BIR Ruling [DA-068-99]

February 5, 1999 BIR RULING [DA-068-99] UP Employees Housing Cooperative, Inc. Magsaysay Avenue, UP Campus Diliman, Quezon City Attention: Ms . Melisa R . Serrano Secretary-General Gentlemen : This refers to your letter dated March 12, 1998 requesting for a ruling that no gain or loss is recognized on the transfer/subdivision and awarding of a parcel of land registered in the name of the cooperative, which acted merely as facilitator under the Group Land Acquisition and Development (GLAD) program of the government to the concerned member-beneficiaries, who are underprivileged and homeless, pursuant to the provisions of R.A. 7279, and therefore, exempt from the corporate income tax, and from the creditable withholding tax imposed under Revenue Regulations No. 2-98. LibLex It is represented that the UP Employees Housing Cooperative, Inc. is a housing cooperative duly registered with the Cooperative Development Authority (CDA) with Certificate of Registration No. QC-138 issued on December 19, 1990; that serving as a facilitator, and through the GLAD Program of the government, it acquired by virtue of a loan from the Home Development Mutual Fund (otherwise known as the Pag-IBIG Fund), parcels of land covered by TCT No. 224182 of the Registry of Deeds for Marikina, Metro Manila TCT No. T-539177 of the Registry of Deeds for the Province of Cavite; that it has subdivided the said properties into homelots and distributed the homelots to its member-beneficiaries. In reply, please be informed that the transfer in favor of your individual member-beneficiaries of the said subdivided property is not subject to either the capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997, or the creditable withholding tax imposed under Revenue Regulations No. 2-98, implementing Section 57 of the same Tax Code, considering that the said transfer of your property is without any consideration since it is merely a formality to finally effect transfer of the said property to your member-beneficiaries who actually bought the same from the previous owners of the said properties through your cooperative. In other words, the transfer is without any consideration because you are in fact transferring the ownership of the property which actually belongs to the member-beneficiaries. Furthermore, 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 the said property to said member-beneficiaries, considering that you could not donate property the ownership of which belongs to the donees (member-beneficiaries) themselves. However, it is noted that under Section 196 of the Tax Code of 1997, the deeds or documents subject to the documentary stamp tax imposed therein are those where the realty sold shall be granted, assigned, transferred, or otherwise conveyed to a purchaser or purchasers or to any other person or persons designated by such purchaser or purchasers, thereby excluding from its purview the instant case considering that no consideration is involved in said transaction upon which the tax is imposed could be based. Accordingly, the transfer of titles of the said properties in favor of your member-beneficiaries is not subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. However, the notarial acknowledgment to said deed of conveyance is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. (BIR Ruling No. 398-93 dated October 11, 1993) 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 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 & Enforcement Group)