BIR Ruling No. 357-2021

BUREAU OF INTERNAL REVENUE REPUBLICOF THE PHILIPPINES DEPARTMENT OF FINANCE Quezon City

Articles 1624 and 1475 of the BIR Ruling No. 290-2013 New Civil Code; Revenue Regulations No.9-2012 357 202

JP LUBATON LAW OFFICE Unit 22-OI URCI Commercial Complex, Alabang-Zapote Road, Las Pinias City

Attention: ATTY. JOHN PATRICK P. LUBATON Gentlemen:

Ludy S. Chiquito, for a ruling on the proper treatment of a Deed of Assignment of rights over gains tax (CGT) or expanded withholding tax (EWT). a Certificate of Sale covering a foreclosed reai estate, whether the same is subject to capital This refers to your letter dated November 07, 2018, requesting on behalf of your client

Clerk of Court/Ex-Officio Sheriff of Las Pinas City issued the corresponding Certificates of brevity), a corporation duly organized and existing under Philippine laws and with principal office at 23rd Floor, RCBCSavings Bank Corporation, 26th and 25th Streets, Bonifacio Global City, Taguig City,was the highest bidder at the foreclosure sales of the properties covered by Sale dated March 16, 2010 and November 20, 2012 respectively in favor of BPHI. Transfer Certificates of Title (TCT) Nos. Documents submitted disclosed that Balikatan Property Holdings, Inc.BPHIfor and As the highest bidder, the

assigned to Ludy S. Chiquito for a total consideration of Eight Hundred Eighty Thousand Pesos (P880,000.00). Assignment wherein all the rights and interest of BPHI in the said Certificates of Sale were On October 18.2016.BPHI executed in favor of Ludy S.Chiquito two 2 Deeds of

with the Registry of Deeds of Las Pinias City, and the same were annotated as Entry No. On April 25.2017, Ludy S.Chiquito caused the registration of the Certificates of Sale in TCT No. T- and Entry No. + in TCT No.

on the Deeds of Assignment dated October 18, 2016. Hence, this request. name. However, the examiner in Revenue District Office (RDO No.053A in Las Pinas assessed Ludy S.Chiquito for the payment of CGT and documentary stamp tax (DST) for the Certificates of Sale dated March 16.2010 and November 20,2012 as well as CGT and DST exercising such right, Ludy S. Chiquito sought for the consolidation of the subject titles to her Upon the expiration of the right of redemption without any of the interested parties

Philippines states that: In reply, please be informed that Articles 1624 and 1475 of the New Civil Code of the

shall be perfected in accordance with the provisions of article 1475. "Article 1624. An assignment of credits and otier incorporeal rights

P430.000.00 on TCT No. T- and P450.000.00 on TCT No.

LUDY S. CHIQUITO c/o JP LUBATON LAW OFFICE 21-3:1 OC

a meeting of minds upon the thing which is the object of the contract and upon the price. "Article 1475. The contract of sule is periectedl ut the monent there is

subject to the provisions of the law governing the form of contracts. From that moment, the parties muy reciprocully demand performance

consideration of Eight Hundred Eighty Thousand Pesos (P880.000.00) although at that time. delivery cannot be effected yet because the redemption period has not yet lapsed. However, property consolidated under her name w' ere it not for the redernption period. assignment of rights. There can be no uncertainty that assignment of rights is perfected from the moment the parties have agreed upon a determinate thing, i.e., the object of the contract and a price certain. Thus, delivery of the thing sold is not necessary for the perfection of the contract. In the case at bar, the Deed of Assignment was executed by BPHi in favor of Ludy rights and interests over the two Certificates of Sale for a total consideration of total from that time on, Ludy S. Chiquito is subrogated to the rights of BPHI to have the title to the S. Chiquito whereby the former had assigned, transferred, and conveyed to the latter all its In view thereof, there are two transactions in this case -- the foreclosure sale and the

shall be treated as a separate contract of sale notwithstanding that the former had only inchoate effectively convey ownership of the property to her from BPHi. rights over the subject property and the latter merely steps into the shoes of the assignor without acquiring a better'right than what the assignor had in the property to which the assigned right pertains. Upon the expiration of the redemption period, BPH:'s inchoate rights and interests over the foreclosed property had ripened to a right of ownership and possession over the same. Thus, the consolidation of ownership by Ludy S. Chiquito over the foreclosed property shall Accordingly, the Deeds of Assignment executed by BPHI in favor of Ludy S. Chiquito

favor of Ludy S. Chiquito, over the said property is subject to the following: Wherefore, the Deeds of Assignment dated October 18. 2016 executed by BPHI in

l. EWT imposed under Section 57 and Revenue Reuiations (RR) No. 2-98. November 10, 2016: as amended. which must be remitted to the" Bureau 'on or before

Value added tax (VAT) imposed under Section I0t: of the National Internal must be paid to the Bureau on or before November 21. 2016: Revenue Code of 1997. as amended, and RR No. 16-05, as amended, which

3. DST imposed under Section 196 of the National I:te:rnal Revenue Code of November 7, 2016; and 1997, as amended, which must te paid to the Bureau on or before

4. DST on the notarial acknowiedgnient pursuant :o0 Section 188 of the National Internal Revenue Code of 1 997. as aimen.e.

foreclosure sale. Section 2 of Revenue Regulations (RR) N5. 9-2012 dated May 31, 2012. provides that: Moreover, it is noteworthy to mention the time of pay Inent of CGT and DST on the

Foreclosed/Auctioned Off Property within the Applicub te Statutory Redemption Period. "Section 2. Taxability of Owner's/Mortgugor's t"uilure to Redeem his

persons or entities, the capital gains tux '((T) impose:' rder Section 24(D)(1) and 27(D)(5) of the Tax Code in relation to Sectun S * : the Tux Code and RR 2-98. as amended. if the property is a capitel u-et: or the Creditable regurdless of the type of proceedings cmd persomatity of morigagees/selling In case of non-redemption of properties sold !ring imotuntary sales. X

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LUDY S. CHIQUITO c/o JP LUBATON LAW' OFFICE C Te- Dc+ j : 921 5:

Section 106 of the Tax Code and RR 16-05, us amendeu: und the docunientary stamp tax (DST) imposed under Section 196 of the Tax ('ode shall become due. Withholding Tax (CWT) imposed under Section 57 ont? RR 2-98, as umended. if the property is un ordinary usset; the vulue udded tex (VAT) imposed under

statutory redemption period: or file the Cwt return ani remit the said tax to the Bureau within ten (10) days following the end of rke month after expiration of the applicable statutory redemption period. CGT or CWT due from the sale, shall then file the C&T return and remit the said tax to the Bureau within thirty (30) days from expiration of the applicable The buyer of the subject property, who is deened to have withheld the

which warrant the imposition of VAT, the said tux must be paid to the Bureau by the VAT-registered owner/mortgagor on or before the 20th or 25th day. whichever is applicable, of the month following the month when the right of redemption prescribes. If the property sold through involuntary sule is tinder the circumstances

statutory redemption period. five (5) days after the close of the month after the !::pse of the applicable The DST return shall be filed and the said tax vurid to the Bureau within

considerution (bid price of the highest nidder) or the fair market value or the Zonal value as determined in accordance with Section siE) of the Tax Code. The CGT/CWT/VAT & DST shall be baseti on w Hichever is higher of the

properties, shall be filed"after the registered owner failed to redeem his auctioned property be filed and the said tax be paid to the Bureau on or before May S, 2018. within the applicabie statutory redemption period. Thus the CS'T return shall be fited and the said tax shall'be remitted to the Bureau on or before May 24, 20!8. white the DST return shall Based on the foregoing, CGT and DST returns. with respect to the sale of the foreclosed

of the assignee, Ludy S. Chiquito, as the successor-in-interest ot the highest bidder, BPHI authorized agent bank (AAB) and other documents evidencing full payment of the taxes due. the RDO concerned shall issue the corresponding Certificates Authorizing Registration in favor Upon presentation of the EWT, VAT, CGT. and DST returns duly validated by an

Please be guided accordingly.

V ery truly yours. Wc

T K-I-L.MAT Commissirmer of Internal Revenue CAESAR R. DULAY 045332

D

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