BIR Ruling No. 217-15

June 19, 2015 BIR RULING NO. 217-15 RA 6657; BIR Ruling No. 012-01; BIR Ruling No. 645-12 Mr. Celso Pascua c/o Marsha M. Pascua 159 Sampaloc II, Bucal, Dasmarias, Cavite Dear Sir : This refers to your letter dated April 29, 2014 requesting tax exemption for the transfer of land from Sta. Lucia Realty Development Corporation to you. Documents submitted disclose that Sta. Lucia Realty Development Corporation (TIN 000-863-895-000) is the registered owner of a parcel of land covered by Transfer Certificate of Title (TCT) No. T-1027242 and measuring Five Hundred Square Meters (500 sq.m.), particularly described as: "A parcel of land (lot 2-F of the subd. plan, Psd-04-138640, being a portion of Lot 2, Psd-04 041669, LRC Rec. No. ___) situated in the Bo. of Malinata, Mun. of Dasmarias, Province of Cavite. . . ." that a Deed of Conveyance over the above-described property was executed on May 20, 2008 by Sta. Lucia Realty Development Corporation in your favor as your full and final tenant's disturbance compensation in compliance with the CARP Law; that the Deed of Conveyance likewise averred that the foregoing property was a portion of the 209,984 sq.m. parcel of land covered by TCT No. T-62380 previously acquired by Sta. Lucia Realty Development Corporation from DJ Realty & Dev., Inc. and that one of the conditions of the sale was that, a portion thereof consisting of 500 sq.m., shall be excluded from the project and allocated to the tenant of the land, identified as Celso Pascua of Bucal, Dasmarias, Cavite; that the Department of Agrarian Reform (DAR) issued a Certification dated March 31, 2014 certifying that the subject conveyance of the property is part of his disturbance compensation on the said property in compliance with the provisions of Agrarian Laws; and that you submitted the following documents in support of your request. 1. Certified true copy of TCT No. T-1027242; 2. Duplicate original of the Deed of Conveyance; 3. Original Certification of DAR; 4. Certified true copy of the Tax Declaration; 5. Photocopy of Sta. Lucia Realty's BIR Certificate of Registration; 6. Photocopies of the Documentary Stamp Tax Return and BIR Tax Payment Deposit Slip; 7. Other relevant documents; and 8. Affidavit of Non-Forum Shopping. In reply, Section 66 of Republic Act No. 6657 otherwise known as the "Comprehensive Agrarian Reform Law of 1988" provides that: "Sec. 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 request is a Certification dated March 31, 2014 from DAR, certifying that the subject property was verified as your disturbance compensation pursuant to RA 6657 (CARP Law). Be it noted that Section 36 (1) of RA 3844, as amended, allows disturbance compensation to a tenant in case of termination of tenancy-relationship by reason of the conversion of the agricultural land into non-agricultural uses. Only Section 35 of RA 3844 was expressly repealed by RA 6657 or the CARP Law. Thus, transfer of land to a tenant by way of disturbance compensation, as in this instance, is still considered one of the transactions contemplated under Section 66 of RA 6657. (BIR Ruling No. 012-01 dated March 14, 2001; BIR Ruling No. 645-12 dated December 7, 2012) Such being the case, the transfer or conveyance of Sta. Lucia Realty Development Corporation to you of the 500 sq.m. parcel of land covered by TCT No. T-1027242 as disturbance compensation is exempt from capital gains tax and documentary stamp tax pursuant to the aforecited provision. (BIR Ruling No. 645-12 dated December 7, 2012) 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 as represented are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue