BIR Ruling [DA-261-97]

August 6, 1997 BIR RULING [DA-261-97] Ms. Carmen S. Mora 13 Tindalo St., Project 3 Quezon City M a d a m : This refers to your letter dated May 2, 1997 stating that you are the registered owner of a parcel of land with improvements thereon, evidenced by Transfer Certificate of Title No. 115516, situated at Quirino District, Quezon City; that on February 27, 1996, Mr. Reginald M. Peralta, your nephew, requested you to affix your signature on a document, not knowing that what you were then signing was a Deed of Absolute Sale of your aforesaid lot and building; that you did not receive a single centavo of the purchase price of your lot and building which was sold for P500,000; that realizing that you were deceived, you verified with the Register of Deeds of Quezon City your Certificate of Title and was surprised to know that your property was thereafter covered by Certificate of Title No. N-155462 and the same was registered in the name of Reginald M. Peralta, married to Milagros Lorenzana and Spouses Maria Lorna P. Bravo and Alejandro P. Bravo; that you executed an Affidavit of Adverse Claim to protect your rights over the aforestated property; that you lodged a formal complaint against the alleged new owners with the Barangay Chairman of Barangay Claro of Project 3, Quezon City; and that after a series of meetings, an amicable settlement was reached, whereby, the adverse parties admitted their wrongdoing and agreed to reconvey the title of the property in your name by executing a Deed of Absolute Sale, but without any monetary consideration, in exchange for the withdrawal of your complaint against them. Based on the foregoing representation and documents submitted, you now in effect request for exemption from the payment of the corresponding taxes due on the said transaction. In reply, please be informed that since the Deed of Absolute Sale prepared by Reginald M. Peralta was only executed with the evident purpose of reconveying the property primarily in order to correct the wrongdoing that has been done to you, and the said reconveyance not having any monetary consideration, this Office is of the opinion as it hereby holds, that the aforesaid transaction between you and the adverse parties is not subject to capital gains tax, imposed under Section 21 (e) of the Tax Code, as amended. Furthermore, it is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code, as amended. However, the notarial acknowledgment the Deed of Absolute Sale is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code, as amended by Republic Act No. 7660. (BIR Ruling No. 027-93 dated January 15, 1993) DcIHSa This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different, this ruling shall then be considered null and void. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV OIC, Asst. Commissioner Legal Service