BIR Ruling No. 088-15

April 8, 2015 BIR RULING NO. 088-15 RA No. 7279; BIR Ruling No. 109-13; BIR Ruling No. 304-13 Innovation Ville Phase IV Homeowners Association, Inc. Brgy. Pooc, Sta. Rosa, Laguna Attention: Marites U. Dagos President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated August 7, 2014, endorsing the sale transaction between Fortune Savings and Loan Association, Inc. and Innovation Ville Phase IV 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 Fortune Savings and Loan Association, Inc. (TIN 000-586-276-000) (hereinafter referred to as Landowner) is the registered owner of two (2) parcels of land covered by two (2) Transfer Certificates of Title (TCT), to wit: TCT No. Lot No. Tax Declaration No. Area (sq.m.) T-297702 768 11-0014-01122 34,173 T-309910 2143-D 11-0014-03213 34,039 Total Area 68,212 ====== all issued by the Registry of Deeds for the Calamba Branch. The aforesaid properties are situated at Brgy. Pooc, Sta. Rosa, Laguna. Innovation Ville Phase IV Homeowners Association, Inc. (TIN 284-723-547-000), on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB). On June 17, 2014, Fortune Savings and Loan Association, Inc., duly represented by its Statutory Liquidator, the Philippine Deposit Insurance Corporation (PDIC) and Innovation Ville Phase IV Homeowners Association, Inc., represented by its President, Marites U. Dagos, executed a Deed of Absolute Sale whereby the former transferred and conveyed Twelve Thousand Thirty Two square meters (12,032 sq.m.) portion of the subject properties to Innovation Ville Phase IV Homeowners Association, Inc. at an agreed price of Nine Million Six Hundred Twenty Five Thousand Six Hundred Pesos (P9,625,600.00) under Community Mortgage Program (CMP) of the SHFC. Pursuant to the certification issued by SHFC, 12,032 sq.m. out of 68,212 sq.m. covered by TCT Nos. T-297702 and T-309910 actually comprise a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Innovation Ville Phase IV 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 on July 3, 2014. TcSCEa In support of its request, Innovation Ville Phase IV Homeowners Association, Inc. has completely submitted on August 15, 2014 the following documents: 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC that the subject properties actually comprise a CMP project; 3) Certified true copy of the Letter-Guaranty; 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 Properties 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 the landowner to Innovation Ville Phase IV Homeowners Association, Inc. of the Twelve Thousand Thirty Two square meters (12,032 sq.m.) portion out of the Sixty Eight Thousand Two Hundred Twelve square meters (68,212 sq.m.) covered by TCT Nos. T-297702 and T-309910 is exempt from the capital gains tax. AIDSTE Upon issuance of this letter of exemption, and upon registration of the document of sale, a lien on the Certificates 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 properties, to the effect that the said properties 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. 20 of RA 7279. Accordingly, the landowner is liable to pay the documentary stamp tax on the documents conveying the afore-stated properties 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. 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 by the landowner to Innovation Ville Phase IV Homeowners Association, Inc. of the 12,032 sq.m. portion out of the 68,212 sq.m. covered by TCT Nos. T-297702 and T-309910 is exempt from the imposition of VAT. (BIR Ruling No. 304-2013 dated August 6, 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) 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. HTAIcD Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX Innovation Ville Phase IV Homeowners Association, Inc. Brgy. Pooc, Sta. Rosa, Laguna Name of Beneficiary Blk. Lot No. Total Area No. (sq.m.) 1 Cangayo, Melvin I. 28 1 74.99 2 Dagus, Joy U. 28 2 77.99 3 Paghubasan, Janice A. 28 3 74.99 4 Bobotioc, Miriam D. 28 4 74.99 5 Dominguez, Sherwin R. 28 5 74.99 6 Fonacier, Marilyn P. 28 6 74.99 7 Duclayan, Faraon C. 28 7 74.99 8 Dagus, Noel U. 28 8 74.99 9 Mitra, Dulce Y. 28 9 74.99 10 Filler, Carren F. 28 10 74.99 11 Dagos, Marites U. 28 11 74.99 12 Dominguez, Kimberly P. 28 12 74.99 13 Dala Cruz, Angelika C. 28 13 74.99 14 Marco, Edmundo C. 28 14 74.99 15 Sapico, Cherish Zandra B. 28 15 74.99 16 Reyes, Leah S. 28 16 74.99 17 Atienza, Bernardita E. 28 17 74.99 18 Carta, Aldwin P. 28 18 74.99 19 Benitez, Reynante M. 28 19 74.99 20 Aleonar, Helen C. 28 20 74.99 21 Lantajo, Michael T. 28 21 74.99 22 Tioxon, Venerando V. 28 22 74.99 23 Dionela, Erickson J. 28 23 74.99 24 Generoso, Michael L. 28 24 74.99 25 Esquierdo, Riza S. 29 1 79.49 26 Soliven, Jayson A. 29 2 74.99 27 Dominguez, Stanley P. 29 3 74.99 28 Pantaleon, Luisa P. 29 4 74.99 29 Loresca, Nolito R. 29 5 74.99 30 Fonacier, Roland P. 29 6 74.99 31 Umerez, Eden D. 29 7 74.99 32 Madaya, Marites E. 29 8 74.99 33 Costillas, Jimmyson C. 29 9 74.99 34 Hernandez, Jessie O. 29 10 74.99 35 Lee, Manuel N. 29 11 74.99 36 Ricarde, Ma. Helen M. 29 12 74.99 37 Ramoga, Verly S. 29 13 74.99 38 Elisan, Lilia A. 29 14 74.99 39 Tamayo, Cherrylyn B. 29 15 74.99 40 Zaballero, Vivian S. 29 16 74.99 41 Belloria, Cris M. 29 17 74.99 42 Luna, Gemma M. 29 18 74.99 43 Tropicales, Gerry G. 29 19 74.99 44 Agapay, Leticia A. 29 20 74.99 45 Santelices, Antonio V. 29 21 74.99 46 Taguilid, Emma A. 29 22 74.99 47 Urriza, Leonora T. 29 23 74.99 48 Manlagnit, Salvador S. 29 24 74.99 49 Esguerra, Leonardo Jr S. 33 2 74.99 50 Tacderan, Paulo C. 33 3 74.99 51 Suarez, Ruel C. 33 4 74.99 52 De Leon, Mario Rain B. 33 5 74.99 53 Labangco, Sherwin C. 33 6 74.99 54 Soriano, Noe M. 33 7 74.99 55 Ardie, Alex S. 33 8 74.99 56 Eladio, Jimenez G. 33 9 74.99 57 Edquila, Jonel F. 33 10 74.99 58 Capati, Aloha S. 33 11 74.99 59 Hernandez, Analia A. 33 12 74.99 60 Almeron, Maria Eloisa C. 33 13 74.99 61 Labangco, Sherwin S. 33 14 74.99 62 Asuncion, Arcadio Jr F. 33 15 74.99 63 Dimapasok, Joana R. 33 16 74.99 64 Esguerra, Leonardo II S. 33 17 74.99 65 La Torre, Felimon O. 33 18 74.99 66 Borbe, Noel B. 33 19 77.99 67 Torres, Armando R. 33 20 77.99 68 Valencia, Raymond D. 34 1 85.49 69 Dudas, Macaria F. 34 2 74.99 70 Jimenez, Leah V. 34 3 74.99 71 Menor, Marian Dr. 34 4 74.99 72 Delos Reyes, Michael V. 34 5 74.99 73 Bermal, Raquel A. 34 6 74.99 74 Busadre, Rosemarie M. 34 7 74.99 75 Ismeria, Hazel C. 34 8 74.99 76 Felipe, Danilo M. 34 9 74.99 77 Andojar, Angelika J. 34 10 74.99 78 Bobiles, Arlene G. 34 11 74.99 79 Orcullo, Gina A. 34 12 74.99 80 Cererera, Ramil G. 34 13 74.99 81 Lagmay, Filipina G. 34 14 74.99 82 Amoranto, Gregorio R. 34 15 74.99 83 Oran, Domingo Jr. P. 34 16 74.99 84 Jaspio, Rommel A. 34 17 74.99 85 Aglanang, Arnold G. 34 18 74.99 86 Garcia, Marites B. 34 19 74.99 87 Bacay, Rodolfo T. 34 20 74.99 88 Garcia, Julie Ann B. 34 21 74.99 89 Perante, Luzviminda S. 34 22 74.99 90 Beato, Josefina V. 34 23 74.99 91 Gonzales, Liza B. 34 24 74.99 92 Amoranto, Alicia C. 34 25 74.99 93 Buelva, Pablo S. 34 26 74.99 94 Zamora, Delia S. 34 27 74.99 95 Adriano, Alejandro A. 34 28 74.99 96 Zamora, Allan Rey S. 34 29 74.99 97 Tapiador, Marlowe B. 34 30 74.99 98 Bobiles, Erlinda G. 34 31 62.99 99 Gilladoga, Faith S. 34 32 57.00 100 Carta, Alfredo Jr. P. 35 1 86.99 101 Asuncion, Leonisa E. 35 2 74.99 102 Salazar, Vanessa D. 35 3 74.99 103 Cayog, Alexis Grace M. 35 4 74.99 104 Sartiel, Rowena A. 35 5 74.99 105 Adato, Nerry F. 35 6 74.99 106 De Leon, Junar A. 35 7 74.99 107 Guererro, Ma. Angela L. 35 8 74.99 108 Digamon, Wilfredo B. 35 9 74.99 109 Fuentes, Emerlina O. 35 10 74.99 110 Villanueva, Roger E. 35 11 74.99 111 Rabulan, Luningning M. 35 12 74.99 112 Salazar, Dancel D. 35 13 74.99 113 Lopez, Merlita P. 35 14 74.99 114 Alba, Joseph D. 35 15 74.99 115 Mansueto, Ma. Johnaglore B. 35 16 74.99 116 Garcia, Michael B. 35 17 74.99 117 Guion, Sanny O. 35 18 74.99 118 Padilla, Jessie S. 35 19 74.99 119 Cruzat, Alberto B. 35 20 74.99 120 Pastor, Allan O. 35 21 74.99 121 Umali, Pablito M. 35 22 74.99 122 Perante, Alex A. 35 23 74.99 123 Amalin, Divina M. 35 24 74.99 124 Dizon, Bernadette M. 35 25 74.99 125 Villadiego, Jovielyn A. 35 26 74.99 126 Villaflores, Jocelyn C. 35 27 74.99 127 Piedad, Ranilo P. 35 28 74.99 128 Calacday, Rachel B. 35 29 92.99 129 Abacan, Allan D. 35 30 86.99 130 Esguerra, Neliza S. 36 1 74.99 131 Busadre, Bartolome M. 36 2 74.99 132 Habulin, Rodel N. 36 3 74.99 133 Dagos, Jenny U. 36 4 89.99 134 Arada, Ahsmin M. 36 5 86.99 135 Digamon, Jimmy C. 36 6 83.99 136 Pabilona, Dennis L. 36 7 80.99 137 Esguerra, Richard II S. 36 8 79.49 138 Paglinawan, Alfa C. 36 9 76.49 139 Salodoga, Gilbert A. 36 10 73.49 140 Fombuena, Nardo S. 36 11 70.49 141 Alcazar, Aljin D. 36 12 67.49 142 Barrameda, Jonel B. 4 1 74.99 143 Dela Cruz, German R. 4 2 74.99 144 Malinis, Lea D. 4 3 74.99 145 Millares, Alwin N. 4 4 74.99 146 Dumaray, Julie A. 4 5 74.99 147 Catienza, Jhay N. 4 6 74.99 148 De Leon, Jose Daniel U. 4 7 74.99 149 Malinis, Julie M. 4 8 74.99 150 Perez, Lydia A. 4 9 74.99 151 Sicad, Raul T. 4 10 74.99 152 Bantang, Renan J. 4 11 74.99 153 Taytay, Victor A. 4 12 74.99 154 Umali, Dave S. 4 13 85.49 155 Borbe, Marlon B. 4 14 74.99 156 Agapay, Russel A. 4 15 74.99 157 Elisan, Miko Earl A. 4 16 74.99 158 Busadre, Rocine M. 4 17 101.99 159 Hernandez, Caroline E. 4 18 74.99 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.