BIR Ruling [DA-059-00]

February 1, 2000 BIR RULING [DA-059-00] Villaran Homeowners Association, Inc . Agustin Street, Barangay Palatiw Pasig City Attention: Ms . Mila Esparcia President Gentlemen : This refers to your letter dated September 14, 1998 requesting for a ruling that the transfer/subdivision of a parcel of land registered in the name of Villaran Homeowners Association, Inc. covered by TCT No. PT-101243 issued by the Registry of Deeds for Pasig City among its members under the provisions of R.A. No. 7279, is exempt from capital gains tax and/or creditable withholding tax imposed under Revenue Regulations No. 2-98. It is represented that Villaran Homeowners Association, Inc. is a non-stock, non-profit community organization duly registered with the Home Insurance and Guaranty Corporation (HIGC); that it was organized to promote low-cost housing project that shall benefit the homeless and underprivileged residents of Pasig City; that Villaran Homeowners Association, Inc. served as facilitator, and through the Community Mortgage Program (CMP) of the National Home Mortgage Finance Corporation (NHMFC), it acquired by virtue of a loan from the NHMFC, the above-mentioned parcel of land at Agustin Street, Barangay Palatiw, Pasig City; and that it has subdivided the said property into homelots and distributed the homelots to its member-beneficiaries. In reply, please be informed that the transfer in favor of your individual member-beneficiaries of the said subdivided property is not subject to either the capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997, or the creditable withholding tax imposed under Revenue Regulations No. 2-98 implementing Section 57(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 the said property to your member-beneficiaries who actually bought the same from the former owner through your Association. In other words, the transfer is without any consideration because you are in fact transferring the ownership of the property 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 belongs 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 is imposed could be based. STcHEI Accordingly, the transfer of titles of the said property in favor of your member-beneficiaries 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.) SIXTO S. EQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)