BIR Ruling [DA-403-04]

July 22, 2004 BIR RULING [DA-403-04] Section 24 (D) (1) BIR Ruling No. DA-116-2001 Wil-Vic Construction & Devt. Corp. 129 Maginhawa St., Teacher's Village Quezon City Attention: Ms. Rebecca G. Genato Gentlemen : This refers to your letter dated June 7, 2004 requesting, in effect, for a ruling that the reconveyance of real property pursuant to a Writ of Execution is not subject to capital gains tax. Documents show that Wil-Vic Construction and Development Corporation ("Wil-Vic") is a domestic corporation existing under Philippine laws; that Hilario U. Urbien is a buyer of Unit 409 of Villa Rebecca Condominium ("subject property") located at 74 Banlat Road, Tandang Sora, Quezon City and covered by Condominium Certificate of Title No. N-17888 and Parking #43 covered by Condominium Certificate of Title No. N-17886; that in a complaint for refund filed by Hilario U. Urbien and others with Housing and Land Use Regulatory Board ("HLURB"), docketed as HLURB Case No. REM-102301-1163, the HLURB ruled, among others, as follows: "2. Declaring the corresponding Deed of Absolute Sale over the Condominium Unit of Villa Rebecca Condominium executed by Wil-Vic in favor of each of the Complainants as CANCELLED. 3. Declaring the corresponding Certificate of Title issued by virtue of the said Deeds of Absolute Sale as CANCELLED and has no force and effect." that on October 20, 2003, a Writ of Execution was issued by Hon. Jesse A. Obligation, Regional Director, National Capital Region Field Office, Housing and Land Use Regulatory Board; that on March 19, 2004, Hilario U. Urbien executed a Deed of Reconveyance in favor of Wil-Vic reconveying/transferring the subject property to the latter; and that Wil-Vic refunded Hilario U. Urbien the amount of PhP511,585.20, representing the purchase price and interest for the unit. EScHDA In reply, please be informed that since the reconveyance of the subject property is in pursuance to a Writ of Execution of the HLURB dated October 20, 2003 and is without consideration, the transfer of the subject property by Hilario U. Urbien in favor of Wil-Vic is not subject to the capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997 nor to the creditable withholding tax prescribed by Revenue Regulations No. 2-98, as amended, implementing Section 57(B) of the Tax Code of 1997. Furthermore, the Deed of Reconveyance is not likewise subject to the documentary stamp tax (DST) imposed under Section 196 of the Tax Code of 1997 but only to the DST imposed under Section 188 of the same Code. 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, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group