BIR Ruling No. 286-2018

REPUBLICOF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE Quezon City

BIR Ruling No.216-2015 Sections 24 (D) (1) and 188 of the NIRC of 1997.as amended F 285--2018 2-.27-2010

Room D. Masonic Center. AND CONSULTANCY SERVICES BABAN & BABANLAW OFFICE 180 Yandoc St.. Baguio City

Attention: ATTY.NESTOR L. BABAN

Gentlemen:

Baguio City. requesting exemption from payment of Capital Gains Tax (CCT) and Documentary Stamp Tax (DST) in reference to Civil Case No. 8312-R. This refers to your letter dated June 29. 2016 duly indorsed by Revenue Region No. 2.

Background:

Avancy, el. .al. " approving, in toto, the Compromise Agreement entered into by the parties its decision in Civil Case No. 8312-R entitled Elfreda G. Pinangat, et. al. vs. Nenila O. during the Judicial Dispute Resolution. The said Compromise Agreement provides that: On August 3. 2016. the Regional Trial Court (RTC) of Baguio City, Branch 6, rendered

Wnder the following terms and conditions. "Thar the parties have mutually decided to buy peace of mind and.end this case

ai In the exercise of utmosi generosity, defendant Nenila Avancy agreed io waive all her claims on the foreclosed house and lot covered by ARp NO. respeciiveiy which are now deciared in her name in Javour of the plaintiffs. andARP NO.

b) The plaintiffs shall cause the cancellation of the tax declarations in the name of ihe defendant Nenita Avancy back io iis original declared owner. Avelina Gaviden, mother of the plainiffs.

C The real property taxes in the amount of P. paid by defendant

at RTC 6 Baguio Ciny. Nenia Avancy io the Baguio City local government will be reimbursed by the plainiiffs to her on Mav 23, 2016 ar 2:00 o'clock in the afternoon

d) The plaintiffs expressed their gratitude on the generosity of defendant Nenita Avancy and wisher her well.

( Both parties praved for ihe dismissal of this case of the Honorable Court.

for lack of legal basis. In reply. we regret to inform you that your request for tax exemption cannot be granted

ELFREDA G.PINANGAT(BABAN& BABAN LAWOFFICE 27 27-2018 2018

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

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

Philippines, classified as capital assets, including pacto de retro sales and other forms of conditional sales, by individuals, including estates and trusts: Provided. property to the government or amv of its political subdivisions or agencies or to That the tax liability, if amy, on gains from sales or other dispositions of real government-owned or controlled corporations shall be determined either under Section 24 (A) or under this Subsection, at the option of the taxpaver." (Emphasis supplied) tax of six percent (6%) based on the gross selling price or current fair market higher, is hereby imposed upon capiial gains presumed to have been realized from the sale, exchange, or other disposition of real property located in the value as determined in accordance with Section 6(E) of this Code, whichever is (I) In General. - The provisions of Section 39(B) notwithstanding. a final

meaning. "Disposition" means an act of disposing; transferring to the care or possession of another: the parting with, alienation of, or giving up property2 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 In the case of Salud vs. Commissioner of Internal Revenuel, the Court of Tax Appeals

reconveyance of the real property in favor of Avelina Gawiden, in the absence of a specific law National Internal Revenue Code of 1997, as amended, or other special tax laws. Thus, the excluding it from the coverage of Section 24 (D) (1) of the National Internal Revenue Code of shall be subject to CGT imposed therein. (BIR Ruling No. 216-2015 dated June 19, 2015) disposition" includes within its purview all kinds of dispositions of real property under 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 1997. as amended. is deemed included within the purview of the said provision. Therefore, it Applying the above ruling of the Court, it is therefore clear that the phrase "other

of the National Internal Revenue Code of 1997, as amended, "is likewise subject to DST imposed in Section 188 of the National Internal Revenue Code of 1997, as amended. Moreover. the reconveyance being a disposition of real property under Section 24(D)(1)

Please be guided accordingly.

Very truly yours.

UO

K-1-LMAT Commissioner of Internal Revenue CAESAR R.DULAY 013864

2 Black's Law Dictionary. 6th Edition CTA EB Case No. 412 dated April 30.2009

PAGE 2 OF 2