BIR Ruling [DA-416-98]

September 14, 1998 BIR RULING [DA-416-98] Anak Bayan Homeowners Association, Inc. 2004-C Anak Bayan Street Malate, Manila Attention: Mr . Roberto B . Cardel President 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 Anak Bayan Homeowners Association Inc. 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 the creditable withholding tax imposed under Revenue Regulations No. 2-98. casia It appears that the parcels of land which are situated at Anak Bayan Street, Malate, Manila are covered by TCT Nos. 201614, 201615, 201616, 201617 and 201618 of the Registry of Deeds for Manila; that the said parcels of land are already in the name of the Association; and that it has subdivided the said properties into homelots and distributed them to its member-beneficiaries. In reply, please be informed that the transfer in favor of your individual member-beneficiaries of the said subdivided properties is not subject to the creditable withholding tax imposed under Revenue Regulations No. 2-98, implementing Section 57(A) of the Tax Code of 1997, 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 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 the said properties to the member-beneficiaries, considering that you could not donate properties the ownership of which belong to the donees (member-beneficiaries) themselves. 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 deeds to be executed by the Anak Bayan Homeowners Association 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. 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. cdta Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)