Liability of the Vendor or Assignor to Capital Gains Tax under a Deed of Absolute Sale of Rights, Interests and Privileges and Assumption of Payment and Performance of Obligation Executed in Relation to a Document of Transfer of Rights and Interest Executed by Vendor

March 1, 1994 BIR RULING NO. 065-94 21 (e) 000-00 065-94 Ms. Angelita D. Carambas 184 Alley 1, Road 4 Project 6, Quezon City M a d a m : This refers to your letter dated July 19, 1993 requesting for a ruling on the liability of the vendor or assignor to capital gains tax under a Deed of Absolute Sale of Rights, Interests and Privileges and Assumption of Payment and Performance of Obligation which was executed on September 26, 1959 in relation to a Document of Transfer of Rights and Interest also executed on February 24, 1969 by the vendor, Jose Alvarez, Jr. in favor of Mrs. Agustina Divina Carambas involving the same property to evidence full payment and/or complete satisfaction of the terms and conditions under the first document executed on September 26, 1959. The records show that the subject property described as Lot 210 4-C, Block LCH 618, situated at Project 6, Diliman, Q.C. and covered by Transfer Certificate of Title No. 145369 issued to Jose Alvarez, Jr. was originally awarded by the People's Homesite and Housing Corporation (now National Housing Authority); that the above-mentioned Deed of Sale was registered with the Register of Deeds of Quezon City on September 25, 1969 and that the corresponding Transfer Certificate of Title No. 145369 issued on September 25, 1969 contained among others, the following annotations: "3. After the issuance of title by the Corporation in the name of the PURCHASER the property covered by this contract shall not be sold or transferred by said PURCHASER within a period of five (5) years from the date of issuance of title, except upon prior written approval of the PHHC". that Jose Alvarez, Jr. has requested for an Authority to cancel the above-quoted condition also annotated on TCT No. 145369 which request was granted by the National Housing Authority on February 22, 1979; that on September 26, 1959 Jose S. Alvarez, Jr. executed a Deed of Absolute Sale of Rights, Interests and Privileges and Assumption of Payment and Performance of Obligation in favor of Ms. Agustina D. Carambas; that on February 24, 1969 Jose S. Alvarez, Jr. executed a separate document referred to in the records as Deed of Transfer of Rights and Interests in favor of the same Agustina Divina Carambas to evidence full payment by the latter. In reply, please be informed that all sales, exchanges, or transfers of real properties (whether classified as ordinary or capital asset) by corporations, consummated on or after January 1, 1990, are subject to the creditable withholding tax. However, in the case of individuals, estates, trusts, trust funds or pension funds, only sales, exchanges or transfers of real properties classified as ordinary assets, consummated on or after January 1, 1990, are subject to the creditable withholding tax. Sale by individuals of real properties classified as capital assets remain subject to the 5% capital gains (final) tax. (RMC 7-90 dated January 16, 1990) As provided for in RMC No. 80-89, the date of notarization appearing on the Deed of Sale shall be considered prima facie the date of consummation of the contract of sale. However, in the case of sales evidenced by public instruments notarized on or before November 30, 1989, the same shall be deemed consummated on the date the Deed of Sale/Transfer is filed with or submitted to the proper revenue office, except in exceptional circumstances where the taxpayer can prove by documentary evidence other than the Deed of Sale/Transfer that the public instrument was truly executed and notarized on the date shown therein. ( Ibid ) It is our opinion that the Deed of Absolute Sale executed by Mr. Alvarez in favor of Mrs. Carambas is an ancient document (more than 30 years old); hence, its authenticity is presumed. It qualifies as an exception to the rule that the date of presentation of the document with the BIR is the date of notarization. Accordingly, it is not subject to the final capital gains tax as presently prescribed under Section 21 (e) of the Tax Code, nor to the expanded withholding tax under Revenue Regulations No. 1-90. Such being the case, a Certificate Authorizing Registration may now be issued to authorize the transfer of subject property in favor of Mrs. Agustina Divina Carambas. cdtech Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue