BIR Ruling [DA-455-99]

August 10, 1999 BIR RULING [DA-455-99] Quijano & Padilla 320 Natividad Building Escolta, Manila Attention: Atty . Rogelio B . Padilla Gentlemen : This refers to your letter dated June 25, 1999 stating that a parcel of land located at 911 Josefina II, Sampaloc, Manila containing an area of 235.1 square meters and covered by TCT No. 164786 issued by the Registry of Deeds for Manila is owned pro-indiviso by Panfilo, Cristeta, Erlinda and Aurora all surnamed Montero, having acquired the same from their parents by virtue of inheritance; that Erlinda Montero sold her 31 square meters share over the said parcel of land to Ernesto T. Materum to which the latter was issued a TCT No. 164787 issued by the Registry of Deeds for Manila; that an alley measuring 63.10 square meters was likewise segregated and TCT No. 164789 was issued in the name of Panfilo, Cristeta, Erlinda, Aurora and Ernesto T. Materum to provide ingress and egress to the latter's property, thus the original 235.1 square meters lot was reduced to 141 square meters as shown in TCT No. 164788; that said title should have carried only the three (3) remaining brother and sisters, namely: Panfilo, Cristeta and Aurora since Erlinda had already sold her share to Ernesto T. Materum for which the latter was issued TCT No. 164787; that thru inadvertence, TCT No. 164788 still included the name of Erlinda Montero, as co-owner; that when Aurora Montero secured her own title for her share of 40 square meters over the said parcel of land, TCT No. 177661 was subsequently issued in her favor, however, the mistake was carried over to the new title; that Erlinda Montero admits that her entire share over the said property was sold to Ernesto T. Materum after its subdivision and termination of the co-ownership; and that on May 3, 1999, a Deed of Reconveyance was executed by and between Erlinda Montero and Aurora Montero whereby the former reconveyed and transferred all her rights, interest and participation over the subject property of 40 square meters and covered by TCT No. 177661 to her sister, Aurora Montero without any consideration. cdll In reply, please be informed that the transfer by Erlinda Montero of her rights, interest and participation over the 40 square meters parcel of land which is covered by TCT No. 177661 in favor of Aurora Montero through a Deed of Reconveyance without any monetary consideration shall not be subject to the capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997, considering that she is in fact not a co-owner of the said property and her name was just inadvertently inscribed in the title of the subject parcel of land. Moreover, the said Deed of Reconveyance shall not be subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997 but the notarial acknowledgment to the said deed is subject to the documentary stamp tax of P15.00 imposed under Section 188 of the same Code. (BIR Ruling No. 096-93 dated March 10, 1993) cdll 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 null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)