BIR Ruling No. 107-84

June 18, 1984 BIR RULING NO. 107-84 120-000-00-107-84 S i r : This refers to your letter dated March 5, 1984 requesting a ruling to the tax consequence arising from a reconveyance of real property. It is represented that Pilar Development Corporation sold to Evelyn Hermo a parcel of land in Pampanga for P120,000.00; that the consideration was to be financed partly by the proceeds of a housing loan in the sum of P91,000.00 from a bank; that it was a condition for the release of the loan that the property be registered first in the name of the buyer and the mortgage thereon duly annotated that notwithstanding the fact that the full amount of the purchase price has not been paid since the loan proceeds has not yet been released, the property was registered in the name of the buyer and mortgage lien thereon duly annotated; that the buyer withdrew from the sale and that a Deed of Reconveyance was made without monetary consideration; and that upon payment of the documentary stamp taxes, the BIR in San Fernando, Pampanga, requires payment of donor's tax on the reconveyance based on the fair market value of the property. In reply, I have the honor to inform you that the "Deed of Reconveyance" executed by the aforesaid buyer is not a donation within the meaning of Section 120 of the Tax Code as amended; hence no donor's tax is due from the buyer. Accordingly, the aforementioned deed or reconveyance may be registered with Register of Deeds without the necessity of paying the donor's tax. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner