BIR Ruling [DA-122-01]

July 18, 2001 BIR RULING [DA-122-01] 24 (D) (1); 196; 188 009-95; 179-98 Camp Delgado Villager's Association, Inc . 311 Veterans' Village, Iloilo City Attention: Mr . Teodulfo P . Pido, Sr . President Gentlemen : This refers to your letter dated August 27, 1999, which was referred to this Office by the Regional Director of Revenue Region No. 11, Iloilo City on September 28, 1999, relative to your request for exemption from capital gains tax on the Waiver of Rights and Interest over a parcel of land executed by one of your members in favor of your Association. It is represented that Camp Delgado Villager's Association, Inc. ("Association") is a non-stock community association of landless urban poor; that it is the absolute owner of a parcel of land covered by Transfer Certificate of Title No. T-92226 acquired through the Community Mortgage Program, a mortgage financing program of the National Home Mortgage Finance Corporation; that the parcel of land was subdivided and later given/awarded to its 134 member-beneficiaries via a Deed of Partition and Assignment; that upon individualization of the parcels of land in favor of its beneficiaries, the Deed of Partition and Assignment was registered with the Registry of Deeds for the City of Iloilo for the issuance of the individual title in the name of the respective member-beneficiary; that the aforementioned individualization of lots was exempted from payment of capital gains tax pursuant to Section 32 (b) of Republic Act 7279; that there are member-beneficiaries of the Association who are recipients also of other residential lots given by other government agencies tasked to purchase and develop tracts of land under the same concept of community ownership; that under the principle that one member-beneficiary cannot be a recipient or awardee of two or more lots, one must choose only one lot; that one of your member-beneficiaries, named Alberto Brillantes, became a recipient of two (2) lots, one coming from the Association, covered by Transfer Certificate of Title No. T- 125602 and another from the National Housing Authority (NHA); and as he has already constructed his house on the lot awarded by the NHA, he tuned-over the property to the Association; that the Association refunded the amount of P21,000.00 to Mr. Brillantes representing his share in the loan; and that Alberto Brillantes executed a Waiver of Rights and Interest over the lot awarded to him by the Association in favor of the latter without any consideration so that the title to the said lot issued in his name be again placed in the name of the Association. In reply, please be informed that since the execution of the Waiver of Rights and Interest by Alberto Brillantes, a member-beneficiary, has the effect of reconveying the aforesaid real property in favor of the Camp Delgado Villagers Association, Inc. and being merely a formality of restoring title to the said property in the name of its previous owner, without monetary consideration, the same is not subject to the capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997, nor to the documentary stamp tax imposed under Section 196 of the same Code. However, the notarial acknowledgment to the said Waiver of Rights and Interest is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. 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. (BIR Numbered Ruling 009-95 dated January 16, 1995 and 179-98 dated December 28, 1998) Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group