BIR Ruling No. 176-83

October 11, 1983 BIR RULING NO. 176-83 M a d a m : This refers to your letter dated June 14, 1983 requesting certification to the effect that the sale by Elena G. Manigque of her 1/2 undivided share in a parcel of land located in Quezon City, covered by Transfer Certificate of Title (TCT) No. 119993 on August 14, 1967 is exempt from the capital gains tax under Section 34(h) of the Tax Code, as amended by Batas Pambansa Blg. 37. It is represented that on July 19, 1967, you and your husband, Melanio D. Manigque executed a Deed of Absolute Sale in favor of Elena G. Manigque transferring to her 1/2 undivided portion of your property located in Quezon City consisting of 416 sq. meters covered by TCT No. 118179 in consideration of P5,000.00; that said document was registered with the Register of Deeds of Quezon City after which TCT No. 119993 was issued in your names and that of Elena Manigque; and that on August 14, 1967, Elena Manigque reconveyed to you and your husband the abovesaid 1/2 undivided portion for the sum of P5,000.00, in effect returning the property to you. In reply, I have the honor to inform you that Section 8 of Revenue Regulations No. 8-79 implementing Section 34(h) of the National Internal Revenue Code as amended by Batas Pambansa Blg. 37 provides that the imposition of a final schedular tax on capital gains realized by citizens and resident aliens from sales or other disposition of real property shall apply to transaction entered into on or after September 7, 1979. Moreover, deed of conveyance of real property acknowledged before a notary public on or after September 7, 1979, shall be deemed to be a sale or disposition of real property on or after September 7, 1979. In view thereof, and inasmuch as the parcel of land was sold on August 14, 1967 as evidenced by a Deed of Sale which is duly notarized, Elena G. Manigque is not required to file the capital gains tax return and pay the final schedular capital gains tax prescribed by Section 34(h) of the Tax Code, as amended by Batas Pambansa Blg. 37. However, if after investigation it is ascertained that Elena G. Manigque derived capital gains from said transaction, she will be subject to the ordinary income tax rates prescribed by Section 21 of the Tax Code in relation to Section 34 of the same Code prior to their amendment by Batas Pambansa Blg. 37 and 135. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue