BIR Ruling No. 097-15

April 14, 2015 BIR RULING NO. 097-15 Republic Act No. 6657; BIR Ruling No. 645-2012; BIR Ruling No. 012-2001 Mrs. Josephine Borja 70 Rose Street, Sulivan, Baliuag, Bulacan Gentlemen : This refers to your letter dated May 20, 2014, as indorsed by the OIC-Regional Director of Revenue Region No. 5, Caloocan City, dated May 20, 2014, requesting for a ruling as to whether or not the sale of agricultural land by the Land Bank of the Philippines (LBP) under Republic Act No. 6657, otherwise known as the "Comprehensive Agrarian Reform Law (CARP)" is exempt from the payment of capital gains and documentary stamp taxes. It is represented that Land Bank of the Philippines (LBP) is the registered owner of two (2) parcels of land identified as: 1) Transfer Certificate of Title (TCT) No. T-91753 LOT-B, Psd-031403-067175 (AR) PORTION OF LOT-21, Bsd-03-002547 LOCATION-Brgy. Tilapayong, Baliuag Bulacan AREA: Four Thousand Square Meters (4,000 sq.m.) 2) Transfer Certificate of Title (TCT) No. T-91745 LOT-A, Psd-031403-067176 (AR) PORTION OF LOT-316-E, Psd-03-039849 LOCATION-Brgy. Sulivan, Baliuag, Bulacan AREA: One Thousand One Hundred Twenty Seven Square Meters (1,127 sq.m.) that both TCTs of the aforementioned properties were issued by the Registry of Deeds for the Province of Bulacan; and that on June 30, 1995, a Deed of Absolute Sale was executed by Land Bank of the Philippines (LBP) conveying the agricultural land in favor of Mr. Alexander Borja Married to Josephine Borja , a farmer-allocatee and beneficiary of the said agrarian reform program. In support of the request for tax exemption, the following documentary requirements were submitted: 1) Letter request/application executed under Oath for tax exemption; 2) Certified true copies of TCT's No. T-91753 and T-91745; 3) Certified true copy of the Deed of Absolute Sale dated June 30, 1995; 4) Original/duplicate original of the Certifications issued by the Municipal Assessor of the Municipality of Baliuag, Bulacan that both parcels of land has improvements erected therein; 5) Certified true copies of the Tax Declarations of TCT No. T-91745 and T-91753 issued by the Municipal Assessor of the Municipality of Baliuag, Bulacan; 6) Certification under Oath dated June 4, 2014 from the Provincial Agrarian Reform Office (PARO) certifying therein that Mr. Alexander Borja married to Josephine Borja are the actual occupant of the aforesaid properties covered by TCT Nos. T-91745 and T-91753 and that said properties are covered under R.A. 3844; 7) Certification under Oath dated June 4, 2014 from the Municipal Agrarian Reform Office (MARO) of Bulacan. In reply, please be informed that since the conveyance of Land Bank of the Philippines in favor of Mr. Alexander Borja married to Josephine Borja was pursuant to an Order of Award by Department of Agrarian Reform (DAR), and that he possesses all the qualifications and none of the disqualifications of a farmer-beneficiary under RA 3844, as amended, the transfer is exempt from capital gains tax and documentary stamp tax pursuant to Section 66 of Republic Act No. 6657 otherwise known as the "Comprehensive Agrarian Reform Law of 1988 " which provides, viz. : cEaDTA " Section 66 . Exemption 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." Attached to the records is a Certification under Oath dated June 4, 2014 from the Provincial Agrarian Reform Office (PARO) Bulacan, certifying therein that the above-mentioned properties are covered under Republic Act 3844 (Agricultural Land Reform Code). Furthermore, the Municipal Agrarian Reform Office (MARO) at San Roque, San Rafael, Bulacan issued a Certification under Oath certifying therein that Mr. Alexander Borja married to Josephine Borja is an awardee of parcels of land more particularly known as Lot-316-E-A, Psd-031403-067176 with an area of 1,127 square meters located at Sullivan, Baliuag, Bulacan and Lot-521-21-B, Psd-031403-067175 with an area of 4,000 square meters located at Tilapayong, Baliuag, Bulacan. Be it noted that only Section 35 of R.A. 3844, as amended, was expressly repealed by R.A. 6657 or the CARP Law. Thus, the transfer of land to a tenant under RA 3844, as amended, as in this instance, is still considered one of the transactions contemplated under Section 66 of R.A. 6657. SCDaHc Such being the case, the transfer by Land Bank of the Philippines of two (2) parcels of land covered by TCT Nos. T-91753 and T-91745, with areas of four thousand square meters (4,000 sq.m.) and one thousand one hundred twenty seven square meters (1,127 sq.m.), respectively, in favor of Mr. Alexander Borja married to Josephine Borja, being a qualified farmer-beneficiary under RA 3844, as amended is exempt from capital gains tax and documentary stamp tax pursuant to the afore-cited provision. (BIR Ruling No. 645-2012 dated December 7, 2012 and BIR Ruling No. 012-01 dated March 14, 2001) 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. ADCSEa Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue