Mr. Gaspar Tuyay

October 17, 2007 BIR RULING [DA-538-07] DA 311-03 Mr. Gaspar Tuyay No. 44 Sta. Barbara Novaliches, Quezon City S i r : This refers to your letter dated March 15, 2007 stating that you are the absolute and registered co-owner of a parcel of land, known as Lot 1-B-2 of the subdivision plan Psd-030803-064118 located at Tenejeros, Balanga City, containing all area of 20,000 square meters covered by TCT No. T-217595, with Renato E. Herrera; that they have caused the subdivision of the said property into 2 lots; that they have decided to terminate their co-ownership by way of subdivision of said property; that on February 10, 2006, a Partition Agreement was executed by and between Renato E. Herrera and Gaspar Tuyay whereby they have divided and adjudicated unto themselves the properties in the manner following: aEcSIH RENATO E. HERRERA Lot 1-B-2-A TCT No. T-254240 500 square meters Lot 1-B-2-G TCT No. T-254246 250 Lot 1-B-2-H TCT No. T-254247 300 Lot 1-B-2-L TCT No. T-254251 345 Lot 1-B-2-M TCT No. T-254252 500 Lot 1-B-2-N TCT No. T-254253 345 Lot 1-B-2-O TCT No. T-254254 345 Lot 1-B-2-P TCT No. T-254255 345 Lot 1-B-2-R TCT No. T-254257 7,158 10,088 ===== GASPAR TUYAY Lot 1-B-2-B TCT No. T-254241 500 square meters Lot 1-B-2-C TCT No. T-254242 300 Lot 1-B-2-D TCT No. T-254243 423 Lot 1-B-2-E TCT No. T-254244 422 Lot 1-B-2-F TCT No. T-254245 609 Lot 1-B-2-I TCT No. T-254248 250 Lot 1-B-2-J TCT No. T-254249 250 Lot 1-B-2-K TCT No. T-254250 250 Lot 1-B-2-Q TCT No. T-254256 7,158 9,912 ==== that however, TCT Nos. T-254241, T-254242, T-254243, T-254244, T-254245, T-254248, T-254249, T-254250 and T-254256 were subjected to tax lien to secure the deficiency tax liabilities of Mr. Renato E. Herrera which was annotated at the back of the said titles on April 6, 2006; and that the said titles are being kept in the Registry of Deeds of Balanga, Bataan. DHIaTS Based on the foregoing representations, you now request for the lifting of the Notice of Tax Liens considering that the deficiency tax liabilities referred to that of your co-owner, Renato E. Herrera, and considering further that the annotation of the tax lien was made after the execution of the Partition Agreement between the parties. In reply thereto, please be informed that Section 219 of the Tax Code of 1997 provides that "Sec. 219. Nature and Extent of Tax Lien . If any person, corporation, partnership, joint-account (cuentas en participacion) , association or insurance company liable to pay an internal revenue tax, neglects or refuses to pay the same after demand, the amount shall be a lien in favor of the Government of the Philippines from the time when the assessment was made by the Commissioner until paid, with interests, penalties, and costs that may accrue in addition thereto upon all property and rights to property belonging to the taxpayer: Provided, That this lien shall not be valid against any mortgage, purchaser or judgment creditor until notice of such lien shall be filed by the Commissioner in the office of the Register of Deeds of the province or city where the property of the taxpayer is situated or located." ADCTac Generally, a tax lien is a legal claim or charge on property, either real or personal, as security for the payment of some debt or obligation. Thus, tax lien attached not only from the service of the warrant of distraint of personal property but from the time tax became due and payable. The Register of Deeds shall assist the BIR in identifying the real properties of delinquent taxpayers for proper entry and annotation of the notice of tax lien and/or levy issued on the certificate of sale. At this juncture, observation has to be made of the fact that this power extends only to properties unquestionably belonging to the judgment debtor. As such, the sheriff is not authorized to attach or levy on property not belonging to the judgment debtor. Under the foregoing circumstances, the registration of the notice of tax lien is indeed material in determining its superiority over the other claims on the subject property. It is in this instance, that the determination of whether or not Mr. Renato Herrera is still the owner of the properties, owned in common with Mr. Gaspar Tuyay, which were subjected to tax lien, is deemed necessary. This is so because there is no co-ownership when the different portions or properties owned by different people are already concretely determined and identifiable, as in this case, even if not yet technically described. (De la Cruz v. Cruz, L-27759, April 17, 1970) Thus, it may be said that the properties subject of the Partition Agreement and which were distributed to Mr. Gaspar Tuyay, as his exclusive properties, can no longer be the subject of tax lien. ACEIac WHEREFORE, in view of the foregoing and considering that the law as much as possible discourages co-ownership, this Office holds that the properties subject of the Partition Agreement and allotted to Mr. Gaspar Tuyay as his own properties can no longer be subject to tax lien for the tax liabilities of Mr. Renato Herrera. Moreover, it is observed that even the properties which appeared to be the share of Renato Herrera, and which were subjected to same tax lien as that annotated on the TCTs of the above-mentioned properties allocated/adjudicated to Gaspar Tuyay, were thereafter freed and cleared and the levy cancelled. This is evident in the TCTs issued in the name of other persons to whom the properties allocated to Renato Herrera were transferred. This Office has reason to believe that the cancellation and lifting of the notice of tax lien and/or levy on the above-mentioned properties, which appeared to be co-owned by the parties, finds its basis. HEASaC Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service