BIR Ruling No. 456-2017

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPAF'TMENT OF FINANCE Quezon City I ra

Bureau of Internat Revenue Ruling

of 1997. as amended P.D. No. 1529: Secs. 24 (D)(1) and 196. NIRC :455-2017 Person to Contact: Chief. Law Division Tel. Nos. 926-55-36 / 927-09-63

Date: -3eptcmber25-2017

NATIONAL POWER CORPORATION BiR Road corner Quezon Avenuc. Diliman. Quezon City

Attention: MA.GLADYS CRLZ-STA. RITA President and CFO Gentlemen:

exempting the Deed of Reconveyance executed by the Nationat Power Corporation (NPC) in Documentary Stamp Tax (DST). Such Deed of'Reconveyance was executed due to the alleged erroneous entries made hy the Register of Deeds (RD) transferring to NPC certain portions of parcels of iand that were not included in the Deed of Absolute Satc dated Augusi 13. 1988. executed by and between NPC: and Corazon V. Agoncillo. favor' of Corazon V. Agoncillo from the payment of Capital Gains Tax (CGT) and This refers to your tetter dated September 14. 2016 requesting for a BIR.ruling

Background:

On August t3. 1988. a Deed of Absolute Sale was executed by and between Hundred Thirty-Four Thousand Five Hundred Thirteen (134.513) square NPC and Corazon V. Agonc:lio represented by her Atty-In-Faet. Sixto Maretta, Jr.. over certain parcels of iand tocated in Barrio Dacanlao. Municipality of Calaca, Province of Batangas. with a total area of One meters, as follows: a. Lot No..3_(whole portion) with an area of 3.022 square meters as well as Lot 1-a(25.189 sq.m.), Lot_L-h_(22.453 sq. m.). Lot 1-d (5.521 sa. m.). and Lot j-f (1.7(0 sq. m.) all under Subdivision Plan Title (IC) No. PSD- Said lots are covered by Transfer Certificate of

h. Lot No..2.(whole portion) with ar area of 57.349 square meters as well as Lot No.4-a (19.259 sa. m.) under Subdivisior Plan covered by TCT No

2 Pursuant to the aforesaid Deed of Absolute Sale. NPC was issued TCT No

Lot 4 with an area ot 57.349 sq. m. and 30.927 sq. m. respectively. area ot 3.022 sa. m. and 255.736 sq. m.. respectivelv. Likewise. NPC was issued TC'I No which cancelled TC'T NO. which canecled Te'T No. over Lot 3 and Lot 1 with an over Lot 2 and

4- NATIONAL POWER CORPORATION (Cora2mn T: Ag.Mcille)

3.The parties to the Deed of Ahsolute Sale acknowledged that while TCT No. the area indicated therein for Lot 1 comprises the entire 255.736 sq. m. in the Deed of Absolute Salc. Similarly. while TCT NO. properly issued tor Lot 2 based on the area purchased by NPC. the area indicated therein for 1.ot 4 comprises the entire 30.927 sq. m. instcad of oniy 19.269 sq. m. (Lot 4-a only) as shown in the Deed of Absolute Sale. instead of a mere 54.873 sq. m. (Lots 1-a. 1-b, 1-d, and 1-f onlv) as shown was properly issucd for Lot 3 based on the area purchased by NPC. was

M Subsequently. a letter dated October 20. 2015 was then received by thc NPC

from Romeo Agoncilio Dinglasan. signing as Atty-In-Fact for the Nos. landowner/s requesting for the correction of the erroneous entries in TCT and

5. NPC through its Office of the Lega! Counsel verified the allegations as mentioned in the abowve-said letter with the Register ot Dceds (RD) in

the existing TC'I's and the Deed of Absolute Sale. and was able to confirm the erroneous entries by the RD taking into account Nasugbu. Batangas in the presence of the Heirs of Corazon V. Agoncillo

6 Thus. the Heirs of Agoneillo requested the immediate correction or

reconveyance from NPC of the lots which were not purchased hy NPC but were included in the titles issued to NPC.

7. NPC agreed to execute a Deed of Reconveyance for the above-mentioned portions of parcels of land not included in the Dced of Absolute Sale and to owner of the said lots. re- convey the same to Corazon V. Agoncillo. the latter being the rightful

8. Upon prior consultation with the RD. Nasugbu Batangas. a Deed of Reconveyance was executed by NPC re-conveying or returning to (`orazon previously covered by TCT No. V. Agoncillo Lots l-c. I-e. I-g of Subdivision Plan b of"Subdivision Pian also in NPC's name. respectively. Hence. this request. in NPC's name and'TC'T and Lot 5 of Plan Psu- which was cancelled by TCT No. whieh was cancelled by TCT Lot 4-

partly provides: In reply- ptease be informed that Section 2 of Presidential Decree (P.D.) No. 1529

Judictal proceedings for the registretion of Jands throughout the Philippines shall be in rem. and shuall be hused on "the generully accepted principles unterhimg ihe Torrens Sysiam. "Sec. ?. Nature of registrution proceedings: jurisdiction of courts.

and mterests therein, and over all petiions filed utter original registration of title. with power to hear and determine all questions arising upon such applicutions or petitions... applicutions for originul registration of title to lands. including improvements Courts of First Instance shall have exclusive jurisdietion over all

Instance) has the authority to act. not onty on applications for original registration of title to land. but also on all petitions filed atter the original registration of title. Thus, it has the authority and power to hear and determine all questions arising from such applications or petitions. Pursuant to the above provisions. the Regional Trial Court (formerly Court of First

+ Amending and Codifying the Laws Retative to Registration of Property and for Other Purposes

PAGE 2 OF 5

NATIONAL POW'ER CORPORATION (COraZO Y. AgONCillIo) ,456-2017 9-25-2017

error attended the titing of the subject properties necessitating the cxchange hy or reconveyance to the rightful owner thereof is an issuc that is within the jurisdiction of the should be done by seeking judicial relief since the properties are titled and registered in the names of the respective owners. The determination of whether or not mistake or inadvertent courts. Thus. any change or amendment on the land titles or in the owncrship of such properties

made by the RD. to wit: denying your request for a Certification or Sworn Statement confirming the erroneous entries Abraham N. Vermudez. addressed to your VP-Legat Counsel. Mr. Melchor P. Ridulme. This was confirmed by the Registry of Deeds, Nasugbu. Batangas, in the letter Of Alty.

cannot issue the (ertification or Sworn Statement being requested in view of Sec. 108 of P.D. No. 1529 as follows. "Relative thereto. the undersigned regrets to inform vou that this Office

filed as provided in the preceding section. ussigns. without his or their written consen. Where the owner's duplicate certificate is not presented. a sinilar petition may he give the court uuthority to reopen the judgment or decree of registration, and that nothing shall he dtone or ordered hy the court which shall impair the title or other interest of a purchaser holding a certificate for value umd in good fuith. or his heirs and grant any other retief upon such terms amd conditions. reuuiring security or bond if necessury. as it miay consider proper. Provided. hovever. That this section shall not be construed to determine the petition afier notice to all parties in interest. and muy order the entry or cancellaion of a new certificate, the entry or cancellation of a memorandum upon a certificute, or person on the certificate has been changed: or that the the marriage has heen terminated and no right or interests of heirs or creditors will thereby be affected: or that a corporation which owned registered land and has been dissolved huas not convened the same within three vears after its dissolution: or upon any other reasonahle ground: and the court mav heur imd interests of any terminated and ceused: or that new interest not appearing upon the certificate have arisen or been created: or tha.an omission or error vus mude in entering a certificute or any memorandum thereon, or on any duplicute .certificate: or thuu the same or umy registered owner hus married, or. if registered us married. thuat except hy order .of the proper Court of First Instance. property. or. in proper cases. the Register of Deeds with the approval of the Conmissioer of Lamd Registration. moy apply by petition to the court upon the ground that the registered book afier the entry of a certificate of tile or of a memorandun thereon und the attestation of the same .by Register of Deeds. registered owner ofother person having am interest in registered expectant or alteration_or anendment shall he made_upon the registration Sec. 108. Anendnrent und alteration of certificates. No erasure inchoateappeuring on the certificate.hine de scription. whether vested. contingent. A

amv other provision of this Deeree afier original registrution shull be filed undentitled in the original case in which the decree or registrution wus entered. All petitions or motions filed under this Section as well as umter

PAGE 3OFS

NATIONAL. POW'ER CORPORATION (COraZON Y: Ag 2HCillo) +436-2017 9m25-2017

Petition to the (ourt upon the ground that an error was nude in the registration of the Trunsfer Certificates of Title (ICTs) issued to NP( In view of the foregoing. vou are therefore ach-ised to file the necessary

herein reconveyance of properties without monctary consideration finds no basis in fact and in Spouses Nilo Ramos and Eliadora Rumos vs. Far East Bank and Trust Company?. the court order that a mistake or inadvertent error attended the titling of the subject properties necessitating the reconveyance to the rightful owner. cannot be given credence. Thus. the Internal Revenue Code of 1997. as amended. In Philippine jurisprudence. it is a well-settied rule that "mere atlegation is not cvidence, and is not equivalent to proof." in the case of Suprcme Court states that: iaw to be exempt from CGT and DST imposed by Sections 24 (D) and 196 of the National Therefore. your allegation of erroneous entries made by the RD without presenting any

euuivalent to proof. Charges based on mere suspicion and speculation likewise cannot be given credence. "Basic is the rule that mere allegation is not evidence and is not

amended. states that: Moreover, Section 24(D)(1) of the National Internal Revenue Code of 1997. as

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

tux of six percent (6%) based on the gross selling price or current fair market .forms of condirional sales, by individuals. including estutes und trusts: Provided. That the tax liability.. if uny. on gains from sales or other dispositions 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, ut the option of the taxpayer. " (Emphasis value as determined in accordance with Section 6(E) of this Code. whichever is from the sale. exchange. or other disposition of real property located in the supplied} higher, is hereby imposed upon capital guins presumed to have heen realized Philippines. classified as capital assets. including pacto de retro sules und other (l) In General. - The provisions of Section 39(B) notwithstanding, u. final

had the occasion to rule that the National Internal Revenue Codc of 1997. as amended. does applied without attempted or strained interpretation. It shalt be construed in its plain and simple another: the parting with, alienation of. or giving up propertys. not define nor qualify the phrase "other disposition". It is clcar, plain and therefore musi be meaning. "Disposition" means an act of disposing: transferring to the care or possession of In the case of Salud vs. Commissioner of Internal Revenuet. the Court of Tax Appeats

24 (D) (1) of the National Internal Revenue Code of'1997. as amended. unless specifically excluded iherefrom or subject to another tax treatment pursuant to different provisions of the National Internal Revenue Code of 1997. as amended. Thus. the Deed of Reconveyance cxcluding it from thc coverage of Section 24 (D) (1) of the National internal Revenue Code ot disposition" includes within its purview all kinds of dispositions of real property under Section executed by the NPC in favor of Corazon V. Agoncillo, in the absence of a specific law Applying the above ruling of the Court. it is therefore clear that the phrase "other

2 Hector C. Villanueva vs. Philippine Daily inquirer. Ine.. et al.. (j.R. No. 164437. May 15. 2009. 588 S('RA 1. + (TA F.B Case No. 412 dated Apri! 30. 2009 : G.R. No. 193804. Fehruary 27. 2013 Black's Law Dictionary. 6th Edition September 1. 2014 20!1. 646 SCRA 462. 477: ECF: Realty and Development. Inc. vs. Rachel (i. Mandap. G.R. No. 196182. H1: Social Security Commission and Social Security System vs. Teresa G. Favila. G.R. No. 170195. Mareh 28

PAGE 4 OF S

NATIONAL POWER (ORPORATION((OrOEOn :A&mHHa) 9-75-2017 hc6~2017

shall be subiect to the capita! gains tax imposed therein. 1997, as amended. is deemed included within the purview of the said provision. Therefore. it

National Internal Revenue Code of 1997. as amended. is likewise subject to the documentary stamp taxes imposed in Section 188 and Section 196 of :he National Internal Revenue Code of 1997, as amended. Also. the reconveyance being a disposition of real property under Section 24 (D) of the

exenmptions und thut he who would seek to he thus privileged must justifi- it hy words too plain to he mistaken and too categorical to be misinicrpreted.e construed strictissini juris usuinst the tuxpuver and liberally in fuvor of the taxing power. Taxation is the rule and exenption is the exeeption. The tos does not look with favor on tux As repeatediv held by tine Supreme Court. "nvs graming exemption from tux are

Please be guided accordingly

Very trul, yours.

1EMmy

Commissioner of internal Revenue CAESAR R. DULAY

K-1-LMAT 009310

CELIA C. KING Deputy Commissioner Resource Management Group

Officer-In-Charge

6 Sea-Land Serv ice. Ine. vs. Court of Appeais and Commissioner of Internat Revenue. G.R. No. 122605. April 30.200

PAGE SOF S