Ms. Estrella S. Garcia

November 23, 2007 BIR RULING [DA-600-07] Section 97 DA-195-2003 Ms. Estrella S. Garcia Ligtong 3, Rosario, Cavite M a d a m : This refers to your letter dated October 16, 2007 requesting that you be permitted to sell real property, the proceeds of which will be used to pay the estate taxes due as a result of the untimely death of your husband. It is represented that you, together with two children, namely, Diamante Garcia and Milky Way Garcia are the surviving heirs of the late Bernardo V. Garcia who died on April 11, 2006; that you and your late husband are the registered owners of the following parcels of land covered by Transfer Certificates of Title Nos. T-17405 (Lot 2623-A), T-216822 (Lot 13-E), and T-24210; that an Extrajudicial Settlement of Estate of the Late Bernardo Garcia with Waiver of Rights was executed and dated October 2, 2007; that the children waived all their rights in favor of the mother on the said parcels of land; that you intend to sell one of the three parcels of land, namely TCT-216822 covered with Tax Declaration No. 17-005-00269 and 17-005-00274 issued by the Register of Deeds of Cavite; and that you would like the title of the subject property be registered in your name so you would be able to sell it, and its proceeds be used to pay the estate taxes due. In reply, please be informed that under Section 97 of the Tax Code of 1997 provides: "SEC. 97. Payment of Tax Antecedent to the Transfer of Shares, Bonds or Rights. There shall not be transferred to any new owner in the books of any corporation, sociedad anonima, partnership, business, or industry organized or established in the Philippines any share, obligation, bond or right by way of gift inter vivos or mortis causa, legacy or inheritance , unless a certification from the Commissioner that the taxes fixed in this Title and due thereon have been paid is shown." (emphasis ours) Based on the above provision, it is very clear that the payment of taxes is a condition precedent before a transfer to a new owner is allowed to be effected in the title. The estate tax due on the estate of the late Bernardo V. Garcia should be paid first before it could be transferred in your name and not the other way around. On account of your representation, an extrajudicial settlement of estate and a waiver in your favor was executed by the children of their share as heirs of your late husband making you the sole beneficiary of all the assets left by the deceased. Regrettably, your request that the title of the abovementioned property be transferred to you to effect its sale with a prospective buyer, the proceeds of which will be used to pay the corresponding taxes due is hereby denied for lack of legal basis. Please be guided accordingly. CaEIST Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service