the transaction involving transfer of ownership of real properties shall equally apply herein. (BIR Ruling No. 061-98 dated May 21, 1998) Hence, the said transaction is exempt from the creditable withholding tax imposed under Revenue Regulations 2-98. Moreover, since the said transfer is without consideration, the same is also exempt from the documentary stamp tax on the document conveying the properties to the claimants under R.A. 6657 as imposed under Section 196 of the Tax Code of 1997. However, the notarial acknowledgment to said deeds of conveyance is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the same Tax Code. 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 considered null and void. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)