BIR Ruling No. 245-15

July 10, 2015 BIR RULING NO. 245-15 RA 7279; BIR Ruling No. 383-13 Samahan ng Ugnayang Pantao sa Talanay Homeowners Association, Inc. Phase I 1 Kagawad Road, Area C Talanay Batasan Hills, Quezon City. Attention: Leon F. Villanueva Jr . President Gentlemen : This refers to your letter dated December 10, 2013 requesting exemption from the payment of Capital Gains Tax and other taxes, relative to the transfer of title of land from Samahan ng Ugnayang Pantao sa Talanay Homeowners Association, Inc. Phase 1 in favor of Winnaflor G. Gaspar pursuant to Republic Act 7279 otherwise known as the "Urban Development and Housing Act of 1992". It is represented that Samahan ng Ugnayang Pantao sa Talanay Homeowners Association, Inc. Phase 1 (TIN 210-615-108-000) is the registered owner of the parcel of land identified as Lot 2, Blk. 1 of the consolidation subdivision plan (LRA) Pcs-32678 approved as a non-subdivision project, being a portion of the cons. of Lot 1 & 17, Blk. 21 Pcs-2874 (L.R.C.) Record No. 1037 containing an area of thirty two square meters (32 sq.m.) covered by Transfer Certificate of Title (TCT) No. N-260791 issued by the Registry of Deeds for the 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 August 13, 2001 in the amount of Php1,740,000.00 involving twenty nine (29) beneficiaries; that BIR Ruling No. S-20-022-2008 dated April 24, 2008 was issued to Samahan ng Ugnayang Pantao sa Talanay Homeowners Association, Inc. Phase 1 exempting from the payment of capital gains tax and documentary stamp tax the transfer/individualization of titles of two (2) parcels of land from Samahan ng Ugnayang Pantao sa Talanay Homeowners Association, Inc. Phase 1 in favor of its qualified member-beneficiaries; that Winnaflor G. Gaspar substituted Marivic Bou as a member-beneficiary of the Association which was approved by SFHC; that can August 12, 2013 the SHFC issued a Partial Release of the Real Estate Mortgage which is annotated in TCT No. N-260791; and that Winnaflor G. Gaspar is now in the process of transferring the portion of her purchased subject property to her name by virtue of a Deed of Sale dated March 20, 2014. HESIcT In support of your request, you have completely submitted on January 23, 2015 the following documents: 1) Written Application for Exemption filed with the Law Division; 2) Deed of Absolute Sale; 3) Certified True Copy of the TCT and Tax Declaration; 4) Certification from the SHFC that the property was acquired through CMP; 5) Certified True Copy of the Articles of Incorporation of the community association; 6) Certification issued by SHFC on the approval of the substitution; 7) Certified True Copy of the Masterlist of Qualified Beneficiaries duly certified by the SHFC; 8) Certificates of Payment; 9) SHFC Partial Release of Real Estate Mortgage; 10) BIR Certificate of Registration; and 11) BIR Ruling No. S-20-022-2008 dated April 24, 2008; 12) Other pertinent documents . In reply, please be informed that by virtue of the substitution as duly approved by the SHFC, Winnaflor G. Gaspar is deemed subrogated to the rights and obligations of Marivic Bou and is bound by exactly the same conditions as those which bound the latter, thus the transfer in favor Winnaflor G. Gaspar of TCT No. N-260791 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 the member-beneficiary who actually bought the same from the former owner through the Association. In other words, the association is in fact transferring the ownership of the property to its member-beneficiary who actually owns 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 property to said member-beneficiary, considering that you could not donate property the ownership of which belongs to the donee (member-beneficiary) himself. (BIR Ruling No. 383-13 dated October 22, 2013) 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 title of the said property to Winnaflor G. Gaspar 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 Certificate Authorizing Registration (CAR) shall only be issued after the submission of the requirements provided under RMO15-2003 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. 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