BIR Ruling [DA-499-98]

November 18, 1998 BIR RULING [DA-499-98] Atty. Teodolfo D. Yerro, Jr. Acting Revenue District Officer Revenue District No. 59 Lipa City S i r : This refers to your letter dated November 5, 1998 requesting, in effect, for a ruling as to whether or not the Memorandum of Agreement entered by and between Spouses Philip R. Rodriguez and Thelma N. Zuiga Rodriguez, Ms. Wilhelmina Antonio and Ret. Gen. Evaristo G. Cario for the dissolution of their co-ownership, the partitioning of the properties under co-ownership and the transfer of title to the co-owners of the properties partitioned, is subject to capital gains tax and documentary stamp tax. cdta It appears that Spouses Philip R. Rodriguez and Thelma N. Zuiga Rodriguez, Ms. Wilhelmina Antonio and Ret. Gen. Evaristo G. Cario are the co-owners pro indiviso of the properties situated at Barangay Bagumbayan, Tanauan, Batangas and covered by Transfer Certificates of Title Nos. T-171931 and T-71933 of the Registry of Deeds for Tanauan, Batangas; and that on October 10, 1998, the parties entered into an agreement to dissolve the co-ownership, partitioned said properties so that title can be issued in the name of the individual co-owners. In reply, please be informed that under Article 496 of the Civil Code, partition as a mode of terminating co-ownership may be made by agreement between the parties or by judicial proceedings. Partition shall be governed by the Rules of Court insofar as they are consistent with the Civil Code. Considering that the transfer of title from the co-ownership to the respective co-owners is not a barter, exchange or other disposition of realty, the same is not subject to the capital gains tax imposed under Section 24(D)(1) and to the documentary stamp tax imposed in Section 196, both of the Tax Code of 1997. Such being the case, the agreement dissolving the co-ownership and dividing the properties among the co-owners is not subject to the capital gains tax imposed under Section 24(D)(1) and to the documentary stamp tax imposed under Section 196, both of the Tax Code of 1997. (BIR Ruling No. 145-98 dated October 09, 1998) aisadc This ruling serves as your authority for the issuance of the corresponding tax clearance certificate to the concerned taxpayers. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)