National Housing Authority

January 23, 2008 BIR RULING [DA-035-08] 24 (D) (1); 196; DA-065-2004 National Housing Authority Quezon Memorial Elliptical Road Diliman, Quezon City Attention: Ms. Dalisay N. Lizardo District Manager NCR-South Sector II Gentlemen : This refers to your letter dated July 30, 2007 relative to the request of Bagong Tanyag Homeowner's Association, Inc. for exemption from the payment of Capital Gains Tax and Documentary Stamp Tax. It is represented that Bagong Tanyag Homeowners' Association, Inc. situated in Bagong Tanyag, Taguig is now in the process of facilitating the transfer of community titles in favor of its 492 member-beneficiaries; and that said association has availed of a loan under the Community Mortgage Program (CMP) under the National Home Mortgage Finance Corporation with National Housing Authority (NHA) as its originator. In reply, please be informed that the transfer in favor of the individual member-beneficiaries of the subdivided properties subject of the CMP is not subject to either the capital gains tax imposed under Section 24 (D) (1), or the creditable withholding tax imposed under Revenue Regulations No. 2-98, as amended, implementing Section 57 (A) of the same Code, considering that the said transfer of the properties is without any consideration since it is merely a formality to finally effect transfer of the said properties to the member-beneficiaries who actually bought the same from the former owner through the Association. In other words, the transfer is without any consideration because of the fact that it is a transfer of ownership of the properties which actually belong to the member-beneficiaries. Furthermore, the said transfer is not subject to the donor's tax imposed under Section 99 of the Tax Code of 1997, since there is no intention on the part of the association to donate the said property to said members, considering that the Association could not donate property the ownership of which belong to themselves (members-beneficiaries). However, it is noted that under Section 196 of the Tax Code of 1997, 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 no consideration is involved in said transaction upon which the tax imposed could be based. Accordingly, the transfer of title of the said property in your favor, as member-beneficiary is not subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. However, the notarial acknowledgment to said deed of conveyance is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. (BIR Ruling No. 398-93 dated October 11, 1993) 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 Legal Service