BIR Ruling No. 467-2017

REPURLIC OF THE PHILIPPINFS DEPARTMEN'T OF FINANCE BUREAU OF INTERNAL REVENUE

Quezon City

Rcpublic Act No.6657 BiR Ruling No. 091-14

47017 --017

Mr. JUANITO SERAPIO COSTUNA

Las Pinas City #31 Yellowbell Road. Pilar Village.

Str:

This refers to your letter dated August 12, 2014 requesting for a Certificate of Tax Exemption from the payment of capital gains tax and documentary stamp tax on the transfer by the heirs of Salud Serapio Costuna of Nine Hundred (900) square mcters of land embraced by Transfer Certificate of Title (TCT) No. with a total area of Eleven Thousand Five Hundred Ninety Seven (11.597) square meters in favor of Milagros G. Sanchez as her Disturbance Compensation under Section 66 of Republic Act No. 6657. otherwise known as the "Comprehensive Agrarian Reform Law".

Documcnts submitted disclose that Juanito S. Costuna. married to Estrellita P Costuna. residing at #31 Yellowbell Road. Pilar Village. Las Pinas City, Ferdinand S. Costuna, married to Marietta Coles. Evelyn C. Francisco. married to Oliver D. Francisco. Leonida C. Castillo, married to Carlo G. Castillo. with postal address at #134 DPHP. 11th Avenue Grace Park, Caloocan City are the legal heirs of Salud Serapio Costuna from whom they inherited a parcel of agricultural tand covered by Transfer Certificate of Title (IC'T) No.

with a total area of Eleven Thousand Five Hunderd Ninety Seven (1 1.597) square meters. more or less. located in Brgy. Catmon, Sta. Maria, Bulacan: that the said parcel of land has registered tenants named Spouses Aniceto Gumafelix and Angelina M. Gumafelix who are now both deceased: that Milagros G. Sanchez, on her behalf and as Attorney-In-Fact of Marissa G. Corea. married to Marcelino Corea. Renato R. Gumafelix. married to Catherine Guevarra. Abetla G. De Luna, married to Wenceslao De Luna. Manoleto Resurreccion. married to Emma Ressureccion. and Jaime R. Gumafelix, single, are the successor-tenants of the said agricultural land: that on June 29. 2012. Milagros G. Sanehez exccuted a -SALAYSAY" (Sworn Statement) whereby she is voluntarily surrendering the land they are tilling and ending their tenancy relationship with the landowners: that on June 25. 2014. the

into Lot 9-D-8-A, Lot 9-D-8-B, Lot 9-D-8-C, Lot 9-D-8-D and Lot 9-D-8-E as per tracing legal hcirs of Salud Serapio Costuna have executed a DEED OF PARTITION WITH DONATION whereby they agreed that TCT No. be subdivided and designated

cloth and biueprint plan (LRA) Psd 431116. duly approved by the Bureau of Lands on October 23. 2012: that they further agreed to register the above subdivided property in their names as seen in the approved BIR CAR Nos. ad - except for Lot 9-D-8-A with an area of Ninc Hundred (900) square meters which was awarded and assigned to Milagros G. Sanchez, married to Clementc F. Sanchez as Disturbance Compensation being the successor tenant of the late Spouses Aniceto Gumefelix and Angelina Gumafelix; that the iand awarded to Milagros G. Sanchez will be used for the construction of their new residential house as

Page 2 of 3 Mr. Juanito Serapio Costuna

stated in her "SALAYSAY" (Sworn Statement) dated June 29. 2012 and is now being used as

Municipal Assessor of Sta. Maria. Bulacan classifying that the 900 sq.m. under TCT No. residential purposes as certified by the Punong Barangay. Brgy. Catmon, Sta. Maria. Bulacan dated January 13. 2017: that Tax Declaration No. was issued by the

is a residential lot: and that a Certification dated April 23. 2015 was issued by the Provincial Agrarian Reform Program Officer (PARPO) of the Department of Agrarian Reform (DAR) stating that the assigned portion mcters, more or less as stated in the DEED OF PARTITION WITH DONATION dated Junc Ps. with an area of 900 square

25.2014 is actually a DISTURBANCE COMPENSA'TION awarded to Milagros G. Sanchez under Section 66 of RA 6657. otherwise known as Comprehensive Agrarian Reform Law.

In reply. please be informed that transfer of real property by way of Disturbance Compensation is exempt from capital gains tax and documentary stamp tax pursuant to Section 66 of Republic Act (RA) No. 6657 othcrwisc known as the Comprehensive Agrarian Reform law of 1988" which provides. viz:

"StC. 66.Exemption from Taxes and Fees of Land Transfers. -- Transactions under this Act involving a transfer of ownership. whether froin natural or juridical persons. shall be exempted from taxes arising from capital gains. These transactions shall also he 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

to which the owner may be entitled." property taxes. without penalty or interest. shall be deductible from the compensation

The records include a Certification. dated April 23. 2014. from the Provincial Agrarian Reform Office (PARO) of Baliuag. Bulacan. certifying that the subject property was verified as disturbancc compensation of tenant and beneficiary. Milagros Gumafelix Sanchez. Also Maria. Bulacan classifying that the 900 sq.m. under TC'T No. attached is Tax Declaration No. Be it noted that Section 36 (1) of RA 3844. as aniended, allows disturbance compensation to a issued by the Municipal Assessor of Sta. is a residential lot

tenant in case of termination of tenancy relationship by reason of the conversion of the agricultural land into non- agricultural uses, to wit:

agreement as to the period or future surrender. of the land. an agricultural lessce shal Sec. 36. Possession of Landholding: Exceptions. Notwithstanding any

dispossession has been authorized by the Court in a judgement that is final and continue in the enjoyment and possession of his landholding except when his executory if after duc hearing it is shown that:

( I ) The agricultural lessor-owner or a member of his immediate family will personally cultivate the landhofding or will convert the landholding. if suitably located, intg

purposes: Provided: That thc agricultural lessec shall be entitled to disturbance residential. factorv, hospitat or school site or other usefui non-agricuttural

compensation equivalent to five vears rental in his Iandholding in addition to his

himself for three years or fail to substantially carry out such conversion within one notice of at Icast one agricultural year before ejectment proccedings are tiled against him: Provided. further. that should the landholder not cultivate the land rights under Section twenty-five and thirty-four. cxcept when the land owned and leased by the agricultural iessor. is not more than five hectares. in which case instead of disturbance compensation the lessee may be entitled io an advance

Mr. Juanito Serapio Costuna Page 3 of 3 n467-217 9-28-2017

year after the dispossession of the tenant. it shall be presumed that he acted in bad faith and the tenant shall havc the right to demand possession of the land and recover damages for any loss incurred by him becausc of said dispossessions.

land by way of disturbancc compensation. as in this instance. is still considered one of the transactions contemplated under Section 66 of RA 6657 cspecially considering that the land is Only Scetion 35 of RA 3844 was expressly repealed hy RA 6657. Thus. the transfer of

no longer heing used for agricultural purposes.

Costuna in favor of Milagros G. Sanchez. in the form of disturbance compensation. is exempt Such being the case. the transfer of TCT No. by heirs of Salud Serapio

from capital gain tax and documentary stamp tax pursuant to the aforecited provision. (BiR Ruling No. (91-14 dated Murch 7. 201+)

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 differcnt. then this ruling shall be considercd null and void.

Very truly yours. Aaa0MAa

Commissioner of Internal Revenue CAESAR R. DULAY N 009631

K-Y-JIA