Sales of Property in Favor of the Government Stipulating that the Seller shall Not be Paid until the Title is Transferred

March 19, 1987 BIR RULING NO. 082-87 21 (e) 74-81 082-87 S i r : This refers to the letter dated March 13, 1987 of Mr. Dominador R. Madamba, Asst. Secretary for Legal Affairs of the Ministry of Public Works and Highways, relative to his request for the issuance of a BIR clearance in favor of Mesdames Remedios F. Littaua and Esperanza Littaua-Ciocon on their capital gains tax liabilities under Section 21(e) of the Tax Code, as amended by Executive Order No. 37. It is represented that, as stipulated in the Deed of Absolute Sale dated March 6, 1986, Mesdames Remedios F. Littaua and Esperanza Littaua-Ciocon represented by Esther Littaua will not receive payment for their expropriated property until the same is submitted to the Ministry of Public Highways under a new transfer certificate of title in the name of the government. In reply, please be informed that since the property of Mesdames Remedios F. Littaua and Esperanza Littaua-Ciocon was sold to the government, their tax liability on the gain derived from the sale shall be determined under Sections 21(a) or 21(e) of the Tax Code, at their option. In case Mesdames Remedios F. Littaua and Esperanza Littaua-Ciocon elect the former, this Office shall issue the certification authorizing the transfer of title to the purchaser. On the other hand, in case Mesdames Remedios F. Littaua and Esperanza Littaua-Ciocon elect the latter, following the suggested arrangement of the Ministry of Public Highways, this Office hereby allow the registration of the deed of sale with the Register of Deeds and, consequently, the transfer of the property in favor of the government. Thereafter, upon submission of a new certificate of title in the name of the government at which time, payment of the expropriated property can be effected, Mesdames Remedios F. Littaua and Esperanza Littaua-Ciocon shall file the corresponding capital gains tax return within thirty (30) days from said submission of the certificate of title. The Ministry of Public Highway shall within the same period, withhold the capital gains tax due from Mesdames Remedios F. Littaua and Esperanza Littaua-Ciocon and remit the same to this Bureau. In this connection, it may be noted that this ruling applies only to sales of property in favor of the government wherein the contract of sale stipulates that the seller shall not be paid until title to the property is transferred to the government. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner