Registration of Real Property Subject to Capital Gains Tax

May 3, 1993 BIR RULING NO. 172-93 REGISTRATION OF REAL PROPERTY SUBJECT TO CAPITAL GAINS TAX 49 (a) (4) 000-00 172-93 Nepomuceno, Hofilea & Guingona Attorneys & Counsellors at Law Suite 304, ITC Building 337 Gil Puyat Avenue Makati, Metro Manila Attention: Atty . Hector L . Hofilea This refers to your letter to the Department of Finance, dated December 3, 1993, which was referred to this Office, stating that pursuant to the Order of the Regional Trial Court, Branch CL (150), Makati, Metro Manila, in the case of "Erlinda Thoenen, Plaintiff vs. Dolores Tuazon, Defendant", Civil Case No. 15704, directing the Register of Deeds of Metro Manila, District IV, to accept for registration the Deed of Absolute Sale of the properties covered by TCT Nos. 83309 and 83310, in favor of plaintiff Erlinda Thoenen; to cancel the same; and to issue new certificates in the name of the said plaintiff, without prejudice, of course, to the BIR and the Municipal Treasurer of Paraaque proceeding against defendant Dolores Tuazon for payment of the requisite taxes. In other words, you now request, in behalf of your clients, Mr. and Mrs. Thoenen, that the BIR allow the registration of the aforesaid property in the name of your client Erlinda Thoenen without actual payment of the capital gains tax and issuance of the BIR Certificate Authorizing Registration. aisadc In reply, I regret to inform you that we cannot accede to your request to register the real property in favor of the transferee/buyer without the payment of the capital gains tax, in view of the mandatory provision of Section 49(a)(4), pertinent portion of which reads: "No registration of any document transferring real property shall be effected by the Register of Deeds unless the Commissioner of Internal Revenue or his duly authorized representative has certified that such transfer has been reported, and the tax herein imposed, if any, has been paid." In other words, if the seller/transferor failed to pay the capital gains tax imposed under Section 21 (a) of the Tax Code, the buyer/transferee may effect the payment of the tax without prejudice to securing reimbursement from the seller. cdta VICTOR A. DEOFERIO, JR. Deputy Commissioner of Internal Revenue