BIR Ruling No. 080-64

December 24, 1964 BIR RULING NO. 080-64 The Regional Director BIR Regional District No. 3 San Fernando, Pampanga S i r : Reference is made to your letter dated October 12, 1964, stating that a ricemill owner leased his property to another for a monthly rental of five hundred (P500.00) pesos. You now request opinion as to whether or not a person by the mere act of leasing his ricemill is constituted a real estate dealer. cdti In answer thereto, I have the honor to inform you that the ricemill (machinery) in question which is leased by the owner is considered a real property by distinction as defined in Article 415(5) of the New Civil Code. The Supreme Court held that machinery which is movable by nature becomes immobilized when placed in a tenement by the owner of the property. (Valdez vs. Central Altagracia, 225, U.S 58., 56 L. ed. 980) Besides the lease does not constitute of the machinery alone but also of the land and building wherein it is installed. The owner of the ricemill in question, is, therefore, a real estate dealer within the purview of Sec. 194(s) of the Tax Code which provides in part, viz: ". . . 'Real estate dealer' includes any person engaged in the business of buying, selling, exchanging, leasing, or renting property as principal and holding himself out as a full or part-time dealer in real estate or as an owner of rental property or properties rented or offered to rent for an aggregate amount of four thousand pesos or more a year: . . . " it appearing that he derives therefrom a monthly rental of five hundred (P500.00) pesos a month, or an aggregate amount of six thousand (P6,000.00) pesos annually. Accordingly, the collection of the amount of one hundred sixty (P160.00) pesos, which includes the compromise penalty, from said taxpayer should be given due course. Very truly yours, (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue