BIR Ruling [DA-018-00]

January 7, 2000 BIR RULING [DA-018-00] St . Bernadette Homeowners Association. Inc . Sto. Rosario, Capas, Tarlac Attention: Mr . Jose P . Cornel OIC/Auditor Gentlemen : This refers to your request for a ruling that no gain or loss is recognized on the transfer/subdivision and awarding of the parcels of land registered in the name of the association to the concerned member-beneficiaries, the actual property-owners, who are underprivileged and homeless, under the provisions of R.A. 7279, and therefore, exempt from creditable withholding tax imposed under Revenue Regulations No. 2-98. It appears that parcels of land situated in Barangay, Sto. Rosario, Capas, Tarlac are covered by TCT Nos. 285959, 285960, 285961 and 286854 issued by the Registry of Deeds for the Province of Tarlac; that the said transfer of your properties is without consideration since it is merely a formality to finally effect transfer of the said properties to your member-beneficiaries who actually bought the same from the former owner through your Association. In other words, the transfer is without any consideration because you are in fact transferring the ownership of the properties to the member beneficiaries who actually owned the same. Moreover, the said transfer is not subject to the donor's tax imposed under Section 98 of the Tax Code of 1997, since there is no donative intent or intention on your part to donate said properties to the member-beneficiaries, considering that you could not donate properties the ownership of which belongs to the donees (member-beneficiaries). Furthermore,, Section 185 of the Revised Documentary Stamp Tax Regulations (Regulations No. 26)provides that "conveyances of realities not in connection with a sale, to trustees or other persons without consideration are not taxable." Accordingly, the deeds to be executed by St. Bernadette Homeowners Association, Inc. to effect the aforesaid transfer in favor of its individual members are not subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. However, the notarial acknowledgments to said deeds of conveyance are subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. (BIR Ruling No. DA-416-98 dated September 14, 1998) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it shall be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group