BIR Ruling [DA-139-99]

March 8, 1999 BIR RULING [DA-139-99] Iligan Integrated Steelworkers Housing Association, Inc. Zone Matinabangon Suarez, Iligan City Attention: Mr . Feliciano M . Losin Managing Director Gentlemen : This refers to your letters dated September 22, 1997 and August 7, 1998 requesting exemption from the payment of the capital gains tax and/or creditable withholding tax and documentary stamp tax the sale and transfer of your properties to your member-beneficiaries who are the actual owners of the funds used to buy the said properties. It is represented that the Iligan Integrated Steelworkers Housing Association, Inc. is a non-stock, non-profit association duly registered with the Securities and Exchange Commission; that it acquired by virtue of the contributions from its members seven (7) parcels of land situated in Suarez, Iligan City covered by TCT Nos. T-11640, T-11641, T-11642, T-11643, T-11644, T-11646, T-11647 issued by the Registry of Deeds of Iligan City; that the said properties was subdivided into homelots and distributed to its member-beneficiaries without any monetary consideration; and that the member-beneficiaries are certified by the City Mayor of Iligan as underprivileged and homeless. In reply, please be informed that the transfer in favor of your individual member-beneficiaries of the said subdivided properties is not subject to either the capital gains tax imposed under Section 24(D)(1) of the tax Code of 1997, nor to the creditable withholding tax imposed under Revenue Regulations No. 2-98, implementing Section 57(B) of the same Code, considering that the said transfer of your properties is without any consideration since it is merely a formality to finally effect transfer of the said properties to your member-beneficiaries who actually acquired the same through your association. In other words, the transfer is without any consideration because you are in fact transferring the ownership of the properties 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 properties to said member-beneficiaries, considering that you could not donate property the ownership of which belongs to the donees (member-beneficiaries) themselves. Finally, under Section 191 of Regulations No. 26 otherwise known as the Revised Documentary Stamp Tax Regulations conveyances to a trustee without valuable consideration or from a trustee to a cestui que trust without valuable consideration are not subject to tax. Hence, the transfer of title 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 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. CMP 171-98 dated September 16, 1998). This ruling is being issued on the basis of the foregoing facts as represented. However, this ruling shall be considered null and void if it will be disclosed that the facts are different upon investigation. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)