BIR Ruling [DA-479-03]

December 10, 2003 BIR RULING [DA-479-03] 24 (D) (1); 313-88 Ms. Carmen Tayag Jordanville Homes Subdivision Quirino Highway Baesa, Quezon City M a d a m : This refers to your letter dated November 28, 2000 requesting for a ruling that no capital gains tax shall be due on the transfer of property in your favor by virtue of the Decision of the Expanded National Capital Region Field Office, Housing and Land Use Regulatory Board. It is represented that you were one of the complainants in HLURB Case No. REM-102794-7027 against Jordan Estate Corporation; that on November 7, 1997, HLURB rendered a decision ordering Jordan Estate Corporation, among others, to indemnify you in the amount of P95,840.70 and P50,000.00; that on January 15, 1998, HLURB issued a Writ of Execution; that on October 2, 1998, HLURB issued an Alias Writ of Execution considering that the writ issued on January 15, 1998 was not satisfied; that on February 12, 1999, that parcel of land covered by Transfer Certificate of Title No. 342707 issued by the Register of Deeds for Quezon City was sold at public auction and you were the highest bidder; that you did not anymore pay the price of the levied property as such was merely credited to the partial satisfaction of the judgment debt; that you now intend to transfer the title to said land in your name, thus this request for a ruling that no capital gains tax shall be due on the transfer of the said property to your name. In reply, please be informed that after consideration of the facts, as represented, and the law applicable thereto, this Office finds no merit in your position. In BIR Ruling No. 313-88 dated July 13, 1988, this Office ruled: "Under Section 21(e) of the Tax Code (now Section 24(D)(1) of the NIRC of 1997), as amended, capital gains presumed to have been realized from the sale, exchange or other disposition of real property located in the Philippines classified as capital assets, including pacto de retro and other forms of conditional sales, by individuals including estates and trusts, shall be taxed at the rate of 5% based on the gross selling price or the fair market value prevailing at the time of sale, whichever is higher. This accordingly, includes sale effected thru a public auction sale. In other words, in the instant case, the 5% capital gains tax, which is payable by Ms. Cornelia La Cuesta Falcon and Mr. Elmo Falcon as the registered owners of TCT No. 512902 and judgment debtor, should be paid after said auction sale but before the registration of the Certificate of Sale issued by the auctioneer conducting the auction sale based on the gross selling price shown in the Sheriffs Deed of Sale in the amount of P308,510.00 or the fair market value of the property whichever is higher. Moreover, the Sheriffs Deed of Sale is subject to documentary stamp tax based on the consideration or value received or paid for the land as stated on said Deed pursuant to Section 196 of the Tax Code, as amended." HEDaTA Accordingly, we regret to inform you that your request is denied. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group