BIR Ruling No. 351-13

September 11, 2013 BIR RULING NO. 351-13 Section 24 (D) (1) of the Tax Code of 1997; BIR Ruling No. 461-11 Lydia R. Medina Block 9 Lot 46 Topland Avenue, Golden Gate Subdivision, Talon 3, Las Pias City Madam : This refers to your letter dated 16 January 2012 requesting for tax exemption on the reconveyance of a parcel of land covered by Transfer Certificate of Title (TCT) No. T-107324 in favor of LYDIA R. MEDINA by virtue of a Deed of Reconveyance executed pursuant to a Writ of Execution by the Branch Clerk of Court of the Regional Trial Court (RTC), National Capital Judicial Region, Branch 255 in Las Pias City. ATcEDS Documents submitted disclose that in a complaint filed with the RTC Branch 255, Las Pias City dated 16 November 2007, LYDIA R. MEDINA alleged that she and her husband, GERARDO MEDINA are the true and lawful owners in fee simple of a house and lot located at Talon, Las Pias as evidenced by TCT No. (105368) T-22162-A issued by the Registry of Deeds of Las Pias; that sometime in June 2006 Spouses GERARDO and LYDIA R. MEDINA borrowed money from a certain LAARNI GARCIA, the defendant in the afore-mentioned complaint, in the sum of Fifty Thousand Pesos (Php50,000.00) and by way of collateral, the aforesaid property was constituted to secure faithful compliance with their obligation; that upon payment of the amount loaned, LYDIA R. MEDINA found out that from the Register of Deeds of Las Pias that her title to the property was already cancelled and a new title (TCT No. T-107324) has been issued in favor of LAARNI GARCIA pursuant to a Deed of Absolute Sale of Registered Land purportedly signed and executed by Spouses GERARDO and LYDIA R. MEDINA which according to the latter was spurious, falsified and unauthorized, hence, null and void. On 30 April 2009, the RTC in a Civil Case No. LP-07-0202 rendered judgment in favor of LYDIA R. MEDINA which states that, to wit: "1. Declaring as null and void the "Absolute Deed of Sale of a Registered Land" dated 05 July 2007 supposedly executed by plaintiff Medina and her husband Gerardo Medina in favor of Garcia; 2. Cancelling and rendering without any valid or binding effect TCT No. 107324 issued in the name of defendant Garcia on account of the subject deed; 3. Reconveying to the plaintiff the property described in TCT No. T-107324; . . ." LAARNI GARCIA elevated the above-quoted Decision with the Court of Appeals and was docketed as CA G.R. CV No. 93639 which was subsequently dismissed in a Decision/Resolution dated 7 April 2011. On 13 May 2011, the said Decision/Resolution became final and executory and has been recorded in the Book of Entries of Judgments. In reply, please be informed that since the reconveyance of subject property in pursuance to the Decision of the RTC is without consideration and the reconveyance was in order to return the property to the legal owners, the transfer of TCT No. T-107324 in favor of Spouses GERARDO and LYDIA R. MEDINA is not subject to the capital gains tax imposed under Section 24 (D) (1) of the Tax Code of 1997, as amended. Likewise, the Deed of Reconveyance is not subject to the documentary stamp (DST) imposed under Section 196 of the Tax Code of 1997, as amended, but is subject to the P15.00 DST on the notarial acknowledgement as imposed under Section 188 of the same Code. (BIR Ruling No. 461 dated 24 November 2011) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. cSEaTH Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue