BIR Ruling [DA-287-99]

May 13, 1999 BIR RULING [DA-287-99] Ms. Marina O. Labrador Lot 3, Block 35, Phase 1, Package I Bagong Silang Project Caloocan City M a d a m : This refers to your letter dated October 9, 1998 requesting for a ruling on the tax consequence of the sale by the National Housing Authority (NHA) of a socialized housing package at the Bagong, Silang Socialized Housing Project situated at Bagong Silang Project Site, Caloocan City in favor of Spouses Edgar and Elizabeth Tirona. It is represented that the National Housing Authority is the owner of the subject socialized housing package covered by Transfer Certificate of Title No. 169575 of the Registry of Deeds of Caloocan City and that it executed a Deed of Sale in favor of the above-mentioned spouses on September 7, 1981. In reply, please be informed that the transfer in favor of the individual members of the real property which was sold under the Community Mortgage Program of the National Housing Authority is not subject to either capital gains tax imposed under Section 24(D) of the Tax Code of 1997, or the creditable withholding tax imposed under Revenue Regulations No. 2-98 implementing Section 57(B) of the Code of 1997 considering that the said transfer is without any consideration since it is merely a formality to finally effect transfer of title of the property to the member-beneficiaries who actually bought the same. Such lack of consideration does not, likewise, render the transfer subject to the donor's tax imposed under Section 99 of the Tax Code of 1997, since there is no intention on the part of the Association to donate the said property the ownership of which belongs to themselves, (member-beneficiaries). Furthermore, Section 185 of the Revised Documentary Stamp Tax Regulations (Regulations No. 26) provides that "conveyances of realties not in connection with a sale, to trustees or other persons without consideration are not taxable." Accordingly, the Deed of Sale executed by the National Housing Authority in favor of Spouses Edgar and Elizabeth Tirona, to effect the aforesaid transfer in favor of the individual member is not subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. However, the notarial acknowledgments to said deed of sale 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 and Enforcement Group