BIR Ruling No. 531-2017

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Quezon City

RA 6657 BIR Ruling No. 009-16

#531-2017 17-17

Paranaque, Metro, Manila I37 Washington St., Merville Vill EPIFANIO ESPINO, JR.

Sir:

dated October 16, 2014 relative to the request for confirmation that the disturbance compensation in the form of land granted to Magdalena Guinto Garcia et al. is exempt from taxes and all other fees. This refers to the 2nd Indorsement of Revenue Revenue No. 5-Caloocan City

the subdivision plan (LRA) by the Registry of Deeds for the Province of Bulacan (Guiguinto). The aforesaid disturbance compensation. to Magdalena Guinto Garcia, Lino R. Guinto, Joven R. relationship between the parties. Certification dated November 27. 2013 was issued sq.m.) covered by TCT No. Landowners) are the registered owners of a parcel'of land, identified as Lot 4354-A of a portion of covered by Transter Certificate of Title (TCT) No. Guinto, Romualdo C. Guinto, Josephine Guinto Tayao and Anthonela Guinto Garcia by Municipal Agrarian Reform Office (MARO) of Pulilan, Calumpit and Plaridel. stating that the Eleven 'Thousand Five Hundred Ninety Four square meters (11,594 area of 28,985 sq.m.) is actually a disturbance compensation under Section 66 of Belen Siiverio. Joselito Espino and Epifanio Espino, Jr. (hereinafter referred to as property is situated at Brgy. Penabatan, Pulilan. Bulacan with an area of Eleven November 25. 20i3, a Deed of Assignment was executed, whereby the landowners thru their Attorney-in-Fact, Epifanio Espino, Jr. transferred and conveyed. by way of the above-mentioned property, as a result of the extinguishment of tenancy Thousand Five Hundred Ninety Four square meters (11,594 sq.m.). more or less. On Republic Act (RA) No 6657. Documents submitted disclose that Buenaventura Espino, Yolanda Espino. CAD. 345, Pulilan Cadastre, L.R.C. Record No. H. Patent approved as a non-subdivision project, being portion of TCT No. which is issued with an

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

conveyance or"transfer thereof. Provided, that al: arrearages in real property taxes, without penalty or interest. shall be deductible from the "Sec. 66. Exemption from Taxes and Fees of Land Transfers. Transactions under this Act involving a transfer of ownership, whether from capital gains. These transactions shall also be exempted from the payment of registration fees, and all other taxes and fees for the compensation to which the owner may be entitled." from natural or juridical persons, shall be exempted from taxes arising

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Page 2 of 2 Magdalena Guinto Garcia _6657 X

allows disturbance compensation to the tenant as a result of extinguishment of Iand into non-agricultural uses or purposes, to wit: tenancy relationship by reason of the reclassification or conversion of the agricultural Moreover. Section 36 (1) of RA 3844. as amended by Section 7 of RA 6389

Notwithstanding any agreement as to the period or future surrender. of the land. an agricultural lessee shall continue in the enjoyment and possession of his landholding, except when his dispossession has been authorized by the Court in a judgment that is final and c.ecutory if after due hearing it is shown that: "Sec. 36.PossessionofLandholding: Exceptions.

head upon recommendation of the National Planning the agricultural lessee shall be entitled to disturbance Commission to be suited for residential. commercial industrial or some other urba : purposes: Provided. That compensation equivalent to five times the average of the gross harvests on his landholding during the last "(1) The landhoiding is declared bv the department five preceding calendar years:"

disturbance compensation given to a tenant pursuant to Section 36 of RA 3844. as Section 66 of RA 6657. amended by RA 6389. is still considered one of the transactions contemplated under Only Section 35 of RA 3844 was expressly repealed by RA 6657. Hence.

compensation received by Magdalena Guinto Garcia et al. was a result of of the agricultural land into residential, commercial, industrial or some other urban purposes, pursuant to Section 36 of RA 3844. as amended by RA 6389. Such being the'case, the transfer of the subject parcel of land in favor of Magdalena Guinto gains tax and documentary stamp tax. (BIR Ruling No. 009-2016 dated Jamuury 18. extinguishment of tenancy relationship because of the reclassification or conversion Garcia et ai. is not within the ambit of RA No. 6657 and, thus. subject to the capital 2016} However, the documents submitted failed to prove that the disturbance

Please be guided accordingly.

Very truly yours. AEuScmAx&

K-1-JRC Commissioner of Internal Revenue CAESAR R. DULAY 0 1 1 2 0 2