BIR Ruling No. 019-13

January 11, 2013 BIR RULING NO. 019-13 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10; SRS-Amazing Grace Homeowners Association, Inc. Purok Greenville, Brgy. Calumpang, General Santos City Attention: Conrado D. Licudan President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation dated September 14, 2012, requesting tax exemption from the payment of Capital Gains Tax and other taxes in accordance with the Republic Act No. 7279, otherwise known as the "Urban Development and Housing Act of 1992." SIDTCa It appears that Sergio Solana, Jr. with Tax Identification Number 153-796-319-000 is the registered owner of a parcel of land identified as PLAN F-11-03-014847 covered by Transfer Certificate of Title (TCT) No. T-38321 issued by the Registry of Deeds for the General Santos City. The aforesaid property is situated at General Santos City with an area of twenty thousand square meters (20,000 sq.m.), more or less. SRS-Amazing Grace Homeowners Association, Inc. with Tax Identification Number 272-016-890-000, on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB). On May 4, 2012, the parties executed a Deed of Absolute Sale whereby the owner transfers and conveys eighteen thousand Nine hundred two and 07/100 square meters (18,902.07 sq.m.) of the subject property to SRS-Amazing Grace Homeowners Association, Inc. at an agreed price of Eight Million Three Hundred Thirty Five Thousand Eight Hundred Twelve Pesos and 87/100 (P8,335,812.87). Pursuant to a certification issued by Social Housing Finance Corporation, eighteen thousand nine hundred two and 07/100 square meters (18,902.07 sq.m.) of the property covered by TCT No. T-38321 is actually a CMP Project and shall be proportionately distributed to the association's one hundred nine (109) qualified member-beneficiaries. 1 For this purpose, SRS-Amazing Grace Homeowners Association, Inc. secured a housing loan under the Community Mortgage Program (CMP), a financing assistance program of the Social Housing Finance Corporation (SHFC) a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). In reply, please be informed that pursuant to Sections 20 and 32 of RA No. 7279, pertinent portions of which state that: "Sec. 20. Incentives for Private Sector Participating in Socialized Housing . To encourage greater private sector participation in socialized housing and further reduce the cost of housing units for the benefit of the underprivileged and homeless, the following incentives shall be extended to the private sector: (d) Exemption from the payment of the following: (2) Capital gains tax on raw lands used for the project; xxx xxx xxx. Sec. 32. Incentives . To encourage its wider implementation, participants in the CMP shall be granted with the following privileges or incentives: xxx xxx xxx (b) Properties sold under the CMP shall be exempted from the capital gains tax; and" the landowners who sold their properties for use in a socialized housing project are exempt from the payment of capital gains tax. Such being the case, the sale of the aforestated properties by the owner to SRS-Amazing Grace Homeowners Association, Inc., in so far as the eighteen thousand nine hundred two and 07/100 square meters (18,902.07 sq.m.) portion thereof of the property covered by TCT No. T-38321 is concerned is exempt from the capital gains tax. Upon issuance of this letter of exemption, and upon registration of the document of sale, a lien on the Certificate of Title of the land to be issued in the name of the Homeowners Association shall he caused to be annotated by the Register of Deeds having jurisdiction over the property, to the effect that the said property shall be used for socialized housing pursuant to R.A. No. 7279. (BIR Ruling No. 130-10 dated December 1, 2010) However, the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Sec. 20 of RA 7279. Accordingly, Sergio Solana, Jr. is liable to pay the documentary stamp tax on the documents conveying the afore-stated property imposed under Section 196 of the Tax Code of 1997, based on the consideration contracted to be paid for such realty or its fair market value determined in accordance with Section 6 (E) of the said Code, whichever is higher. (BIR Ruling No. 130-10 dated December 1, 2010) It is, however, understood that this ruling is never intended and shall not be construed as giving authority to the concerned Register of Deeds to effect transfer of the land title in the name of the buyer without the necessary certificate of authority to register issued by this Bureau. In this regard, this ruling shall be presented to the Revenue District Office (RDO) concerned in order for the latter to issue the Certificate Authorizing Registration (CAR). The CAR shall only be issued after the submission of the requirements provided under RMO15-2003. (BIR Ruling No. 040-10 dated August 27, 2010) Notwithstanding the foregoing, the Bureau of Internal Revenue shall conduct verification and post-audit that the actual occupants of the property transferred under the CMP are qualified beneficiaries and therefore, the seller is entitled to exemption from capital gains tax or income tax imposed under the Tax Code of 1997. 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, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX SRS-Amazing Grace Homeowners Association, Inc. Purok Greenville, Brgy. Calumpang, General Santos City Name of Beneficiary Blk. No. Lot Total Area No. (sq.m.) 1 Matilos, Corazon Duhig 1 1 132.88 2 Matilos, Alma Pulgo 1 2 132.88 3 Amierol, Nestoria Fausto 1 3 166.08 4 Wao, Amalia Fausto 1 4 166.08 5 Quia, Philip Antoling 1 5 166.08 6 Quia, Peter Don Antoling 1 6 166.08 7 Monjas, Nicolas Monderondo 1 7 166.08 8 Aparece, Domingo Ang 1 8 166.08 9 Congson, Ofelia Gepulla 1 9 166.08 10 Congson, Rodolfo Jr. Gepulla 1 10 166.08 11 Bisnar, Ven Jeferson Anciano 1 11 166.08 12 Bisnar, Janet Anciano 1 12 166.08 13 Vicio, Ricardo Comandante 1 13 166.08 14 Vicio, Rheeza Mae Conjurado 1 14 166.08 15 Pepito, Liezel Villafuerte 1 15 166.08 16 Pepito, Mark Mahilom 1 16 166.08 17 Benitez, Sylvia O. 1 17 166.08 18 Estoque, Pablito Muis 1 18 189.35 19 Maningger, Lency Manonda 2 1 237.51 20 Maningger, Olius Mananda 2 2 166.08 21 Regalado, Vencie Fegarido 2 3 166.08 22 Mercado, Antonio Pentoh 2 4 166.08 23 Padilla, Ronaldo Ladisca 2 6 166.08 24 Baquillos, Lorelle P. 2 7 245.82 25 Asuncion, Jackson Andrada 2 8 166.08 26 Quiamco, Jimmy Garay 2 9 222.56 27 Calimbo, Novelita Yong 2 10 166.08 28 Rizalde, Ricky Solomon 2 11 197.65 29 Masoara, Alfrens Hamil 2 12 166.08 30 Remulta, Roger Mosquera 2 13 172.74 31 Jalover, Elvie Figuracion 2 14 166.08 32 Jalover, Edgar Figuracion 2 15 149.49 33 Redondo, Allan Matilos 2 18 166.08 34 Funtanar, Paul John M. 2 19 166.08 35 Mangkit, Isabelo Garcia 3 1 195.99 36 Sayon, Jer Villaceran 3 2 166.08 37 Pepito, Narcisa Caparos 3 3 166.08 38 Betinol, Amelia 3 4 166.08 39 Naquilla, Pedro Layao 3 5 199.31 40 Licudan, Conrado Delena 3 6 166.08 41 Licudan, Shane Jan Bautista 3 7 166.08 42 Licudan, Jimuel Bautista 3 8 166.08 43 Licudan, Darrel Bautista 3 9 166.08 44 Licudan, Felomino Delena 3 10 166.08 45 Ledesma, Rolan Mabilog 3 11 166.08 46 Narredo, Evelyn Turtogo 3 12 166.08 47 Belda, Julita Lebonpasil 3 13 166.08 48 Gubalane, Marlon Gulayan 4 1 189.35 49 Avila, Bernie P. 4 2 242.49 50 Lambino, Ricardo Magsalay 4 3 234.19 51 Genita, Judith Tolero 4 4 225.89 52 Delos Santos, Rico Lava 4 5 217.58 53 Dado, Ruth Pilar 4 6 209.28 54 Catamco, Rafael Moreno 4 7 200.96 55 Lagaran, Anna Mae Ayuban 4 8 192.66 56 Hibaler, Johnny Leuterio 4 9 184.35 57 Doronio, Jean Dolar 4 10 176.05 58 Gerodias, Arlene D. 4 11 136.19 59 Tangian, Amor Ruden 5 1 202.62 60 Custodio, Jobert Ejurcadas 5 2 197.64 61 Mallare, Leonardo Larano 5 3 162.76 62 Llupar, Daryl Lontayao 5 4 166.08 63 Agtas, Noel Alada 5 5 167.75 64 Llupar, Eric Villamor 5 6 166.08 65 Dejiga, Jessie Casio 5 7 186.01 66 Casicas, Charlyngel Labanancia 5 8 166.08 67 Galay, Ariel Silawan 5 9 181.03 68 Casicas, Marlyn Lavanancia 5 10 174.39 69 Bartulay, Aileen Pepito 5 11 184.35 70 Sauro, Sharon Casicas 5 12 166.08 71 Bartolay, Eliezar Lagaran 5 13 187.68 72 Sanico, Lorelyn Casicas 5 14 166.08 73 Gelle, Loryfe Galay 5 15 191.00 74 Moreno, Bernardito R. 5 16 176.05 75 Arguilles, Carol Liloc 5 17 194.32 76 Salcedo, Edna Cordova 5 18 166.08 77 Mabilog, Agustin Matilos 5 19 197.64 78 Lim, Maribeth Salinas 5 20 162.76 79 Pegaro, Doreen Ann Politud 6 1 169.41 80 Pegaro, Ammielyn Politud 6 2 174.39 81 Avilla, Leonides L. 6 3 167.75 82 Capundan, Haydie Labadia 6 4 177.71 83 Castillo, Elizer Gocela 6 5 146.15 84 Daza, Ma. Illyn Dionio 6 6 134.53 85 Dela Torre, Pretzelyn Mendoza 6 7 127.89 86 Gallo, Robert Bernas 6 8 136.19 87 Fundar, Lilia Dionisio 6 9 156.12 88 Fundar, Gerry Dionisio 6 10 159.44 89 Brasileno, Jerald Claudio 6 11 182.69 90 Canoy, Genelyn Brasileno 6 12 157.78 91 Balanay, Melannie 6 13 144.49 92 Minerales, Janice Balanay 6 14 122.90 93 Capoy, Alexis Gonzaga 7 1 129.55 94 Capoy, Ariel Gonzaga 7 2 166.08 95 Trayag, Josephine 7 3 166.08 96 Jimenea, Rosie Labadia 7 4 166.08 97 Sarco, Diego C. 7 5 166.08 98 Casinao, Joely L. 7 6 166.08 99 Espera, Alex 7 7 166.08 100 Nadela, Epimaco Alingalan 7 8 166.08 101 Pineda, Marites P. 7 9 166.08 102 Pineda, Melvin P. 7 10 232.53 103 Padilla, Porferio Navarro 8 1 209.28 104 Sagabain, Nilda Valdez 8 2 169.42 105 Sarol, Mary Grace Pacis 8 3 166.08 106 Hernardez, Antonio Caparoso Jr. 8 4 166.08 107 Ceniza, Gemma Montalban 8 5 166.08 108 Castillo, Edlyn Gocela 8 6 166.08 109 Catubig, Amie Jameo 8 7 184.36 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.