Request for Issuance of Certificate of Tax Credit Relative to the Payment of CGT and DST on the Sale of Real Property

October 16, 1998 BIR RULING NO. 148-98 24 (D) (1) 196-000-00-148-98 Ongkiko Kalaw Manhit & Acordia Law Offices 8th Floor, PDIC Bank Building 8737 Paseo de Roxas, Makati City Attention: Attys . Ma . Zenaida Ongkiko-Acordia and Kristin Barbara M . Bautista Gentlemen : This refers to your letter dated June 29, 1998 requesting on behalf of your client, Mr. Jimmy Chan, for the issuance of a Certificate of Tax Credit relative to the payment of capital gains tax and documentary stamp tax on the sale of his real property located in Quezon City in favor of Mr. Joseph Kuan. It is represented that on March 31, 1998, Mr. Jimmy Chan sold in favor of Mr. Joseph Kuan a parcel of land including improvements thereon situated in Quezon City, that consequently, Mr. Chan paid on April 28, 1998, a capital gains tax of One Hundred Twenty Thousand Pesos (P120,000.00) and documentary stamp tax of Thirty Thousand Pesos (P30,000.00); that on May 26, 1998, he again paid a deficiency documentary stamp tax of Seven Thousand Five Hundred Pesos (P7,500 00); that when the documents relative to the said sale were submitted to Revenue District Office No. 39 for processing of the (Certificate Authorizing Registration, you were informed that there is still due from your client a deficiency capital gains tax and documentary stamp tax in the respective amounts of Fifty Six Thousand Six Hundred Thirty Four Pesos and Sixty Centavos (P56,634.60) and Forty-Four Thousand One Hundred Sixty Pesos (P44,160.00); that after going through the said documents, the Revenue District Officer discovered that the assessment made by the Revenue Officer who previously handled the case, and which was relied upon as correct by Mr. Jimmy Chan when he paid for the same, was erroneous; that consequently on June 17, 1998, Mr. Jimmy Chan and Mr. Joseph Kuan executed a Deed of Rescission cancelling the Deed of Absolute Sale dated March 31, 1998; and that after subsequent negotiations, however, both parties decided to push through with the sale by executing a new Deed of Absolute Sale covering the same parcel of land. Based on the foregoing, you are requesting that the taxes previously paid on the previous transaction be credited against any assessment of capital gains tax and documentary stamp tax on the subsequent transaction so that your client, Mr. Jimmy Chan will pay only whatever additional tax may be assessed against him. In reply, please be informed that since Mr. Jimmy Chan already paid capital gains tax of One Hundred Twenty Thousand Pesos (P120,000.00) and documentary stamp tax of Thirty Thousand Pesos (P30,000.00) on a sale transaction which was subsequently rescinded by the parties on June 17, 1998 due to the erroneous computation of the taxes that were due on said sale transaction, and which sale transaction will ultimately be pushed through involving the same property, this Office hereby grants your request that the payments by your client, Mr. Jimmy Chan, of the amount of P120,000.00, as capital gains tax on the previously rescinded sale transaction involving the same property executed on March 31, 1998 could be credited on the new Deed of Sale which the two parties will execute. However, the documentary stamp tax in the amount of P30,000.00 cannot be credited to the new Deed of Sale which the parties will execute neither can it be refunded considering that there had been a valid sale transaction which was subsequently rescinded. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling will be considered null and void. llcd Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue