BIR Ruling No. 402-11

October 25, 2011 BIR RULING NO. 402-11 Sections 2, 3, 5 & 6 of P.D. No. 457; 00-000 University of the Philippines Los Baos 3rd Floor, Library/Administration Building, College Laguna, 4031 Philippines Attention: Dr. Ruben D. Tanqueco Vice Chancellor and Chair UPLB Land Use Committee Gentlemen : This refers to the 2nd Indorsement Letter dated April 1, 2011 of Regional Director Rodita B. Galanto of Revenue Region No. 9 endorsing your request for a certificate of tax exemption pursuant to Presidential Decree No. (P.D.) 457 as amended by P.D. No. 729 and P.D. No. 1046-A, in relation to the registration of the Deeds of Award of a five hundred (500) square meters home lot to each of the following five (5) tenant-tillers of the University of the Philippines Los Baos (UPLB): 1) Benito M. Mercado 2) Lucena Valencia-Malabanan 3) Cristeta Lagsa-Bersal 4) Adriano M. Reyes 5) Virgilio T. Lalap As represented, the UPLB is a public institution of higher learning created pursuant to Act 1870 otherwise known as "AN ACT FOR THE PURPOSE OF FOUNDING A UNIVERSITY FOR THE PHILIPPINE ISLANDS, GIVING IT CORPORATE EXISTENCE, PROVIDING FOR A BOARD OF REGENTS, DEFINING THE BOARD'S RESPONSIBILITIES AND DUTIES, PROVIDING HIGHER AND PROFESSIONAL INSTRUCTION, AND FOR OTHER PURPOSES," as amended by Presidential Decree (P.D.) 58 otherwise entitled "CONSTITUTING THE UNIVERSITY OF THE PHILIPPINES AT LOS BAOS, GRANTING IT FULL AND COMPLETE AUTONOMY, AND AMENDING THE CHARTER OF THE UNIVERSITY OF THE PHILIPPINES." On the 15th day of May 1974, the then President of the Republic of the Philippines Ferdinand E. Marcos issued P.D. No. 457 entitled, "AUTHORIZING THE UNIVERSITY OF THE PHILIPPINES AT LOS BAOS TO ACQUIRE BY NEGOTIATED SALE OR BY EXPROPRIATION CERTAIN PRIVATE PROPERTIES FOR THE EXPANSION OF AGRICULTURAL RESEARCH PROGRAMS AND APPROPRIATING NECESSARY FUNDS THEREFORE," Sections 2 and 4 which provides that for the dispossession of the bona-fide tenant-tillers from their farm-holdings they shall be financially compensated and be given a free home lot of Five Hundred (500) square meters each to be located in the barrio site to be set aside by the University of the Philippines at Los Baos, viz. : CIETDc Section 2. ". . . ." In both cases, for the dispossession of the bona-fide tenant-tillers from their farm-holdings they shall be compensated in the amount of Twelve Thousand Five Hundred (P12,500.00) Pesos per hectare and they shall be given a free home lot of Five Hundred (500) square meters each to be located in the barrio site to be set aside by the University of the Philippines at Los Baos. The other landless occupants in the area shall be given the option to purchase in the barrio site a home lot of not more than Five Hundred (500) square meters each at One Peso and Twenty Five Centavos (P1.25) per square meter. Section 4. The Bureau of Lands shall execute the subdivision survey of the home-lots of the tenant-tillers mentioned in Section 2 hereof on the basis of a subdivision survey to be prepared by the University of the Philippines at Los Baos. The University shall upon approval of the subdivision survey, immediately execute the corresponding deeds of conveyances of the home-lots to the tenant-tillers and shall at its own expense cause the registration thereof in the name of the tenant-tillers and landless occupants who opted to buy home-lots. Pursuant to the above-mentioned provisions, the UPLB executed five (5) Deeds of Award of a five hundred (500) square meters home lot to each of the five (5) tenant-tillers of the UPLB. TaDSHC Based on the foregoing representations, UPLB now requests for a certificate of tax exemption pertaining to the registration of the aforementioned Deeds of Award pursuant to Sections 5 and 6 of P.D. No. 457, as amended by P.D. No. 729 and P.D. No. 1046-A, which provides, viz. : Section 5. The University of the Philippines at Los Baos shall be exempt from registration fees for the acquisition of titles to the properties as well as for the issuance of individual titles to the tenant-tillers and landless occupants who opted for home lots. Should expropriation proceedings be resorted to, the University shall likewise be exempt from all court fees. Section 6. The landowners are hereby exempted from payment of capital gains tax and the tenant-tillers from any tax on the compensation prescribed in this Decree. aTCAcI In reply thereto, please be informed that Section 2 of P.D. No. 457, as amended by P.D. No. 729 and P.D. No. 1046-A, provides that, "for the dispossession of the bona-fide tenant-tillers from their farm-holdings they shall be compensated in the amount of Twelve Thousand Five Hundred (P12,500.00) Pesos per hectare and they shall be given a free home lot of Five Hundred (500) square meters each to be located in the barrio site to be set aside by the University of the Philippines at Los Baos." In correlation thereto, Section 6 of P.D. No. 457 provides that "the landowners are hereby exempted from payment of capital gains tax and the tenant-tillers from any tax on the compensation prescribed in this Decree." Therefore the five (5) Deeds of Award of a five hundred (500) square meters home lot to each of the aforementioned five (5) tenant-tillers which form part of their compensation for their dispossession from of each of their farm-holdings by the UPLB, are exempt from any tax. 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