12-17-2004 BIR Ruling [DA-640-04]

December 17, 2004

BIR RULING [DA-640-04]
24 (D); 196; 105
DA-127-2002
Quiason Makalintal Barot Torres & Ibarra
21st Floor Robinsons-Equitable Tower
4 ADB Ave. cor. Pedro Poveda Street
Ortigas Center, Pasig City
Attention: Attys. Wilfrido E. Sanchez, Ruelito Q. Soriano
and Benedict R. Tugonon
Gentlemen :
This refers to your letter dated October 16, 2004 requesting on behalf of your client,
Eduardo T. Caniza for a ruling confirming your opinion that the termination of coownership/partition of properties is exempt from capital gains tax, documentary
stamp tax and value-added tax. aAEIHC
It appears that Eduardo T. Caniza (Eduardo for brevity) together with his brother
Ernesto T. Caniza (hereinafter referred to as Ernesto) are the absolute and
registered co-owners of the following real properties jointly titled in their names:
TCT/CCT No. Location
TCT No. T-98706

Cavinti, Laguna

CCT No. 23284

Unit 101, One Corporate Plaza, Pasay City

TCT No. 215810

T. Alonzo, Sta. Cruz, Manila

TCT No. T-1 5579

Sungay East, Tagaytay City

TCT No. 215811/215812 Platerias, Sta. Cruz, Manila

TCT No. 164922

Masangkay, Tondo, Manila

on October 17, 2002, Eduardo and Ernesto executed a Memorandum of Agreement

whereby the brothers agreed to partition the above-stated properties as follows:
To: Eduardo T. Caniza

TCT No. T-98706

Cavinti, Laguna

CCT No. 23284

Unit 101, One Corporate Plaza, Pasay City

TCT No. 215810

T. Alonzo, Sta. Cruz, Manila

To: Ernesto T. Caniza

TCT No. T-15579

Sungay East, Tagaytay City

TCT No. 215811/215812 Platerias, Sta. Cruz, Manila

TCT No. 164922

Masangkay, Tondo, Manila

In reply, please be informed that under Section 24(D)(1) of the Tax Code of 1997, a
final tax of six percent (6%) based on the gross selling price. or current fair market
value as determined in accordance with Section 6(E) of the Tax Code of 1997,
whichever is higher, is imposed upon capital gains presumed to have been realized
from the sale exchange, including pacto de retro sales and other forms of
conditional sales, by individual, including estates and trust.
Considering that there is no sale, exchange or disposition of property in the abovementioned transaction but merely a partition of the properties among the co-owners
which properties rightfully belong to them and without any consideration, the same
is not subject to capital gains tax imposed under Section 24(D)(1) of the Tax Code of
1997. TCaEIc
Moreover, the partition of the said properties among the co-owners is not subject to
documentary stamp tax under Section 196 of the Tax Code of 1997, but only to the
documentary stamp tax of P15.00 prescribed under Section 188 of the same Tax
Code. (BIR Ruling No. DA-127-2002 dated July 25, 2002)
The transaction is likewise not subject to value-added tax, since the dissolution of
co-ownership and eventually the partition of properties is not a sale of goods and
services pursuant to Section 105 off the Tax Code of 1997.
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. aTSEcA
Very truly yours,
Commissioner of Internal Revenue
By:
(SGD.) JOSE MARIO C. BUAG
Deputy Commissioner

Legal and Inspection Group

C o p y r i g h t 2 0 0 8 C D T e c h n o l o g i e s A s i a, I n c.

12-16-2004 BIR Ruling [DA-639-04]