BIR Ruling No. 384-2021

REPUBLIC OF THE PHILIPPINES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE

Quezon City

Section 24 (D) (1) of the National Internal revenue Code of 1997, as amended. BIR Ruling No. 1326-2018 CT33&-202

OCT1 3

ANTHONY SUBIDO DE SALES

Las Pifas, Manila

Sir:

payment of capital gains tax (CGT) and documentary stamp tax (DST) on the reconveyance of a real property pursuant to a Deed of Reconveyance executed between ANTHONY SUBIDO DE SALES and MARGARITA DE JESUS ORTEGA on 10 January 2012. This refers to your letter dated 27 February 20:2 requesting for exemption from the

MARGARITA DE JESUS ORTEGA promised to purchase the said parcel of land and pay reconvey and transfer the ownership of the property to ANTHONY SUBIDO DE SALES by parce! of land situated in Brgy. Pulang Lupa Dos, Barrio of Tungtong, Municipality of Las Pinas under Transfer Certificate of Title (TCT) No. the contract price thereon upon transfer of the title of the property under her name. Thus. pursuant to the representations made by MARGARITA DE JESUS ORTEGA, ANTHONY SUBIDO DE SALES transferred ownership of the said property and new TCT was issued bearing TCT No. DE JESUS ORTEGA, she failed to pay the contract price. Hence the parties both agreed to virtue of Deed of Reconveyance dated t0 January 2012. It is represented that ANTHONY SUBIDO DE SALES was the registered owner of a : . However, after the transfer of title in favor MARGARITA Sometime in 2010.

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

"SEC. 24. Income Tax Rates.

XXX XXX XXX (D) Capital Gain from the Sale of Real Property,

Philippines, classified as capital assets, including pacto de retro sales and other tax of six percent (6%) based on the gross selling price or current fair market value as determined in accordance with Section 6(E) of this (ode, 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 (1) In General. - The provision of Section 39(B) notwithstanding, a final

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forms of conditional sales, by individuals, including estates and trusts: Provided. government-owned or controlled corporations shall be determined either under section 24 (A) or under this Subsection, at the option of the taxpayer. " (Emphasis supp{ied) 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

had the occasion to rule that the Tax 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. In the case of Salud vs. Commissioner of Internal Revenue', the Court of Tax Appeals

Revenue Code of I997, as amended. disposition" includes within its purview all kinds of dispositions of real property under section 24 (D)(1) of the Tax Code of 1997, as amended, unless specifically excluded therefrom or subject to another tax treatment pursuant to different provisions of the National Internal Applying the above ruling of the Court, it is therefore clear that the phrase "other

the CGT imposed therein. nothing in the said Deed of Absolute Sale which expressly states that in case the contract has not been paid at the time of the sale, the parties thereto can reconvey the property due to non- is deemed included within the purview of the said provision. Therefore, it shall be subject to consummated sale, as the title thereto was transferred from the seller to the buyer. There is payment. Thus, the Deed of Reconveyance dated January 10, 2012, executed by ANTHONY SUBIDO DE SALES and MARGARITA DE JESUS ORTEGA, in the absence of specific law excluding it from the coverage of Section 24 (D) (1) of the Tax Code of 1997, as amended. The Deed of Absolute Sale dated 29 October 2010 is a perfectly and validly

of the Tax Code of 1997, as amended, is likewise subject to the DST imposed in Sections 188 and Section 196 of the Tax Code of 1997, as amended. Moreover, the conveyance being a disposition of real property under section 24 (D)(1)

Please be guided accordingly.

Very truly yours. 100308

Commissioner of Internal Revenue CAESAR R. DULAY 30539 K-J-JAC

2 Black's Law Dictionary, 6th Edition. 1 CTA EB Case No. 412 dated April 30, 2009.