BIR Ruling No. 454-12

July 10, 2012 BIR RULING NO. 454-12 RA 7279; BIR Ruling No. 005-11; BIR Ruling No. 367-11 Mabuhay Vinyl Employees Bagong Lipunan Community Association, Inc. Camague, Tubod, Iligan City Attention: Consorcio C. Gabo, Sr. President/Chairman of the Board Gentlemen : This refers to your letter dated March 22, 2011 endorsed by Revenue Region No. 16-Cagayan de Oro City, requesting for an exemption from the payment of capital gains tax and documentary stamp-tax relative to the transfer/individualization of a parcel of land from Mabuhay Vinyl Employees Bagong Lipunan Community Association, Inc. in favor of its qualified member-beneficiaries (see Annex) pursuant to Republic Act 7279 otherwise known as the "Urban Development and Housing Act of 1992". Documents submitted show that Mabuhay Vinyl Employees Bagong Lipunan Community Association, Inc. with Tax Identification Number 418-367-968-000, is the registered owner of a parcel of land located at Pag-ibig Cpd., Camague, Tubod, Iligan City and covered by Transfer Certificates of Title (TCT) No/s. T-20,781 and T-21,268 issued by the Register of Deeds for the City of Iligan; that it is a non-stock non-profit organization duly registered with the Ministry of Human Settlements Home Financing Corporation on May 28, 1980 with Registration No. 11-004; that the aforesaid lot was acquired through a loan under the Home Financing Program of the National Home Mortgage Finance Corporation (NHMFC); that the project is duly registered with the Housing and Land Use Regulatory Board under Certificate of Registration No. 21267, with License to Sell No. 23485 for socialized housing; and that the Mabuhay Vinyl Employees Bagong Lipunan Community Association, Inc. is now in the process of subdividing the purchased property that will eventually be distributed to its member-beneficiaries, who are now fully paid on their loan with the Home Development Mutual Fund 1 (HDMF). 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 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 properties is without any consideration since it is merely a formality to finally effect the transfer of the said properties 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 properties to its member-beneficiaries who actually own the same. (BIR Ruling No. 005-11 dated January 19, 2011 and BIR Ruling No. 367-11 dated October 5, 2011) aITECA It is, however, understood that the Certificate Authorizing Registration (CAR) shall only be issued 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 P400,000.00 and P160,000.00 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. Moreover, the said transfer is not subject to the donor's tax imposed under Section 99 of the Tax Code of 1997, considering that your association could not donate properties the ownership of which belongs to the transferees (member-beneficiaries) themselves. Furthermore, 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, as amended. 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, as amended. (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 Mabuhay Vinyl Employees Bagong Lipunan Community Association, Inc. Pag-ibig Cpd., Camague, Tubod, Iligan City Name of Beneficiary Blk. No. Lot No. Total Area (sq.m.) 1. Rogelio B. Orellaneda 1 1 259 2. Efren M. Baguio 1 2 266 3. Nathaniel J. Branzuela 1 3 258 4. Edwin D. Gemelo 1 4 272 5. Severino C. Eroy 1 5 266 6. Angelo B. Ylanan 1 6 265 7. Edgardo C. Lastimoso 1 7 367 8. Ramoncito R. Reyes 2 1 276 9. Salvador Ll. Adeva 2 2 266 10. Marilou A. Cantal 2 3 329 11. Consorcio C. Gabo, Sr. 2 4 257 12. Domingo F. Collantes 2 5 255 13. Edilberto V. Espada 2 6 257 14. Patricio C. Pason 2 7 265 15. Edgardo C. Sipalay 2 8 266 16. Basilio D. Jao 2 9 264 17. Godofredo G. Zalsos 3 1 195 18. Juanito S. Gonzales 3 2 202 19. Vicente Andrade 3 3 197 20. Alberto C. Benitez 3 4 180 21. Fidela C. Unat/Wenceslao Unat 3 5 183 22. Methodio A. Postanes 3 6 183 23. Edgardo A. Sala 3 7 188 24. Andrew B. Pancho 3 8 183 25. Virgilio C. Garcia 3 9 183 26. Calixto C. Venenoso, Jr. 3 10 286 27. Tregidia E. Quidlat 3 11 286 28. Ludivino D. Erquita 3 12 356 29. Didimo A. Edrozo 3 13 366 30. Elvira D. del Socorro/Edward del 3 14 266 Socorro 31. Nestor R. Salazar, Jr. 3 15 277 32. Medardo S. Germano 3 16 360 33. Amar L. Soriano 3 17 379 Footnotes 1. NHMFC assigned to HDMF, the housing loan of Mabuhay Vinyl Employees Bagong Lipunan Community Association, Inc.