Mr. Merlindo A. Gullem

May 2, 2008 BIR RULING [DA-279-08] DA412-05 Mr. Merlindo A. Gullem B2 L6 & 7 Alliance Dreamland Subdivision Signal Village Taguig City S i r : This refers to your letter dated January 30, 2008 requesting exemption from the payment of capital gains tax on the transfer of a parcel of land in your favor as member-beneficiary of the Alliance of GHQ HHSG and Pag-ASA Villages (AGHP). TCaADS It is represented that AGHP is a non-stock, non-profit community organization; that it is an association of informal occupants affected by the Development of Fort Bonifacio to which the member/beneficiary belongs; that you were awarded a lot located in Taguig City covered by TCT No. 3653 with an area of 36 square meters as relocation site pursuant to the revised Memorandum of Agreement between the Bases Conversion and Development Authority (BCDA) and the Association dated December 24, 1998. In reply thereto, please be informed that the transfer in favor of the individual member-beneficiary of the above-described property is not subject to either the capital gains tax imposed under Section 24 (D) (1) of the Tax Code of 1997 or creditable withholding tax imposed under Revenue Regulations No. 2-98, as amended, implementing Section 57 (B) of the same Code, considering that the said transfer is without any consideration since it is merely a formality to finally effect the transfer of the said properties from the Association to the member-beneficiaries who actually bought the same. In other words, the Association is in fact transferring the ownership of the property to the member-beneficiary who actually owns the same. HCaEAT It is, however, understood, that the Certificate Authorizing Registration (CAR) shall only be issued after it is established upon proper verification by the Revenue District Officer (RDO) concerned that, considering the rules on valuation of real property, the actual selling price per sale transaction of the lots in this case does not exceed P300,000.00 per HUDCC Memorandum No. 03, Series of 2005, for each qualified beneficiaries. Moreover, the said transfer is not subject to the donor's tax imposed under Section 99 of the Tax Code of 1997, considering that the Association could not donate a property the ownership of which belongs to the transferees (member-beneficiaries) themselves. Section 185 of Regulations No. 26, otherwise known as the Revised Documentary Stamp Tax Regulations, implementing Title VII of the Tax Code, provides that conveyances of realties not in connection with a sale, to trustees of other persons without consideration are not taxable. Accordingly, the deed to be executed by the Association to effect the aforesaid transfer in favor of Mr. Merlindo A. Gullem, as its 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 same Code. SHaATC 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, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service