BIR Ruling [DA-088-03]

March 20, 2003 BIR RULING [DA-088-03] RR 8-98; 48-99 Philippine National Bank PNB Financial Center Roxas Blvd., M a n i l a Attention: Atty. Ma. Cecilia L. Pesayco SVP & Chief Legal Counsel Gentlemen : This refers to your letter dated January 25, 2001 stating that prior to the issuance of Revenue Regulations No. 8-98, the Capital Gains Tax Return on all foreclosed properties (regardless of location) involving past due accounts handled by PNB, Head Office, were filed with BIR, Pasay City; and that the payments were centralized at the PNB, Financial Center, Roxas Blvd., Pasay City. Based on the foregoing, you are requesting that 1. PNB be exempted from the provisions of Sec. 3, Revenue Regulations No. 8-98 by allowing it to pay the Capital Gains Tax Return with Revenue District 51, Pasay City as earlier accommodated by Atty. Anselmo G. Adriano, then Revenue District Officer. 2. The Revenue District Officer of BIR-Pasay City be directed to process and continue the issuance of Certificate Authorizing Registration (CAR) on the Capital Gains Tax and Documentary Stamp Tax which were already paid by the Bank in BIR, Pasay City; and 3. PNB be exempted from the submission of BIR Form No. 1902 inasmuch as the borrowers/mortgagors refused to cooperate with PNB when their accounts turned past due and/or the mortgaged properties have already been foreclosed. In reply, please be informed as follows: 1. Sections 3 and 6 of Revenue Regulations No. 8-98 dated August 25, 1998 provides, viz. : "Sec. 3. Time and Place of Payment of Capital Gains Tax. Within thirty (30) days following each sale or disposition, the Capital Gains Tax Return shall be filed by the seller and payment made to an Authorized Agent Bank (AAB) located within the Revenue District Office (RDO) having jurisdiction over the place where the property being transferred is located. Sec. 6. Tax Clearance Certificate. Upon presentation of the Capital Gains Tax Return with a bank validation evidencing full payment of the capital gains tax or the creditable withholding tax due on the sale, transfer, barter, exchange or other disposition of real property classified as capital or ordinary asset, as the case may be, the Revenue District Officer (RDO) of the revenue district where the property being transferred is located shall issue the corresponding Tax Clearance (TCL) or the Certificate Authorizing Registration (CAR) for the registration of the real property in favor of the transferee. xxx xxx xxx." Based on the foregoing, payment of the capital gains tax shall be made to an Authorized Agent Bank (AAB) located within the Revenue District Office (RDO) having jurisdiction over the place where the property being transferred is located. In view thereof, this Office regrets to deny your request to pay the capital gains tax on all foreclosed properties at Revenue District No. 51, Pasay City. 2. Section 2 of Revenue Regulations No. 11-96 provides, viz. : "Sec. 2. Tax Clearance for Capital Gains Tax. Upon filing of the Capital Gains Tax Return by an individual, estate or trust and full payment of the capital gains tax due on the sale, transfer, barter or exchange or other disposition of real property, including conditional sale of property classified as capital asset, the Revenue District Officer (RDO) of the revenue district where the transferor is registered shall issue the corresponding tax clearance (TCL) certificate authorizing the registration of the real property in favor of the transferee by the Register of Deeds." Thus, with respect to capital gains tax and documentary stamp tax that were already paid prior to the effectivity of Revenue Regulations No. 8-98 (that is, during the effectivity of Revenue Regulations No. 11-96), the RDO of Pasay City, being the concerned RDO that accepted the corresponding tax payments, shall issue the CAR or TCL, which CAR or TCL shall be endorsed to the RDO of the place where the property is located for purposes of registration. However, upon the effectivity of Revenue Regulations No. 8-98 and pursuant to the aforecited Sec. 6 thereof, the RDO of the place where the property being foreclosed is located shall issue the corresponding TCL or CAR for purposes of registration of the real property. HTCSDE 3. As regards your request for exemption from submission of BIR Form No. 1902, please be informed that Section 2 of Revenue Regulations No. 4-99 specifically provides that the seller shall fill up and file the said form. PNB, as the statutory seller, shall pay the corresponding taxes due on the foreclosure sale. In such case, PNB shall have to fill up BIR Form No. 1902 on behalf of the mortgagor-owner by supplying such information previously ascertained by it as the mortgagee bank. Accordingly, PNB is hereby directed to comply with the submission of the said registration form. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group