[TAX] Republic vs Soriano Facts: Republic Facts: Republic of the Philippines, represented by the Department of Public Works and Highways (DPWH), led an epropriation case against respondent !rlene R" #oriano, pursuant to Republic !ct (R!) $o" %&', otherwise known as !n !ct to *acilitate the !c+uisition of Right-fWay, #ite or .ocation for $ational /o0ernment 1nfr 1nfras astr truc uctu turre Pro2 Pro2ec ects ts and and for for othe otherr Pu Purp rpos oses es3" 3" 4he 4he prop proper erty ty soug sought ht to be epropriated shall be used in implementing the construction of the $orth .u5on 6pre 6press ssway way ($.67 ($.67) ) Harbor Harbor .ink .ink Pro2e Pro2ect ct (#egme (#egment nt &) from from $.67 $.67 to 8ac!rt 8ac!rthur hur Highway, 9alen5uela :ity" :ity" Petit etitio ione nerr duly duly depo deposi site ted d to the the !c !cti ting ng ;ran ;ranch ch :ler :lerk k of :our :ourtt the the amou amount nt of P<= P <=,= ,=== =="= "== = repr epresen esenti ting ng >= >==? =? of the the 5ona 5onall 0alu 0alue e of the the sub2 sub2ec ectt prop proper erty ty"" !ccor !c cordin ding g to the R4:, the recor records ds of the case case re0ea re0eall that that petit petition ioner er adduc adduced ed e0idence to show that the total amount deposited is 2ust, fair, and e+uitable" -n $o0ember >@, <=>A, the R4: rendered its Decision, the dispositi0e portion of which readsB WH6R WH6R6* 6*-R -R6, 6, with with the the for foregoi egoing ng dete determ rmin inat atio ion n of 2ust 2ust comp compen ensa sati tion on,, 2udgment is hereby hereby renderedB renderedB A) -rdering the plaintiC to pay defendant !rlene R" #oriano Php<,>=="== per s+ua s+ uarre mete meterr or the the su sum m of *our our Hund Hundrred 4went wenty y 4hou 4housa sand nd Pesos esos (Php< (Php<=,= =,===" =="==) ==) for the <== s+uar s+uare e meters meters as fair, fair, e+uita e+uitable ble,, and and 2ust 2ust compensation with legal interest at > per annum from the taking of the possession of the property, sub2ect to the payment of all unpaid real property taes and other rele0ant ) PlaintiC is likewise ordered to pay the defendant conse+uential damages which shall include the 0alue of the transfer ta necessary for the transfer of the sub2ect property from the name of the defendant to that of the plaintiC Petitioner led a 8otion for Reconsideration maintaining that pursuant to ;angko #entral ng Pilipinas (;#P) :ircular $o" '&&, #eries of <=>A, which took eCect on Euly >, <=>A, the interest rate imposed by the R4: on 2ust compensation should be lowered to F? for the instant case falls under a loan or forbearance of money" money" 1n its -rder dated 8arch >=, <=>, the R4: reduced the interest rate to F? per annum not on the basis of the aforementioned aforementioned :ircular, :ircular, but on !rticle <<=& of of the :i0il :ode in the nature of indemnity for delay" Issues: (>) W-$ Respond espondent ent is entitl entitled ed to F? per annum annum inter interest est (<) W-$ Petitioners should pay for the transfer taes Held: 4he petition petition is partly meritorious" meritorious"
(>) Payment of 2ust compensation for the epropriated property amounts to an eCecti0e forbearance on the part of the #tate" 4he law applicable is the :entral ;ank :ircular and not the :i0il :ode" R4:Gs reliance on $ational Power :orporation 0s" !ngas is misplaced for the same has already been o0erturned by Republic 0" :ourt of !ppeals, where the court held that the payment of 2ust compensation for the epropriated property amounts to an eCecti0e forbearance on the part of the #tate" 1n line with the recent circular of the 8onetary ;oard of the ;angko #entral ng Pilipinas (;#P8;) $o" '&&, #eries of <=>A, the pre0ailing rate of interest for loans or forbearance of money is si percent (F?) per annum" Howe0er, the imposition of interest in this case is unnecessary because petitioner was able to deposit with the trial court the amount representing the 5onal 0alue of the property before its taking" 4he award of interest is imposed in the nature of damages for delay in payment to ensure prompt payment of the 0alue of the land and limit the opportunity loss of the owner" Howe0er, when there is no delay in the payment of 2ust compensation, there should be no imposition of interest" (<) Regarding petitionerGs contention that it cannot be made to pay the 0alue of the transfer taes in the nature of capital gains ta and documentary stamp ta, the same is partly meritorious" With respect to the capital gains ta, the court nds merit in petitionerGs posture that pursuant to #ections <(D) and @F(!)(A) of the >&&' $ational 1nternal Re0enue :ode ($1R:), capital gains ta due on the sale of real property is a liability for the account of the seller" 1t has been held that since capital gains is a ta on passi0e income, it is the seller, not the buyer, who generally would shoulder the ta" !s to the documentary stamp ta, petitioner cites #ection >&F of the >&&' $1R: as its basis in saying that the documentary stamp ta is the liability of the seller" 4he pro0ision cited does not eplicitly impute the obligation to pay the documentary stamp ta on the seller" 1n fact, according to the ;1R, all the parties to a transaction are primarily liable for the documentary stamp ta, as pro0ided by #ection < of ;1R Re0enue Regulations $o" &<===" !s a general rule, any of the parties to a transaction shall be liable for the full amount of the documentary stamp ta due, unless they agree among themsel0es on who shall be liable for the same" 1n this case, there is no agreement as to the party liable for the documentary stamp ta due on the sale of the land to be epropriated" ;ut petitionerGs :iti5enGs :harter, which functions as a guide for the procedure to be taken by the DPWH in ac+uiring real property through epropriation under R! %&'" 4he :iti5enGs :harter, issued by petitioner DPWH itself on December , <=>A,
eplicitly pro0ides that the documentary stamp ta, transfer ta, and registration fee due on the transfer of the title of land in the name of the Republic shall be shouldered by the implementing agency of the DPWH, while the capital gains ta shall be paid by the aCected property owner"