BIR Ruling [DA-440-05]

October 25, 2005 BIR RULING [DA-440-05] Wee Dee Ping Scout A.M. Limbaga Road Pasonanca Zamboanga City S i r : This refers to your letter dated December 2, 2003 requesting an authority for the Revenue District Office (RDO) No. 93, Zamboanga City to issue the corresponding Certificate Authorizing Registration (CAR) relative to the sale of a parcel of land by Wee Lee Hiong in favor of Wee Dee Ping. It is represented that on August 6, 1976, a Deed of Sale involving three (3) adjoining parcels of land covered by TCT Nos. 3715(T-12908), T-9490 and 3716(T-12909) issued by the Registry of Deeds for Zamboanga City with an aggregate area of 12,500 square meters was executed by Elpidio M. Alfaro in favor of Emilia Mas, Jose P. Alfaro, Paz A. Baena and Alicia A. Baylon for the amount of P21,000.00; that on June 7, 1989, the aforesaid parties executed an Easement of Road Right of Way in favor of Wee Lee Hiong, owner of Lot No. 2238-A, granting the latter a perpetual right of way to traverse Lot No. 2238-B and covered by TCT No. 9490 for and in consideration of P90,000.00 with an area of 3,421 square meters which is a portion of the 12,500 square meter lot above-mentioned; that on June 4, 2002, the capital gains tax and the corresponding documentary stamp tax were paid in the respective amounts of P10,000.00 and P1,125.00; that sometime in 1996, Jose P. Alfaro et al., sold the entire Lot 2238-B containing an area of 12,500 square meters covered by TCT No. 9490 to Ateneo de Zamboanga including the area subject of the easement and the latter was able to secure the CAR to which TCT No. 125482 was issued in favor of Ateneo de Zamboanga; that TCT No. 125482 bears an annotation of a Notice of Adverse Claim by Wee Dee Ping which was subscribed and sworn before Ma. Lourdes B. Baes of the Metropolitan Trial Court of Zamboanga City; that the inscription was made on April 11, 1996 by the Register of Deeds for Zamboanga City; that on May 7, 2002, Wee Lee Hiong executed a Deed of Absolute Sale in favor of Wee Dee Ping involving the Easement of Road Right of Way; that the sale included all the terms and conditions found on that Easement of Road Right of Way that was previously executed by Jose P. Alfaro et al.; and that the capital gains tax and the documentary stamp tax on the aforesaid deed of absolute sale were respectively paid on June 4, 2002 and May 8, 2002. In reply thereto, please be informed that Section 24(D)(1) of the Tax Code of 1997, as implemented by Revenue Regulations No. 8-98 provides that ETIDaH "(1) In General. The provisions of Section 39(B) notwithstanding, 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 this Code, whichever is higher, is hereby imposed upon capital gains presumed to have been realized from the sale, exchange, other disposition of real property located in the Philippines, classified as capital assets, including, pacto de retro sales and other forms of conditional sales, by individuals, including estates and trusts: . . ." Corollarily, in Section 6 of Revenue Regulations No. 8-98 provides that "Section 6. Tax Clearance Certificate . Upon presentation of the Capital Gains Tax Return or Creditable Withholding 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 Certificate Authorizing Registration (CAR) for the registration of the real property in favor of the transferee." There can be no uncertainty that the issuance of the Certificate Authorizing Registration (CAR) is premised on the fact that the capital gains/creditable withholding and documentary stamp taxes due on the sale of a parcel of land have been paid based on the gross selling price or fair market value, whichever is higher. Inasmuch as the taxes due on the said sale by the former owner, Wee Lee Hiong, have already been paid, it is now incumbent upon the RDO to issue the corresponding CAR so that title to the portion of the property containing an area of 3,421 square meters may now be registered in the name of Wee Dee Ping. WHEREFORE, in view of the foregoing , this will therefore serve as an authority for the Revenue District Officer of RDO No. 15, Zamboanga City, to issue the CAR over a portion of the property covered by TCT No. 125482 or containing an area of 3,421 square meters in favor of WEE DEE PING upon presentation of the evidence of the payment of the capital gains tax and the corresponding documentary stamp tax. 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