Barangay Tibag Pamayanan Association, Inc.

April 10, 2018 BIR RULING NO. 619-18 Republic Act (RA) No. 7279; BIR Ruling No. 005-2011 Barangay Tibag Pamayanan Association, Inc. San Jose Homes, Balite, Calapan City, Oriental Mindoro Attention: AAA _______________ Gentlemen : This refers to your letter dated January 25, 2017, requesting exemption from the payment of taxes relative to the transfer of title of land from Barangay Tibag Pamayanan Association, Inc. in favor of its qualified member-beneficiaries 1 pursuant to Republic Act (RA) 7279, otherwise known as the "Urban Development and Housing Act of 1992." ATICcS It is represented that Barangay Tibag Pamayanan Association, Inc. is the registered owner of a parcel of land, with an area of 30,489 square meters, more or less, covered by Transfer Certificate of Title (TCT) No. T-89151 issued by the Registry of Deeds for the Province of Mindoro Oriental; that the aforesaid lot was acquired through a loan under the Community Mortgage Program (CMP),with the Local Government Unit (LGU)-Calapan City as Originator/Mobilizer, per Certification dated November 24, 2016 issued by the Social Housing Finance Corporation (SHFC);that based on same Certification, said project was taken-out/paid on May 02, 1997 in the loan amount of Php__________, involving 258 beneficiaries; and that Barangay Tibag Pamayanan Association, Inc. is now in the process of subdividing the subject parcel of land to its member-beneficiaries. In reply, please be informed that the transfer of the subdivided lots in favor of the individual members-beneficiaries of Barangay Tibag Pamayanan Association, Inc. is not subject to either the capital gains tax (CGT) imposed under Section 27 (D) (5) of the National Internal Revenue Code of 1997, as amended, or the creditable withholding tax (CWT) imposed under Revenue Regulations (RR) No. 2-98, as amended, considering that said transfer is being made without any monetary consideration. The transfer is only a formality to finally effect the transfer of the subject property to its member-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 member-beneficiaries who actually own the same. Moreover, the said transfer is not subject to the donor's tax imposed under Section 99 of the National Internal Revenue Code of 1997, as amended, since there is no donative intent on the part of Barangay Tibag Pamayanan Association, Inc. to donate the property to its members-beneficiaries, considering that it could not donate property the ownership of which already belongs to the members-beneficiaries themselves. ETHIDa Furthermore, under Section 196 of the National Internal Revenue Code of 1997, as amended, the deeds or documents subject to the documentary stamp tax (DST) imposed therein are those where the realty sold are 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 the subdivided lots in favor of the beneficiaries is not subject to DST under Section 196 of the National Internal Revenue Code of 1997, as amended. However, the notarial acknowledgment to the deed of conveyance is subject to the DST of P15.00 pursuant to Section 188 of the National Internal Revenue Code of 1997, as amended. It is, however, understood that the Certificate Authorizing Registration (CAR) shall only be issued after the submission of the requirements provided under Revenue Memorandum Order (RMO) No. 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 2 for house and lot and P180,000.00 for lot only for each qualified beneficiaries. (BIR Ruling No. 005-11 dated January 19, 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.) CAESAR R. DULAY Commissioner of Internal Revenue Footnotes 1. Please see attached Masterlist of Beneficiaries consisting of nine (9) pages and containing 258 beneficiaries. 2. 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.