DDC Land, Inc.

August 11, 2008 BIR RULING [DA-(C-036) 129-08] Sec. 24 (D) (1) DDC Land, Inc. Marbella 1 Condominium, 14th Floor, Unit 6, 2223 Roxas Blvd., Pasay City Attention: Ms. Jocelyn D. Jayao Conversion Engr. Edna R. Sutter Exec. Vice-President Gentlemen : This refers to your letter dated April 15, 2008 requesting, on behalf of Ely E. Diang, exemption from Capital Gains Tax on the reconveyance of a parcel of land covered by TCT No. 512379. It is represented that on June 27, 2006, Ely E. Diang purchased from Dry Dock Corporation (DDC Land) a parcel of land covered by TCT No. 512379; that on June 29, 2006, Ely Diang availed of a Pag-Ibig Housing Loan Program with Home Development Mutual Fund (HDMF); that as a requirement of the HDMF, DDC Land transferred in-trust in favor of Ely E. Diang the subject property on the condition that she will faithfully pay her amortization to HDMF; that as a result of Ely E. Diang's non-payment of her monthly amortizations to HDMF, the latter directed DDC Land to buy back the aforesaid property after the grace period provided for under R.A. 6552 (Realty Installment Buyer Protection Act) has been property observed; and that a Deed of Reconveyance was subsequently executed between DDC Land and Ely Diang on November 22, 2007 without monetary consideration. In reply, please be informed that the case at hand is similarly situated with that of Citizens Development Inc. to whom this Office issued BIR Ruling No. 068-00 dated December 14, 2000 and ruled that EAICTS xxx xxx xxx "From the foregoing provisions of Section 24(D)(1) of the Tax Code of 1997, it seems that the sale of the said property in your favor by Ms. Isabelita U. Macatuno is subject thereto. However, a closer perusal of the said transaction would reveal that the property subject of the same is the same property which you previously transferred in her favor under the UHLP Pag-ibig Program which, as represented, one of the requirements of which is that the Title to the property being sold should first be transferred in the name of the buyer. In other words, the transfer of Title of the property being sold should be complied with in order to fall under the UHLP Pag-ibig program. Considering, however, that after Title to the property in question had been transferred in the name of Ms. Isabelita U. Macatuno, she decided to cancel/withdraw her application with Pag-ibig, that prompted you to request that she in turn should reconvey the same in your favor, hence the instant Deed of Reconveyance. Such being the case, this Office is of the opinion as it hereby holds that the reconveyance of the said property by Ms. Isabelita U. Macatuno in your favor on December 7, 1999 is exempt from the payment of capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997 and documentary stamp tax prescribed under Section 196 of the same Code. However, the same is subject to the documentary stamp tax of P15.00 as imposed by Section 188 of the Tax Code of 1997 on acknowledgments. (BIR Ruling No. 042-97 dated April 8, 1997)." Based on the foregoing, since the said reconveyance was executed due to non-payment of Ely Diang of her monthly amortizations to HDMF and with the end view of transferring the said property back to DDC Land, its original owner, without monetary or valuable consideration, this Office is of the opinion as it hereby holds that the reconveyance of the aforestated property by Ely E. Diang in favor of DDC Land is exempt from the payment of capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997 and documentary stamp tax prescribed under Section 196 of the same Code. However, the same is subject to the documentary stamp tax of P15.00 as imposed by Section 188 of the Tax Code of 1997 on acknowledgments. DHEcCT 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 null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service