Service Support Brigade Resident Association

August 3, 2009 BIR RULING [SH-(071) 492-09] RA #7279; SH(047) 281-2008 dtd. 11/12/08 Service Support Brigade Resident Association Dreamland, Hagonoy Taguig City Attention: Reynaldo D. Garcia President Gentlemen : This refers to your letter dated July 28, 2008, requesting exemption from the payment of capital gains tax relative to the transfer/individualization of titles of a parcel of land from the Service Support Brigade Resident Association , in favor of its qualified member-beneficiaries pursuant to Section 32 (b) of Republic Act (RA) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992." Documents submitted disclosed that Service Support Brigade Resident Association, (SSB, for short), is a non-stock, non-profit community association duly registered with the Securities and Exchange Commission (SEC) on October 14, 1993 bearing SEC Reg. No. ANO93-004418; that it is an organization of informal occupants affected by the development of Fort Bonifacio into a commercial area; that as a result of the said development, it was awarded a lot located at Taguig City, covered by TCT No. 887 of the Registry of Deeds for Taguig City, to be known as "Lupang Katuparan Housing Project" consisting of 7,431 square meters as their relocation site pursuant to the revised Memorandum of Agreement dated March 30, 1999 between the Bases Conversion and Development Authority (BCDA) and the Association; and that it is now in the process of subdividing the subject property that will eventually be distributed to its member-beneficiaries. In reply, please be informed that the transfer in favor of your 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 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 since it is merely a formality to finally effect the transfer of the said property 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 property to its member-beneficiaries who actually own the same. DcIHSa 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 lots in this case does not really exceed P180,000.00 or P225,000.00, as the case may be, for each qualified beneficiaries, (now P400,000.00 per latest circular of HUDCC). 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 a property the ownership of which belongs to the transferees (member-beneficiaries) themselves. Furthermore, the transfer of title of the said property in favor of your member-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, as amended. 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, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service