BIR Ruling No. 303-2022

BUREAU OF INTERNAL REVENUE REPUBLICOF THE PHILIPPINES DEPARTMENT OF FINANCE Quezon City

Secs.2 and 58B) of the Tax Code of 1997,as amended OT 303-2022 JUN 2 2 2022

Paranaque City Lot 23,Block 56 Francisco Reyes St. BF I ames Paranaque Subdivision FRANCISCO G.TAGAO LAW OFFICE

Attention: Atty.Francisco G.Tagao

Gentlemen:

Corporation Ayala Greenfield, OLC Developent Coporation, Fidelity Investment for a confirmatory ruling that there is no need for the issuance of a separate Certificate Authorizing Registration (CAR) on the transfer of the club share which is appurtenant to the sale of lot or appurtenant to the lot purchased. Corporation, Centennial Land Development Corporation, Gentle Wind Land Development Corporation, Central Estate Management,Inc., and Greenfield Property Dev.& Holdings, Inc This refers to your request or. behalf of your clients Ayala Greenfield Develc ment

of the developed lots. Its primordial purpose is to operate its leisure and sporting facilities for profit golf and leisure club, to meet the sporting and leisure requirements of prospective buyers the benefit of the Club members. Laguna, which were developed for residential purposes ("the Subdivision). Ayala Greenfield and other individuals formed Ayaa Greenfield Golf and Leisure Club, Inc.the Club),a non- It is represented that Ayala Greenfield acquired certain tracts of land in Calamba City

the sres is P Shares, and common shares consisting of Pursuant to its Articles of Incorporation, the Club has an authorized capital stock of Class B shares. All shares are without par alue. The initial issue price of ' per share. Class A shares, which shall also be the Founders

any additional or separate consideration for the corres, onding club share. with an appurtenant club share to the prospective buye.s for the quoted price of the lot, wi chout The scheme was desigad to pursue a valid business purpose of increasing the marketability of the lot without additional cost to the prospective buyers. Ayala Greenfield intends to sell its lot the club share) to ensurc that for every lot sold, there is a club share appurtenant thto. the Subdivision, Ayala Greenfield substribed to In order to attract prospective bi yers o. d lot and estat lish their own residence within Class A shares and Class B shares

to sell and subsequently a deed of absolute sale upon full paynr.cnt of the purchase price of the lot. After the execution of the deed of absolute sale, a suppleml:nt to the deed of absolute sale To document the sale, Ayala Greenfield and the buyer o the lot will execute a contract

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will b- executed by the same parties wherein the terms and conditions for ne transfer of the club share appurtenant to the lot purchased which include among otier things: share without the payment to Ayala Gr enfield of any additional monetary consideration; and a. In consideration for the pu hase by the buyer of the lot in the subdivision,Ayala Greenfield co.eys to the buyer one ordinary club

annotation of the foregoing restriction on the certificate covering the share and the Transfer Certificate of Title covering the lot. b. The share is appurtenant to the lot purchased, and this shall not be the disposition of the lot shall constitute a lien in both the share and the lot. By the execution of the supplement to the deed of absolute sale, the buyer authorizes Ayala Greenfield as its at:orny-in-fact, to cause the sold, conveyed, or disposed of separately by the buyer from the lot purchased, excepi in case of an involuntary transfer. The restriction on

deed of absolute sale are already incorporated in the comprehensive deed of absolute sale. Statement that the club share is appurtenant to the lot and the terms of the supplement to the It is worth noting that starting December 2020, the contract to sell of the lot includes a

Code) of 1997, as amended, statesthat: In reply, please be informed that Section 2 of the National Internal Revenue Code (Tax

The Bureau of Internal Revenue shall be under the super:ision and control of the Department of Finance and its powers and duties shall "SEC. 2. Powers and Duties of the Bureau of Internal Revenue.

comprehend the assessment and collection of all national interna

forfeitures, penalties, and fines canected iherewith, including the to and administer the supervisory and police powers conferred to it by this Code or other laws. revenue taxes, fees, and cha.. and the enforcement of all execution of judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts.The Bureau shall give effect

provides that: In relation thereto, Section 58(E of the Tax Coce of 1997, as amended, textually

"SEC.58. Returns and Payment of Taxes Withk.:ld at Source.

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or creditable withholding tax, if any, has been paid xxx " certified that such transfer has been reported, and the capital gains of Deeds unless the Commissioner or his duly representative has document transferring real property shall be effected by the Register (E) Registration with Register of Deeds.- - No registration of any

BIR is to collect taxes. In so fat as registration of document transferring real property is concerned, a Certificate Authorizing Registration (CAR) is issued by the BIR only to certify Taking the provision together, the prime concern of the Bureau of Internal Revenue

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transaction have been paid. emphasized that the CAR is nothing more tut a certifiation that applicable taxes on the that taxes (capital gains tax, documentary stamp tax, creditable withholding tax and certification fees appiicable to the transfer of strablesproperty have been paid.It must be

the parties treated as indivisible. Article 1225 of the Civil Code provides: In Philippine contract law,one species of an indivisible object is a divisible thing which

give definite things xxx shall be deemed to be indivisible. "Art. 1225. For the purpose of the preceding articles, obligations to

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However, even though the object or ser ice may be physically divisible, an obligation is indivisible if so provided by law on intended by the parties. "

their nature, separable, the parties, howev.., intended to treat them as indivisible. appurtenant thereof, the parties likewise agreed that insofar as the club share is concerned,no further consideration is required for its acquisition. While the lot and the club share are, by Ayala Greenfield intends to sell the lots in the sutdivision with the club share as an

appuienant to the purchase of lot in Ayala Greenfield, a separate CAR to effect the transfer of the club share is, pro hac vice, therefore unnecessary. share apart from the lot, that is, the membership to the clut is part of the consideration in and From the foregoing, considering the indivisibility and non-transferability of the club

if upon investigation, it will be disclosed that the facts are different, then this ruling shabe considered null and void. This ruling is being issued on the basis of the foregoing facts as represented. However.

Very truly yours.

Comrnissic-jer of Internal Revenue iowaM AESAR R.DULAY G 051892 K-1 O

2 Pursuant to Section 89 of the Revised Corporation Code which provides, vi=:SEC. 89.Nortransferability of Membe ship. - Membership in a nonstock corporation and all rights arising theref.:om are personal and non- transferable, unless the articles of incorporation or the bylaws otherwise provide Capalla vs. COMELEC, G.R. No. 201112, October 23, 2012