Ms. Angelita Yamsuan

November 25, 2009 BIR RULING [DA-(I-037) 704-09] RA 6657; BIR Ruling No. 104-90; UN-038-94; UN-123-94; DA-095-98; DA-(I-007)-070-08 Ms. Angelita Yamsuan 651 R.E. Chico Street Baliuag, Bulacan Madam : This refers to your letter dated October 5, 2009 requesting, in behalf of your client Ms. Concordia Samson, for a ruling exempting the conveyance of a portion of an agricultural parcel of land from capital gains tax and documentary stamp tax pursuant to Republic Act (R.A.) No. 6657, otherwise known as the Comprehensive Agrarian Reform Program (CARP). It is represented that Ms. Samson is the registered owner of a parcel of an agricultural land covered by Original Certificate of Title No. RO-460 (15725) containing an area of 25,177 square meters more or less; that said land was subjected to Operation Land Transfer by the Department of Agrarian Reform under Presidential Decree No. 27, or the 1972 Land Reform Program of the Government, and RA No. 6657; that the land is tenanted by Mr. Katipunan; that pursuant to the comprehensive agrarian reform program, a portion of the land consisting of 12,588.5 square meters was conveyed by Ms. Samson to Mr. Katipunan as a form of disturbance compensation in an instrument captioned as Deed of Assignment and executed by the parties on July 23, 2009; and that you are now seeking confirmation that the above conveyance is exempt from capital gains tax and documentary stamp tax under RA No. 6657. In reply, please be informed that Section 66 of R.A. No. 6657 states that: "SEC. 66. Exemptions from taxes and fees of land transfers. Transactions under this Act 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." SEHTAC Based on the foregoing, the transfer of title to lots distributed to the qualified beneficiaries of CARP as a form of disturbance compensation is exempt from capital gains tax and also from the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. (BIR Ruling No. 104-90 dated May 29, 1990) This exemption applies not only to transfers of ownership over lands actually tilled by the tenants, but also to the conveyance of house and lot by way of disturbance compensation, by the landowner-transferor to the tenant-beneficiaries. Accordingly, the transfer of the above-mentioned agricultural land by your client to her tenant beneficiary by way of disturbance compensation is not subject to the capital gains tax and the corresponding documentary stamp tax imposed under Section 196 of the Tax Code of 1997. 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