BIR Ruling No. 284-2019

REPUBLICOF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Quezon City

Section 24(D)(1),NIRC

BIR Ruling No.216-2015

0284-2019 MAY T 5 2019

No.1988 Perfecto Street VIMAR A.TUAZON Tondo, Manila

Madam:

from capital gains tax and documentary stamp tax on the rectification and correction of entries in your respective titles to real properties. This refers to your letter dated February 17, 2011, requesting for an exemption

A. Rubin acquired under co-ownership a ONE HUNDRED FIFTY (150) square meters real property located in Kundiman Street, Sampaloc, Manila, from the co- It is represented that Maria Loida E. De Ocampo, Vimar A. Tuazon and Lynell

owners/vendors thereof, after which they proceeded to improve, possess and occupy

the same lot, they had the same subdivided into three (3) lots with an area of FIFTY the same lot as adjoining lot owners; that for the purpose of separating their titles to

39-A of the subdivision plan (LRA) Psd-397954 in the name Maria Loida E. De plan (LRA) Psd-397954 in the name of Vimar A. Tuazon; that as it turned out later. the registered owners realized that while they were occupying their respective titles do not match the actual description of their properties, in other words, TCT No. (50) square meters each and registered TCT No. - Ocampo and TCT No. - properties, the technical description of their properties appearing in their respective description of the property owned by Vimar A. Tuazon and the title TCT No. -279200 in the name of Vimar A. Tuazon describes the property owned and occupied by Maria Loida E. De Ocampo; that obviously there was a mistake in the technical description issued in the name of Maria Loida E. De Ocampo bears the technical a parcel of described as lot 39-C of the subdivision a parcel of described as lot

embodied in each other's titles; that both registered owners executed a document before Notary Public Jimmy D. Lacebal expressing their intention to correct the

mistake; and that while the document executed was a Deed of Exchange, in truth and

of entries in their respective titles to truly reflect the technical description of the in fact, there is no exchange of property but rather a mere rectification and correction

properties they own and possess.

In reply, Section 24 (D) of the Tax Code of 1997, as amended, provides, viz.:

determined in accordance with Section 6 (E) of this Code. Section 39 (B) notwithstanding, a final tax of 6% based on whichever is higher, is hereby imposed upon the capital Real Property. - the gross selling price or current fair market value as "Section 24 (D). 1) In General.- The provision of Capital Gains from Sale of

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gains presumed to have been realized from the sale, exchange, or other disposition of real property located in the Philippines, classified as capital assets, including pacto de retro sales and other forms of conditional sales, by individuals, including estates and trusts: . .

Court of Tax Appeals had occasion to rule that the i997 Tax Code, as amended, does not define nor qualify the phrase "other disposition". It is clear, plain and therefore must be applied without attempted or strained interpretation. It shall be construed in its plain and simple meaning. "Disposition" means an act of disposing; transferring to the care or possession of another; the parting with, alienation of, or giving up property (Black's Law Dictionary, 6th Edition). In the case of Salud vs. CIR, CTA EB Case No. 412 dated April 30, 2009, the

"other disposition" under Section24(D)(1) of the 1997 Tax Code includes within its purview all kinds of dispositions of real property unless specifically excluded therefrom or subject to another tax treatment pursuant to other provisions of the 1997 Tax Code or other special tax laws. Applying the above ruling of the Court, it is therefore clear that the phrase

exempting from tax the herein exchange of properties, said transaction is subject to CGT under Section 24(D)(1) of the 1997 Tax Code, as amended. (BIR Ruling No. 216-2015 dated June 19, 2015) Foregoing considered, in the absence of an express statutory provision

of the 1997 Tax Code, as amended, is likewise subject to the documentary stamp taxes imposed in Section 188 and Section 196 of the same Code. (BIR Ruling No. 216-2015 dated June 19, 2015) The conveyance, being a disposition of real property under Section 24(D)(1)

Please be guided accordingly.

Very truly yours.

Masama

Commissioner of Internal Revenue CAESAR R. DULAY

K-1-JRC/JAC 025777