June 25, 2010

BIR RULING [DA-(C-027) 112-10]

Sec. 27 (D) (5) & RR 17-2003; BIR
Ruling No. 060-92, DA-237-05,
DA-333-06 & DA-508-06
Limcoma Rural Bank, Inc.
San Jose, Batangas
Attention: Ms. Rufina S. Salas
Managing Director
Gentlemen :
This refers to your letter dated March 23, 2010 requesting for legal opinion
on the reckoning date for the payment of capital gains tax.
As represented, you acquired a real property from the Philippine Deposit
Insurance Corporation (PDIC) through a public bidding held on December 14,
2009. You paid the bidding deposit on the said date. You received the Certificate
of Award and was given instruction to settle the balance of the bid price on
December 22, 2009.
PDIC prepared all the necessary papers and you received the notarized
Deed of Sale dated February 19, 2010 on March 4, 2010. You paid the
documentary stamp tax and the capital gains tax (CGT) on March 5, 2010 and
March 8, 2010, respectively.
The head of the assessment division of BIR District Office No. 59 in Lipa
City maintains that you have to pay penalties for late payment of CGT based on
the date of the full settlement of the bid price on December 22, 2010 although the
Deed of Sale had not been issued.
aTICAc

You are, however, of the opinion that the date of reckoning for the payment
of said tax should be the date of the Deed of Sale on February 19, 2010.
In reply, please be informed that Revenue Regulations (RR) No. 17-2003,
providing, among others, the policy that the capital gains tax on the sale, exchange
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CD Technologies Asia, Inc.

Taxation 2011

or other disposition of real property classified as capital assets shall be collected as

a final withholding tax, states as follows:
"SECTION 5.
Returns and Payments of Taxes Withheld at
Source. Section 2.58 of Revenue Regulations No. 2-98, as amended, is
hereby further amended to read as follows:
"Sec. 2.58. Returns
Withheld at Source.

and

Payment

of

Taxes

(A) Monthly return and payment of taxes withheld

at source.
(1)

...

(2)

WHEN TO FILE

(a) For both large and non-large taxpayers,

the withholding tax return, whether creditable or
final (including final withholding taxes on interest
from any currency bank deposit and yield or any
other monetary benefit from deposit substitutes and
from trust funds and similar arrangements) shall be
filed and payments should be made, within ten (10)
days after the end of each month, except for taxes
withheld for the month of December of each year,
which shall be filed on or before January 15 of the
following year; and except for the final capital gains
tax on the sale or other onerous disposition of real
property considered as capital asset which must be
taken/withheld from the seller by the buyer and
remitted within thirty (30) days from the date of
notarization of the transfer document to the
collecting agent of the RDO having jurisdiction over
the place where the property is located."
xxx

xxx

xxx" (Emphasis provided.)

In view of the foregoing, this Office is of the opinion that the reckoning
date for the payment of capital gains tax is the date of notarization of the transfer
document or in this case, the Deed of Sale (BIR Ruling Nos. 060-92, DA-237-05
dated May 31, 2005, 06 *(1) dated May 19, 2006, DA-508-06 dated August 24,
2006)
This ruling is being issued on the basis of the foregoing facts as
represented. However, if upon investigation, it will be disclosed that the facts are
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Taxation 2011

different, then this ruling shall be considered as null and void.

DcCHTa

Very truly yours,

Commissioner of Internal Revenue
By:

(SGD.) GREGORIO V. CABANTAC

Deputy Commissioner
Legal and Inspection Group

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CD Technologies Asia, Inc.

Taxation 2011

Endnotes
1 (Popup - Popup)
*

Note from the Publisher: Copied verbatim from the official copy.

Copyright 1994-2012

CD Technologies Asia, Inc.

Taxation 2011