Wil-Vic Construction & Development Corporation

January 8, 2010 BIR RULING [DA-(C-002) 005-10] 24 (D) (1), 196, 188; 179-98 Wil-Vic Construction & Development Corporation 96 V. Luna Rd. Ext., Sikatuna Quezon City Attention: Ms. Rebecca G. Genato Treasurer Madam : This refers to your letter dated November 5, 2009 requesting for a ruling that the reconveyance of a real property pursuant to a Compromise Judgement is not subject to capital gains tax, creditable withholding tax and documentary stamp tax. It appears that Vilma Maribel Margallo is the registered owner of a condominium unit as evidenced by Condominium Certificate of Title (CCT) No. 51264 of the Registry of Deeds for the City of Makati. Ms. Margallo is likewise the defendant in Civil Case No. 08-738 before the Regional Trial Court (RTC), National Capital Judicial Region, Branch 134, Makati City for Annulment of Sales, Title with Reconveyance and Damages filed by Mr. William O. Genato, President of Wil-Vic Construction & Development Corporation (WCDC). During the Mediation Conference of the aforesaid case on October 16, 2009 with Hon. Lucia Violago-Isnani, both parties entered into a Compromise Agreement and on October 23, 2009, a Compromise Judgment was rendered by Hon. Perpetua Atal-Pao, viz. : "xxx xxx xxx WITNESSETH WHEREAS, the Plaintiff and the Defendant herein have finally decided to settle amicably their dispute which is the subject matter of the above-entitled case by entering into this Compromise Agreement subject to the following terms and conditions: EHITaS 1. That the Plaintiff shall refund to the Defendant the amount of PESOS: SEVEN HUNDRED FIFTY THOUSAND (Php750,000.00) Philippine Currency on November 11, 2009 before the Mediation Unit; 2. That the Defendant shall execute a Deed of Reconveyance in favor of Wil-Vic Construction & Development Corporation who is the originating owner of Unit 204 of Makati Terraces Condominium situated at No. 3650 Davila St., Tejeros, Makati City; 3. That the Defendant surrender CCT No. 51264 of Unit 204 of Makati Terraces Condominium to the Plaintiff; 4. That the Defendant shall immediately surrender to the Plaintiff the condominium unit peacefully and in good tenantable condition; 5. That the Defendant shall pay all association dues, water consumption, electricity bills, cable subscriptions and submit clearance from Homeowner's Association, Manila Electric Company, Philippine Long Distance Company, etc. until the turn-over of the condominium unit; 6. That the Defendant shall submit a Real Estate Tax Clearance; 7. That all expenses for the reconveyance of the CCT No. 51264 in favor of the Plaintiff shall be for the account of the Plaintiff. xxx xxx xxx" In reply thereto, please be informed that since the conveyance of the above-mentioned property is in pursuance to the Compromise Judgment of the Court and was made without monetary consideration, the transfer of the subject property by Vilma Maribel Margallo in favor of William O. Genato is not subject to the capital gains tax imposed in Section 24 (D) (1) of the Tax Code of 1997 nor to the creditable withholding tax prescribed in Revenue Regulations No. 2-98, as amended, implementing Sec. 57 (B) of the said Code. Furthermore, the Deed of Reconveyance executed is likewise not subject to the documentary stamp tax (DST) imposed in Section 196 of the Tax Code of 1997 but only to the DST imposed under Section 188 of the same Tax Code, as amended. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered as null and void. ESaITA Very truly yours, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner