Loyola Grand Villas Homeowners Association, Inc.

October 2, 2009 BIR RULING [DA-(C-22) 576-09] 101 (A) (3); DA-618-2004 Loyola Grand Villas Homeowners Association, Inc. LGV Community Center, Columbia St. Loyola Grand Villas, Quezon City Attention: Ms. Milagros B. Arnaldo President Gentlemen : This refers to your letter dated June 24, 2009 stating that Solid Homes, Inc. (SHI) is the owner in fee simple of a property located at Loyola Grand Villas Subdivision, Diliman, Quezon City, more particularly described as Lot 5-B-3, of the subdivision plan Psd-13-000837, being a portion of Lot 5-B, Psd-13-000243, LRC Rec. No. 7672 with an area of Three Thousand Three Hundred Forty Eight (3,348) sq.m. as evidenced by Transfer Certificate of Title (TCT) No. N-91158. On the other hand, Loyola Grand Villas Homeowners' Association, Inc. (LGVHAI), is a non-profit corporation organized under Philippine laws. The former intends to transfer the subject property to the latter to be used by it as amenities and recreation center, among them the: plaza, sports center, office of the homeowners' association, children's playground, tennis court and volleyball court for the use and benefit of the homeowners' association. In reply, please be informed that conveyance of realty not in connection with a sale to trustees or other persons without consideration are not taxable. (Sec. 185, Regulations No. 26). In the herein case, the transfer is without consideration, and the conveyance is not in connection with a sale made to LGVHAI. In fact, the purpose of the conveyance by the donor of the subject property is in pursuance to Presidential Decree No. 957 or known as "The Subdivision and Condominium Buyers Protective Decree", whereby parks, playgrounds and other open spaces may be donated to the homeowner's association for the proper management of the said facilities for the common benefit and enjoyment of its members. In view thereof, this Office is of the opinion that the conveyance in favor of LGVHAI without monetary consideration is exempt from capital gains tax/creditable withholding tax, donor's tax and documentary stamp tax imposed by Section 196 of the 1997 Tax Code, as amended. However, the acknowledgement is subject to the documentary stamp tax on the certificate in the amount of P15.00 pursuant to Section 188 of the same Tax Code. (BIR Ruling No. DA-473-99 dated August 17, 1999) IHEAcC This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be ascertained that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service