BIR Ruling [DA-127-05]

April 6, 2005 BIR RULING [DA-127-05] 24 (D) (1), 196; DA-399-2004 Natalia Realty, Inc . SEB Commercial Center Ortigas Avenue Extension Taytay, Rizal Attention: Ms. Susana L. Campipi Liaison Officer Gentlemen : This refers to your letter dated September 21, 2004 requesting for exemption from the payment of capital gains tax on the reconveyance by Delio Z. Daleon of his property to its previous owner. Documents submitted shows that Natalia Realty, Inc. is the previous owner of a parcel of land located at Bo. San Luis, Municipality of Antipolo, Rizal and covered by Transfer Certificate of Title (TCT) No. N-130114 of the Registry of Deeds for Marikina; that Natalia Realty, Inc. entered into a Management Development and Sales Agency Agreement with Estate Developers and Investors Corporation (Estate for brevity) on September 22, 1983, whereby they agreed that the latter will manage the development and likewise will operate and market the above-described parcel of land; that said property was later sold by Estate to Delio Z. Daleon thru a Contract to Sell with Assignment on October 23, 1986 and the title thereto is now registered in the name of the latter, but due to financial reasons Delio Z. Daleon is unable to pay the lot he had purchased and therefore, desires to return the said property to its former owner by way of a Deed of Reconveyance. In reply, please be informed that since the transaction is without any monetary consideration, and considering further that the execution of the Deed of Reconveyance was not for monetary consideration, the same is not subject to the capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997, nor to the withholding tax imposed under Revenue Regulations No. 2-98. Furthermore, the said reconveyance of the real property is not likewise subject to the documentary stamp tax imposed under Section 196 of the 1997 Tax Code. However, the notarial acknowledgement to the said deed is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. (BIR Ruling No. DA-399-2004 dated July 22, 2004) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group