BIR Ruling No. 092-15

April 8, 2015 BIR RULING NO. 092-15 RA No. 7279; BIR Ruling No. 109-13 Gymwa Homeowners Association, Inc. Sitio Grancena, Opao, Mandaue City Attention: Aida C. Alilin President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated August 4, 2014, endorsing the sale transaction between Sps. Teodoro Yap and Liantin G. Yap and Gymwa 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 Sps. Teodoro Yap (TIN: 129-786-036-000) and Liantin G. Yap (TIN 100-793-915-000) (hereinafter referred to as Landowners) are the registered owners of three (3) parcels of land covered by three (3) Transfer Certificates of Title (TCT), to wit: TCT No. Lot No. Tax Declaration No. Area (sq.m.) 46864 1-E-4-L-11-A-1 2006-019-00561 316 40365 1-E-4-L-12 2006-019-00606 1,488 46273 1-E-4-L-11-B 2006-019-00569 912 Total Area 2,716 ===== all issued by the Registry of Deeds for Mandaue City. The aforesaid properties are situated at Brgy. Opao, Mandaue City. Gymwa Homeowners Association, Inc. (TIN: 432-646-103-000), on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB). On July 23, 2013, the parties executed a Deed of Absolute Sale whereby the Landowners transferred and conveyed Two Thousand Five Hundred Seventy Two and 32/100 square meters (2,572.32 sq.m.) portion of the subject properties to Gymwa Homeowners Association, Inc. at an agreed price of Six Million Four Hundred Thirty Thousand Seven Hundred Ninety One and 20/100 Pesos (P6,430,791.20) under Community Mortgage Program (CMP) of the SHFC. Pursuant to the certification issued by SHFC, the 2,572.32 sq.m. out of 2,716 sq.m. covered by TCT Nos. 46864, 40365 and 46273 actually comprise a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. n For this purpose, Gymwa 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. ASEIDH In support of its request, Gymwa Homeowners Association, Inc. has completely submitted on August 8, 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 landowners to Gymwa Homeowners Association, Inc. of Two Thousand Five Hundred Seventy Two and 32/100 square meters (2,572.32 sq.m.) portion out of Two Thousand Seven Hundred Sixteen square meters (2,716 sq.m.) covered by TCT Nos. 46864, 40365 and 46273 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 Certificates of Titles 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) EcaDCI 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 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) 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. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ATTACHMENT Gymwa Homeowners Association, Inc. Sitio Grancena, Opao, Mandaue City Name of Beneficiary Blk. Lot No. Total Area No. (sq.m.) 1 Tuacao, Perlita B. 1 1 40.69 2 Tuacao, Mary Cris B. 1 2 40.69 3 Baunsit, Warren D. 1 3 40.69 4 Omolon, Rene Heart B. 1 4 40.69 5 Dela Pea, Sarex O. 1 5 40.69 6 Dela Pea, Jeramil O. 1 6 40.69 7 Bronola, Mirasol S. 1 7 40.69 8 America, Logena A. 1 8 40.69 9 Lienes, Florenda A. 1 9 40.69 10 Aldimer, Arnel B. 1 10 40.69 11 Abris, Leonard B. 1 11 40.69 12 Bate, Edna P. 1 12 40.69 13 Baunsit, Manolo N. 1 13 40.69 14 Baunsit, Corazon V. 1 14 40.69 15 Baunsit, Adelfa V. 1 15 40.69 16 Camenade, Mercedes T. 1 16 40.69 17 Baunsit, Marializa N. 1 17 40.69 18 Naparate, Florelyn N. 1 18 40.69 19 Naparate, Jeroy S. 1 19 40.69 20 Waper, Vicente R. 1 20 40.69 21 Calesa, Robina S. 1 21 40.69 22 Alilin, Remos B. 1 22 58.49 23 Barrientos, Marivic C. 2 1 44.50 24 Baunsit, Lucilo N. 2 2 44.50 25 Baunsit, Christoper G. 2 3 40.69 26 Baunsit, Nieves N. 2 4 40.69 27 Alilin, Aida C. 3 1 40.69 28 Cimafranca, Janeth A. 3 2 40.69 29 Alilin, Jocel C. 3 3 40.69 30 Alilin, Joseph C. 3 4 40.69 31 Alilin, Joed C. 3 5 40.69 32 Semblante, Gina B. 3 6 40.69 33 Baunsit, Jerom B. 3 7 40.69 34 Semblante, Veronica B. 3 8 40.69 35 Caballa, Marry Ann S. 3 9 40.69 36 Semblante, Mario B. 3 10 43.23 37 Bate, Gladys C. 3 11 44.50 38 Segara, Clara M. 4 1 40.69 39 Villordon, Evelynda M. 4 2 40.69 40 Hernale, Lorna H. 4 3 40.69 41 Asis, Epillo H. 4 4 40.69 42 Cabando, Allan C. 4 5 40.69 43 Arce, Sisenado S. 4 6 40.69 44 Arce, Morino B. 4 7 40.69 45 Entrampas, Micheal B. 4 8 40.69 46 Ponce, Violeta P. 4 9 63.58 47 Sayson, Evelinda B. 5 1 43.23 48 Sayson, Renelyn C. 5 2 44.50 49 Sebal, Maria Wella D. 6 1 48.32 50 Dacoylo, Mary Joy C. 6 2 50.86 51 Dacoylo, Jomar C. 7 1 47.05 52 Naparate, Marichu N. 7 2 40.69 53 Sarintas, Nida B. 7 3 40.69 54 Semblante, Ma. Chelo P. 7 4 40.69 55 Mansueto, Rosemarie F. 7 5 40.69 56 Baclohan, Gemma U. 7 6 40.69 57 Gomez, Judelyn P. 7 7 45.78 58 Naparate, Anariza S. 7 9 58.49 59 Mabera, Alvin C. 7 10 58.49 60 Dela Serna, Bernardina G. 7 11 45.78 Footnotes n Note from the Publisher: Missing footnote text.