Cta_00_cv_04639_d_1993sep30_ref.pdf

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REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY

MANILA FASHIONS INC., Petitioner, C.T.A . CASE NO. 4639

- versus COMMISSIONER OF INTERNAL REVENUE, Respondent, X -

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X

D E C I S I 0 N This is

an

respondent

appeal from

Commissioner

requiring the

the

of

Internal Revenue

certificate of sale

under Sec. Code on

the

Revenue

Internal

documentary stamp

the National

decision of

196 of

a sheriff's

covering real property

sold in

an e xecu tion sale. Petitioner Manila engaged

in

the

Fashions Inc,

bu siness

of

a corpor ation

manufacturing

and

exporting ready-to -wear garments, was able to obtain a fav o rable

judgment

Industrial Co.

125 of the

Econ Co mme rcia l

( ECIC for brevity)

C-13655 entitled Commercial and

against

"Manila

in Civil Case No.

Fashions

Industrial Co."

said decision,

Eco n Commercial

1010

Inc.

vs.

rendered by

Kalookan Regional Trial

'

and

Court.

Econ Branch In the

and Industrial

Co.

DECISION C.T.A. Case No. 4639 -

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(ECIC) was adjudged li ab le to in the

amount

of

more

partial satisfaction buildin g owned by

the petitioner herein

than P12,000,000.00.

of

the

j udgment,

ECIC was levied

petitioner in a public

factory

and so l d

auction in the

of P5,000 , 000.00 with the

a

In

to the

total amou n t

corresponding certificate

of sale peing issued by the sheriff. The

petitioner

certificate of sale Deeds \-Thich,

as a

presente d

sheriff 's

the

to the approp riate condition

for its

Register of registra tion

required the petitioner to pay the documentary sta mp tax,

if

an y

certifi cate

is of

respondent .

due

thereon,

exemption HoH·ev er ,

duly

the

assessed the petitioner

or

to

secure

issued

by

respondent's

the su m of

a the

examiner

PSO,OOO.OO with

an additional P12,500.00 as pena lt y for late payment of

the

tax

based

on

sheriff's certificate

the of

c ontention

sale

documentary stamp tax under

that

the

to

the

is subject

S e ction 196 of

the Tax

Code. In

order

to

registr atio n of the

preve nt

any

de l ay

s h eri ff's certi ficate

the pe t itioner paid under

protest the total

in

the

of sale , sum of

P62,500 . Thereafter , it sou ght for a reconsideration of th e assess ment made by

1011

the respond e nt' s ex aminer

)

DECISION C.T.A. Case No. 4639 -

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based on the argument that the documentary stamp tax under Sec. 196 of the sheriff's

Tax Code does not

certificate

of

sale

as

apply to a

it

does

not

transfer any right of possession or ownership on the real

property

therefore

subject

be

purview of

construed

the

submitted by

thereof

said

as

a

"sale"

provision.

the petitioner

subject to the

and

It

that

should

not

within

the

is,

however,

the document

documentary stamp tax

is

under Section

188 of the Tax Code. In his final decision

dated May 20,

1991, the

respondent denied the petitioner's

claim for refund

stating

conveyance

that

"with

regard

to

and

transfers of real properties, the time of accrual of the tax serves snugly as the decisive factor" in the determination of

the liability

to the

stamp tax under Section 196 of the

documentary

Tax Code.

according to the respondent is from

This,

the time of the

execution of the certificate of sale by the sheriff. Thus, the case is whether

only issue or not

sale is subject to

to be

resolved in

a sheriff's

this

certificate of

the documentary stamp J

tax under

Section 196 of the Tax Code, or, stating it from the point of

view

·of

the

1012

respondent, when

does

the

DECISION C. T .A. Cas e No. 4 639 - 4 -

documentary stamp tax under Section

196 " accru e " o r

attach on a sheriff's certificate of sale? We rule in favor of the petitioner. Section 196 of the Tax Code provides: "Sec tion 196. Stamp tax on deeds of sale and conveyance of the real property. On al l conveyances, deeds, instruments, or wr i tings, other than g ran t s, patents, or original ce rtificates of adjudication i ss u ed by th e Gover nment, whereby any lands, tenem e nts or other realty sold shall be granted, assigned, transferred, or otherwise conveyed to the purchaser, or purchasers, or to any other person or persons designated by such pu rchaser or purchasers, there shall be collected a documentary stamp tax at the following rates: XXX

XXX

XXX

(b ) For eac h additional one thousand pesos, or fractional part thereof in excess of one thousand pesos of such consideration or value, te n pesos. XXX

XXX

XXX

A docu mentary stamp tax is in excise tax. into a

It is

transaction

a tax on the rather

nature of an

th~

privilege to ente r

than

on

the

doc ument

itself (Azarraga vs. Rodriguez, 9 Phil.637). It is

worth

transa ct ion in whereby a

emphasizing

the present

contr acting party

1 01~

1

,that the

c~se

particu l ar

involves a

obligates to

s ale ,

transfer

)

DECISION C.T.A. Case No. 4639 -

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the ownership and to deliver a d eterminate thing for a price certain

(Art.

It could

be

1458, Civil Cod e ).

easily discerned

and

document

cover consummated sales, for a particula r

t~ansfer

the law requires that

the

under Section 196 that

participial use of the words the conveyance

that from

subject thereof

must

in determining whether

is covere d by

its provisio n,

the conveyan ce and

deed must

embody th e following f a cts: 1.

Lands, tenem e nts, or realty sold1

2.

Th e lands, tenement s , or

ha s

been

sold

be

realty that

2ra nted,

assigned,

transferred, or otherwise conv eyed

to the

pur c haser. In the c ase of Gonzales 355), the Supreme

v s. Calim bas (51 Phil.

Court descri bed a

certificate of

sale as follows : XXX

XXX

XXX

In this connection the American decisions call attention to t h e difference between the effects of the delivery of t h e certificate of sale which is given to the purchaser at the time the sale is made and the deed which i s delivere dI to him at the expiration of the period ,of redemption. The certificate issued to the purchaser under Section 463 of thi Code of Civil Proc e dure is intended to be a mere memorial of the fact that purchase was made by the pe r son named as buyer in the cer t ificat e . This document is not in tended to operate as an absolu te

1014

DECISION C.T.A. Case No. 4639 -

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transfer of the property, but merely to identify the property, to show the price paid, and the date when the right of redemption expired. The effective conveyance of the land is accomplished by the deed which is issued only after the period of redemption has expired. The transfer is not perfect until the execution and delivery of the sheriff's deed, though it must be understood that when the deed is executed it operates by relation, from the time when the lien of the judgement was acquired (Foorman vs. Wallace, 75 Cal., 552, 556). As is said in Pike vs. Halpin (188 Mich., 447, 450), the rights secured by an execution purchaser at the sale are inchoate before the deed, and it is necessary for the purchaser to procure his deed to complete his title. The mere purchase and certificate of sale alone do not confer any right to the possession of beneficial use of the premise". (Underscoring supplied) The

respondent

had

himself

admitted

the

soundness of the above ruling. Accordingly, a simple analysis of the uncontested nature

of a certificate

of sale would readily provide Us with the conclusion that the said document

does not satisfy

enumerated requisites of inasmuch as

the

mere

certificate of sale transfer any

only upon the that the

sheriff's

ipso facto

convey or

possession over

execution of the

becomes effective

the subject

thereof.

final deed

the real

or consummated.

101 .

Tax Code

the

the ownership

conveyance of

of the

execution of

does not

right of

property, much less

Sec. 196

the above-

It is of sale

property involved Parenthetically,

DECISION C.T.A. Case No. 4639 -

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it might as well be stated that Sec. 196 imposes its corresponding documentary conveyance and involved.

deed of

conveyance becomes deed of sale

both

the documentary only from the or

the

property stamp tax

time that the when the

final

has been duly executed by the sheriff.

the Tax

provision

on

the real

consummated

Furthermore, a VII of

sale of

Consequently,

under Sec. 196 accrues

stamp tax

thorough

Code

therein

examination of

reveals that

which

makes

the only reference

Title other to

a

transaction of sale is Section 176 which provides:

)

Section 176. Stamp tax on sales, agreement to sell, memoranda of sales, deliveries or transfer of bonds, due bills, certificates of obligation, or shares or certificates of stock.XXX

XXX

XXX

(Underscoring supplied) A comparative circumspection of Sec. 196 of the Tax Code with the above-quoted legislative intent to 196

'

provision confirms a

impose the

documentary stamp

to transactions

tax under

Sec.

involving

consummated

sales.

The

or

documents

ommission

of

"agreement to sell" and "memoranda of sale" from the application of Sec. 196 could only be construed as a deliberate intention

to exclude

memorandum of sale of

from

a real property

1016

its scope

a

which is but

DECISION C.T.A. Case No. 4639 -

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an apt description of the

sheriff's certificate of

sale subject of this present case. No

less

than

Regulation

Revenue

(Documentary Stamp Tax

No.

Regulations) duly

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issued by

the respondent conforms to the foregoing conclusion , the pertinent provision of which provides: XXX

XXX

XXX

"Sec. 165. Dee d executed by sheriff, etc. Deeds of fi n al sale, executed by the sheriff after the period of one year of legal redemp t ion had expired in accordance with t h e Code of Civil Procedure, are subject to the documentary stamp tax. (Underscoring supplied) XXX

XXX

XXX

Finally, considering that the documentary stamp tax under Sec . 196 is already imposable on the final deed of sale, in no instance can We similarly impose the same

documentary

stamp

tax on

the

sheriff's

certificate of sale of the very same transaction. It is a

settled

rule

documentary stamp excise tax,

may

Herald Lumber Co. We

hold,

in

our

tax, being

jurispru dence in the

only be

collected

10 Phil.

372) :

however,

that

nature of once (CIR

the

a an vs.

sheriff's

certificate of sale is subject · to the three (3) peso documentary stamp tax

under Section 188

on certificate) of the Tax Code.

1017

(Stamp tax

DECISION C.T.A. Case No. 4639 -

WHEREFORE,

P62,497.00

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judgment is hereby rendered ordering

the respondent to refund of

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to the petitioner

representing

erroneously

the sum collected

tax. SO ORDERED. Quezon City, Metro Manila, September 29, 1993.

Q~~ '2,- ~ ERNESTO D. ACOSTA Presiding Judge

C E R T I F I C A T I 0 N I hereby certify that the after due

consultation

Court of Tax Appeals in

among

decision was reached the members

of

the

accordance with Sectio n 13,

Article VIII of the ConstitutionI .

· e~Q.~~ ERNESTO D. ACOSTA Pres iding Judge Court of Tax Appeals

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