BIR Ruling No. 384-13

October 22, 2013 BIR RULING NO. 384-13 RA 6657; BIR Ruling No. 012-01 Santos DC. Angeles Sullivan, Baliuag, Bulacan Madam : This refers to the 2nd Indorsement of Revenue Region No. 5 Caloocan, 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 (R.A.) No. 6657, otherwise known as the "Comprehensive Agrarian Reform Law" is exempt from the payment of the capital gains tax and the documentary stamp tax. It appears that Land Bank of the Philippines is the registered owner of a parcel of land, identified as Lot 283 of the consolidation-subdivision plan (LRC) Pcs-11324, Sheet 1, being a portion of the consolidation of Lots 2662, 2677, 4061 and 2672, Baliuag Cadastre, LRC Cad. Rec. No. 787 covered by Transfer Certificate of Title (TCT) No. RT-54555 (T-182026) issued by the Registry of Deeds for the Province of Bulacan. The aforesaid property is situated at Brgy. Sulivan, Baliwag, Bulacan with an area of seven hundred five square meters (705 sq.m.), more or less. On August 11, 2011, a Deed of Absolute Sale was executed by LBP conveying the agricultural land in favor of Mr. Santos DC. Angeles, the beneficiary of the said agrarian reform program by virtue of Certificate of Land Transfer (CLT No. 12838) dated May 8, 1978. In reply, please be informed that 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. : "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." cEASTa Attached to the records is Certification dated 20 July 2012 from the Municipal Agrarian Reform Office (MARO), Cluster 4 of Tangos, Baliwag, Bulacan, certifying that the Deed of Absolute Sale executed by and between LBP and Santos DC. Angeles dated June 12, 2011 is covered by Presidential Decree (P.D.) No. 27, 1 in relation to R.A. No. 3844 2 and R.A. No. 6657. Only Section 35 of R.A. No. 3844 was expressly repealed by R.A. No. 6657. Thus, transfer of land as provided under P.D. No. 27, as in this instance, is still considered one of the transactions contemplated under Section 66 of R.A. No. 6657. Accordingly, the transfer by Land Bank of the Philippines of the above-mentioned property is exempt from capital gains tax and documentary stamp tax pursuant to the aforecited provision. (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. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue Footnotes 1. DECREEING THE EMANCIPATION OF TENANTS FROM THE BONDAGE OF THE SOIL, TRANSFERRING TO THEM THE OWNERSHIP OF THE LAND THEY TILL AND PROVIDING THE INSTRUMENTS AND MECHANISM THEREFOR, dated 21 October 1972. 2. THE AGRICULTURAL LAND REFORM CODE.