BIR Ruling No. 432-2017

REPUBLIC OF THE PHILIPPINES

BUREAU OF INTERNAL REVENUE DEPARIMENT OF FInANCE Quezon City

D

i Sections 24(D)(). 188. and BIR Ru[ing No. 216-2015 amended 196 of the NIRC of 1997.as 432-207

CONRAD BYRON SORIANO 48-A Pureza St. Tugatog. Malabon City 9-6-017

Sir:

gains (CGT) and documentary stamp taxes (DST) on your exchange of properties without monetary consideration. This refers to your letter dated September 19. 2016. requesting exemption from capital

Background:

an area of six hundred nincty-threc (693) sq. m. and covered by Transfer Certificate ot Title name of Vilma Dispo and Picdad D. Soriano undcr TCT No. property was divided into two (2) parcels. Lot 3-A of the subd. Plan (1.RA) Psd- designated as Lot No. 3. Block No. 3. of the consolidated- subdivision plan Pes- 754 containing {TCT} No by TCT No. (LRA) Psd- Sometime in 1989. Vilma Dispo and Piedad D. Soriano jointly bought a parcel of land covered by 'ICT No. was issued in the name of Vilma M. Dispo. and Lot 3-B of the subd. Plan (I ). On March 1. 1995, the real property was transferred in the was issued in the name of Piedad D. Soriano. On Februarv 6 2002. the covered

property covered by 'iC'T No. decided to demolish the old and dilapidated improvement to give way for the construction ot a new one. However, as necessary documents were submitted to Quezon City huilding permit officials. it was found out that the portion occupied by Piedad D. Soriano should have been for in accordance with thc blue print and building and area plans. In order to correct the said error. Soriano. executed a Deed of Fxchange of Real Property dated September 13. 2011. wherein the parties agreed to exchange their respective properties with that of the other without any monetary consideration. Hence. this request. Vilma Dispo and the part occupied by Vilma Dispo should have been for Piedad D. Soriano. Vilma Dispo and Piedad D. Soriano with the conformity of the new owner. Conrad Byron Sometime in 20t0. Piedad D. Soriano donated the property covered by IC'T No. to her nephew. Conrad Bvron Soriano. who consequenuy registered in his name the The new owner. Conrad Byron Soriano.

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

"SEt. 24. heome Tax Rates.

YX YYY XXY

(D) (apital Gains from Sale of Real Property.

tax of six percent (6%) based on the gross selling price or eurrent fair market value as determined in accordamce with Section 6tE) of this (ode, whichever is higher. is hereby imposed upon cupital gains presumed to hine heen reulized (+ In (eneral. - The provisions of Section 39(B) notwithstanding. a fin!

CONRAD BYRON SORIANO i432-2017 9-6-2017

Section 24 (A) or under this Subsection, at the option of the tuxpiver." (Fmphasis from the sale. exchange, or other disposition of real property locuted in the Philippines. classified as capital assets, inchuding pacto de retro sales and other forms of conditional sales. by individuals. including estates and trusts: Provided. property to the governmeni or any of its political subdivisious or agencies or to government-ovned or controlled corporations shall he determined either umder supplied) That the tax liability, if any. on gains from sales or other dispositious of real

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. the phrase "other disposition". It is clear. plain, and therefore must be applied without attempted alienation of. or giving up properly A reading of the afore-quoted provision shows that the law does not define nor quaiify

amended. or other special tax laws. Thus, the herein exchange of properties. in the absence of a specific law excluding it from the coverage of Section 24 (D) (1) of the National Internal provision. Therefore. it shall be subject to CGT imposed therein. (BIR Ruling No. 216-2015 kinds of dispositions of real property under Section 24(D)( l) of the National Internal Revenue Code of 1997. as amended, unless specifically excluded therefrom or subject to anothcr tax treatment pursuant to different provisions of the National Internal Revenue Code of 1997. as Revenue Code of 1997. as amended, is deemed included within the purvicw of the said dated June 19. 2015) It is therefore clear that the phrase "other disposition" includes within its purview all

of the National Internal Revenuc Code of 1997. as amended. is likewise subject to DST imposed in Section 188 and Section 196 of the National Internal Revenue Code of 1997. as amended. Moreover. the reconveyance being a disposition of real property under Section 24(D( I)

Please be guided accordingty.

Very truly yours.

K-J-LMAT Commissioner of Internal Revenue CAESAR R. DULAY

Resource Management Group Deputy Commissioner Officer-In-Charge CELIA C.KINGN C

: Black's Law Dictionary. 6th Fdition

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