BIR Ruling [DA-318-99]

May 21, 1999 BIR RULING [DA-318-99] Maybunga Homeowners Association, Inc. 430 Interior Geronimo Street Barangay Maybunga, Pasig City Attention: Mr. Reynaldo Valdezco President Gentlemen : This refers to your letter dated April 15, 1998 requesting exemption from the corporate income tax and from the creditable withholding tax imposed under Revenue Regulations No. 2-98 of the transfer of the parcels of land registered in the name of the Association, which acted merely as facilitator under the Community Mortgage Program (CMP) projects of the government to the member-beneficiaries, the actual property owners, who are underprivileged and homeless, under the provisions of R.A. No. 7279. It is represented that the Maybunga Homeowners Association, Inc. is duly registered with the Securities and Exchange Commission (SEC); that serving as a facilitator, and through the CMP Program of the government, it acquired by virtue of a loan from the National Home Mortgage Finance Corporation (NHMFC), parcels of land situated at Barangay Maybunga, Pasig City; and that it has subdivided that said properties 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 properties 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(A) of the same code, considering that the said transfer of your properties is without any consideration since it is merely a formality to finally effect transfer of the said properties 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 properties which actually belong to the member-beneficiaries. TcHCIS Furthermore, the said transfer is not subject to the donor's tax imposed under Section 93 of the Tax Code of 1997, since there is no donative intent on your part to donate the said properties to the member-beneficiaries, considering that you could not donate properties the ownership of which belong to themselves. 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 properties 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. CMP-171-98 dated September 16, 1998, citing BIR Ruling No. 393-93 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. cDAISC Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)