Is the Refund of the Amount Previously Paid as Documentary Stamp Tax But Was Overlooked and Paid Again Proper?

September 9, 1992 BIR RULING NO. 259-92 21 (e) 123-89 259-92 Anchor Finance and Investment Corporation 4th floor, Phil. Asia Life Champaca II Bldg. Alfaro St. Salcedo Village, Makati, Metro Manila Attention: Ms . Evangeline C . Escobillo President Gentlemen : This refers to your letter dated June 27, 1992 stating that on October 21, 1991 the property of Spouses Delfin and Herminia Manaog situated at Tandang Sora, Quezon City, covered by TCT No. 268809 was attached in your favor in Civil Case No. 144084 (CFI Br. XVIII, Manila) entitled "Anchor Finance Corp. Plaintiff, versus DM's Marketing Corp. & Delfin Manaog & Herminia Manaog, Defendants"; that on July 9, 1965, the attached property was sold at public auction and awarded in your favor as the highest bidder thereof; that meanwhile, on June 18, 1984, Spouses Delfin & Herminia Manaog executed a Deed of Assignment over the same property in favor of the Spouse Jimmy & Lilie Bassig; that the said assignment includes "The Assignors" statutory right of redemption in the event of the sale of the property at public auction; that the same Deed of Assignment also provides that the "Assignees recognized and acknowledge the validity and enforceability of the lien by attachment in favor of Anchor Finance and Investment Corporation and the Real Estate Mortgage on the properties in favor of Anchor Finance and Investment Corporation notwithstanding this Deed of Assignment"; that on June 15, 1992, Spouses Bassig redeemed the aforesaid property and a corresponding certificate of redemption was issued; and that you then paid the corresponding capital gains tax and documentary stamp tax for the transfer of ownership in favor of the Spouses Bassig but the Revenue District Office No. LV-B refused to process the papers claiming that the property belongs to you by virtue of the auction sale. Based on the foregoing representations, you now request in effect a ruling relative to the aforestated facts on the following queries: "a) Can ownership be validly transferred to Spouses Jimmy and Lilia Bassig by virtue of certificate of redemption pursuant to the Deed of Assignment executed by the registered owners (Sps. Manaog) in their (Sps. Bassig) favor? "b) Can we refund the amount of P18,750.00 which we previously paid as documentary stamp tax but was overlooked and paid again?" In reply, please be informed that the answers to your queries are as follows: 1) Yes, ownership can be validly transferred to the Spouses Jimmy & Lilia Bassig by virtue of certificate of redemption pursuant to the Deed of Assignment executed by the registered owners, Spouses Manaog in their (assignee, Spouses Bassig) favor, considering that in such event the property redeemed shall be considered as property of the assignee and can no longer be subject to execution under a judgment exclusively affecting the personal liability of the assignor as debtor mortgagor. (LRC Consulta No. 38, Register of Deeds of Iloilo, pet., April 12, 1955). Hence, the assignor, Spouses Manaog, shall be subject to the capital gains tax imposed under Section 21 (e) of the Tax Code, as amended. On the other hand, in exercising its assigned right to redeem the aforesaid realty, the assignee, Spouses Bassig is not subject to income tax. Moreover, the deed of redemption, in the instant case, is subject to the documentary stamp tax imposed under Section 196 of the Tax Code since a conveyance of real property from the assignor, Spouses Manaog, as seller, to the assignee, Spouses Bassig, as purchaser, is deemed to have taken place. 2) No, the amount of P18,750.00 (which you previously paid on May 24, 1988 as documentary stamp tax but was overlooked and paid again could not be legally refunded pursuant to Section 204 (3) of the Tax Code, as amended, which provides, viz: "204 (3) Credit or refund taxes erroneously or illegally received, or penalties imposed without authority; refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the Commissioner a claim for credit or refund within two years after the payment of the tax or penalty ." Thus, since more than two years have already elapsed from the time you paid the amount of P18,750.00 as documentary stamp tax on May 24, 1988 up to the time of your written claim for the refund of the same as contained in your aforesaid letter dated June 22, 1992, your right to claim for refund of the said amount of P18,750.00 as documentary stamp tax has, therefore, already prescribed. LLpr Very truly yours, JOSE U. ONG Commissioner of Internal Revenue