BIR Ruling No. 649-12

December 10, 2012 BIR RULING NO. 649-12 RA 6657; BIR Ruling No. 012-01 Lamberto V. Villarama Cofradia, Malolos, Bulacan Sir : This refers to the 1st Indorsement of Revenue Region No. 5 Caloocan City, requesting for a ruling as to whether or not the sale of agricultural land by the Land Bank of the Philippines (LBP) under 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 117 of the subdivision plan (LRC) Psd-248725, being a portion of a parcel of land described in TCT No. T-223998, LRC Record No. 9559 covered by Transfer Certificate of Title (TCT) No. 039-RT2011007663 (T-264717) issued by the Registry of Deeds for the Province of Bulacan (Guiguinto). The aforesaid property is situated at Cofradia, City of Malolos, Bulacan with an area of two thousand one hundred nine square meters (2,109 sq.m.), more or less. On May 27, 2011, a Deed of Absolute Sale was executed by LBP conveying the area of one hundred forty seven square meters (147 sq.m.) of the subject property in favor of Mr. Lamberto V. Villarama, the beneficiary of the said agrarian reform program. 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." CIHAED Attached to the records is a Certification dated 10 October 2012 from the Provincial Agrarian Reform Office (PARO) of Bulacan, certifying that the Deed of Absolute Sale executed by and between LBP and Lamberto V. Villarama dated May 27, 2011 is covered by Sec. 66 of RA 6657, lands acquired thru PD 27 in relation to RA 3844. 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