BIR Ruling [DA-239-96]

July 11, 1996 BIR RULING [DA-239-96] Atty. Tomas B. Temprosa, Jr. Villa Temprosa Siniloan, Laguna S i r : This refers to your letter dated May 13, 1996 requesting exemption from the capital gains tax and documentary stamp tax of the retransfer and reconveyance by Mr. David J. Reyes and Philippine Long Distance Telephone Company (PLDT) in your favor of a parcel of land situated in Brgy. P. Burgos, Siniloan, Laguna containing an area of 405 sq. meters and the retransfer and reconveyance by Mr. David J. Reyes in favor of PLDT of a parcel of land also situated in Brgy. P. Burgos, Siniloan, Laguna, containing an area of 1,000 sq. meters. It is represented that on September 24, 1979, a parcel land (Lot 1, of the consolidation and subdivision plan Pcs-043429-009314, being a portion of the consolidation of Lots 3572-A 3572-B, 3572-D, Pcs-04-048985) was sold to you by Mr. David J. Reyes; that the said parcel land was erroneously included in the parcel of land subsequently sold to PLDT by Mr. David J. Reyes on October 31, 1991; that the error was discovered upon a re-survey of Lot 3572-B covered by Transfer Certificate of Title No. T-5278 in the name of PLDT and Lot No. 3572-D covered by Transfer Certificate of Title No. T-5227 in the name of David J. Reyes; and that the parties have decided to correct the error by executing a Deed of Reconveyance by way of amicable settlement of the case. TcDIEH You have also represented that the capital gains tax, documentary stamp tax and transfer tax were duly paid on the previous sales and transfers by Mr. David J. Reyes of the same parcel of land to you and PLDT. In reply, please be informed that since in the instant case there is no actual sale, exchange or disposition of real property and the purpose of the execution of the Deed of Reconveyance is merely to correct a mistake without any monetary consideration, this Office is of the opinion and so holds that the aforementioned retransfer and reconveyance by Mr. David J. Reyes and PLDT in your favor and the retransfer and reconveyance by Mr. David J. Reyes in favor of PLDT of the two (2) parcels of land described in the proposed Deed of Reconveyance is not subject to the capital gains tax imposed under Section 21 (e) of the Tax Code, as amended, nor to the creditable withholding tax imposed under Revenue Regulations No. 1-90. Moreover, the said Deed of Reconveyance to be executed for the purpose is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code, as amended. However, the notarial acknowledgment is subject to the P15.00 documentary stamp tax under Section 188 of the same Code. (BIR Ruling No. 027-93 dated January 15, 1993) This ruling is being issued on the basis of the foregoing representations and will be considered null and void if it turns out later that the facts are not as represented. ADTEaI Very truly yours, (SGD.) ALICIA P. CLEMENO Assistant Commissioner (Legal Service)