BIR Ruling [DA-435-00]

December 18, 2000 BIR RULING [DA-435-00] 50 & 52 FC 220-83 Ongkiko Kalaw Manhit and Acorda Law Offices 4th Flr., Cacho-Gonzales Bldg., 101 Aguirre St. Legaspi Village, Makati City Attention: Atty . Florante Arceo Bautista and Atty . Mindamar S . Somera Gentlemen : This refers to your letter dated August 28, 2000 requesting a ruling as to whether or not the share of a spouse in the liquidation of their community property is subject to donor's tax. It is represented that Ka Kuen Tan Chua was married to Eleanor Capillas on December 18, 1994; that during their marriage, the spouses acquired two (2) parcels of land in Quezon City covered by Transfer Certificates of Title (TCT) Nos. 165937 and 178984; that said spouses did not acquire any other property of value during the existence of their marriage; that on August 11, 1999, the spouses' marriage was declared null and void ab initio by the Regional Trial Court of Quezon City in Civil Case No. Q-98-34772; that said decision directed the parties to liquidate their properties in accordance with Articles 50 and 51 of the Family Code; that the parties executed an Agreement on August 24, 2000 liquidating their community property, wherein the ownership of the other parcel of land covered by TCT No. 165937 was given to Eleanor Capillas, while the ownership of the other parcel of land as evidenced by TCT No. 178984 was given to Ka Kuen Tan Chua; and that the parties now intend to register the above-stated properties in their own names, but the Register of Deeds for Quezon City will not register the same unless the donor's tax therein are paid. In reply, please be informed that no donation had taken place when former spouses, as in this case appropriate to themselves separately the properties which belong to their community property as a consequence of the liquidation of the partnership. The parties merely segregated and adjudicated for their own individual and separate ownership the properties which, from the celebration of their marriage, rightfully belong to them equally. (BIR Ruling No. 220-83 dated December 8, 1983) In the instant case, since the parties merely appropriated to themselves their respective shares in the community property, such appropriation of the properties covered by the Agreement on the liquidation thereof is not subject to donor's tax. Accordingly, the aforestated Agreement executed by and between Ka Kuen Tan Chua and Eleanor Capillas may be registered with the Register of Deeds of Makati City, without the necessity of paying the donor's tax. 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. ADECcI Very truly yours, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group