BIR Ruling No. 362-2020

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Quezon City

Section 24 (D)(1) of the National

Internal Revenue' Code of 1997.

as amended.

BIR Ruling No. 1326-2018

0-0362-2020

JUN 2 5 2020

MS. ARLENE B. GIMENA &

GREGORIO A.LIKIT

YFC Village, San Antonio,

Agdao, Davao City

Gentlemen/Madam:

This refers to your letter, with attachiments, as indorsed by the Regional Director,

Revenue Region No. i9 -- Davao City, dated April 25, 2019, requesting for Certificate of

Tax Exemption from the payment of capital gains tax (CGT) and documentary stamp tax

(DST) relative to the Deed of Exchange, executed by and between Arlene B. Gimena and

Gregorio A. Likit, for the purpose of correcting mistakes in their respective titles.

It is represented that Arlene B. Gimena had purchased from YCF Neighborhood

, as evidenced by Association of Agdao, Inc. the property known as Lot 6. Block l1, with an area

of 82 sq. m., more or less, and covered by TCT No.

Deed of Absolute Sale dated September 07, 2016. However, it was discovered that the

actual portion she has occupied and developed prior to the execution of the Deed of

Absolute Sale is the portion known as Lot 7, Block 11, Psd-112402-125582, with an area

of 66 sq. m., more or less, covered by TCT No.

On the other hand, Gregorio A. Likit, had purchased also from YCF

as evidenced Neighborhood Association of Agdao, Inc. the property known as Lot 7, Block 11, with an

area of 66 sq. m., more or less, and covered by TCT'No.

by Deed of'Absolute Sale dated September 09, 2016. It was also discovered that the

actual portion he has occupied and developed prior to the execution of the Deed of

Absolute Sale is the portion known as Lot 6, Block 11, Psd-112402-125582, with an area

of 82 sq. m., more or less, covered by TCT No.

On December 8, 2017, Arlene B. Gimena and Gregorio A. Likit executed a Deed

of Exchange wherein Arlene B. Gimena and Gregorio A. Likit agreed as follows:

1. Arlene B. Gimena, conveys and sets over absolutely unto Gregorio A.

Likit, his heirs and successor, by way of Exchange the property known

as Lot 6, Block 11 with an area of 82 sq. m. and covered by TCT No.

DT0362-Z023 JUN 2 52020

Page 2 of 3 Ms.Arlene B.Gimena &Mr.Gregorio A.Likit

2.Gregorio A.Likit, conveys and sets over absolutely unto Arlene B. Gimena, her heirs and successor, by way of Exchange the property known as Lot 7, Block 11 with an area of 66 sq. m. and covered by TCT No.

Ownership, acknowledging the clerical error in her honest mistake of interchanging the Neighborhood Association of Agdao, Inc., executed an Affidavit of Exchange of True Lot Number, Title Number and area in square meters between Arlene B. Gimena and On November 08, 2018, Marie June C. Santa Agata, President of YCF

Gregorio A. Likit.

Exemption with regard to the tax consequences of the correction and/or registration of the above-mentioned exchange of properties. In connection with the foregoing, you are requesting for a Certificate of Tax

Revenue Code of 1997, as amended, states that: In reply, please be informed that Section 24 (D) (1) of the National Internal

"SEC. 24. Income Tax Rates. --

xxxxxx XXX

(D) Capital Gains from the Sale of Real Property,

final tax of six percent (6%) based on the gross selling price or current fain (1) In General. - The provision of Section 39(B) notwithstanding, a

market value as determined in accordance with Section 66 of this Code. whichever is higher, is hereby imposed upon capital 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: Provided, that the tax liability, if any, on gains

from sales or other disposition of real property to the government or any of

its political subdivisions or agencies or to government-owned or controlled

corporations shall be determined either under section 24 (A) or under this

Subsection, at the option of the taxpayer. " (Emphasis supplied)

In the case of Salud vs. Commissioner of Internal Revenuel, the Court of Tax

Appeals had the occasion to rule that the National Internal Revenue Code of 1997, 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 property2.

Applying the above ruling of the Court, it is therefore clear that the phrase "other

disposition includes within its purview all kinds of dispositions of real property under

CTA EB Case No. 412 dated April 30, 2009.

2 Black's Law Dictionary, 6th Edition.

0-0362-2020

JUN 2 5 2020

Ms. Arlene B. Gimena & Mr. Gregoric A. Likit

Page 3 of 3

Section 24 (D) (1) of the National Internal Revenue Code of 1997, as amended, unless

specifically excluded therefrom or subject to another tax treatment pursuant to different

provisions of the same Code. Thus, the Deed of Exchange dated'December 8,2017]

executed by Arlene B. Gimena and Gregorio A. Likit, in the absence of specific law

excluding it from the coverage of Section 24 (D) (1) of the National Internal Revenue Code of 1997, as amended, is deemed included within the purview of the said provision. Therefore, it shall be subject to the CGT imposed therein.

(D) (1) of the National Internal Revenue Code of 1997, as amended, is likewise subject to Moreover, the conveyance being a disposition of real property under Section 24

the DST imposed in Sections 188 and 196 of the same Code.

Please be guided accordingly

Very truly yours,

a eww

CAESARR. DULAY

Commissioner of Internal Revenue

035467

K-1-JAC 4