QuestionsQuestions (BIR REVENUE MEMORANDUM CIRCULAR NO. 49-92)
The text cites CARP implementation under R.A. 6657 and related agrarian reform laws. It specifically references Executive Order (E.O.) No. 407, as amended by E.O. No. 448, which directed government instrumentalities and agencies, including GFIs, to immediately transfer their agricultural lands to DAR.
It states that D/T executed under CARP law and E.O. 407 is exempt from taxes and fees incidental to registration. However, the exemption does not cover taxes/fees due on previous transactions or instruments of foreclosure on properties whose titles were not yet consolidated in the name of the GFI at the time transfer to DAR occurred.
Its purpose is to provide a mechanism for the generation and registration of CLOA for GFI agrilands with unconsolidated titles transferred to DAR, by addressing the payment of capital gains taxes and other fees that would otherwise delay registration.
The MOA states that the following are charged as liens on the proceeds: (1) Capital Gains Taxes (with an exception noted), (2) Documentary Stamp Taxes, (3) Realty Taxes, (4) Registration Fees, and (5) Transfer Fees.
Capital gains taxes are excepted where the foreclosure sale on the property was conducted on or prior to September 3, 1986. In that case, the capital gains tax shall be for the account of the debtor-mortgagor.
The MOA provides that when DAR executes a Deed of Reconveyance in favor of the GFI concerned because the property (or portion) is later found not suitable to agriculture, the registration of that Deed of Reconveyance shall be free from all charges and thus not subject to the clearances of the taxes and fees previously mentioned.
GFIs must: (1) secure from the BIR District Revenue Officer a statement of accounts for documentary stamps and capital gains taxes arising from acquisition through foreclosure or other modes of acquisition; (2) secure from the City or Municipal Treasurer a statement of realty tax payment or tax delinquencies; (3) execute and attach affidavits of consolidation of ownership covering foreclosed lands whose redemption periods had already prescribed; and (4) submit to DAR the BIR and local government statements of account together with their claims for compensation.
If the previous owner is an individual, estate, or trust, BIR reckons the computation of the debtor-mortgagor’s capital gains tax liability as of 30 days from the date of issuance of the certificate of sale or instrument of foreclosure. If the previous owner is a juridical person, the computation is reckoned from the 15th day of the fourth month next following the taxable year when the certificate of sale/instrument of foreclosure was executed.
The documentary stamp tax is reckoned as of the execution of the certificate of sale or instrument of foreclosure.
DAR presents to the Register of Deeds (ROD) for registration the D/T, attaching the Owner’s Duplicate of Certificate, the affidavit of consolidation, and the Certificate of Land Ownership Award (CLOA).
DAR must incorporate: (a) statements of account from BIR, the City/Municipal Treasurer, and the LRD; (b) a copy of the duly registered D/T; (c) certified xerox of the CLOAs; and (d) certified xerox of the ROD’s copy of the title showing all annotations, including the affidavit of consolidation, D/T, and CLOA.
LRA accepts and registers the affidavit of consolidation, Deed of Transfer, Owner’s Duplicate Certificate, and CLOA. It directs that title be transferred directly to beneficiaries without necessarily issuing new title in the name of the GFI and Republic. It also provides that titles already consolidated in the name of the GFI may not be issued anew in the name of the Republic, but CLOA may be issued directly in the name of the farmer beneficiaries.
The MOA states that the affidavit of consolidation, Deed of Transfer, and CLOA shall be annotated at the back of the title of the mortgagor.
LBP deducts from the proceeds of the land compensation claims of the GFIs all collectible accounts due to BIR, local government, and ROD as duly certified. If collectible accounts exceed the cash portion, the difference is taken from and paid out of the bond portion of proceeds in the form of LBP Bonds payable at full face value.
LBP must remit payments under the MOA within 30 days from the date of actual deduction. For internal revenue taxes, it must accomplish a monthly remittance form similar to withholding agent remittance, using BIR Form Nos. 1743-A1 and 1743-B.
The BIR is responsible for issuing statements of account relative to the amount of documentary stamps and capital gains taxes arising from, and by reason of, acquisition through foreclosure of agricultural lands by the GFI concerned.
It addresses the delay in registration by allowing GFIs to proceed with CLOA registration without immediately paying out-of-pocket for capital gains taxes and incidental fees. Instead, these obligations are satisfied through deductions from the land compensation proceeds, with LBP administering the liens/deductions and bond payment if needed.