Sale Evidenced by the Copy of the Deed of Absolute Sale

February 8, 1960 BIR RULING NO. 117-60 Mr. Amado Acayan Manila Pilots Association Port Area, Manila S i r : Reference is made to your letter dated January 27, 1960 requesting a ruling on whether or not the sale evidenced by the copy of the deed of absolute sale attached thereto, is for income tax purposes, a sales on the installment plan. It appears that for and in consideration of the sum of P96,908.00, Philippine Currency, of which amount P24,000.00 was paid on November 11, 1957 and the balance of P72,908.00 being payable in accordance with the terms of a real estate mortgage executed in favor of the vendor, Mrs. Laura B. Powell transferred absolute ownership of a parcel of land to Mr. Siy Hac Kee by a deed of absolute sale executed on March 19, 1958. Under the terms of the aforesaid mortgage, Mr. Siy Hac Kee, the Vendee-Mortgagor, agree to pay to Mrs. Powell, the Vendor-Mortgagee, the balance of P72,908.00 on or before January 11, 1959. It is to be noted, in this connection, that the deed of sale was executed only on March 19, 1958. In said deed of sale, no mention was ever made to the fact that the execution of said document was just a ratification or confirmation of the sale made in 1957, if such was the case. Under these circumstances, the sale is deemed made in 1958. The supposed payment of P24,000.00 in 1957 cannot be considered an initial payment in that year because the sale cannot be deemed made in said year. This amount was given perhaps as earnest money. Inasmuch as the amount of P24,000.00 is considered as initial payment on the sale made in 1958, this amount and the other payment in the amount of P24,000.00 made on May 2, 1958 constituted the initial payments on the sale, and since such initial payments constitute more than 25 per cent of the selling price, the sale cannot be considered as installment sale. LLjur Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue