Capital Gains Tax Exemption on the Conjugal Partnership Property

August 31, 1988 BIR RULING NO. 427-88 21 (e) 000-00 427-88 Gentlemen : This refers to your letter dated June 20, 1988 requesting a ruling as to whether or not you are liable for the payment of capital gains tax on the Deed of Transfer you and your husband executed on March 30, 1988 pursuant to a Judgment on Compromise rendered by the Regional Trial Court of Pasig, Metro Manila, Branch No. 160 in Special Proceedings No. 724-3, dated April 6, 1988. It is represented that pursuant to the Judgment on Compromise issued by the abovementioned Court, a townhouse covered by Condominium Certificate of Title No. 3069, located at Green Valley Townhouse, Valle Verde I, Ugong, Metro Manila, which was registered in the name of your husband, Suresh Daswani, is transferred to you as your share in your conjugal partnership properties; and that the Register of Deeds needs a clearance from this Office that your tax liability as a result of said transfer has been paid. In reply, please be informed that under Article 143 of the Civil Code of the Philippines all property of the conjugal partnership of gains is owned in common by the husband and the wife. Such being the case, and since the property involved in this case is conjugal partnership property, the Deed of Transfer you and your husband executed on March 30, 1988 pursuant to the aforesaid Judgment on Compromise rendered by the Regional Trial Court of Pasig, Metro Manila on April 6, 1988, is not subject to the capital gains tax imposed under Section 21(e) of the Tax Code, as amended. In other words, transfer of real property pursuant to Article 190 of the Civil Code of the Philippines is not among those contemplated under Section 21(e) of the Tax Code, since the property involved therein is owned in common by the spouses. Moreover, said Deed of Transfer is not likewise subject to documentary stamp tax since the monetary consideration from which the said tax is based is wanting. cdta Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner