Orfanel Alambra Limwan & Solis

June 13, 2008 BIR RULING [DA-368-08] DA465-04 Orfanel Alambra Limwan & Solis Unit 211 Quadstar Building DG. 80 Ortigas Avenue 1502 Greenhills, San Juan Metro Manila Attention: Atty. Dominic C.M. Solis Gentlemen : This refers to your letter dated May 15, 2008 stating that your client, Spouses Efren P. Soliman and Victoria T. Soliman (Spouses Soliman), are the co-owners of a parcel of land containing an area of 720 square meters located at West Fairview Park, Quezon City covered by TCT No. 119295 issued by the Registry of Deeds for Quezon City; that on December 27, 1993, Spouses Soliman obtained a loan from Spouses Severiano M. Diesta and Amparo M. Martin (Spouses Diesta) in the amount of P2,115,647.16 for the payment of which Spouses Soliman executed a Deed of Sale with Right to Repurchase over said real property; that it was stipulated in said deed that Spouses Soliman had two (2) years from the execution thereof to repurchase the property; that on September 4, 1994, before the two-year period to repurchase expired, Spouses Diesta by means of fraud, deceit, undue influence and ill-placed cajolery, prevailed upon Spouses Soliman to execute a deed of absolute sale over the subject property; that Spouses Diesta even promised not to register the deed of absolute sale before the expiration of the 2-year period to repurchase; that the deed of absolute sale having been executed Spouses Soliman continued to be in possession of the property; that in 1995, Spouses Soliman offered to pay the loan but Spouses Diesta refused alleging that the subject property had already been registered in their name and that they were now the owners thereof; that it was only then that Spouses Soliman found out that their property had already been titled in the name of Spouses Diesta; and that in a decision dated September 4, 2007 entitled "Spouses Efren P. Soliman and Victoria T. Soliman, Plaintiffs vs. Spouses Severiano M. Diesta and Amparo M. Martin, Defendants, docketed as Civil Case No. Q-95-25847, the Regional Trial Court Branch 80, Quezon City ruled as follows "WHEREFORE, premised considered, judgment is hereby rendered as follows: a) Declaring the Deed of Absolute Sale dated September 4, 1994 and Transfer Certificate of Title No. 119295 issued by virtue thereof VOID. b) Ordering the Register of Deeds of Quezon City to cancel Transfer Certificate of Title No. 119295. c) Declaring the Deed of Sale with Right to Repurchase dated December 27, 1993 an equitable mortgage. d) Giving the plaintiffs thirty (30) days from the finality of this Decision to redeem the mortgaged property by paying the amount of P2,115,647.16. Otherwise, plaintiffs would have the option to foreclose the mortgaged property. e) Ordering the defendants to pay plaintiffs the sum of Fifty Thousand Pesos (P50,000.00) as attorney's fees and the cost of the suit. SO ORDERED." Based on the foregoing representations, you now request for a ruling that the reinstatement into ownership over the subject property by the Spouses Soliman in the light of the cancellation of TCT No. 119295 and by virtue of a final and executory court judgment is not subject to capital gains tax and the corresponding documentary stamp tax. In reply thereto, please be informed that since the reinstatement of the above-mentioned property is in pursuance with the Court Order dated September 4, 2007 and without consideration, the transfer of the said property in favor of Spouses Soliman is not subject to the capital gains tax imposed in Section 24 (D) (1) of the Tax Code of 1997 nor to the creditable withholding tax prescribed in Revenue Regulations No. 2-98, as amended, implementing Section 57 (B) of the said Code. Furthermore, the reinstatement of the said property is likewise not subject to the documentary stamp tax (DST) imposed in Section 196 of the Tax Code of 1997 but only to the DST imposed under Section 188, supra. 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. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service