United Libis Homeowners Association, Inc. Phase II

January 21, 2016 BIR RULING NO. 042-16 Sec. 32, RA No. 7279; BIR Ruling No. 109-13; BIR Ruling No. 304-13 United Libis Homeowners Association, Inc. Phase II D. Bonifacio St., Canumay East, Valenzuela City Attention: Eduardo Q. Celorico, Jr. President Gentlemen : This refers to the letter of Eduardo T. Manicio, Executive Vice President of the Social Housing Finance Corporation (SHFC) dated May 29, 2015, endorsing the sale transaction between Philippine Veterans Bank and United Libis Homeowners Association, Inc. Phase II for exemption from the payment of Capital Gains Tax and other taxes in accordance with the Republic Act (RA) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". AIDSTE Documents submitted disclose that Philippine Veterans Bank with Tax Identification Number 000-836-616-000 (hereinafter referred to as Landowner) is the registered owner of a parcel of land, identified as Lot No. 1 of the cons. Subd. plan (LRA) Pcs-32771, approved as a non-subd. project, being a portion of the cons. of Lots 550-C-1, (LRC) Psd-41264 & Lot 550-D-2-A (LRC) Psd-166514, L.R.A. Record No. 6941 covered by Transfer Certificate of Title (TCT) No. V-59872 issued by the Registry of Deeds for the Metro Manila District II. The aforesaid property is situated at D. Bonifacio St., Canumay East, Valenzuela City with an area of Five Thousand Eight Hundred Sixty Two square meters (5,862 sq.m.), more or less. United Libis Homeowners Association, Inc. Phase II (TIN 416-109-826-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On March 27, 2015, the parties executed a Deed of Absolute Sale whereby the Landowner transferred and conveyed the subject properties to United Libis Homeowners Association, Inc. Phase II at an agreed price of Nine Million Three Hundred Forty One Thousand Five Hundred Thirty Four and 93/100 Pesos (P9,341,534.93). Pursuant to the certification issued by SHFC, 5,130.30 sq.m. out of 5,862 sq.m. covered by TCT No. V-59872 actually comprise a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, United Libis Homeowners Association, Inc. Phase II secured a housing loan under the CMP, a financing assistance program of the SHFC a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). Documentary Stamp Tax (DST) due on the sale has been paid. In support of its request, United Libis Homeowners Association, Inc. Phase II has completely submitted on September 11, 2015 the following documents: 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC that 5,130.30 sq.m. portion of the subject properties qualify and is actually a CMP project; 3) SHFC Letter-Guaranty No. 1025; 4) Certified true copy of the Deed of Absolute Sale to the Community Association; 5) Certified true copy of the Articles of Incorporation of the Community Association; 6) Certified true copy of the Masterlist of Qualified Beneficiaries duly certified by the SHFC; 7) Certified true copies of the TCTs and Latest Tax Declarations of the Property Sold to the Community Association; 8) Certified true copy of the Location Plan of the Lot Sold to the Community Association; 9) TIN ID/BIR Certificate of Registration of the seller and the Homeowner Association; and 10) Other pertinent documents. In reply, please be informed that pursuant to Section 32 of RA No. 7279, pertinent portions of which state that: "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 landowner who sold its properties under CMP for use in a socialized housing project are exempt from the payment of capital gains tax. AaCTcI Such being the case, the sale by the landowner, Philippine Veterans Bank to United Libis Homeowners Association, Inc. Phase II of the 5,130.30 sq.m. out of 5,862 sq.m. covered by TCT No. V-59872 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 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 RA No. 7279. (BIR Ruling No. 109-13 dated March 21, 2013) However, the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Sec. 32 of RA 7279. Accordingly, the landowners are liable to pay the documentary stamp tax on the document 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 realties or their fair market values determined in accordance with Section 6 (E) of the said Code, whichever is higher. (BIR Ruling No. 109-13 dated March 21, 2013) 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 titles 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 RMO 15-2003. (BIR Ruling No. 109-13 dated March 21, 2013) Moreover, under Section 109 (1) (P) of the Tax Code of 1997, as amended by R.A. 9337, the sale of real properties utilized for low-cost and socialized housing as defined by R.A. No. 7279 shall be exempt from value-added tax (VAT), thus, the sale of the 5,130.30 sq.m. out of 5,862 sq.m. covered by TCT No. V-59872 by the landowner to United Libis Homeowners Association, Inc. Phase II is exempt from the imposition of VAT. (BIR Ruling No. 304-2013 dated August 6, 2013) 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 sellers are entitled to exemption from capital gains tax or income tax imposed under Sec. 24 (D) (1) 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. EcTCAD Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX United Libis Homeowners Association, Inc. Phase II D. Bonifacio St., Canumay East, Valenzuela City Name of Beneficiary Blk. Lot Total Area No. No. (sq.m.) 1 Reubal, Ma. Theresa Libores 1 1 31.95 2 Pasaylo, Edison Bucado 1 2 30.47 3 Lajot, Marlo Jasuelas 1 3 48.53 4 Sariba, Maricel Azur 1 4 56.79 5 Marao, Johnel Red 1 5 23.57 6 Resurreccion, Roy Bacani 1 6 30.47 7 Arevalo, Marivic Mercado 1 7 34.93 8 Uri, Roderick Makasadya 1 8 40.17 9 Terana, Susan Labrador 1 9 40.17 10 Pitalbo, Jesus Madulid 1 10 33.64 11 Honrales, Rowena Erbiola 1 11 22.52 12 Iglesia, Irenea Cao 1 12 27.70 13 Rosales, Roberto Llabres 1 13 18.01 14 Invina, Marvin Napay 2 1 40.17 15 Sentelices, Jane Molina 2 2 41.55 16 Pluma, Jinky Dorol 2 3 59.56 17 Nalla, Esterio Salise 2 4 19.54 18 Tesio, Elly Clavite 2 5 36.41 19 Butcon, Sheniryl Curan 2 6 41.55 20 Yuson, Anicor Ecot 2 7 36.01 21 Lubiano, Gemma Viovicente 3 1 32.67 22 Duallo, Charisma Teoxon 3 2 32.58 23 Rimonte, Alvin Dubas 3 3 32.56 24 Guro, Elvira Egcalinos 3 4 32.55 25 Tumbiga, Floro Jr. Bronsal 4 1 19.63 26 Butcon, Romano Almeroda 4 2 56.86 27 Tropa, Analyn Gomez 4 3 29.23 28 Manantan, Teddy Gomez 4 4 48.48 29 Aora, John Elmer Asido 4 5 22.16 30 Moreno, Milry Jarminan 4 6 29.27 31 Aora, Ma. Cristina Asido 4 7 24.93 32 Rafael, Joseph Eclarinal 4 8 62.33 33 Mario, Patricia Sagayap 4 9 34.63 34 Atup, Arjay Mendoza 4 10 34.63 35 Depaloma, Bernard Secula 4 11 18.01 36 Orogo, Dennis Olayta 4 12 40.74 37 Caracas, Samson Reomales 4 13 18.01 38 Herrera, Cresito Faala 4 14 16.91 39 Adorico, Mary Grace Luayon 5 1 27.70 40 Cahaponon, Romy Supilanas 5 2 25.36 41 Adorico, Reynaldo Luayon 5 3 47.09 42 Obia, Marlon Arcilla 5 4 37.40 43 Llanto, Rolando Socoren 5 5 18.53 44 Alarcon, John Jueves 5 6 65.10 45 Saldo, Oliver David 5 7 59.56 46 Pintor, Mario Villadal 5 8 15.85 47 Beltran, Rodolfo Ruz 5 9 29.09 48 Binaban, Sancho Roxas 5 10 28.13 49 Binaban, Jason Hernandez 5 11 23.88 50 Lapiceros, Erwin Guiyab 5 12 39.23 51 Lapiceros, Michelle Calumba 5 13 36.68 52 Felicierta, Reynante Vernaula 5 14 22.69 53 Felicierta, O. Capili 5 15 22.38 54 Flores, Edgar Maraya 6 1 22.19 55 Rubio, Mary Jean Lim 6 2 24.05 56 Isagan, Rizalyn Invina 6 3 29.09 57 Lancero, Alexander Belarmino 6 4 58.17 58 Gumapac, Artemio Solupan 6 5 38.78 59 Gadingan, Mildred Cioco 6 6 38.23 60 Pedrajeta, Angelo Placencia 6 7 31.14 61 Igonia, Maricel Cataylo 6 8 25.98 62 Lactawan, Joselito Pagatpatan 6 9 37.61 63 Aol, Rudina Quilatan 6 10 25.78 64 Monido, Isagani Sasana 6 11 35.68 65 Guianan, Deonito Pitalbo 6 12 39.23 66 Pedrajeta, Bernardino Pria 6 13 25.98 67 Tupas, Mario Angoy 6 14 48.99 68 Reportoso, Artemio Liabres 6 15 23.91 69 Repana, Virginia Quilatan 6 16 37.87 70 De Felix, Erlinda Sarcia 6 17 36.54 71 De Felix, Christopher Sarcia 6 18 46.79 72 Villojan, Edison Monotilla 6 19 24.68 73 Pitalbo, Zaldy Jr. Barrida 7 1 65.85 74 Mercado, Melody Ann Olayta 7 2 53.24 75 Sanchez, Ronald Cordova 7 5 51.35 76 Sanchez, Leonardo Jr. Cordova 7 6 51.25 77 De Juan, Sherlito Ebacuado 7 7 33.77 78 Cardoza, Mary Joy Pegarido 7 8 34.50 79 Pacultad, Rey Dela Cruz 7 9 33.02 80 Gallego, Adrian Pongase 7 10 37.59 81 Gallego, Jose Adriano Quimco 7 11 37.99 82 Ramoya, Myrna Andes 7 12 70.54 83 Napuli, Markcris Panerio 7 13 37.69 84 Napuli, Marilou Panerio 7 14 37.09 85 Celorico, Edelyn Quinto 7 15 35.28 86 Policarpio, Danilo Jr. Bautista 8 1 29.84 87 Dela Cruz, Jommel Del Castelio 8 2 27.99 88 Martisano, Teodora Claveria 8 3 57.98 89 Celorico, Eduardo Jr. Quinto 8 4 33.69 90 Celorico, Juanita Quinto 8 5 33.15 91 Lerin, Arsenio Tarle 8 6 47.41 92 Pacultad, Beverly Alacyang 8 7 38.20 93 Dacutanan, Joey Reyes 8 8 34.63 94 Morallos, Rachell Manlapaz 8 9 51.00 95 Baares, Rutchel Cardoza 8 10 32.85 96 Mabitado, Marvin Osabel 8 11 34.02 97 Millena, Salvador De Leon 8 12 34.88 98 Leong, Rodel Hail 9 1 23.60 99 Pabia, Ariel Lampera 9 2 30.47 100 Rebello, Joffrey Retamar 9 3 48.77 101 Batallones, Joel Alejandro 9 4 48.08 102 Fuentes, Christene Lestino 9 5 35.38 103 Diego, Guido Castillo 9 6 19.17 104 Ejorcadas, Ricky Toliroso 9 7 27.88 105 Rimonte, Marvin Dubas 9 8 27.45 106 Dubas, Ramon Ramos 9 9 39.92 107 Fuentes, Mary Ann Grafil 9 10 28.49 108 Villaverde, Orlando Sr. Repeque 10 1 62.65 109 Villaverde, Orlando Jr. Agno 10 2 39.67 110 Villaverde, Manilyn Agno 10 3 36.76 111 Noto, Edifer Dela Vega 10 4 32.38 112 Canales, Jonar Pancito 10 5 31.76 113 Solana, Mary Ann Magsubar 10 6 34.70 114 Maceda, Jonel Madera 10 7 63.37 115 Sarol, Jejun Malong 10 8 31.79 116 Sarol, Arnaldo Pintoy 10 9 38.30 117 Rebello, Josephine Retamar 10 10 33.37 118 Batallones, Rowena Antonio 10 11 29.36 119 Salabao, Eduardo Apoyan 10 12 46.66 120 Cabansag, Cristina Brillante 11 1 36.90 121 Lumagdong, Leonora Armenio 11 2 44.93 122 Espina, Rosalino Cabug Os 11 3 29.61 123 Hundangan, Mary Jane Espina 11 4 37.77 124 Sernechez, Acman Belante 11 5 42.19 125 Olayta, Fredderick O. 12 1 35.39 126 Ilasin, Leonardo Bendiola 12 2 31.62 127 Dela Pea, Renelyn Joy Cardoza 12 3 32.19 128 Martin, Renato San Diego 12 4 37.94 129 Aguinaldo, Alejandro Legaspi 12 5 53.17 130 Camba, Editha Beltran 12 6 71.36 131 Camba, Edelvon Beltran 12 7 46.61 132 Claveria, Luceno Zamora 12 8 44.14 133 Enano, Oscar Dazer 12 9 58.01 134 Rico, Celeste Ojano 12 10 67.87 135 Ojano, Myravi Nocillado 12 11 27.58 136 Pajaganas, Rey Tabar 12 12 24.20 137 Salse, Raul Fabre 12 13 22.48 138 Casibang, Rodante Lingan 12 14 19.68 139 Tamayo, Daisy Gabreza 12 15 22.04 140 Cervantes, Percival Brazil 12 16 50.58 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.