An Ordinance Amending Articles C and F, of Ordinance No. 15-438, Otherwise Known as the Revenue Code of Isabela City, Establishing New Economic Enterprises and Prescribing Its Fees and Charges, Thereon

March 9, 1999 BIR RULING [DA-143-99] Samahang Magkakapitbahay Area VI Sitio Aguardiente Homeowners Association, Inc. Sitio Aguardiente, Brgy. Sta. Monica Novaliches, Quezon City Attention: Mr . Pedro C . Ben, Jr . Committee Chairman (Pantoja Property) Gentlemen : This is refers to your letter dated November 27, 1998 requesting for a ruling on your exemption from the payment of capital gains tax relative to the transfer of twelve (12) parcels of land sole under the Community Mortgage Program (CMP) of the National Home Mortgage Financing Corporation (NHMFC) in favor of the individual members of your association. It appears that Samahang Magkakapit Bahay Area VI Sitio Aguardiente Homeowners Association, Inc . is duly registered with the Home Insurance and Guaranty Corporation (HIGC); that serving as a facilitator, and through the CMP Program of the government, it acquired by virtue of a loan from the NHMFC, twelve (12) parcels of land covered by Transfer Certificate of Title Nos. N-187411, N-187412, N-187413, N-187414, N-187415, N-187416, N-187417, N-187418, N-187419, N-187420, N-187421 and N-187427 all situated at Brgy. Sta. Monica, Novaliches, Quezon City; and that it has subdivided the said properties into homelots and distributed the homelots to its member-beneficiaries. In reply, please be informed that the transfer in favor of your individual member-beneficiaries of the said subdivided properties are not subject to either the capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997 or the creditable withholding tax imposed under Revenue Regulations No. 2-98, implementing Section 57(B) of the same Code, considering that the said transfer of your properties is without any consideration since it is merely a formality to finally effect the transfer of the said properties to your member-beneficiaries who actually bought the same from the former owner through your Association. In other words, you are in fact transferring the ownership of the properties to the member-beneficiaries which actually owned the same. Furthermore, the said transfer is not subject to the donor's tax imposed under Section 93 of the Tax Code, since there is no donative intent on your part to donate the said properties to the member-beneficiaries, considering that you could not donate properties the ownership of which belong to the donees (member-beneficiaries) themselves. 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 could be based. Accordingly, the transfer of titles of the said properties in favor of your member-beneficiaries are 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. CMP-171-98 dated September 16, 1998) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)