Dante L. Simsuangco

August 21, 2007 BIR RULING [DA-463-07] Sec. 66 DA 030-02 Dante L. Simsuangco Luacan, Dinalupihan Bataan S i r : This refers to your letter dated February 14, 2006 requesting for a ruling that the donation of a parcel of land by Spouses Dante L. Simsuangco and Fe de Guzman Simsuangco which is covered by the Comprehensive Agrarian Reform Program (CARP) to qualified beneficiaries, Spouses Ma. Elenita Simsuangco Sison and Roberto G. Sison, is exempt from the payment of donor's tax. It appears and as certified to by the Department of Agrarian Reform (DAR) dated February 22, 2006, that the above-mentioned parcel of land consisting of 10,956 square meters covered by Certificate of Landownership Awards (CLOA) No. 2786 located at Bataan and registered in the name of Dante L. Simsuangco is covered by the CARP as of July 2, 1992; that it is your opinion that said donation is exempt from donor's tax, since the latter is designed to curb indiscriminate gifting, in order to save on or avoid estate tax on a vast estate diminished in consequence of excessive donation; and that instead of receiving compensation on the disposition of their land, the landowners simply donated the property to the qualified beneficiaries, which is more advantageous to them. CTcSAE In reply thereto, please be informed that Section 66 of Republic Act No. 6657 provides, viz: "Sec. 66. Exemption from taxes and Fees of Land Transfers. Transactions under this Act [RA 6657] involving a transfer of ownership, whether from natural or juridical persons, shall be exempted from taxes arising from capital gains. 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 or interest, shall be deductible from the compensation to which the owner may be entitled." Thus, in BIR Ruling No. DA030-02 dated March 7, 2002, this Office ruled that "xxx xxx xxx "There can be no uncertainty that transactions involving transfer of ownership of land covered by CARP are exempt from capital gains tax and also from 'other taxes'. (BIR Ruling No. DA095-98 dated March 19, 1998) In other words, the proceeds to be derived by the landowner from the sale of the land covered by CARP is exempt from capital gains tax and also from documentary stamp tax imposed under Section 196 of the Tax Code of 1997. Conversely, donation of the above-mentioned parcel of land to the tenant-beneficiaries of the comprehensive agrarian reform program is therefore exempt from all taxes and fees being imposed in connection therewith, more specifically from donor's tax. DACIHc Corollarily, in BIR Ruling No. 100-98 dated June 29, 2000, the same Office ruled that "xxx xxx xxx "Accordingly, pursuant to Section 66 of R.A. No. 6657, in relation to Section 65 of the Act, donations of homelots, including replacement houses built on the relocated site, . . . in favor of the tenants/farm workers are exempt from donor's tax imposed under then Section 91 of the Tax Code, as amended (now Section 98 of the Tax Code of 1997) "xxx xxx xxx" SUCH BEING THE CASE, this Office holds that the donation by Spouses Dante L. Simsuangco and Fe de Guzman Simsuangco of the above-described parcel of land covered by CARP in favor of the qualified beneficiaries is exempt from donor's tax. This ruling is being issued on the basis of the foregoing facts as represented. 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service