Cruz-Ville Homeowners Association, Inc.

February 18, 2016 BIR RULING NO. 065-16 RA No. 7279; BIR Ruling No. 053-15 Cruz-Ville Homeowners Association, Inc. Ibayo, Brgy. Calzada, Tipas, Taguig City Attention: Danny V. Bueno President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of the Social Housing Finance Corporation (SHFC) dated September 4, 2015, endorsing the sale transaction between Teodoro S. Cruz, et al., and Cruz-Ville Homeowners Association, Inc. 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". Documents submitted disclose that Teodoro S. Cruz, (married to Primitiva E. Cruz), Evelyn C. Ramos, (married to Arturo R. Ramos) and Danilo S. Cruz, (married to Marilou T. Cruz) (hereinafter referred to as Landowner) is the registered owner of a parcel of land, identified as 1855, Mcadm. 590-D, Taguig Cadastral Mapping, Plan AP-04-003218, LR Case No. 260, LRA Record No. N-73339 covered by Transfer Certificate of Title (TCT) No. 164-2014001610 issued by the Registry of Deeds for Taguig City. The aforesaid property is situated at Brgy. Calzada, Tipas, Taguig City with an area of Four Thousand Fifty Eight square meters (4,058 sq.m.), more or less. Cruz-Ville Homeowners Association, Inc. (TIN 412-751-768-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On April 13, 2015, the parties executed a Deed of Absolute Sale whereby the Landowner transferred and conveyed the subject property to Cruz-Ville Homeowners Association, Inc. at an agreed price of Twelve Million One Hundred Seventy Four Thousand Pesos (P12,174,000.00). Pursuant to the certification issued by SHFC, the subject property covered by TCT No. 164-2014001610 actually comprises a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Cruz-Ville Homeowners Association, Inc. 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, Cruz-Ville Homeowners Association, Inc. has completely submitted on October 23, 2015 the following documents: HEITAD 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC that the subject property qualifies and is actually a CMP project; 3) SHFC Letter of Guaranty No. 1083; 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 TCT and Latest Tax Declaration 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 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 by Teodoro S. Cruz, Evelyn C. Ramos and Danilo S. Cruz to Cruz-Ville Homeowners Association, Inc. of the subject property covered by TCT No. 164-2014001610 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 Homeowner's 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. 053-15 dated February 27, 2015) 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 realty or its fair market value determined in accordance with Section 6 (E) of the said Code, whichever is higher. 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 RMO 15-2003. (BIR Ruling No. 053-15 dated February 27, 2015) 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 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. ATICcS Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX Cruz-Ville Homeowners Association, Inc. Ibayo, Brgy. Calzada, Tipas, Taguig City Name of Beneficiary Blk. Lot Total Area No. No (sq.m.) 1 Diwata, Elpedio Cabug-os 1 1 40.45 2 Ramos, Jenny Rebancos 1 2 36.12 3 Legson, Victoria Matias 1 3 36.12 4 Villaos, Nolito Lamac 1 4 36.12 5 Ortiz, Marilou Orpaner 1 5 52.01 6 Ferrer, Salieta Fabregas 1 6 43.34 7 Rivadulla, Ana Marie Herrera 1 7 43.34 8 Rivadulla, Jayson Herrera 1 8 43.34 9 Dacillo, Carina Porca 1 9 43.34 10 Bermudez, Arnilio Toguerro 1 10 43.34 11 Ditchusa, Ruth Villaruz 2 2 43.34 12 Ditchusa, Elmarie Villaruz 2 3 43.34 13 Matienzo, Darrelle Sardinia 3 1 36.12 14 Cabarles, Ricky Germina 3 2 37.56 15 Boholano, Ricardo Cinco 3 3 43.34 16 Villena, Joel Trecho 3 4 43.34 17 Floro, Arnold Gulfan 3 5 43.34 18 Villena Jose Alex Trecho 3 6 43.34 19 Floro, Amira Amata 3 7 43.34 20 Batolio, Joan Trecho 3 8 43.34 21 Buerano, Grace Barraza 3 9 43.34 22 Magramo, Elnora Vegafria 3 10 43.34 23 Torio, Helen Bermundo 3 11 53.45 24 Alberto, Karen Villaruz 4 1 33.23 25 Alberto, Kenneth Villaruz 4 2 43.34 26 Tanael, Shirley Guerrero 4 3 43.34 27 Alcantara, Eduardo Tebelen 4 4 43.34 28 Natividad, Luzviminda Cortez 4 5 43.34 29 Cortez, Raul San Jose 4 6 43.34 30 Dapitan, Cresencia Senoc 4 7 43.34 31 Dadivas, Genie Delaon 4 8 43.34 32 Dadivas, Carmelita Oro 4 9 44.78 33 Morasa, Danilo Dela Cruz 4 11 41.89 34 Morasa, Dexter Dela Cruz 4 12 46.23 35 Baluya, Elvie Suyom 5 1 44.78 36 Vergara, Marilyn Ciocson 5 2 46.23 37 Banares, Christine Diana Torrento 5 3 47.67 38 Rose, Maria Lesilda Urbe 5 4 43.34 39 Campo, Dennis Caballero 5 5 44.78 40 Inopia, Melvin Amador 5 6 37.56 41 Aviso, Michelle Rada 5 7 39.01 42 De Torres, Annalisa Ramos 5 8 43.34 43 Nalunat, Whilma Gallera 5 9 43.34 44 Baydo, Noriel Villaruz 5 10 43.34 45 Baydo, Niel Villaruz 5 11 43.34 46 Baydo, Noregen Villaruz 5 12 43.34 47 Baydo, Nick Villaruz 5 13 43.34 48 Zolina, Jerry Licayan 5 14 43.34 49 Orio, Villa Apolinar 5 15 43.34 50 Boneo, Ronelo, Jr. Soriano 5 16 43.34 51 Bayhon, Loreto Villaruz 5 17 43.34 52 Bayhon, Karen Rechelle Villaruz 5 18 37.56 53 Dolor, Efren Caldeo 6 1 43.34 54 Busalla, Crisjay Corpuz 6 2 43.34 55 Soria, Alberto Nazareth 6 3 43.34 56 Abellera, Rosauro Lorenzo 6 4 43.34 57 Germina, Myrna Campo 6 5 43.34 58 Dadivas, Irene Olaco 6 6 43.34 59 Balanay, Jenny Lopez 6 7 43.34 60 Vecino, Roumelle Abe Abe 6 8 43.34 61 Escultura, Jerry Roquiro 6 9 43.34 62 Espino, Myla Asuncion 6 10 43.34 63 Takada, Hiroyoshi Aviso 6 11 43.34 64 Yu, Aisha Dolores Cayton 6 12 43.34 65 Aviso, Marilyn Germina 6 13 43.34 66 Cabarles, Richard Germina 6 14 43.34 67 Aviso, Alberto Germina 6 15 43.34 68 Cabarles, Arrel Germina 6 16 43.34 69 Cabarles, Larry Germina 6 17 43.34 70 Montecalvo, Irene Cortes 6 18 43.34 71 Erero, Bernaditt Dela Isla 6 19 43.34 72 Castor, Jenard Olano 6 20 43.34 73 Dublas, Aisalyn Manlapas 6 21 43.34 74 Derano, Juliet Recreo 6 22 43.34 75 Germina, Nerie Rapsing 6 23 43.34 76 Erero, Renato Dela Isla 6 24 43.34 77 Germina, Leonora Rapsing 6 25 54.90 78 Dela Cruz, Anita Culala 7 1 43.34 79 Espocia, Allen Mariz Beringa 7 2 43.34 80 Tayoto, Carmelo Tatad 7 3 43.34 81 Tomelden, Lourdes Azicate 7 4 43.34 82 Villa, Abelardo Rellora 7 5 43.34 83 Cruz, Marvin Abe Abe 7 6 43.34 84 Panteria, Cristynelli Tabilog 7 7 43.34 85 Noblefranca, Era Russiana 7 8 43.34 86 Noblefranca, Bebylyn Gabonales 7 9 43.34 87 Lascoa, Roselyn Basaez 7 10 43.34 88 Agnaya, Maria Accad 7 11 43.34 89 Dacquel, Angelita Condaya 7 12 43.34 90 Bueno, Danny Villamor 7 13 43.34 91 Bueno, Carl Dominique Parada 7 14 43.34 92 Delfin, Teresita Bayhon 7 15 43.34 93 Legson, Andres Jr. Andes 7 16 43.34 94 Miravalles, Rhensy Legson 7 17 47.67 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.