BIR Ruling [DA-473-99]

August 17, 1999 BIR RULING [DA-473-99] St. Peter's Village Homeowners Association, Inc. Tunghaan, Minglanilla Cebu Attention: Mr . Vicente Tesaluna President Gentlemen : This refers to your letter dated February 27, 1998 requesting for a ruling that the donation by Dr. Leonardo C. Enad, married to Linda Selma of their property located at Barangay Tunghaan, Minglanilla, Cebu, to the St. Peter's Village Homeowners Association, Inc., a non-stock, non-profit community association duly registered with the Home Insurance and Guaranty Corporation (HIGC), is exempt from donor's tax imposed under Section 98 of the Tax Code of 1997. It appears that the donor, Dr. Leonardo C. Enad, married to Linda Selma, is the President/Administrator of the Juliano Enad Estate, Inc. the developer of St. Peter Village; that the property subject of the donation is an open space reserved by the developer as a playground for the exclusive use and benefit of the members of the St. Peter's Village Homeowners Association, covered by TCT No. 55303 of the Registry of Deeds for the Province of Cebu, in the name of the donor; that the donor executed a Deed of Donation conveying the said parcel of land to the Association without any monetary consideration for the latter to manage and maintain. In reply, please be informed that "conveyance of realty not in connection with a sale, to trustees or other persons without consideration are not taxable" (Sec. 185, Regulations No. 26 of the Revised Documentary Stamp Tax Regulations). In this case, the deed of conveyance in question is without consideration, and the conveyance is not in connection with a sale made to the Association. In fact, the purpose of the conveyance by the donor to the Association of the open reserved area is for the management of the Association for the common benefit and enjoyment of its members. In view thereof, this Office is of the opinion as it hereby holds that the said donation in favor of Association without monetary consideration is exempt from donor's tax imposed under Section 98 of the Tax Code of 1997; and that the said Deed of Conveyance is not also subject to the documentary stamp tax imposed by Section 196 of the same Code. However, the acknowledgment is subject to the documentary stamp tax on the certificate in the amount of P15.00 pursuant to Section 188 of the Tax Code of 1997. (BIR Ruling No. 349-93 dated July 30, 1993) LexLib This ruling is issued on the basis of the foregoing representations. However, if upon investigation, it will be disclosed that the facts are different from that as represented, 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)