BIR Ruling No. 163-82

May 5, 1982 BIR RULING NO. 163-82 34-h 71-82 163-81 Messrs. Ozaeta, Romulo, Mabanta, Buenaventura, Sayoc & de los Angeles Attorneys-At-Law Second Floor, Corinthian Plaza 121 Paseo de Roxas, Makati Metro Manila Attention: Atty . Eduardo de los Angeles Gentlemen : This refers to your letter dated March 31, 1982, requesting a ruling as to whether the transfer by landowners of home lots to their tenants as part of the disturbance compensation and pursuant to an Order of the Ministry of Agrarian Reforms is subject to the final schedular capital gains tax prescribed by Section 34(h) of the Tax Code as amended by B.P. Blg. 37. cd Documentary evidence submitted show that on November 12, 1974, Leonor, Federico, Adelaida and Jaime, all surnamed de los Angeles and Josefina A. Paulino separately filed with the Ministry of Agrarian Reforms petitions under R.A. No. 3844, as amended and P.D. No. 815, to convert to residential, commercial and/or other urban uses certain properties owned by them, situated in the Municipalities of San Mateo and Montalban, Province of Rizal; that in an Order dated January 22, 1979, the Ministry of Agrarian Reforms granted their aforesaid request subject, however, to the payment of disturbance compensation to their tenants; and that "all the tenant-farmers affected by this Order and who have no homelots of their own, must be given by the petitioners (landowners) a homelot each of at least 180 square meters as part of the disturbance compensation." In reply, I have the honor to inform you that since the homelot given by the landowner to the tenant is part of the disturbance compensation payable by the former to the latter, pursuant to an Order of the Ministry of Agrarian Reforms, no capital gain was derived by the landowner as a result of said transaction. Hence, the landowner is not liable to the capital gains tax. cdta Very truly yours, RUBEN B. ANCHETA Acting Commissioner