Buyer of Rights No Longer Liable to Pay the Capital Gains Tax and the Corresponding Documentary stamp Tax on the Sale of Lot

November 14, 1991 BIR RULING NO. 249-91 21 (e) 053-89 249-91 Gentlemen : This refers to your letter dated September 13, 1991 requesting in effect a ruling to whether or not Mr. Salvador C. Bueno, a buyer of rights from Mr. Avelino Santiago over Lot 13, Block 7, GSIS Low-Cost Housing Project (MRR) at Manggahan, Pasig, Metro Manila, is still liable to pay the capital gains tax, documentary stamp tax, certification and registration fees on the transfer in his favor of the said parcel of land (Lot 13, Block 7) considering that the same taxes and fees had already been paid by Mr. Salvador Bueno upon registration of the Deed of Sale covering Lot 13, Block 6 of the said Low-Cost Housing Project, which you honestly and mistakenly issued in favor of Mr. Avelino J. Santiago. cdta It is represented that on July 13, 1988, you executed a Deed of Absolute Sale for Lot 13, Block 6 at Manggahan, Pasig, Metro Manila, in favor of Mr. Avelino J. Santiago, the original awardee; that the sale was subsequently registered simultaneously with the sale in favor of Mr. Salvador Bueno on July 21, 1988, for which Mr. Bueno paid the amount of P2,500.00 for capital gains tax, P500.00 for documentary stamp tax, P3.00 for certification fee and P225.00 for registration fees; that in due time TCT No. 66996 was issued by the Register of Deeds at Pasig, Metro Manila in favor of the Buenos; that upon presentation of the TCT to the Assessor's Office for the issuance of a Tax Declaration for Lot 13, Block 6, it was found out that the said lot was already titled in the name of Mr. Marcelino Roque, also a GSIS awardee, on January 24, 1984; that you were immediately notified of the error and a further verification of the records showed that Mr. Avelino J. Santiago was indeed an awardee of Lot 13, Block 7, instead of Lot 13, Block 6; that on April 18, 1990, TCT No. 66996 was reconveyed to you and in lieu thereof of a new Deed of Absolute Sale for Lot 13, Block 7 was issued by you on June 26, 1990 in favor of Mr. Avelino J. Santiago, to rectify the error, and that upon presentation of said new Deed of Absolute Sale at the BIR Office at Pasig, Metro Manila, Mr. Bueno was again made to pay for capital gains tax, documentary stamp tax, certification fee and most likely also the registration fee by the Register of Deeds at Pasig, Metro Manila, which Mr. Bueno refused to pay on the ground that said taxes and fees were already paid for Lot 13, Block 6 which turned out to be the wrong lot. In reply, please be informed that under Section 21 (e) of the Tax Code, as amended, capital gains presumed to have been realized from the sale, exchange or other disposition of real property located in the Philippines classified as capital assets, including pacto de retro sales and other forms of conditional sales, by individuals, including estates and trusts, shall be taxed at the rate of 5% based on the gross selling price or the fair market value prevailing at the time of sale, whichever is higher. Accordingly, the sale of Lot 13, Block 7 of your aforesaid Low-Cost Housing Project by Mr. Avelino J. Santiago, the awardee thereof, in favor of Mr. Salvador Q. Bueno is subject to the 5% capital gains tax imposed under Section 21 (e) of the Tax Code, as amended, based on the fair market value (Zonal Value) or consideration appearing on the deed of sale executed for the purpose, whichever is higher. Considering, however, that in the instant case, payment of the 5% capital gains tax and the corresponding documentary stamp tax has already been made by Mr. Salvador Q. Bueno when he caused the transfer and registration of Lot 13, Block 6, which he bought from Mr. Avelino J. Santiago, in his name coupled with the fact that the said property was previously awarded by your Office to Mr. Marcelino Roque on January 24, 1984 which, through inadvertence was again awarded to Mr. Avelino J. Santiago on July 13, 1988 although the true intent of your Office was, to award Lot 13, Block 7 to Mr. Avelino J. Santiago, this Office, is therefore, of the opinion that Mr. Salvador Q. Bueno is no longer liable to pay the capital gains tax and the corresponding documentary stamp tax on the sale of Lot 13, Block 7, of Mr. Avelino J. Santiago in favor of Mr. Salvador Q. Bueno (BIR Ruling No. 053-89). Very truly yours, (SGD.) JOSE U. ONG Commissioner