BIR Ruling No. 430-2017

REPUBLIC OF THE PHHIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE Quezon City

['Scction 66. Republic Act (RA) No.6657 BIR Ruling No. 393-2016 -

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Parulan. Plaridcl. Bulacan JOSE D. MARIANO

Sir:

of capitai gains tax (CGT) and documentary stamp tax (DST) pursuant to Republic Aci (RA) 3844. as amended by RA 6389. This refers to your letter dated August 05. 2016 requesting cxemption from the payment

(21.972) sq. meters. more or less; that the said property was divided into three (3) lots under Vergel de Dios. Cecilia Vergel de Dios. Felix Vergel de Dios. Jr.. and Fernando Vergel de Dios. are the registered owners of a parcel of tand" covered by Transfer Certificate of T'itle Psd-424674. as follows: (TCT) No. Based on the documents submitted, it shows that Pedro Vergel de Dios. Carmencita :ontaining an area of Twenty-One Thousand Nine Hundred Seventy-I'wo

a. Lot 3375-A-1 with an area of Fifteen Thousand Two Hundred Thirty-I'wo (i 5.232) square meters. more or less:

b. Lot 3375-A-2 with an area of Six Thousand (6.000) square meters. morc or less: and

c. l.ot 3375-A-3 with an area of Seven Hundred Forty (740) square meters. more or less:

in-Fact. Rico Ramon Vcrgcl dc Dios Pagkalinawan, executed a "Kasulatan Ng Paglilipat that on December 20. 2012, Carmencita Vergel de Dios. Pedro Vergel de Dios. Cecilia Vergel de Dios, Felix Vergel de Dios. Jr., and Fernando Vergel de Dios. represented by their Attorney" Bilang Disturbance Compensation" in favor of you, over Lot 3375-A-2. covered by TCT No. on January 04, 20 16. the Department of Agrarian Reform issued a Certification manifesting no objection to the registration of the above-mentioned ""Kasulatan Ng Paglilipat Bilang Disturbance Compensation": and that on February 12. 2016. the Department of Agrarian Rcform issued another Cenification stating that you are the agriculturat iessee over a parcel of Iand covered by TCT No. No. containing an area of Six Thousand (6.000) square meters. more or less; that

Compensation is exempt from CGT and DST pursuant to Section 66 of RA No. 6657 otherwise known as the "Comprehensive Agrarian Reform I.aw of 1988" which provides. viz.: In reply. plcase be informed that transfers of real property by way of Disturbance

that all arreuragess in real property tuxes." without penalty or interest. shull he deductible from the compensation to which the owner may, be entitled. " juridical persons. shall he exempted from taxes arising .from cupital guins. and all othe: taxes and fees for the conveyance or transfer thereof. Provided. under this Act invohing u transfer of ownership. whether from natural or These transactions shall also be exempted from the piynent of registrat ion fees. "Sec. 66. Exenption from Taxes and Fees of Land Transfers. - Trunsactions

JOSE D. MARIANO 9-C-2017 40-07

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

tessee shall contimue in the enjoyment and possession of his landholding. except when his dispossession has been authorized by the Court in u judgment thut is final and executory if after due hearing it is shown that: agreenent_as to the period or future surrender. of the land, an agricultural "Sec. 36. Possession of Landholding: Exceptions. - Notwithstunding any

recommendation of the National Planning Commission to be "(I The landholding is declared by the department head upon

five preceding calendar years: " entitled to disturbance compensation eauivalent to five times the suited for residential. commercial. industrial or some other urban purposes: Provided. Thut the agricultural lessee shall be average of the sross harvests on his landholding during the last

to Section 36 of RA 3844. as amended by RA 6389. is still considered one of the transactions contemplated under Section 66 of RA 6657. the reclassification or conversion of the agricultural land into non-agricultural uses, pursuant compensation given to a tenant due to the extinguishment of tenancy relationship by reason of Only Section 35 of RA 3844 was expressly repealed by RA 6657. Hence, disturbance

being the case, the transfer'of the parcel of land covered by TCT No. No. containing an area of Six Thousand (6,000) square meters. more or less. in favor ot Josc D. Mariano is not within the ambit of RA No. 6657 and, thus, subject to CGT and DST. (BIR you received was a resuit of extinguishment of tenancy relationship because of the reclassification or conversion 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 Ruling 393-2016 dated November 21. 2016) However, the documents submitted failed to prove that the disturbance compensation

Please be guided accordingly.

Very truly yours.

K-I-LMAT COPY FURNISHED: REVENUJE REGION NO. 05 - Caloocan City Attention: Revenue District Office No. 25A -- Plaridel, Bulacan Resource Management Group Deputy Commissioner Officer-In-Charge CeLiA C. KiNO W W+l Commissioner of Internal Revenue CAESAR R. DULAY

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