BIR Ruling No. 076-15

March 30, 2015 BIR RULING NO. 076-15 RA No. 7279; BIR Ruling No. 294-14; BIR Ruling No. 283-14 Calle Onse GTDL Homeowners' Association, Inc. Calle Onse-Riverside, Brgy. Gen. T. de Leon, Valenzuela City 1442 Attention: Ms. Virginia G. Loveras President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated September 29, 2014, endorsing the sale transaction between Agripina R. Delupio, Adelaida D. De Gula , and Calle Onse GTDL 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 Agripina R. Delupio (TIN 165-513-374-000), and Adelaida D. De Gula (TIN 227-497-896-000) are the registered owners of two (2) parcels of land covered by Transfer Certificates of Title (TCT), to wit: TCT No. Area (sq.m.) Tax Declaration No. 013-2014000482 787.60 C-018-33599 013-2014000483 262.50 C-018-33600 issued by the Registry of Deeds for Valenzuela City. The aforesaid property is situated at Brgy. Gen. T. de Leon, Valenzuela City. Calle Onse GTDL Homeowners' Association, Inc. (TIN 258-726-633-000), on the other hand, is a homeowners' organization registered with the Housing and Land Use Regulatory Board (HLURB) under Certificate of Registration No. 14216. On September 30, 2013, the parties executed a Deed of Absolute Sale whereby the owners transferred and conveyed Eight Hundred Eighty Square meters & Ten Decimeters (880.10 sq.m.) portion of the subject properties to Calle Onse GTDL Homeowners' Association, Inc. at Two Thousand Two Hundred Pesos (Php2,200.00) per square meter or at a total agreed price of One Million Nine Hundred Thirty Six Thousand Two Hundred Twenty Pesos (Php1,936,220.00), Philippine Currency. Pursuant to a Certification issued by SHFC, Eight Hundred Eighty Square meters & Ten decimeters (880.10 sq.m.) out of the One Thousand Fifty square meters & Ten Decimeters (1,050.10 sq.m.) covered by TCT Nos. 013-2014000482 (formerly V-72665) and 013-2014000483 (formerly V-72666) actually comprise a CMP Project and shall be proportionately distributed to the association's Twenty Eight (28) qualified member-beneficiaries (Annex A). For this purpose, Calle Onse GTDL Homeowners' Association, Inc. secured a housing loan under the CMP, a financing assistance program of the Social Housing Finance Corporation a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). In support of its request, Calle Onse GTDL Homeowners' Association, Inc. has completely submitted the following documents: 1) Letter application for tax exemption; HCacTI 2) Certification of the President of the SHFC that the subject property qualifies and is actually a CMP project; 3) Certified true copy of the Deed of Absolute Sale to the Community Association; 4) Certified true copy of the Articles of Incorporation of the Community Association; 5) Certified true copy of the Masterlist of Qualified Beneficiaries duly certified by the SHFC; 6) Certified true copies of the TCT and Latest Tax Declaration of the Property Sold to the Community Association; 7) Certified true copy of the Location Plan of the Lot Sold to the Community Association; 8) TIN ID/BIR Certificate of Registration of the seller and the Homeowner Association; 9) BIR Form 2000-OT (Documentary Stamp Tax Return); 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 the landowners to Calle Onse GTDL Homeowners' Association, Inc. , in so far as the Eight Hundred Eighty Square meters & Ten Decimeters (880.10 sq.m.) portion of the properties covered by TCT Nos. 013-2014000482 (formerly V-72665) and 013-2014000483 (formerly V-72666) 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 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. 294-14 dated July 23, 2014) However, the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Sec. 20 of RA 7279. Accordingly, the landowners are 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. 283-14 dated July 7, 2014) 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 Nos. 294-14 dated July 23, 2014 and 283-14 dated July 7, 2014) 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. DIETcH Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX A Calle Onse GTDL Homeowners' Association, Inc. Calle Onse-Riverside, Brgy. Gen. T. De Leon, Valenzuela City Masterlist of Beneficiaries Name of Beneficiary Blk. Lot Total Lot No. No. Area 1. Duallo, Reymond A. 1 1 29.52 2. Lumbao, Augusto M. 1 2 29.52 3. Monticalvo, Janice A. 1 3 29.52 4. Bagan, Demetria S. 1 4 29.52 5. Ruivivar, Rey D. 1 5 32.05 6. Lumbao, Richard A. 1 6 28.12 7. Monticalvo, Allan A. 1 7 30.37 8. Tan, Antonia M. 1 8 28.12 9. Loveras, Rafael P. 1 9 29.24 10. Gonjoran, Loida B. 1 10 28.12 11. Sakamoto, Maika Q. 1 11 28.12 12. Quizon, Ricky A. 1 12 28.12 13. Loveras, Virginia G. 2 1 30.37 14. Flaviano, Arnel L. 2 2 29.24 15. Padilla, Felie F. 2 3 29.24 16. Go, Claribel D. 2 4 58.49 17. Monticalvo, Josefina M. 2 5 29.24 18. Tenasa, Eddie R. 3 1 29.24 19. Sacopon, Annalyn M. 3 2 58.49 20. Amper, Lucino 3 3 29.24 21. Sacopon, Bony M. 3 4 29.24 22. Narag, Mocino 3 5 29.24 23. Sacopon, Louie M. 3 6 30.37 24. Taborda, Brykitz P. 3 7 29.24 25. Alcazar, Mateo M. 4 1 30.37 26. Dela Cruz, Miguel A. 4 2 29.24 27. Dela Cruz, Maria Leonora P. 4 3 29.24 28. Derla, Rosalin P. 4 4 29.24 Total: 880.10 =====