BIR Ruling No. 090-12

February 16, 2012 BIR RULING NO. 090-12 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10 Samahang Magkakapitbahay ng Sitio Evergreen Homeowners Association, Inc. (Phase 2) Brgy. Pasong Tamo, Quezon City Attention: Solomon S. Monteverde II President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation dated August 23, 2011, requesting tax exemption from the payment of Capital Gains Tax and other taxes in accordance with Republic Act No. 7279, otherwise known as the Urban Development and Housing Act of 1992. It appears that ADEZ Realty, Inc. with Tax Identification Number 000-735-320-000, Enrique de Zuzuarregui, Pacita Javier and Antonio de Zuzuarregui, Jr., are the registered owners of a parcel of land, identified as Lot 100-4-B-1, of the subd. Plan Fls-1476-D, being a portion of Lot 1004-B, Fls-1324, Piedad Estate, LRC Record No. covered by Transfer Certificate of Title (TCT) No. 25724 issued by the Registry of Deeds for the Quezon City. The aforesaid property is situated at Brgy. Pasong Tamo, Quezon City with an area of nine thousand six hundred sixty four square meters (9,664 sq.m.), more or less. Samahang Magkakapitbahay ng Sitio Evergreen Homeowners Association, Inc. (Phase 2) with Tax Identification Number 294-281-589-000, on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB). On July 1, 2011, the parties executed a Deed of Sale whereby the owners thru their Attorney-in Fact, Enrique de Zuzuarregui, transfer and convey seven thousand seven hundred twenty four square meters (7,724 sq.m.) of the subject property to Samahang Magkakapitbahay ng Sitio Evergreen Homeowners Association, Inc. (Phase 2) at an agreed price of Eleven Million Five Hundred Eighty Six Thousand Pesos (11,586,000.00). Pursuant to a certification issued by Social Housing Finance Corporation, seven thousand five hundred ninety eight square meters (7,598 sq.m.) of the property covered by TCT No. 25724 is actually a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Samahang Magkakapitbahay ng Sitio Evergreen Homeowners Association, Inc. (Phase 2) 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). EASIHa 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" 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 property by the owners thru their Attorney-in Fact, Enrique de Zuzuarregui to Samahang Magkakapitbahay ng Samahang Magkakapitbahay ng Sitio Evergreen Homeowners Association, Inc. (Phase 2), in so far as the seven thousand five hundred ninety eight square meters (7,598 sq.m.) portion thereof 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, the owners thru their Attorney-in Fact, Enrique de Zuzuarregui 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. 130-10 dated December 1, 2010 ) aEcSIH 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 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. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ATTACHMENT SAMAHANG MAGKAKAPITBAHAY NG SITIO EVERGREEN HOMEOWNERS ASSOCIATION, INC. (PHASE 2) Sitio Evergreen, Brgy. Pasong Tamo, Quezon City, Metro Manila Blk. No. Lot Total Area Name of Beneficiary No. (sq.m.) 1. Roberto C. Tanggulan 1 1 37.59 2. Rodelio T. Sarmiento 1 2 37.59 3. Robert S. Basister 1 3 37.59 4. Cesar M. Nuez 1 4 37.59 5. Alvin L. dela Cruz 1 5 37.59 6. Shiela May DG. Atienza 1 7 37.59 7. Nilo A. Novio 1 8 37.59 8. Salud S. Cortez 1 9 37.59 9. Dominador S. Policarpio 1 10 37.59 10. Antonio P. de Guzman 1 11 37.59 11. Ferdinand R. Teodosio 1 12 37.59 12. Charito C. Velasco 1 13 37.59 13. Rosario B. Pabilando 1 14 37.59 14. Ariel C. Velasco 1 15 37.59 15. Romeo T. Lubguban 1 17 37.59 16. Jimmy C. de Guzman 1 18 37.59 17. Ma. Charmaine O. Sajota 1 19 37.59 18. Jessie L. Labrador 1 20 37.59 19. Joemar A. Pandoy 1 22 37.59 20. Antonio P. Guides 1 23 37.59 21. Rowena S. Maulauen 1 24 37.59 22. Shirine G. Atienza 1 25 37.59 23. Evelyn S. Atienza 1 26 37.59 24. Carminda I. Guimbo 1 28 37.59 25. Roldan V. Yabes 1 31 37.59 26. Jesus E. Abainza 1 32 37.59 27. Junet B. de Leon 1 33 37.59 28. Dionisio B. Yecla 1 34 37.59 29. Rhea O. Carsola 1 35 37.59 30. Gloria S. Reyes 1 36 37.59 31. Efren A. Lubguban 1 38 37.59 32. Mary Jackie Lyn A. Pandoy 1 40 37.59 33. Desiree V. Batin 1 41 37.59 34. Bienvinido E. Villegas 1 42 37.59 35. Benedicto E. Villegas 1 43 56.38 36. Randy A. Fernando 2 1 62.16 37. Melanie C. Marquez 2 2 65.05 38. Ponciano S. Parias 2 3 50.60 39. Ricardo T. Basister 2 4 50.60 40. Jayson B. Parias 2 5 50.60 41. Elna I. Elloren 2 6 50.60 42. Deogracia R. Bernaldez 2 7 50.60 43. Lauro R. Austria 2 8 50.60 44. Efren B. Bernalez 2 9 50.60 45. Larry M. Villegas 2 11 50.60 46. Marcelino G. Carcha 2 12 50.60 47. Antonina G. Villegas 2 14 50.60 48. Melisa D. Tripon 2 15 50.60 49. Ronnie T. Cezar 2 16 50.60 50. Melody D. Dalida 2 17 50.60 51. Ma. Lourdes S.D. Villegas 2 19 50.60 52. Rosemarie V. Salvador 2 19 50.60 53. Mirasol V. Cacot 2 20 50.60 54. Marilo T. Ortiz 2 21 50.60 55. Zeus R. Teodosio 2 22 50.60 56. Christian O. Sajota 2 23 49.15 57. Romalita R. Pablo 2 24 49.15 58. Rosario O. Sajota 3 1 49.15 59. Marlon F. Dimalaluan 3 2 49.15 60. Rolando V. Pascua 3 3 50.60 61. Carmelita R. Ascotia 3 4 50.60 62. Alfredo C. Tanggulan, Sr. 3 5 50.60 63. Eduardo S. Malinao 3 6 50.60 64. Lorna E. Cruz 3 7 50.60 65. Nieves O. Estepa 3 8 50.60 66. Hendrie V. Canlas 3 10 50.60 67. Eduardo B. Arpon 3 11 50.60 68. Nelson M. Guevarra 3 12 50.60 69. Carmen L. Dulay 3 13 50.60 70. Juvylyn G. Fajardo 3 14 50.60 71. Jennylyn G. Fajardo 3 15 50.60 72. Ronaldo B. Nigue 3 16 50.60 73. Mark Anthony B. Nigue 3 18 50.60 74. Carlito E. Villegas 3 19 50.60 75. Nelly A. Baquiran 3 20 50.60 76. Isidro A. Bassig 3 22 50.60 77. Excelsis S. Acacio 3 24 50.60 78. Clarinda V. Bacaycay 3 25 50.60 79. Felice Adeli B. Acacio 3 26 50.60 80. Joel G. Villegas 3 27 50.60 81. Eleuterio I. Elloren, Jr. 3 28 50.60 82. Mark Arjhael S. Labrador 3 29 47.71 83. Ma. Gina S. Mariano 3 30 66.50 84. Roldan R. Yanes 4 1 50.60 85. Virgilio C. Alvendo 4 2 50.60 86. Nelson Florentino A. Yate 4 3 50.60 87. Susan A. dela Cruz 4 5 50.60 88. Rizalino F. Carvajal 4 6 50.60 89. Evelinda V. Francisco 4 7 50.60 90. Eduardo R. Zapra 4 8 50.60 91. Marlon T. Jamero 4 9 50.60 92. Sheridan P. Reyes 4 10 50.60 93. Patricia Q. Limbas 4 11 50.60 94. Ruel H. Revoltar 4 12 50.60 95. Myra A. Dapadap 4 13 50.60 96. Nestor L. de Torres 4 14 50.60 97. Edwin T. Ramilla 4 15 49.15 98. Lea Jurish S. Monteverde 4 16 49.15 99. Adelina I. Elloren 4 17 50.60 100. Danilo B. Fulgencio 4 18 50.60 101. Ruel R. Yanes 4 19 50.60 102. Vivencio C. Conde Jr. 4 21 47.71 103. Rommel C. Marcellano 4 22 49.15 104. Wenceslao C. Ergo 5 1 49.15 105. Dario E. Allarde 5 2 49.15 106. Porfirio A. Estepa Jr. 5 3 50.60 107. Gerami C. Fernandez 5 4 50.60 108. Edeluisa A. Soriano 5 5 50.60 109. Milagros C. Fernandez 5 6 50.60 110. Winnie Vi G. Borromeo 5 7 50.60 111. Marina T. Samillano 5 8 50.60 112. Marlene S. Chua 5 9 50.60 113. Rolando E. de Ocampo 5 10 50.60 114. Fernando E. Cabiling 5 11 50.60 115. Liezl D. Malabag 5 12 50.60 116. Sisinando E. Villegas 5 13 50.60 117. Emilio A. Bacaycay 5 14 50.60 118. Sheryl B. Ramos 5 15 50.60 119. Elvie B. Tacoyo 5 16 50.60 120. Ronaldo E. Cabiling 5 18 50.60 121. Renie E. Cabiling 5 20 50.60 122. Marciano A. Briones 5 23 50.60 123. Rosalina T. Loyola 5 25 50.60 124. Romeo B. Labrador 5 29 50.60 125. Francis Ferdinand A. Alpuente 5 30 56.38 126. Maxima V. Oray 5 31 60.72 127. Antonio D. Creo 6 1 46.26 128. Irish M. Bacolot 6 2 46.26 129. Jinky F. Buenaventura 6 3 46.26 130. Lynn A. Pancho 6 4 46.26 131. Trinida A. Fajardo 6 5 46.26 132. Riza F. Ellorda 6 6 46.26 133. Efren P. Cruz 6 7 46.26 134. Peldie B. Lupoy 6 8 46.26 135. Jhona A. Rondina 6 9 46.26 136. Nestor G. Asis 6 10 46.26 137. Analyn L. Apit 6 11 46.26 138. Reynan E. Eugenio 6 12 50.60 139. Reyciel Ma. Cecilia M. Acacio 6 14 82.40 140. Joselito R. Allarde 6 15 65.05 141. Teofila T. Lozada 6 16 43.37 142. Romeo E. Eugenio 6 17 39.03 143. Gloria M. Pulod 6 18 43.37 144. Angelita A. Gallentes 6 19 47.71 145. Aurea Solini M. Biscocho 7 1 86.74 146. Solomon S. Monteverde IV 7 2 56.38 147. Clarence Rico M. Biscocho 7 3 50.60 148. Elliaj Kaye M. Capacete 7 4 50.60 149. Solomon S. Monteverde V 7 5 50.60 150. Eloisa Aurora M. Dasigan 7 6 50.60 151. Jerry R. Allarde 7 8 70.84 152. Bernadette Grashaila M. Capacete 8 1 56.38 153. Eron Karl M. Capacete 8 2 50.60 154. Solomon S. Monteverde II 8 3 50.60 155. Edilberto M. Capacete III 8 4 50.60 156. Ciel Katherina M. Acacio 8 5 50.60 157. Apo Francis M. Acacio 8 6 50.60 158. Solomon S. Monteverde III 8 7 50.60 159. Cesario M. Yanes 10 1 46.26 160. Rustico B. Castillo 10 2 43.37 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.