Title
MOA on CLOA registration for GFI agrilands
Law
Bir Revenue Memorandum Circular No. 49-92
Decision Date
Oct 13, 1992
The Memorandum of Agreement among the Department of Agrarian Reform, Bureau of Internal Revenue, Land Bank of the Philippines, Land Registration Authority, and various Government Financial Institutions establishes procedures for the tax-exempt transfer and registration of agricultural lands under the Comprehensive Agrarian Reform Program, addressing the financial burdens associated with capital gains and other taxes on unconsolidated titles.
memorandum of
agreement
agrarian reform

Legal basis, context, and objectives

  • The MOA is anchored on R.A. 6657 and other agrarian reform laws requiring agricultural lands to be acquired by the government through DAR for distribution to Agrarian Reform Beneficiaries (ARBs) under the Comprehensive Agrarian Reform Program (CARP).
  • The MOA recognizes Executive Order No. 407, as amended by E.O. 448, which directs government instrumentalities and agencies, including GFIs, to transfer agricultural lands to DAR.
  • The MOA addresses the registration delays caused by GFIs’ inability to pay capital gains taxes and other incidental fees for Deeds of Transfer (D/T) involving unconsolidated titles.
  • The MOA provides a settlement mechanism that converts certain taxes and fees into liens on the proceeds of land compensation.

Core tax-and-fee lien rule

  • Taxes and fees imposed in connection with consolidation of titles for lands covered by the MOA must be charged as liens on the proceeds of the land.
  • The MOA specifies that the lien covers Capital Gains Taxes, Documentary Stamp Taxes, Realty Taxes, Registration Fees, and Transfer Fees.
  • Capital Gains Taxes are excluded from the lien where the foreclosure sale on the property covered 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.
  • Deed of Reconveyance executed by DAR in favor of the concerned GFI when the property or portion is later found not suitable to agriculture is free from all charges and is not subject to clearances of the taxes and fees mentioned under the lien rule.

Parties’ responsibilities by agency

  • The GFIs must secure from the concerned BIR District Revenue Officer a statement of accounts covering documentary stamps and capital gains taxes arising from acquisition of lands through foreclosure proceedings or other modes of acquisition.
  • The GFIs must secure from the concerned City or Municipal Treasurer a statement of realty tax payment or tax delinquencies for all agricultural lands acquired by the GFIs and transferred to DAR.
  • The GFIs must execute and attach to the D/T affidavits of consolidation of ownership covering foreclosed lands whose periods of redemption had already prescribed.
  • The GFIs must submit to DAR the statements of account issued by the BIR and the local governments together with their claims for compensation.
  • The BIR must issue statements of account on documentary stamps and capital gains taxes arising from the acquisition through foreclosure of agricultural lands by the concerned GFI.
  • DAR must present 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 in each GFI claim folder the following: (a) statements of account from the BIR, the City or Municipal Treasurer, and the LRD; (b) a copy of the duly registered D/T; (c) a certified xerox of the CLOA; and (d) a certified xerox of the ROD’s copy of the title bearing all annotations including the affidavit of consolidation, the D/T, and the CLOA.
  • The LRA must accept and register: (a) Affidavit of Consolidation, (b) Deed of Transfer, (c) Owner’s Duplicate Certificate, and (d) Certificate of Land Ownership Award.

Detailed computation timing for capital gains

  • The MOA requires the BIR to compute the debtor-mortgagor’s capital gains tax liability for individual, estate, or trust previous owners as of 30 days from the date of issuance of the certificate of sale or instrument of foreclosure.
  • For juridical-person previous owners, the computation of the debtor-mortgagor’s capital gains tax liability 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 MOA requires documentary stamp tax to be reckoned as of the execution of the certificate of sale/instrument of foreclosure.

Land registration mechanics and CLOA issuance

  • The LRA must transfer title of foreclosed lands directly to the beneficiaries without necessarily issuing a new title in the name of the GFI and the Republic.
  • The MOA requires that the affidavit of consolidation, Deed of Transfer, and CLOA be annotated at the back of the title of mortgagor.
  • Titles already consolidated in the name of GFI must not be reissued as new title in the name of the Republic; instead, CLOA must be issued directly in the name of the farmer beneficiaries.
  • The LRA must issue to DAR through the Register of Deeds statements of account with respect to registration fees due.
  • The LRA must release to DAR-PARO the registered TCT-CLOA for distribution to the ARB concerned.
  • The LRA must furnish DAR-PARO with a certified xerox of the ROD’s copy of the title showing all annotations including the affidavit of consolidation, the D/T, and the CLOA.

LBP’s deduction, remittance, and payment flow

  • The LBP must deduct from the proceeds of the land compensation claims of the GFIs all collectible accounts due to the BIR, the local government, and the ROD, as duly certified by the agencies concerned.
  • If the collectible accounts exceed the cash portion of the proceeds, the difference must be taken from and paid out of the bond portion of the proceeds in the form of LBP Bonds payable at full face value.
  • After all tax obligations and fees are fully satisfied, the LBP must pay the GFIs the balance of the proceeds.
  • The LBP must remit all payments to the proper agencies under the deduction mechanism within 30 days from the date of actual deduction.
  • For internal revenue taxes, the LBP must accomplish a monthly remittance form similar to the one used by a withholding agent, using BIR Form Nos. 1743-A1 and 1743-B.

Integration, publication, and effects

  • The MOA’s participation covers DAR, BIR, LBP, LRA, and the named GFIs: Philippine National Bank, Development Bank of the Philippines, Al Amanah Islamic Bank, Republic Planters Bank, Government Service Insurance System, and Social Security System.
  • The MOA is executed in the presence of witnesses identified as (Sgd.) Illegible (twice) and binds the parties through their authorized representatives’ signatures.
  • The circular directs internal revenue officers and others concerned to follow the arrangement and to provide it wide publicity.
  • The circular is adopted on October 13, 1992.

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