BIR Ruling

March 24, 1997 MEMORANDUM FOR: The Revenue District Officer Revenue District Office No. 50 South Makati Makati City This refers to your query as to whether we can hold in abeyance the issuance of Certificate Authorizing Registration on a sale of Realty covered by Transfer Certificate of Title No. T-175244, issued in the name of the late Benigno Toda Jr., notwithstanding the payments of P6,504,700.00 and P1,951,440.00 as capital gains tax and documentary stamp tax respectively in order to prevent the properties of the estate from being dissipated. LexLib A brief history of the case would show that Transfer Certificate of Title No. T. 175244 issued in the name of Benigno Toda Jr. was issued in lieu of Transfer Certificate of Title No. 128670 covering a real property which was the paraphernal property of the late Rosemarie T. de Toda, who was then married to Benigno Toda, Jr. Both Transfer Certificate of Title refer to the same property located at Banaba St., Forbes Park, Makati City. When Rosemarie T. de Toda died on March 4, 1991, an estate tax return was filed by the estate of Rosemarie T. de Toda showing the above mentioned property (TCT 128670) as part of her estate. Said property was among those transferred to Benigno Toda Jr. (as an heir of Rosemarie T. de Toda) based on a extra judicial settlement executed among the surviving heirs. It was our position then that the properties of the estate of Rosemarie T. de Toda were transferred to the surviving heirs without the payment of the correct estate tax and without clearance issued by this Bureau. cdt Hence, in order to protect the interest of the government and pursuant to Sections 206 and 220 of the Tax Code, tax lien/claim were annotated on the properties of the estate which were already transferred to the heirs. Records further show that a tax lien under entry No. 80222/1.75244 was annotated on Transfer Certificate of Title No. 175244 (formerly TCT No. 126670), issued in the name of Benigno Toda Jr. The chain of events that followed show that when Benigno Toda Jr. died, (pending resolution of the protested assessment of the estate of Rosemarie T. de Toda), the aforesaid property issued in his name was also included as part of his estate. The surviving heirs, meanwhile, renegotiated for the sale of the said property the proceeds of which were used to pay the deficiency estate tax assessment of the estate of Rosemarie T. de Toda because these properties was claimed as part of her estate. The alleged pending tax case in your query refers to the claim filed by the Bureau in the matter of the Testate Proceeding of the late Benigno Toda Jr., Special Proceedings No. 3792, filed with the Regional Trial Court, National Capital Region, Makati, Metro Manila, in relation to the tax liability for capital gains and documentary stamp taxes arising from the sale in 1990 of the shares of stocks in Cibiles Corporation of Benigno Toda Jr. What is in issue in that case is the liability of Benigno Toda Jr. for income tax purposes and would not apply to the tax lien under entry No. 80222/175244 annotated on TCT No. 175244, which lien was issued for the purpose of securing the payment of the deficiency estate tax assessment of the estate of Rosemarie T. de Toda and not that of the estate of Benigno Toda Jr, although the TCT was already issued in the name of the latter. For these reasons, the properties transferred to the heirs still form part of the gross estate of the decedent Rosemarie T. de Toda for estate tax purposes. Also, the issuance of a Certificate Authorizing Registration becomes a ministerial duty it appearing that the aforesaid sale was a bonafide sale and the corresponding capital gains tax and documentary stamp tax were shown to have been paid to the Bureau. Finally, the tax lien annotated on said Transfer Certificate of Title No. 175244 was already lifted and considered without force and effect upon payment by the estate of Rosemarie T. de Toda of the amount of P100,381,914.68 in full and final settlement of the deficiency estate tax assessment of said decedent. cdta Based on the foregoing, the issuance of a Certificate Authorizing Registration in favor of the taxpayer/vendee is proper. Please be guided accordingly. (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue