Bureau of Local Government Finance Opinion

March 23, 2012 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The City Treasurer Quezon City Sir : This refers to the letter dated May 25, 2010 of Atty. Rainer Defante, Assistant Vice President, Legal Unit, Asia United Bank, addressed to Atty. Amador G. Leao Jr., OIC-Taxes and fees Division of that City which was Indorsed to this Bureau by then City Treasurer Victor B. Endriga. TaDIHc Asia United Bank in the said letter request for the segregation of tax Declaration No. E-067-07136, under the name of Spouses Ricardo and Teresita Tan covered by TCT No. N-284185 as well as for the exemption from transfer tax. It is the contention of said Bank that when the sale which transpired between the Bank and Spouses Tan on the subject property were partially rescinded, no sale or disposition of property transpired, thus, no tax consequence occurred. The Bureau believes otherwise. While it is true that no sale took place when the parties rescinded the October 12, 2005 contract, ownership or title was transferred from one party to the other. Thus giving rise to a taxable transaction under Section 135 of R.A. 7160 or the Local Government Code of the Philippines which reads: Section 135. Tax on Transfer of Real Property Ownership . (a) The province may impose a tax on the sale, donation, barter, or on any other mode of transferring ownership or title of real property at the rate of not more than fifty percent (50%) of one percent (1%) of the total consideration involved in the acquisition of the property or of the fair market value in case the monetary consideration involved in the transfer is not substantial, whichever is higher. The sale, transfer or other disposition of real property pursuant to R.A. No. 6657 shall be exempt from this tax. (b) For this purpose, the Register of Deeds of the province concerned shall, before registering any deed, require the presentation of evidence of payment of this tax. The provincial assessor shall likewise make the same requirement before canceling an old declaration and issuing a new one in place thereof. Notaries public shall furnish the provincial treasurer with a copy of any deed transferring ownership or title to any real property within thirty (30) days from the date of notarization. It shall be the duty of the seller, donor, transferor, executor or administrator to pay the tax herein imposed within sixty (60) days from the date of the execution of the deed or from the decedent's death. From the provision aforequoted, it could be inferred that the transaction covered by the provision is not limited on the sale, donation, and barter of real property, but covers any or other mode of transferring ownership or title of real property. DaACIH Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director