BIR Ruling No. 233-12

March 29, 2012 BIR RULING NO. 233-12 RA 7279; BIR Ruling No. 005-11; BIR Ruling No. 367-11 Neill Property Homeowners' Association, Inc. Upper Banlat Brgy. Tandang Sora, Quezon City Attention: Emilia V. Pacay President Gentlemen : This refers to your letter dated September 20, 2011 requesting for an exemption from the payment of capital gains tax and other taxes, if any relative to the transfer of title of land from NEILL PROPERTY HOMEOWNERS' ASSOCIATION, INC. (formerly NEILL PROPERTY RESIDENCE ASSOCIATION, INC.) in favor of its one hundred six (106) qualified member-beneficiaries pursuant to Republic Act 7279 otherwise known as the "Urban Development and Housing Act of 1992". It is represented that NEILL PROPERTY HOMEOWNERS' ASSOCIATION, INC. (formerly NEILL PROPERTY RESIDENCE ASSOCIATION, INC.) with Taxpayer's Identification No. 201-138-052-000, is the registered owner of the parcels of land located at Brgy. Upper Banlat, Quezon City and covered by Transfer Certificates of Title, to wit: TCT No. Area (sq. m.) Tax Declaration No. 181859 105 E-122-13704 181860 100 E-122-13725 181888 100 E-122-13711 181885 50 E-122-13861 181879 50 E-122-12695 181869 50 E-122-14005 181882 50 E-122-13696 181884 50 E-122-13697 181862 48 E-122-13698 181887 50 E-122-12882 181863 50 E-122-13883 181864 50 E-122-13699 181883 50 E-122-13694 181865 100 E-122-14017 181886 50 E-122-13951 181878 62 E-122-13950 181951 100 E-122-13986 181952 100 E-122-14004 181877 76 E-122-13949 181953 50 E-122-14002 181954 87 E-122-13953 181868 50 E-122-13948 181921 100 E-122-14047 181955 100 E-122-13947 181956 53 E-122-13946 181920 50 E-122-14003 181957 99 E-122-13945 181958 66 E-122-13805 181928 100 E-122-13880 181919 100 E-122-13795 181876 100 E-122-13863 181874 100 E-122-13864 181875 100 E-122-13867 181873 100 E-122-13868 181872 100 E-122-13869 181871 118 E-122-13874 181959 49 E-122-13850 181929 50 E-122-13796 181909 50 E-122-13684 181930 50 E-122-13677 181960 100 E-122-13797 181961 50 E-122-13798 181918 50 E-122-13937 181931 100 E-122-13799 181947 100 E-122-13875 181897 100 E-122-14007 181898 52 E-122-14006 181950 49 E-122-14015 181858 100 E-122-13800 181867 50 E-122-13801 181910 100 E-122-13995 181908 103 E-122-13717 181922 100 E-122-13803 181949 50 E-122-14000 181917 118 E-122-13999 181899 52 E-122-13998 181916 50 E-122-14014 181900 56 E-122-13852 181915 50 E-122-13954 181901 50 E-122-13939 181902 50 E-122-13762 181914 50 E-122-13780 181932 100 E-122-13884 181933 106 E-122-13886 181080 50 E-122-13940 181934 50 E-122-13866 181935 100 E-122-13840 181881 59 E-122-13870 181941 57 E-122-13878 181948 65 E-122-13872 181936 50 E-122-13853 181913 50 E-122-13871 181946 117 E-122-13837 181861 91 E-122-13854 181912 103 E-122-13838 181939 101 E-122-13843 181889 50 E-122-13855 181937 114 E-122-13723 181890 50 E-122-13856 181911 50 E-122-13952 181938 100 E-122-13753 181940 70 E-122-13752 181942 102 E-122-13941 181857 100 E-122-13842 181943 124 E-122-13751 181927 116 E-122-13757 181907 118 E-122-13943 181903 50 E-122-13944 181896 50 E-122-13756 181895 92 E-122-14013 181904 100 E-122-13755 181894 50 E-122-14012 181944 50 E-122-13754 181893 100 E-122-14011 181926 50 E-122-13877 181905 90 E-122-14010 181891 100 E-122-13763 181870 50 E-122-13762 181924 50 E-122-13761 181945 50 E-122-13860 181916 50 E-122-13786 181925 47 E-122-13787 181866 50 E-122-13788 181923 60 E-122-13726 181892 59 E-122-13727 181962 60 E-122-13726 issued by the Registry of Deeds for Quezon City; that it is a non-stock, non-profit organization duly registered with the Housing and Land Use Regulatory Board (HLURB); that the aforesaid lot was 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 January 16, 1992 in the amount of Php1,957,336.80; and that the NEILL PROPERTY HOMEOWNERS' ASSOCIATION, INC. (NEILL PROPERTY RESIDENCE ASSOCIATION, INC.), is now in the process of subdividing the purchased property to its member beneficiaries. In support of its request, NEILL PROPERTY HOMEOWNERS' ASSOCIATION, INC. (formerly NEILL PROPERTY RESIDENCE ASSOCIATION, INC.) has completely submitted on October 28, 2011 the following documents: 1) Written Application for Exemption filed with the Law Division; 2) Certified True Copy of the Transfer Certificate of Title (TCT); 3) Certification from the Social Housing Finance Corporation (SHFC) that the property was acquired through CMP; 4) Certified true copy of the Articles of Incorporation of the community association; 5) Certified true copy of the Masterlist of qualified beneficiaries duly certified by the appropriate body (HLURB, NHA, LGU) see Annex; 6) BIR Certificate of Registration of the Homeowner Association; and 7) Other pertinent documents . In reply, please be informed that the transfer in favor of your individual member-beneficiaries of the said subdivided property 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 of property is without any consideration since it is merely a formality to finally effect the transfer of the said property to its 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. CEDHTa 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 property to said member-beneficiaries, considering that you could not donate property 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 purchasers are actually the owners thereof. Besides, no consideration is involved in said transaction upon which the tax imposed could be based. Accordingly, the transfer of title of the said property 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. 005-11 dated January 19, 2011 and BIR Ruling No. 367-11 dated October 5, 2011) It is, however, understood that the Certificate 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 lots in this case does not exceed P400,000.00 for each qualified beneficiaries. (BIR Ruling No. 005-11 dated January 19, 2011 and BIR Ruling No. 367-11 dated October 5, 2011) 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.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ATTACHMENT NEILL PROPERTY HOMEOWNER'S ASSOCIATION, INC. Upper Banlat, Tandang Sora, Quezon City Name of Beneficiary Blk. No. Lot No. Total Area (sq.m.) 1. RICAFORT, ARBIE N. 1 1 105 2. PARINAS, LEONORA G. 1 2 100 3. TAMBO-ONG, ELSIE A. 1 3 100 4. TAMBO-ONG, JIMMY A. 1 4 50 5. PARINAS, DEHLIA P. 1 5 50 6. PATNONGON, EDUARDO A. 1 6 50 7. PAHIMNAYAN, DARIO A. 1 7 50 8. TENEBROSO, FERNANDO M. 1 8 50 9. SALIDO, LILIBETH G. 1 9 48 10. BALANG, EDMUNDO D. 1 10 50 11. GARCIA, DIOSCORO M. 1 11 50 12. LORA, JOLLY R. 1 12 50 13. OGA, ALBERTO B. 1 13 50 14. LLANTO, ROBERTO L. 1 14 100 15. FLORES, ANNABELLE M. 1 15 50 16. CABACANG, TEOFILO M. 1 16 62 17. ENGLISH, CORAZON G. 2 1 100 18. MALIG, ELEUTERIO H. 2 2 100 19. PALABRICA, MARCELINO P. 2 3 76 20. ANGELES, LIGAYA R. 2 3 50 21. PAAT, JOCELYN A. 2 5 87 22. LEGASPI, ALFREDO SR. V. 2 6 50 23. VILORIA, EMILY G. 2 7 100 24. OCAMPO, JUANITO M. 2 8 100 25. MURILLO, ERNESTO S. 2 9 53 26. LAOYON, SOLOMON P. 2 10 50 27. GUZMAN, ERNESTO P. 2 11 99 28. GALAROSA, ANTONIO V. 2 16 66 29. PARINAS, CESARIO JR. I. 3 1 100 30. DESQUITADO, AGAPITO B. 3 2 100 31. PACAY, MANUEL S. 3 3 100 32. PACAY, ROSENDA Z. 3 4 100 33. VIGILIA, RODRIGO 3 5 100 34. GUINTO, ESPERANZA V. 3 6 100 35. SIRIBAN, JOERGE G. 3 7 100 36. PACAY, MARISSA B. 3 8 118 37. MUYANO, MELECIO M. 4 1 49 38. LLAGAS, PETRONILO J. 4 2 50 39. RIVERA, JOVENCIO C. 4 3 50 40. SALVADOR, PEDRO JR. B. 4 4 50 41. DESQUITADO, JOVITO F. 4 5 100 42. ARMENDEZ, NORMITA L. 4 6 50 43. CANAMAQUE, ATILANO G. 4 7 50 44. SEVILLA, ROSITA T. 4 8 100 45. GUNGAB, AMADO C. 4 9 100 46. PARINAS, FLORENCIA I. 4 10 100 47. PARINAS, RENATO I. 4 11 52 48. ESPALLARDO, REBECCA F. 4 12 49 49. CABINTOY, VOLTAIRE G. 5 1 100 50. SALALILA, ALFREDO B. 5 2 50 51. MORADOS, LUCILO T. 5 3 100 52. MANAOIS, MANOLITO C. 5 4 103 53. CLAUSTRO, DALMACIO T. 5 5 100 54. MADRIAGA, JOSEPHINE A. 5 6 50 55. MUYANO, PRUDENCIO M. 5 7 118 56. LOSO, DIONISIO N. 5 8 52 57. OPINA, D'ARTAGNAN D. 5 9 50 58. ALMARINES, ANGELITA R. 5 10 56 59. VALENTINO, BENJAMIN N. 5 11 50 60. ABAYON, GERRY O. 5 12 50 61. GENERATED LOT 5 13 50 62. BERGORO, DANILO A. 5 14 50 63. LOPEZ, JOSE R. 5 15 100 64. RABANAL, AMALIA R. 6 1 106 65. RABANAL, VICTORIA S. 6 2 50 66. NICOLAS, MARTINA B. 6 3 50 67. ANTONIO, DANILO Y. 6 4 100 68. ANTONIO, BIEN Y. 6 5 59 69. ANTONIO, JOAQUIN JR. Y. 6 6 57 70. LEGASPI, VICENTE S. 6 7 65 71. SARINGAN, HENRY O. 6 8 50 72. ANDALES, EDGAR A. 6 9 50 73. CASTILLO, JOSE H. 6 10 117 74. ARROYO, EVELYN B. 7 1 91 75. VICENTE, LUCIA J. 7 2 103 76. ANTONIO, JOSE Y. 7 3 101 77. GENERATED LOT 7 4 50 78. SIBAL, LETICIA S. 7 5 114 79. GENERATED LOT 7 6 50 80. GENERATED LOT 7 7 50 81. VILORIA, JUANITO P. 8 1 100 82. TUBICE, MARIA L. 8 2 70 83. DE VERA, SAMUEL C. 8 3 102 84. MADRIAGA, ROGELIO C. 8 4 100 85. CONCON, ABDON G. 8 5 124 86. SORIANO, JIMMY G. 8 6 116 87. HERRERA, SIMFORIANO S. 8 7 118 88. LOSO, CENON T. 8 8 50 89. SABLAY, ASUNCION O. 8 9 50 90. ESTRELLA, NELSA B. 9 1 92 91. ARANJUEZ, ELIZA F. 9 2 100 92. VIRAY, AURORA M. 9 3 50 93. SORIANO, VILMA G. 9 4 50 94. MANABA, MARTIN E. 9 5 100 95. GALING, ARTURO M. 9 6 50 96. PARINAS, FERNANDO I. 9 7 90 97. CABOTEJA, LUDIVINA C. 9 8 100 98. RABANAL, BONIFACIO S. 9 9 50 99. DESQUITADO, JAIME F. 9 10 50 100. MIGUEL, VIRGINIA V. 9 11 50 101. ACHAZO, ANDRES M. 9 12 50 102. BOLOSENO, ANTONIO M. 9 13 47 103. ELCAMEL, METUDIO L. 9 14 50 104. TAGUIAM, DANILO L. 9 15 60 105. VITUALLA, CLARO R. 9 16 59 106. BURGOS, CRIS D. 9 17 60