Samahan ng Nagkakaisang Damdamin (SAND) de Manuguit Homeowners Association, Inc.

January 31, 2018 BIR RULING NO. 110-18 RA 7279; BIR Ruling No. 383-13 Samahan ng Nagkakaisang Damdamin (SAND) de Manuguit Homeowners Association, Inc. 991 Int. 4 Morong St. Manuguit, Tondo, Manila Attention: AAA _______________ Gentlemen : This refers to your letter dated August 27, 2014 requesting exemption from the payment of Capital Gains Tax and other taxes, relative to the transfer of titles of land from Samahan ng Nagkakaisang Damdamin (SAND) de Manuguit Homeowners Association, Inc. in favor of fully paid members-beneficiaries pursuant to Republic Act 7279 otherwise known as the "Urban Development and Housing Act of 1992." It is represented that Samahan ng Nagkakaisang Damdamin (SAND) de Manuguit Homeowners Association, Inc. (TIN: 000-000-000-000) is the registered owner of parcels of land covered by the following Transfer Certificates of Title (TCT),to wit: AScHCD TCT No. Lot Area sq.m. 251626 1 36 251669 2 32 251609 3 31 251631 4 18 251632 5 15 251647 6 58 251689 7 30 251678 8 24 251625 9 11 251622 10 23 issued by the Registry of Deeds for the City of Manila; that it is a non-stock, non-profit organization duly registered with the Home Insurance and Guaranty Corporation (HIGC) under Registration No. 04-1739; that the aforesaid lots were acquired through a loan under the Community Mortgage Program (CMP) of the Social Housing Finance Corporation (SHFC);that said project was taken-out/paid on March 11, 1998; that the SHFC issued a Partial Release of Real Estate Mortgage constituted above-described TCTs; and that the following are now in the process of transferring the purchased properties to their names by virtue of their respective Deeds of Absolute Sale, to wit: Name of Member-Beneficiaries TCT No. BBB 251626 CCC 251669 DDD 251609 EEE 251631 FFF 251632 GGG 251647 HHH 251689 III 251678 JJJ 251625 KKK 251622 In support of your request, you have completely submitted on June 29, 2016 the following documents: 1) Written Application for Exemption filed with the Law Division; 2) Deeds of Absolute Sale; 3) Certified True Copies of the Transfer Certificate of Title (TCT); 4) Certification from the Social Housing Finance Corporation (SHFC) that the property was acquired through CMP; 5) Certified true copy of the Articles of Incorporation of the community association; 6) Certified True Copy of the Masterlist of Qualified Beneficiaries duly certified by the SHFC; 7) Certificates of Payment; 8) Partial Release of Real Estate Mortgage; 9) BIR Certificate of Registration; 10) Other pertinent documents . 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 27 (D) (5) of the Tax Code of 1997, as amended, or the 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 merely a formality to finally effect the 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 association is in fact transferring the ownership of the property to its member-beneficiaries who actually own the same. 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 donative intent or intention on your part to donate the said properties to each member-beneficiary, considering that you could not donate such properties the ownership of which belong to the donees (member-beneficiaries) themselves. (BIR Ruling No. 005-11 dated January 19, 2011 and BIR Ruling No. 367-11 dated October 5, 2011) 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 the supposed purchaser is actually the owner thereof. Accordingly, the transfer of titles 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. 383-13 dated October 22, 2013) It is, however, understood that the respective Certificates Authorizing Registration (CAR) shall only be issued after the submission of the requirements provided under RMO 15-2003 and 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 house and lot packages in this case does not really exceed P450,000.00 and P180,000.00 for lot only. Thus, sale of a house and lot or lot only above the maximum amount shall be subject to the corresponding internal revenue taxes. (BIR Ruling No. 383-13 dated October 22, 2013) 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. AcICHD Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue Footnotes 1. Formerly 235806/T-1446. 2. Ibid . 3. Ibid . 4. Ibid . 5. Ibid . 6. Ibid . 7. Note from the Publisher: Copied verbatim from the official document. Missing Footnote Text. 8. Note from the Publisher: Copied verbatim from the official document. Missing Footnote Text. 9. Ibid . 10. Ibid .