BIR Ruling No. 374-14

October 3, 2014 BIR RULING NO. 374-14 RA No. 7279; BIR Ruling No. 286-13; BIR Ruling No. 258-12; BIR Ruling No. 030-12 Samahang Pagkakaisa sa Abot Kaya Homeowners Association, Inc. Road 3, Castaeda Area, Golden Acres Subdivision, Talon 5, Las Pias City 1747 Attention: Ms. Marieta Borja Gentlemen : This refers to your undated letters received by this office on September 9, 2010 and February 21, 2012, requesting exemption from the payment of capital gains tax relative to the transfer of land from the Samahang Pagkakaisa sa Abot Kaya Homeowners Association, Inc. (Association) in favor of its eleven (11) qualified members-beneficiaries pursuant to Republic Act (RA) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". It is represented that the Association is non-stock, non-profit corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. ANO95-00807 with TIN 203-829-311-000; that it is likewise registered with the Home Insurance and Guaranty Corporation (HIGC) bearing Registration No. 04-3504; that the Association is the registered owner of the following parcels of land and more particularly described as follows, to wit: TCT No. Area (Sq.M.) Tax Declaration No. T-92835 32 E-017-21866 T-92865 32 E-017-18889 T-92856 32 E-017-18880 T-92841 26 E-017-18865 T-92860 32 E-017-18884 T-92869 32 E-017-18893 T-92910 32 E-017-19070 T-92849 32 E-017-18873 T-92845 32 E-017-18869 T-92828 32 E-017-19126 T-92867 32 E-017-18891 that the aforesaid lots were acquired through a loan under the Community Mortgage Program (CMP) of the Social Housing Finance Corporation (SHFC);and that the Association is now in the process of subdividing the said properties to its members-beneficiaries. (See Annex) TcIHDa In support of its request, the Association has completely submitted the following documents, to wit: 1. Written Application for Exemption filed with the Law Division; 2. Certified True Copies of the TCTs; 3. Certification from the SHFC that the property was acquired through CMP; 4. Certified true copy of the SEC Registration, Articles of Incorporation and By-Laws of the Association; 5. Certified true copy of the HIGC Registration; 6. Certified true copy of the list of qualified beneficiaries; 7. Substitution Approval issued by the SHFC; 8. BIR Certificate of Registration of the Association; and 9. Other pertinent documents. In reply thereto, please be informed that the transfer in favor of its 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 and is merely a formality to finally effect the transfer of the said property to the member-beneficiaries 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-beneficiaries who actually own the same. (BIR Ruling Nos. 286-13 dated July 25, 2013; 258-12 dated April 20, 2012; and 030-12 dated January 16, 2012) 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 on the part of the Association to donate the said property to said members-beneficiaries, considering that it could not donate property the ownership of which belongs to the donees (members-beneficiaries) themselves. (BIR Ruling No. 286-13 dated July 25, 2013) ASaTCE 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 titles of the said properties in favor of the members-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. 258-12 dated April 20, 2012) 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 house and lot packages is P400,000.00 for each qualified beneficiaries (adjusted pursuant to RMC 30-2009) and P160,000.00 for lots only pursuant to RR 17-2001. (BIR Ruling Nos. 286-13 dated July 25, 2013; 258-12 dated April 20, 2012; and 030-12 dated January 16, 2012) 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 ANNEX Samahang Pagkakaisa sa Abot Kaya Homeowners Association, Inc. Masterlist of Beneficiaries Name of Beneficiary Blk. No. Lot No. Total Area (Sq.M.) 1. Camacho, Remegio C. I 2 26 2. Manlangit, Rosalyn O. I 17 32 3. Lumactud, Lulita I 10 32 4. Cahigan, Arman I 17 32 5. Dela Cruz, Prudencio O. II 4 32 6. Pahayahay, Ma. Theresa C. II 6 32 7. Nable, Nathalie C. II 2 32 8. Becero, Leonilo IV 1 32 9. Lampera, Rodolfo VI 9 32 10. Macoco, Siony I 6 32 11. Molina, Minda VI 16 32