BIR Ruling No. 095-13

March 20, 2013 BIR RULING NO. 095-13 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10 Botda II Village Homeowners Association, Inc. Brgy. Buray, Oton, Iloilo Attention: Jose Noel Sendin President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation dated September 11, 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". HITEaS It appears that Spouses Felix L. Flores and Carina V. Flores with Tax Identification Numbers 117-322-409-000 and 921-023-553-000, respectively, are the registered owners of a parcel of land, identified as Lot 8437 of the Cadastral survey of Oton, Cadastral Case No. 82, L.R.C. Cadastral Record No. 1382 covered by Transfer Certificate of Title (TCT) No. 217809 issued by the Registry of Deeds for the Province of Iloilo. The aforesaid property is situated at Brgy. Buray, Oton, Iloilo with an area of seventeen thousand five hundred forty six square meters (17,546 sq.m.), more or less. Botda II Village Homeowners Association, Inc. with Tax Identification Number 006-461-191-000, on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB). On June 12, 2012, the parties executed a Deed of Sale whereby the owners transferred and conveyed the subject property to Botda II Village Homeowners Association, Inc. at an agreed price of Nine Million Five Hundred Forty Thousand Pesos (P9,540,000.00). Pursuant to a certification issued by Social Housing Finance Corporation (SHFC), the property covered by TCTs No. 217809 is actually a CMP Project and shall be proportionately distributed to the association's one hundred fifty nine (159) qualified member-beneficiaries. 1 For this purpose, Botda II Village Homeowners Association, Inc. secured a housing loan under the Community Mortgage Program (CMP), a financing assistance program of the 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" DTcACa 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 Spouses Felix L. Flores and Carina V. Flores to Botda II Village Homeowners Association, Inc., 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, Spouses Felix L. Flores and Carina V. Flores 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 RMO 15-2003. (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. ACTISD Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX Botda II Village Homeowners Association, Inc. Brgy. Buray, Oton, Iloilo Name of Beneficiary Blk. No. Lot Total Area No. (sq.m.) 1 Sendin, Junrick 1 1 114.29 2 Talha, Eliseo 1 2 160 3 Langusta, Jose 2 1 137.14 4 Burgos, Roel 2 2 135.71 5 Salinas, Efren 3 1 105.71 6 Caminian, Ernie 3 2 105.71 7 Castigador, Vicente 3 3 105.71 8 Caminian, Noriel 3 4 105.71 9 Fuentebella, Rhoda 4 1 108.57 10 Espinosa, Rholyn 4 2 108.57 11 Gallo, Rhea 5 1 122.85 12 Gallo, Rocky John 5 2 114.29 13 Elambayo, Nilo 5 3 114.29 14 Espinosa, Roselyn S. 5 4 114.29 15 Bullag, Jeysel 5 5 114.29 16 Bullag, Ian E. 5 6 114.29 17 Agsamosam, Allan 5 7 114.29 18 Palapas, Sonia 5 8 114.29 19 Canon, Manuelito 5 9 114.29 20 Cordova, Ronnie O. 5 10 114.29 21 Daguinot, Cynthia 5 11 114.29 22 Cadano, Rosa 5 12 114.29 23 Castigador, Reu 5 13 114.29 24 Monarca, Roseminda M. 5 14 114.29 25 Tibus, Stephanie 5 15 114.29 26 Camaring, Marjoe 5 16 114.29 27 Sabio, Raul A. 5 17 114.29 28 Camaring, Johna Marie 5 18 117.14 29 Buenavista, Shella May 5 19 107.15 30 Ticao, Jacqueline 5 20 107.15 31 Palomo, Laura 5 21 107.15 32 Gamarcha, Ricardo 5 22 107.15 33 Talha, Kathy Ruby 5 23 107.15 34 Lima, Melvin D. 5 24 107.15 35 Magallanes, Jayme 5 25 107.15 36 Magallanes, Gemma 5 26 107.15 37 Gumban, Jonathan 5 27 114.29 38 Cordova, Peter John 5 28 105.71 39 Sanonte, Pamela 5 29 105.71 40 Bullag, Tesie 5 30 105.71 41 Santerva, Evelyn 5 31 114.29 42 Elefan, Kristofer 5 33 102.86 43 Salinas, Russel 5 34 102.86 44 Sevilla, Juliet 5 34 102.86 45 Araneta, Lydia D. 5 35 102.86 46 Tonquin, Raymond 5 36 102.86 47 Sendin, Norberto 5 37 102.86 48 Ngalongalay, Elmer 5 38 102.86 49 Tupas, Jayme 5 39 105.71 50 Aculit, Moonyen 5 40 105.71 51 Morales, Josette 5 41 105.71 52 Ticao, Riza Dee 5 42 105.71 53 Ticao, Randell 5 43 105.71 54 Gale, Virginia 5 44 105.71 55 Espadera, Edgar E. 5 45 105.71 56 Flores, Ma. Shirley 5 46 105.71 57 Escarola, Nelly L. 5 47 105.71 58 Noca, Abelardo 5 48 105.71 59 Noca, Danilo 5 49 105.71 60 Noca, Rosendo 5 50 121.43 61 Salunga, Gladys S. 5 51 112.85 62 Sendin, Jose Noel 6 1 122.85 63 Baylosis, Marivic C. 6 2 114.29 64 Haro, Emma V. 6 3 114.29 65 Villanueva, Karen O. 6 4 114.29 66 Olivares, Jose III F. 6 5 114.29 67 Sacenal, Stella 6 6 114.29 68 Sacenal, Robert 6 7 114.29 69 Mallorca, Kathleen 6 8 114.29 70 Palma, Dina 6 9 114.29 71 Yleana, Joreen S. 6 10 114.29 72 Suarez, Gerard Von 6 11 115.72 73 Sorongon, Rolly 6 12 115.72 74 Sigarola, Cherry Ann 6 13 114.29 75 Melgar, Christopher 7 1 102.86 76 Bernabe, Adelfa 7 2 102.86 77 Sendin, Romeo 7 3 102.86 78 Escarola, Heide J. 7 4 102.86 79 Duero, Mary Ann 7 5 102.86 80 Sumugat, Annabel 7 6 102.86 81 Sarifa, Michelle 7 7 107.15 82 Sarifa, Mary May 7 8 107.15 83 Tabilona, Domingo, Jr. 7 9 102.86 84 Palomo, Sarah L. 7 10 114.29 85 Alison, Larry 7 11 108.57 86 Canos, Joana B. 7 12 108.57 87 Camagan, Flora A. 8 1 122.85 88 Jamotuya, Roy 8 2 130 89 Tondo, Loida 8 3 114.29 90 Nuneza, Noel 8 4 114.29 91 Mateo, Leah 8 5 114.29 92 Suedad, Margarita 8 6 114.29 93 Cocjin, Marietta 8 7 122.85 94 Jaspe, Ma. Rosena M. 8 8 130 95 Sacenal, Ramon, Jr. 9 1 105.71 96 Barranco, Ma. Febe 9 2 110 97 Rojo, Marlon 9 3 105.71 98 Minerva, Eric 9 4 110 99 Sacenal, Rainer 9 5 105.71 100 Valencia, Erwin 9 6 110 101 Basco, Gerry G. 9 7 105.71 102 Chan, Rouella M. 9 8 110 103 Basco, Rowsel 9 9 105.71 104 Mapa, Roselda E. 9 10 110 105 Langusta, Christine P. 10 1 114.29 106 Manabat, Annaliezl 10 2 115.72 107 Octavio, Donna 10 3 114.29 108 Palma, Bonnaly 10 4 114.29 109 Octavio, Minerva 10 5 114.29 110 Gascon, Emee 10 6 114.29 111 Gonzaga, George 10 7 114.29 112 Flores, Flordeliza 10 8 114.29 113 Tubid, Rowel 10 9 114.29 114 Polo, Rodel 10 10 115.72 115 Sanonte, Donna Mae 11 1 114.29 116 Salcepuedes, Alvin 11 2 114.29 117 Bacad, Beatriz Eugenia 11 3 114.29 118 Torremillano, Rowena Jean B. 11 4 114.29 119 Yudelmo, Gaudioso L. 11 5 114.29 120 Lima, Efren 11 6 114.29 121 Ibanez, Leysel 11 7 114.29 122 Tondo, Jose Erwin 11 8 114.29 123 Camagan, Jasmin Joy A. 11 9 114.29 124 Tibus, Frezel 11 10 114.29 125 Baranco, Leah 12 1 105.71 126 Barranco, Marlene 12 2 105.71 127 Ganancial, Rosario 12 3 105.71 128 Baranco, Noel 12 4 104.28 129 Calambro, Richard 12 5 102.86 130 Escoyala, Alvin 12 6 102.86 131 Mallorca, Ernie 12 7 102.86 132 Acuesta, Dae Anne 12 8 102.86 133 Morana, Emilio 12 9 102.86 134 Nortiga, Mark Anthony 12 10 102.86 135 Nortiga, Ivy Rissa 12 11 102.86 136 Tubillara, Lorna 12 12 102.86 137 Talha, Sheleen 12 13 102.86 138 Pulido, Rochelle 12 14 102.86 139 Almeda, Hacil 12 15 102.86 140 Jalico, Maricelle 12 16 102.86 141 Montales, Aireen 12 17 102.86 142 Sabio, Gretchen E. 12 18 102.86 143 Tallodar, Carolyn 12 19 102.86 144 Villavicencio, Ma. Lynette 13 1 114.29 145 Perez, Maybelle Lalaine O. 13 2 114.29 146 Gallenero, Niel 13 3 114.29 147 Gallenero, Nicolas 13 4 102.86 148 Bullag, Joenard E. 13 5 102.86 149 Malaga, Aida 13 6 102.86 150 Ginelen T. Gayapa 13 7 102.86 151 Dumaop, Roberto 13 8 102.86 152 Flores, Maribel L. 13 9 102.86 153 Agregado, Lorena 13 10 102.86 154 Ching, Catherine L. 13 11 102.86 155 Agregado, Nacy 13 12 102.86 156 Canoso, Mary Joy 13 13 104.28 157 Bebit, Jovan P. 13 14 114.29 158 Bebit, Lucelyn P. 13 15 114.29 159 Escarola, Fe 13 16 114.29 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.