Atty. Robert M. Ramos, Jr.

December 17, 2008 BIR RULING [DA-(I-045) 547-08] 24 (D) (1), 196, 188; 045-95; DA-687-2007 Atty. Robert M. Ramos, Jr. Blk. 1 Lot 7, Ivory Homes West Fairview, Quezon City Sir : This refers to your letter dated May 8, 2008 requesting for an opinion in behalf of your clients, the Heirs of Sps. David P. Goze and Salome F. Goze, as to the tax consequence on the transfer of real properties to Salome F. Goze, pursuant to the terms and conditions of a Decision rendered by the Regional Trial Court (RTC), Branch 90, National Capital Judicial Region (NCJR), Quezon City. Documents presented show that Virginia C. Hanrieder filed a case against Architect David P. Goze for breach of contract relative to the latter's violation of the contract of service for the construction and building of the plaintiffs two-storey residential house located in Kaligtasan, Don Antonio Heights, Quezon City. The case was docketed as Civil Case No. Q96-27282 and raffled to RTC, Branch 90, Quezon City. On September 1997, David P. Goze died and was formally substituted by his wife Salome F. Goze and their son Roland F. Goze. On December of 1998, a decision was rendered in favor of the plaintiff, Virginia C. Hanrieder ordering the Estate of David P. Goze to pay the former the sum of P1,592,130.00. After the rendition of decision and for purposes of satisfying said Order, Mrs. Hanrieder thereafter discovered that the sole property of the Estate of David P. Goze which is a parcel of land located at Dona Isidora cor. Don Faustino, Kapalaran Subdivision, Quezon City and was covered by Transfer Certificate of Title (TCT) No. 253768, has been subdivided into four (4) lots and sold to Sps. Doze's children and grandchildren. Further, upon presentation of the respective deeds of sale to the Register of Deeds of Quezon City, new TCTs were issued, to wit: TCT No. Issued in favor of: N-187670 Oscar F. Goze (son of Sps. David and Salome Goze) N-187671 Merlie F. Goze (daughter of Sps. David and Salome Goze) N-187672 Edgar F. Goze (son of Sps. David and Salome Goze) N-187673 Julius Cesar F. Goze and Frieda F. Goze (son and daughter of Sps. David and Salome Goze); Christine S. Goze, Michael S. Goze and Mark Angelo S. Goze (all three of whom are children of Roland F. Goze, who, in turn, is the son of Sps. David and Salome Goze) Afterwards, Virginia Hanrieder filed another case, this time against Salome F. Goze and the registered owners of the subdivided lots, namely, Oscar F. Goze, Merlie F. Goze, Edgar F. Goze, Julius Cesar F. Goze, Frieda F. Goze, Christine S. Goze, Michael S. Goze, and Mark Angelo S. Goze. The case was docketed as Civil Case No. Q99-38709 and raffled to RTC, Branch 226, Quezon City. Virginia Hanrieder prayed for the declaration of nullity of the Deeds of Sale, Cancellation of TCT Nos. N-187670, N-187671, N-187672, and N-187673 on the ground that the afore-stated deeds on which said titles were based are spurious and the transfers were made in fraud of creditors. On August 6, 2002, a decision was rendered in the said case declaring as null and void the deeds of sale in favor of defendant registered owners as well as the new TCTs issued as a result of the same. The dispositive portion of the Decision are quoted as follows: HAaECD "WHEREFORE, premises considered, this Court finds the complaint to be substantiated by evidence on record and judgment is hereby rendered thus: 1) Declaring all the deeds of sale : a) Exh. "E" in favor of Oscar Floresca Goze; b) Exh. "F" in favor of Merle Floresca Goze; c) Exh. "G" in favor of Edgar Floresca Goze; d) Exh. "H" in favor of Julius Cesar Floresca Goze; e) Exh. "H-1" in favor of Frieda F. Goze; f) Exh. "H-2" in favor of Christine S. Goze, Michael S. Goze and Mark Angelo S. Goze, dated June 2 and June 4, 1997 as null and void; 2) Declaring all the four (4) land titles: a) Exh. "I" TCT No. N-187670 registered in the names of Oscar F. Goze married to Gertrudes Fidela M. Goze; b) Exh. "J" TCT No. N-187671 registered in the name of Merle F. Goze married to Hassan Mohammad Khamis; c) Exh. "K" TCT No. N-187672 registered in the name of Edgar F. Goze married to Marilyn C. Goze; d) Exh. "L" TCT No. N-187673 registered in the names of Julius Cesar F. Goze, Frieda F. Goze married to Conrado Joseph Ambrosio, Christine S. Goze, Michael S. Goze, and Mark Angelo S. Goze, as null and void; 3) Accordingly the Registry of Deeds of Quezon City is ordered to cancel TCT Nos. N-187670, N-187671, N-187672, N-187673 and to reinstate TCT No. 253768 in the names of Spouses David P. Goze and Salome F. Goze; 4) Ordering the defendants to pay plaintiff the following: a) P100,000.00 as moral damages; b) P100,000.00 as exemplary damages; c) P50,000.00 as (and for) attorney's fees; d) Costs of suit." In a Resolution dated April 11, 2005, the above Decision was affirmed in its entirety by the Second Division of the Supreme Court. On May 10, 2005, said Resolution became final and executory. On June 8, 2007, RTC, Branch 226, Quezon City resolved to grant Virginia Hanrieder's Motion for Execution of the Decision dated August 6, 2002. In compliance with the above-stated Decision, you now cause the reinstatement of TCT No. 253768 in the names of Sps. David P. Goze and Salome F. Goze. In reply thereto, please be informed that since the reinstatement of the above-mentioned title is in pursuance to the Court Order dated August 6, 2002 and is without consideration, it is not subject to the capital gains tax imposed in Section 24 (D) (1) of the Tax Code of 1997, as amended. CTSAaH This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service