Transfer/Subdivision of Parcel of Land Registered under an NGO - Exempt from Capital Gains Tax & CWT

October 11, 1993 BIR RULING NO. 398-93 TRANSFER/SUBDIVISION OF PARCEL OF LAND REGISTERED UNDER AN NGO EXEMPT FROM CAPITAL GAINS TAX & CWT 50 (b) 153-91 398-93 Samahang Pabahay ng mga Manggagawang NGO, Inc. 77-B Rosa Alvero St., Loyola Heights Quezon City Attention: Mr . Albert S . Yuson President This refers to your letter dated March 1, 1993, in effect, requesting for a ruling that the transfer/subdivision of a parcel of land registered in the name of Samahang Pabahay ng mga Manggagawang NGO, Inc. covered by Transfer Certificate of Title No. 53068 among its members is exempt from capital gains tax. cdtech It is represented that the Samahang Pabahay ng mga Manggagawang NGO, Inc. is a non-stock, non-profit community organization duly registered with the Securities and Exchange Commission (SEC); that you were organized to promote low-cost housing project that shall benefit workers and professionals in development agencies or non-governmental organizations (NGOs); to pool resources and skills of NGO workers that shall support the needs in building a low-cost housing project; and to promote mutual cooperation and support among NGO workers thereby building a community bound by common visions and needs; that you bought a parcel of land from Corazon Villanueva located in Upper Banlat, Tandang Sora, Quezon City, and allegedly corresponding capital gains and documentary stamp taxes were paid by Ms. Villanueva as a result thereof. In reply, please be informed that the transfer in favor of your individual members of your said subdivided property is not subject to either the capital gains tax imposed under Section 21(e) of the Tax Code, as amended, or the creditable withholding tax imposed under Revenue Regulations No. 1-90 implementing Section 50(b) of the same Code considering that the said transfer of your property is without any consideration since it is merely a formality to finally effect transfer of title of the said property to your members who actually bought the same from Corazon Villanueva through your association. In other words, the transfer is without any consideration because you are in fact transferring property the ownership of which actually belongs to the members. Such lack of consideration does not likewise, render the said transfer subject to the donor's tax imposed under Section 93 of the Tax Code, since there is no intention on your part to donate the said property to said members considering that you could not donate property the ownership of which belongs to the donee (members). Finally, under Section 196 of the Tax Code, as amended, all conveyances, deeds, instruments, or writings, other than grants, patents, or original certificates of adjudication issued by the Government, whereby lands, tenements or other realty sold shall be granted, assigned, transferred, or otherwise conveyed to the purchaser or purchasers, or to any other person or persons designated by such purchaser or purchasers shall be subject to a documentary stamp tax at the rate of P10.00 for every one thousand pesos or less or fractional part thereof in excess of one thousand pesos based on the consideration or value received or contracted to be paid for such realty. It is noted that under the above-cited provision of the Tax Code, the deeds or documents subject to the documentary stamp tax imposed therein are those where the realty sold shall be granted, assigned, transferred, or otherwise conveyed to a purchaser or purchasers or to any other person or persons designated by such purchaser or purchasers thereby excluding from its purview the instant case considering that the supposed purchasers are actually the owners thereof. Besides, no monetary consideration is involved in said transaction upon which the tax is imposed in said section could be based. Accordingly, the transfer of title of the said property in favor of your members is not subject to the documentary stamp tax imposed under Section 196 of the Tax Code. However, such Deeds are subject to the documentary stamp tax of P3.00 imposed under Section 188 of the Tax Code, as amended (BIR Ruling No. 453-88). LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue