Bureau of Local Government Finance Opinion

January 11, 2000 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Henry Lim Bon Liong President SP Properties, Inc. 2nd Floor, Sterling Place 2302 Pasong Tamo Ext., Makati City Sir : This has reference to your letter dated June 25, 1999 seeking opinion as to whether transfer of land covered by Certificate of Land Ownership (CLOA) or transfer of land by their CLOA owners to another person, whether natural or juridical, is exempt from the payment of transfer tax under Section 66 of RA 6657, otherwise known as the Comprehensive Agrarian Reform Program Law, quoted as follows: "Sec. 66. Exemption from Taxes and Fees of Land Transfer. Transactions under this Act [RA 6657] 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." It is represented that SP Properties, Inc. (SPPI) is an industrial developer. It acquired lands from CLOA owners in Cavite through sale and new Torrens [transfer] Certificate of Titles were already issued in its name. It is represented further that while applying for the issuance of new Tax Declarations, the Provincial Assessor of Cavite belatedly required SPPI to pay the transfer taxes on the transactions citing Article D, Section 2D.01 of Provincial Ordinance No. 98-001. TECIaH The aforequoted Section 66 of RA 6657, however, should be read in relation with Section 24 of the said Act which states that "Ownership of the beneficiary shall be evidenced by a Certificate of Land Ownership Award, which shall contain the restrictions and conditions provided for in this Act, and shall be recorded in the Register of Deeds concerned and annotated in the Certificate of Title." In addition, Article 224 (a) of the Implementing Rules and Regulations (IRR) implementing Section 135 of the Local Government Code (LGC) states: " ART. 224. Tax on Transfer of Real Property Ownership. (a) The province may impose a tax on the sale, donation, barter, or on any other mode of transferring ownership or title of real property at the rate of not more than fifty percent (50%) of one percent (1%) of the total consideration involved in the acquisition of the property or of the fair market value in case the monetary consideration involved in the transfer is not substantial, which ever is higher. The sale, transfer or other disposition of real property pursuant to RA 6657 shall be exempt from this tax ." (underscoring supplied) On the basis of the above provisions of law, it is very clear that the transfer of real property pursuant to RA 6657 shall be exempt from the transfer tax, i.e. , the transfer from the owner to the beneficiary. However, considering that this involves transfer of ownership from the beneficiary (CLOA owner) to a juridical entity (SPPI), this Bureau is of the view that the subject transfer is no longer exempt from the payment of transfer taxes imposable by the Province of Cavite under its duly-enacted tax ordinance. The Provincial Assessor of Cavite under a separate letter of even date is furnished a copy of this letter for his perusal and guidance. SCHTac Very truly yours, (SGD.) ANGELINA M. MAGSINO Deputy Executive Director Officer-in-Charge <http://www.blgf.gov.ph/downloads/opinion/localtax/2000/a1999-0817.pdf> last visited October 4, 2013.