Maginhawa Pag-Ibig Town II Bagong Lipunan Community Association, Inc.

November 24, 2009 BIR RULING [SH-(118) 733-09] RA 7279; S-20-035-2008 Maginhawa Pag-Ibig Town II Bagong Lipunan Community Association, Inc. Barrio Mayamot, Antipolo, Rizal Attention: Chita B. Balao Secretary Gentlemen : This refers to your letter dated September 14, 2009 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 Maginhawa Pag-Ibig Town II Bagong Lipunan Community Association, Inc. in favor of Victoria O. Jimenez as one of the 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 show that Maginhawa Pag-Ibig Town II Bagong Lipunan Community Association, Inc. is the registered owner of a parcel of land located at Maginhawa Pag-ibig, Maries Village II, Mayamot, Antipolo City and covered by Transfer Certificates of Title (TCT) No. R-46152 issued by the Register of Deeds for Antipolo City; that it is a non-stock non-profit organization duly registered with the Home Financing Corporation on April 30, 1981 with Registration No. 04-032; that the aforesaid lot was acquired through a loan under the Community Mortgage Program (CMP) of the National Home Mortgage Finance Corporation (NHMFC);and that the Maginhawa Pag-Ibig Town II Bagong Lipunan Community Association, Inc. is now in the process of subdividing the purchased property that will eventually be distributed to one of its member-beneficiaries, Victoria O. Jimenez, who is now fully paid on her individual loan as per partial cancellation of real estate mortgage with the NHMFC. 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. HAEDCT 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 issuance of HUDCC Resolution No. 1-2008, dated December 11, 2008 wherein it adjusted the socialized housing package for each qualified beneficiaries). 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. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service