Gloria Residents Association, Inc.

November 11, 2016 BIR RULING NO. 386-16 R.A. 7279; BIR Ruling 514-2012 Gloria Residents Association, Inc. Gloria Compound Pilar Village Las Pias City Attention: AAA _______________ Gentlemen : This refers to your undated letter requesting exemption from capital gains tax (CGT) and other taxes, if any, relative to the transfer of title of land from Gloria Residents Association, Inc. in favor of its qualified members-beneficiaries pursuant to Republic Act 7279 otherwise known as the "Urban Development and Housing Act of 1992." Based on documents submitted, it is shown that Gloria Residents Association, Inc., with Taxpayer's Identification No. 000-000-000-000, is a non-stock, non-profit organization duly registered with the Housing and Land Use Regulatory Board (HLURB) with Registration No. 04-166; that it is the registered owner of various lots which 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 November 10, 1994 in the amount of Php__________; that the SHFC issued Partial Releases of Real Estate Mortgage constituted over the properties described below: TCT No. Date of Date of Release Beneficiaries Annotation of of Real Estate Real Estate Mortgage Mortgage 005-2012000443 August 23, 1994 January 13, 2014 BBB 005-2012000521 August 23, 1994 August 11, 2014 CCC 005-2012000381 August 23, 1994 - DDD 005-2012000611 August 23, 1994 November 11, 2014 EEE 005-2012000522 August 23, 1994 October 29, 2013 FFF 005-2012000523 August 23, 1994 May 12, 2014 GGG 005-2012000415 August 23, 1994 July 10, 2013 HHH 005-2012000360 August 23, 1994 July 10, 2013 III 005-2012000478 August 23, 1994 April 10, 2014 JJJ 005-2012000512 August 23, 1994 May 12, 2014 KKK 005-2012000558 August 23, 1994 July 10, 2013 LLL 005-2012000605 August 23, 1994 April 7, 2014 MMM 005-2012000425 August 23, 1994 July 10, 2013 NNN 005-2012000465 August 23, 1994 May 12, 2014 OOO 005-2012000354 August 23, 1994 May 12, 2014 PPP 005-2012000466 August 23, 1994 October 29, 2013 QQQ 005-2012000569 August 23, 1994 July 27, 2015 RRR 005-2012000559 August 23, 1994 July 10, 2013 SSS 005-2012000624 August 23, 1994 May 11, 2014 TTT 005-2012000380 August 23, 1994 May 12, 2014 UUU 005-2012000481 August 23, 1994 Nov. 8, 2013 VVV 005-2012000514 August 23, 1994 Nov. 8, 2013 WWW 005-2012000349 August 23, 1994 July 10, 2013 XXX 005-2012000541 August 23, 1994 Nov. 8, 2013 YYY 005-2012000341 August 23, 1994 May 12, 2014 ZZZ 005-2012000340 August 23, 1994 January 14, 2014 AAA 005-2012000596 August 23, 1994 May 12, 2014 BBBB 005-2012000392 August 23, 1994 July 22, 2015 CCCC 005-2012000434 August 23, 1994 July 10, 2013 DDDD and that the above-named beneficiaries are now in the process of transferring the purchased properties to their respective names. SaCIDT In support of your request, the following documents have been submitted: 1) Written Application for Exemption filed with the Law Division; 2) Certified True Copy of the Transfer Certificates of Title (TCTs); 3) Certification from the Social Housing Finance Corporation (SHFC) that the property was acquired through CMP; 4) HLURB Certification that the Association is duly registered with HLURB; 5) Certificates of Payments; 6) Partial Releases of Real Estate Mortgage; and 7) Other pertinent documents. In reply, please be informed that the transfer by Gloria Residents Association, Inc. in favor of the above-named members-beneficiaries who have made full payment of their purchased subdivided lots is not subject to either the CGT 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, considering that the said transfer of property is made without any consideration and effected only as a formality to finally effect the transfer of the said property to its members-beneficiaries who actually bought the same from the former owner through the Association. In other words, the association is merely transferring the ownership of the property to its members-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 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 already belongs to the members-beneficiaries themselves. (BIR Ruling No. 514-2012 dated August 3, 2012) It is noted that under Section 196 of the Tax Code of 1997, the deeds or documents subject to the documentary stamp tax (DST) 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 subject lots in favor of the above-named beneficiaries is not subject to DST under Section 196 of the Tax Code of 1997. However, the notarial acknowledgment to the 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. 514-2012 dated August 3, 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 in this case does not exceed P450,000.00 1 for house and lot and P180,000.00 for lot only for each qualified beneficiaries. (BIR Ruling No. 514-2012 dated August 3, 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.) CAESAR R. DULAY Commissioner of Internal Revenue Footnotes 1. HUDCC Resolution No. 1, Series of 2013, promulgated on October 16, 2013, approving the adjustment of price ceiling for horizontal socialized housing from P400,000.00 per house and lot to P450,000.00.