Request to Defer Payment of Capital Gains Tax and Documentary Stamp Tax

February 18, 1998 BIR RULING NO. 020-98 24 (D) (1)-000-00-20-98 Atty. Braulio R.G. Tansinsin 360 Tomas Pinpin Street Binondo, Manila S i r : This refers to your letter dated November 10, 1997 relative to BIR Ruling No. DA-282-97 dated August 20, 1997 where this Office held that "xxx xxx xxx In, reply, please be informed that Section 21(e) of the Tax Code, as amended, provides that 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 sales 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 the sale, whichever is higher. Such being the case, both exchanging parties are subject separately and distinctly to capital gains tax based on the fair market value or zonal value, whichever is higher. LibLex Moreover, pursuant to Section 196 of the Tax Code, as amended, a conveyance or deed whereby land is assigned or transferred to another is subject to documentary stamp tax based on the consideration or value received or contracted to be paid for such realty. (BIR Ruling No. 029-96 dated February 27, 1996)" It is represented that the Revenue District Office of Marikina refuses to issue the Tax Clearance Certificate (TCL) unless spouses Francis E . Garchitorena and Victoria P . Garchitorena (Garchitorenas) pay the capital gains tax and the documentary stamp tax on the aforementioned transactions for themselves and that of spouses Cesar N . Magpayo and Zoila Magpayo (Magpayos) . prcd In connection therewith, you are requesting that since there is still a problem with regard to the title of the property of the Garchitorenas, while the title of the property of the Magpayos is clean and all the other documents relative to said property are complete, you be allowed to pay the capital gains tax and documentary stamp tax on the transfer by the Magpayos of their aforesaid parcel of land located at Evangelista St., BF Homes, Paraaque, Metro Manila covered by TCT No. S-103673 in favor of the Garchitorenas; and that later on when the problem relative to the property of the Garchitorenas is resolved, they will pay the capital gains tax and the documentary stamp tax relative to said transfer. In reply thereto, please be informed that your aforesaid request is hereby granted. This will serve as the authority of the Revenue District Office of Marikina to issue the TCL in favor of the Garchitorenas over the transfer of the property of the Magpayos located at Evangelista St., BF Homes, Paraaque, Metro Manila covered by TCT No. S-103673 upon payment of the capital gains tax and documentary stamp tax based on the fair market value or zonal value whichever is higher prevailing at the time of the execution of the Deed of Exchange on December 16, 1981. Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue