BIR Ruling No. 418-2020

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 0T-0418-2020

JUL 2 4 2020

Blk. 13 Lot 5 Phase 1, Kadayawan Homes, Bangkal, Davao City GEISEL GILDA V.SUNER-CARINO

Madam:

March 15, 2019, requesting for the issuance of a ruling relative to the Deed of Exchange dated Regional Director of Revenue Region No. 19, Davao City, through 1st Indorsement dated May 26, 2017 executed by you and Glenn Villaluz Suner. This refers to your letter dated September 18, 2017, which was forwarded by the

City, bounded and described as follows: Transfer Certificate of Title (TCT) No. It is represented that you are the registered owner of a parcel of land covered by of the Registry of Deeds for Davao

HUNDRED TWENTY NINE (129) SOUARE METERS, MORE OR LESS... PROJECT (LOT 14, BLOCK 13 OF THE CONSOLIDATION-SUBDIVISION A PARCEL OF LAND OF THE CONSOLIDATION-SUBDIVISION PLAN PCS- ALL OF (LRC) TALOMO, CITY OF DAVAO BEING A PORTION OF LOT 337-N TO 337-T . SITUATED IN THE BARRIO OF CONTAINING AN AREA OF ONE

covered by TCT No. described as follows: On the other hand. Glenn Villaluz Suner is the registered owner of a parcel of land of the Registry of Deeds for Davao City,"bounded and

City of Davao, . . consolidation-subdivision plan Pcs- 337-N to 337-T, all of LRC Psd- "A parcel of land of the consolidation-subdivision project (Lot 5, Blk. 13 of the . containing an area of . situated in the Barrio of Talomo, being a portion of Lot

more or less.

of your late father, Antonio V. Suner, Jr., who died intestate on January 4, 2003. After his death, you, together with your siblings, subdivided the properties of your late father and your share. Believing that the lot occupied by Glenn Villaluz. Suner was Lot 5, Block 13, he After a survey was conducted, you found out that the property you occupied was not the one each other, such that in order to correct the error, you and Glenn Villaluz Sufier executed a Hence, this request. occupied your respective lots. The lot designated as Lot 5, Block 13, was decided to be the share of Glenn Villaluz Sunier while the lot designated as Lot 14, Block 13, was decided to be title thereof and a new title under TCT No. that was agreed upon. The error was likely caused by the fact that the two lots are adjacent to Deed of Exchange in order to reflect the true agreement of the settlement of your late father. Likewise, believing that the lot occupied by you was Lot 14, Block 13, you also processed the processed the title thereof and a new title under TCT No. It is further represented that the two (2) aforementioned properties comprise the estate was issued under your name. was issued under his name.

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

GEISEL GILDA V. SUNER-CARINO T-0418-2020 JUL 2 4 2020

"SEC. 24. Income Tax Rates.

XXX XXX XXX

(D) Capital Gains from Sale of Real Property.

(1) In General. - The provisions of Section 39(B) notwithstanding, a final 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 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

forms of conditional sales, by individuals, including estates and trusts: Provided, Philippines, classified as capital assets, including pacto de retro sales and other That the tax liability, if any, 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, at the option of the taxpayer." (Emphasis supplied)

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

applied without attempted or strained interpretation. It shall be construed in its plain and simple 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

another; the parting with, alienation of, or giving up property2. meaning. "Disposition" means an act of disposing; transferring to the care or possession of

24 (D) (1) of the National Internal Revenue Code of 1997, as amended, unless specifically disposition" includes within its purview all kinds of dispositions of real property under Section Applying the above ruling of the Court, it is therefore clear that the phrase "other

excluded therefrom or subject to another tax treatment pursuant to different provisions of the

26, 2017 executed by you and Glenn Villaluz Suner, in the absence of a 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 capital gains tax (CGT) imposed therein. National Internal Revenue Code of 1997, as amended. Thus, the Deed of Exchange dated May

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

Please be guided accordingly.

Very truly yours,

mausanl

K-1-LMAT Commissioner of Internal Revenue CAESAR R. DULAY 035800 O

Black's LawDictionary6th Edition CTA EB Case No. 412 dated April 30, 2009

PAGE2OF2