BIR Ruling No. 087-13

March 5, 2013 BIR RULING NO. 087-13 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10 Rene L. Casas (RLC) Compound Homeowners Association, Inc. Brgy. Calzada, Tipas, Taguig City Attention: Aisa C. Baluyot President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation dated August 2, 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. CAcDTI It appears that Rene L. Casas married to Estrellita T. Casas with Tax Identification Number 144-979-526-000 is the registered owner of a parcel of land covered by Transfer Certificate of Title (TCT) No. 2027-P issued by the Registry of Deeds for the Taguig City. The aforesaid property is situated at Taguig City with an area of four thousand twenty eight square meters (4,028 sq.m.), more or less. Rene L. Casas (RLC) Compound Homeowners Association, Inc. with Tax Identification Number 412-281-651-000, on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB). On July 19, 2012, the parties executed a Deed of Absolute Sale whereby the owner transfers and conveys three thousand four hundred seventy six and 56/100 square meters (3,476.56 sq.m.) of the subject property to Rene L. Casas (RLC) Compound Homeowners Association, Inc. at an agreed price of Seven Million Six Hundred Seventy Seven Thousand One Hundred Eighty Three Pesos and 15/100 (P7,677,183.15). Pursuant to a certification issued by Social Housing Finance Corporation, three thousand four hundred seventy six and 56/100 square meters (3,476.56 sq.m.) of the property covered by TCT No. 2027-P is actually a CMP Project and shall be proportionately distributed to the association's seventy three (73) qualified member-beneficiaries. 1 For this purpose, Rene L. Casas (RLC) Compound 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" ITADaE 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 Rene L. Casas (RLC) Compound Homeowners Association, Inc., in so far as the three thousand four hundred seventy six and 56/100 square meters (3,476.56 sq.m.) portion thereof of the property covered by TCT No. 2027-P 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 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, Rene L. Casas 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. SECIcT Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX RENE L. CASAS (RLC) COMPOUND HOMEOWNERS ASSOCIATION, INC. Brgy. Calzada, Tipas, Taguig City Name of Beneficiary Blk. No. Lot Total Area No. (sq.m.) 1 SOFRONIA M. DEL MUNDO 1 1 51.17 2 HONEYLYN M. DEL MUNDO 1 2 45.15 3 CHERLYN M. SABIDURIA 1 3 45.15 4 MAYROSE L. MICAEL 1 4 45.15 5 LONA E. CUVINAR 1 5 48.16 6 MARY JANE V. MAGDANGAL 1 6 48.16 7 ROSALINA M. CUBILLA 2 1 48.16 8 JOB B. LLERA 2 3 45.15 9 JOSE JERWIN C. ESTAMPADOR 2 4 45.15 10 FEBELYN D. PASCUAL 2 7 45.15 11 ALICIA C. OLVIDA 2 8 45.15 12 WENEFRIDA L. CAINDOY 2 9 45.15 13 ROGER B. FERNANDEZ 2 10 45.15 14 VICTORIA V. BAGAMAN 2 11 45.15 15 EDWIN C. RUBIN 2 12 45.15 16 HELEN C. VALENZUELA 2 13 45.15 17 MARLY P. ABCEDE 2 14 45.15 18 EVANGELINE P. VILLANUEVA 2 15 45.15 19 SUSAN B. CANEDA 2 17 45.15 20 MARIBEL C. QUILET 2 18 45.15 21 NECIFORA A. BERDERA 2 19 45.15 22 CERINO P. DUMAGUIT 2 20 45.15 23 ROMULO I. FALLENA 2 21 45.15 24 RAMON B. BELLO 2 22 45.15 25 MICHELLE R. SARCIBAN 2 23 55.69 26 SIMEON B. BELLO JR. 2 25 55.69 27 BOBBY B. BENEDICTO 3 1 45.15 28 VICKY L. AGON 3 2 45.15 29 GERRY G. CAYANAN 3 3 45.15 30 LEONARDO B. LUZURIAGA 3 4 45.15 31 SUSANA B. ADOPTANTE 3 5 45.15 32 EVA B. LOPEZ 3 6 45.15 33 MA. CERENA C. DALANON 3 7 45.15 34 CHONA G. CAINDOY 3 8 45.15 35 ARNEL A. LANUZA 3 9 45.15 36 JOSELYN C. AZUERO 3 10 45.15 37 DELIA N. HERRERA 3 11 45.15 38 RACHEL L. EBARSABAL 3 12 45.15 39 GENEROSA T. BONCALON 3 13 45.15 40 ADONES P. CRUZ 3 14 45.15 41 RICKY L. VITO 3 15 45.15 42 CHERRYL-LYN J. CALVO 3 16 45.15 43 SALVACION T. CELEDONIO 3 17 45.15 44 AISA C. BALUYOT 3 18 45.15 45 AMELITA G. SOMOGUE 3 19 45.15 46 DANILO O. OMPOY 3 20 45.15 47 LORENCITA ASILO 3 21 45.15 48 NOVARIZA C. ZAPECO 3 22 45.15 49 BENJAMIN R. NEDIA 3 23 45.15 50 NELSON C. CAVITE 3 24 45.15 51 MARICEL R. SAYSON 3 25 45.15 52 DONNALYN P. FUENTES 3 26 45.15 53 WENCESLAO P. CAY 3 27 145.99 54 ROMA RIZA G. COLLADO 4 1 45.15 55 MAILYN C. PABALATE 4 2 45.15 56 VICENTA A. MABAO 4 3 45.15 57 CYNTHIA DC. LORENZO 5 1 45.15 58 ERNESTO G. CAINDOY JR. 5 2 45.15 59 RYAN D. ALIPANTE 5 3 42.14 60 RUBY R. REPALDO 5 4 49.67 61 ESTRELITA P. ADOBAS 6 1 45.15 62 JOSEPHINE L. PANGYARIHAN 6 2 46.66 63 DARLENE C. ADOBAS 6 3 45.15 64 JOAN L. PANGYARIHAN 6 4 45.15 65 MAXIMINO M. OCENAR 6 5 45.15 66 AMOR D. LUNA 7 1 52.68 67 NIDA R. REBUT 7 3 48.16 68 LEILANIE A. GUTIERREZ 7 4 52.68 69 NERISA G. AUTENCIO 7 6 52.68 70 DOLORES G. IYOG 8 1 54.18 71 ROBERT H. OCAMPO 8 2 45.15 72 CARMELA C. JUNSAY 8 3 45.15 73 NORA D. CULALA 8 4 51.17 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.