A sale with pacto de retro transfers the legal title to the vendee (Aldente vs. Amandoron, 46 Phil 488). Hence, it is subject to the payment of capital gains tax pursuant to Section 21 (e) of the Tax Code. If the period to repurchase expires, the ownership of the property becomes consolidated by operation of law in the vendee, and the vendor loses all his rights in the property sold (Ortiz vs. Ortiz, 26 Phil. 280; De Bayguen vs. Vda. De Elpa, 143 SCRA 412). The consolidation of ownershio, however, shall not be recorded/ registered by the Register of Deeds without a judicial order after the vendor has been duly heard (Art. 1697, Civil Code of the Philippines). (LRA Consulta No. 2836 dated April 14, 2000)
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