Salinasville II Homeowners' Association, Inc.

May 4, 2009 BIR RULING [SH-(034) 298-09] Sec. 20 RA 7279; DA-064-2004 Salinasville II Homeowners' Association, Inc. Salinas Urban, Salinas I, Bacoor, Cavite Attention: Mr. Gilbert R. Purio President Gentlemen : This refers to your letter dated September 23, 2008 requesting tax exemption of the transfer/sub-division of a parcel of land covered by Transfer Certificate of Title (TCT) No. 1140591 registered in the name of Salinasville II Homeowners' Association, Inc. ("SALINASVILLE" for brevity) to its members-beneficiaries. IHaECA Documents submitted disclose that the SALINASVILLE, with Taxpayer Identification No. 223-101-769-000, is a non-stock, non-profit community organization under a Community Mortgage Program (CMP) pursuant to Section 32 (b) of R.A. No. 7279; that SALINASVILLE is registered with the Housing and Land Use Regulatory Board (HLURB) with Registration No. 01487-R4A-03-02 dated February 11, 2003; that the parcel of land covered by TCT No. 1140591 (formerly TCT No. 1057655) was acquired by SALINASVILLE from Aurea Espiritu de Tan, Ester Espiritu, Consolacion Espiritu Mendez, Ricardo Espiritu, Dolores Espiritu, Alfonso Espiritu, Felicitas Espiritu, Jaime Espiritu through a loan under CMP of the Home Mortgage Finance Corporation with the National Housing Authority as originator; that said project was taken-out on December 6, 2006 in the amount of Nine Million Seven Hundred Seventy-Four Thousand Eight Hundred Seven Pesos (P9,774,807.00); and that SALINASVILLE intends to have the said property subdivided, transferred and proportionately distributed to the Association's 195 members-beneficiaries. In reply, please be informed that the transfer in favor the SALINASVILLE's individual member-beneficiaries of the said subdivided property is not subject to either the capital gains tax imposed under Section 24 (D) (1), or the creditable withholding tax imposed under Revenue Regulations No. 2-98, as amended, implementing Section 57 (A) of the same Code, considering that the said transfer of your property is without any consideration since it is merely a formality to finally effect transfer of the said property to your member-beneficiaries who actually bought the same from the former owner through your Association. In other words, the transfer is without any consideration because you are in fact transferring the ownership of the property which actually belongs to the member-beneficiaries. However, 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 no consideration is involved in said transaction upon which the tax imposed could be based. Accordingly, the transfer of title of the said property in your favor, as member-beneficiary 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. 398-93 dated October 11, 1993) 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, and/or any of the requirements set forth in this letter are not complied with, then this ruling shall be considered null and void. CHTAIc Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service