May 8, 2007

BIR RULING [DA-287-07]

Sec. Nos. 24 (D) (1) & 196; DA-435-2000
Puyat Jacinto & Santos Law Offices
12/F Manilabank Building,
6772 Ayala Avenue, Makati City
Attention : Atty. Roy Enrico C. Santos
Partner
Gentlemen :
This refers to your letter dated March 16, 2007 requesting a ruling that the
transfer of title to a condominium unit pursuant to an agreement to distribute
communal property from one spouse to another, which was executed in the course
of proceedings for the annulment of the spouses' marriage and which was later
approved by the court, is not subject to donor's tax, capital gains tax or
documentary stamp tax.
It is represented that on September 13, 1988, Nicanor Pablo M. Vergara and
Anna Marie F. Padilla were married without having executed an ante-nuptial
agreement; that pursuant to applicable law, the parties' property relations are
governed by the absolute community of property ("ACP"); that on January 20,
2003, Anna Marie P. Vergara filed a petition for declaration of nullity of marriage
before the Regional Trial Court of Quezon City; that during the pendency of the
proceedings, the spouses executed on July 13, 2003 an Agreement on Distribution
of Communal Property whereby, among other stipulations, the parties agreed that
the condominium unit with parking slot located at Platinum Condominiums,
Annapolis Street, Greenhills, San Juan, denominated Unit 11D and covered by
Condominium Certificate of Title No. 5080-R issued by the Registry of Deeds of
the City of San Juan, would belong to Anna Marie P. Vergara; that the said
condominium unit is presently registered under the name of Nicanor Pablo M.
Vergara.
It is further represented that on October 11, 2004, the court issued a
Decision granting the petition for declaration of nullity of marriage; that the court
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also dissolved the parties' absolute community property relations and approved the
Agreement on Distribution of Communal Property, incorporating the same as part
of the Decision; that it is the intention of Anna Marie F. Padilla to transfer the title
covering the subject condominium unit in her name, as per the parties' agreement.
In reply, please be informed that this office ruled in BIR Ruling No.
DA-435-00 dated December 18, 2000, that no donation had taken place when
former spouses 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 distribution thereof is not subject to donor's tax.
Moreover, the transfer of the condominium unit to Ms. Padilla is also not
subject to capital gains tax, as such transfer is equivalent to a conveyance but
without any monetary consideration, made in compliance with the court's Decision
granting the parties' agreement for the distribution of communal property (BIR
Ruling No. DA-092-01 dated May 6, 2001). Neither is the said transfer subject to
documentary stamp tax since the monetary consideration in the conveyance of said
condominium unit from which tax shall be based is wanting.
HETDAa

Accordingly, the aforestated Agreement executed by and between Nicanor

Pablo M. Vergara and Anna Marie P. Vergara to transfer the title covering the
subject condominium unit may be registered with the Register of Deeds of the City
of San Juan without the necessity of paying the donor's tax, capital gains tax, and
documentary stamp 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.

Very truly yours,

Commissioner of Internal Revenue
By:

(SGD.) JAMES H. ROLDAN

Assistant Commissioner
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Legal Service

Copyright 2014

CD Technologies Asia, Inc. and Accesslaw, Inc.

Philippine Taxation Encyclopedia First Release 2014