BIR Ruling [DA-410-00]

November 27, 2000 BIR RULING [DA-410-00] 83 & 216 85-97 Mr. Ildefonso P. Santos, Jr. Suite 1905-B East Tower, Exchange Road Ortigas Center 1600 Pasig, M.M. S i r : This refers to your letter dated June 8, 2000 requesting in effect for: (1) an extension to pay the estate tax due on the Estates of Abelardo P. Santos, Sr., Andres P. Santos and Caridad Santos Borja and (2) authority to transfer ownership to PSHAI before payment of the estate taxes due. It is represented that you are the attorney-in-fact of the heirs of Abelardo P. Santos, Sr., Andres P. Santos and Caridad Santos Borja; that Abelardo P. Santos, Sr., Andres P. Santos and Caridad Santos Borja are your brothers and sister; that the heirs are your nephews and nieces; that Abelardo P. Santos, Sr. died on September 18, 1994, Andres P. Santos on May 23, 1995 and Caridad Santos Borja on July 12, 1994; that the estate tax due on the estate of Abelardo P. Santos, Sr., Andres P. Santos and Caridad Santos Borja is P808,548.00 each; that you are closely working with the office of Mrs. Corazon Pangcog, RDO, Branch 39, South Quezon City on the above-mentioned transaction; that her office has assisted you in the computations of the estate taxes due and in the preparation of the estate tax returns; that you cannot pay the estate taxes due yet since the heirs are poor, financially hard-up and incapable of settling the respective estates of their parent/s; that in order to raise the money to pay the said taxes, you sold the real estate properties inherited from your parents to the Paez Santoville Homeowners Association, Inc. (PSHAI) with office address at Litex Road, Barangay Payatas, Quezon City; that the PSHAI is a community association with a total membership of 498 families who are member-beneficiaries of the National Government's Community Mortgage program under RA 7279 to be financed by the National Home Mortgage Finance Corporation (NHMFC) through a Deed of Sale/Loan/Mortgage; that the total area of the real estate properties to be sold is 38,168 square meters located at Litex Road, Barangay Payatas, Quezon City, covered by Transfer Certificate of Title (TCT) No. N-190085 with an area of 17,655 sq.m., TCT No. N-190086 with an area of 3,341 sq.m., TCT No. N-190089 with an area of 12,762 sq.m., and TCT No. N-190090 with an area of 4,410 sq.m., all registered in the name of Abelardo P. Santos, et al.; that the amount of approved loan/mortgage by the NHMFC is P21,411,000.00; that you are working on the transfer of ownership to the PSHAI and have signed a Deed of Sale; that PSHAI will be paying the documentary stamp tax (DST); that based on the ruling from this Office, you are exempt from the capital gains tax (CGT); that you cannot transfer the title to the PSHAI unless the estate taxes have been paid and settled with the Branch 39, South Quezon City; that you can only receive the check payment amounting to P21,411,000.00 from the Treasury Department of NHMFC when the new TCT's are registered in the name of PSHAI and submitted to the NHMFC for payment; and that you have executed three (3) promissory notes, one for each of the estate taxes due and shall pay the said taxes as soon as you receive the check payment from the proceeds of the sale/loan/mortgage from the NHMFC. In reply, please be informed that under then Section 83(b) and (c) of the Tax Code, as amended (now Section 90(B) and (C) of the Tax Code of 1997), estate tax return is required to be filed within six (6) months from the decedent's death, and in meritorious cases, a reasonable extension not exceeding thirty (30) days for filing the return may be granted by the Commissioner of Internal Revenue. The payment of the estate tax or any part thereof shall be made upon the filing of the return or on such date as fixed if an extension is granted by the Commissioner, but in no case to exceed five (5) years in case the estate is settled through the courts, or two (2) years in case the estate is settled extrajudicially pursuant to Section 84 of the same Code (now Section 91 of the Tax Code of 1997). (BIR Ruling No. 85-97 dated July 29, 1997) In view of the foregoing we regret to inform you that your request for a 30-day extension of time within which to file and pay the estate tax due on the Estates of Abelardo P. Santos, Sr., Andres P. Santos and Caridad Santos Borja is denied since the 30-day period for the filing of the estate tax returns for the estates of Abelardo P. Santos, Sr., Andres P. Santos and Caridad Santos Borja have already expired. Thus, for failure to comply therewith, there shall be imposed a corresponding penalty, surcharge and interest for late filing of return. SIcEHC A promissory note is not one of the modes for collecting unpaid taxes due on the estate of a deceased person. Accordingly, your request for authority to transfer ownership to PSHAI before payment of the estate taxes due is hereby denied for lack of legal basis. .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, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal & Inspection Group