BIR Ruling [DA-568-98]

December 21, 1998 BIR RULING [DA-568-98] Ms. Carolina G. Luzentales BIR Revenue District No. 28 2nd Floor Garcia Bldg. 882 Quirino Highway, Novaliches Quezon City M a d a m : This refers to your letter dated October 28, 1998 requesting for a ruling as to whether or not the sale of agricultural land under R.A. No. 6657, otherwise known as the "Comprehensive Agrarian Reform Law" is exempt from the payment of the capital gains tax, documentary stamp tax and the estate tax. cdtech It appears that Spouses Dominador and Remedios Gianan are the landowners of agricultural land situated at Bariis, Legaspi City, Albay containing an area of 266,514 square meters and covered by TCT No. 11722 of the Registry of Deeds for Legaspi City; that sometime in 1984 Spouse Dominador L. Gianan died intestate without settling the estate tax; that the said agricultural land was subjected to the land reform program of the government for a total payment of P423,244.67; and that out of the P423,244.67, 65% will be paid in the form of a ten-year bond. In reply, please be informed that pursuant to Section 66 of Republic Act No. 6657, reading "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 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. 104-90 dated May 29, 1990) However, the estate of Dominador L. Gianan is subject to the estate tax imposed under then Section 77 of the Tax Code, as amended. This ruling is issued on the basis of the foregoing representation. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be declared null and void. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)