Don Vicente Villas Homeowner's Association, Inc. Phase 6

April 5, 2016 BIR RULING NO. 104-16 Section 32, RA No. 7279; BIR Ruling No. 053-15 Don Vicente Villas Homeowner's Association, Inc. Phase 6 Brgy. Pulo, Cabuyao, Laguna Attention: Jesus M. Tamayo President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of the Social Housing Finance Corporation (SHFC) dated September 15, 2015, endorsing the sale transaction between Eleuterio H. Bella, Jr. and Don Vicente Villas Homeowner's Association, Inc. Phase 6 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 Eleuterio H. Bella, Jr., (married to Magdalena Cruz (hereinafter referred to as Landowner) is the registered owner of a parcel of land, identified as Lot 1-C of the subd. plan Psd-04-0192736, being a portion of Lot, Psu-48436 LRC Rec. No. 49140 covered by Transfer Certificate of Title (TCT) No. T-667744 issued by the Registry of Deeds for the Calamba City. The aforesaid property is situated at Brgy. Pulo, Cabuyao, Laguna with an area of Seven Thousand Six Hundred Fifty Three square meters (7,653 sq.m.), more or less. Don Vicente Villas Homeowner's Association, Inc. Phase 6 (TIN 250-848-828-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On April 20, 2015, the parties executed a Deed of Absolute Sale whereby the Landowner transferred and conveyed the subject property 1 to Don Vicente Villas Homeowner's Association, Inc. Phase 6 at an agreed price of Eleven Million Four Hundred Seventy Two Thousand Pesos (P11,472,000.00). Pursuant to the certification issued by SHFC, 6,315 sq.m. out of 7,653 sq.m. covered by TCT No. T-667744 actually comprises a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 2 For this purpose, Don Vicente Villas Homeowner's Association, Inc. Phase 6 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. In support of its request, Don Vicente Villas Homeowner's Association, Inc. Phase 6 has completely submitted on September 18, 2015 the following documents: 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC that 6,315 sq.m. portion of the subject property qualifies and is actually a CMP project; 3) SHFC Letter of Guaranty No. 1084; 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 Property 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 Eleuterio H. Bella, Jr. to Don Vicente Villas Homeowner's Association, Inc. Phase 6 of 6,315 sq.m. out of 7,653 sq.m. covered by TCT No. T-667744 is exempt from the capital gains tax. ETHIDa 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 Homeowner's Association shall 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 RA No. 7279. (BIR Ruling No. 053-15 dated February 27, 2015) However, the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Sec. 32 of RA 7279. Accordingly, the landowners are liable to pay the documentary stamp tax on the document 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. 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. 053-15 dated February 27, 2015) 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 ANNEX Don Vicente Villas Homeowner's Association, Inc. Phase 6 Brgy. Pulo, Cabuyao, Laguna Blk. Lot Total Area Name of Beneficiary No. No. (sq.m.) 1 Pagoso, Rommel Corpuz 1 1 50.34 2 Valencia, Marissa Reyes 1 2 51.92 3 Ugan, Anabel Cananas 1 3 50.34 4 Herrero, Eddie Ignacio 1 4 50.34 5 Soriano, Ofelia Reyes 1 5 50.34 6 Ocampo, Romeo Reyes 1 6 50.34 7 Molina, Josephine Reyes 1 7 50.34 8 Catamisan, Cherlita Casas 1 8 50.34 9 Faduga, Raymond Bedeo 1 9 50.34 10 Ong, Hannah Lynn Jaron 1 10 50.34 11 Maala, Darwin De Roxas 1 11 50.34 12 Dayrit, Emmanuel Martin 1 13 50.34 13 Magbanua, Ruben Estimala 1 14 50.34 14 Dayrit, Allan Christopher Martin 1 15 50.34 15 Rio, Jovelyn Velasco 1 16 50.34 16 Medel, Marcela Villanueva 1 17 50.34 17 Lodor, Benjie Melano 1 19 50.34 18 Odivillas, Bob Beronilla 1 20 50.34 19 Millano, Edgar Gomez 1 21 50.34 20 Padriquez, Mary Jane Bag-Ao 1 22 50.34 21 Paur, Allan Melano 1 23 50.34 22 Tuburan, Joevelyn Malata 1 24 50.34 23 Conde, Maridel Robles 1 25 50.34 24 Tirado, Rolando Erpe 1 26 50.34 25 Alcazar, Jomar Conde 1 27 50.34 26 Encinas, Romeo Jr. Sendico 1 28 50.34 27 Robles, Mary Grace Leop 1 29 50.34 28 Demasu-Ay, Re-Ann Palabriga 1 30 50.34 29 Icaro, Jennifer Garcia 1 31 50.34 30 Nale, Mary Joy Mahinay 1 32 50.34 31 Estrella, Virgildo Amistoso 1 33 50.34 32 Fadrogane, Rosalia Fungot 2 4 50.34 33 Pastrana, Monaliza Felipe 2 5 50.34 34 Pastrana, Aldren Baysa 2 6 50.34 35 Pastrana, Jervis Felipe 2 7 50.34 36 Pastrana, Rustico De Luna 2 8 50.34 37 Delos Reyes, Elmer Passion 2 9 50.34 38 Lumacad, Maylord Postre 2 10 50.34 39 Fabila, Ricky Nequia 2 11 50.34 40 Jamisola, Anna Lucille Gallana 2 12 50.34 41 Dionisio, Aracelle Fabila 2 13 50.34 42 Libradilla, Ireneo Samontanes 2 14 50.34 43 Cabillon, Lorraine Jacinto 2 16 50.34 44 Belegal, Beneth Ramos 2 17 50.34 45 Trinidad, Lorie Leano 2 18 50.34 46 Belegal, Bernardo Culla 2 19 50.34 47 De Vera, Lovell Leano 2 20 50.34 48 Napuli, Leazel Sotoniel 2 21 50.34 49 Obea, Evelyn Ramirez 2 22 50.34 50 Delos Reyes, Alwin De Pasion 2 23 50.34 51 Barrio, Jesus Abendao 2 24 50.34 52 Sambo, Dominador Quimbao 2 25 50.34 53 Suarez, Lamberto Fernandez 2 26 50.34 54 Dimatulac, Rolando Galang 2 27 50.34 55 Dema-Ala, Reno Payaday 2 28 50.34 56 Pangilinan, Editha Santos 2 29 50.34 57 Olivares, Jerry Raosa 2 30 50.34 58 Lazo, Rodalyn Padilla 2 32 50.34 59 Padilla, Rowena Mendoza 2 34 50.34 60 Gallegos, Nelson Malasarte 2 37 50.34 61 Lim, Ana Diolola 3 5 50.34 62 Antad, Marilyn Bat-Ao 3 6 50.34 63 Rodriguez, Rosalinda Diolola 3 7 50.34 64 Yohanon, George Galiste 3 8 50.34 65 Luces, Glenda Fuentes 3 9 50.34 66 Luces, Glea Fuentes 3 10 50.34 67 Geronimo, Arnold Ambagan 3 11 50.34 68 Geronimo, Ronilo Ambagan 3 12 50.34 69 Verdin, Nelie Aurelio 3 13 50.34 70 Gabora, Emelita Bocayong 3 14 50.34 71 Abalos, Reynaldo Mollina 3 15 50.34 72 Fabunan, Celso Fadriquela 3 16 50.34 73 Napoli, Annie Leazle Sotoniel 3 18 50.34 74 Cordova, Anelyn Asupra 3 20 50.34 75 Alporha, Gorgonio Flomares 3 21 50.34 76 Sopranes, Renia Entredecho 3 22 50.34 77 Nicolas, Ma. Liezl Pahilagao 3 23 50.34 78 Entredicho, Lauro Mayano 3 24 50.34 79 Manansala, Marivic Pahilagao 3 25 50.34 80 Reyes, Maria Cristilyn Franco 3 26 50.34 81 Pahilagao, Lesandra Faduga 3 27 50.34 82 Taya, Gina Sabilala 3 28 50.34 83 Faduga, Perliebeth Bedeo 3 29 50.34 84 Quintinita, Sammy Moredo 3 30 50.34 85 Jaromay, Rema Joy Ponce 3 31 50.34 86 Acabal, Lorena Canovas 3 32 50.34 87 Brobo, Mira Cielo Lorin 4 1 50.34 88 Brobo, Jaime Lorin 4 3 50.34 89 Leal, Cherilyn Legada 4 6 50.34 90 Leal, Divina Boquete 4 8 50.34 91 Hintural, Domingo Jr. Carpio 4 9 50.34 92 Parayno, Leonardo Babula 4 10 50.34 93 Padigos, Patricia Asilo 4 11 50.34 94 Pangibitan, Maricel Camu 4 13 50.34 95 Talento, Ricardo Andaya 4 15 50.34 96 Lumacad, Divino Postre 4 16 50.34 97 Tamayo, Jesus Jr. Mondano 4 17 50.34 98 Quilao, Mary Jane Postre 4 18 50.34 99 Santilles, Ma. Cecilia Cabrera 4 19 50.34 100 Anonical, Elmer Cerda 4 21 50.34 101 Tangog, Roberto Dela Cruz 4 23 50.34 102 Bobis, Genefer Morco 4 25 50.34 103 Aguilar, Eugene Bechayda 4 26 50.34 104 Alvareda, Roland Bobis 4 27 50.34 105 Aguilar, Honeylyn Bechayda 4 28 50.34 106 Magno, Dharel Arroyo 4 29 50.34 107 Magno, Jorel Dacanay 4 31 50.34 108 Albo, Annaliza Dalsalya 5 1 50.34 109 Albo, Maureen Batonao 5 2 50.34 110 Bellen, Jenny Babes Aguilar 5 3 50.34 111 Malapad, Alandro Lope 5 4 50.34 112 Pura, Susan Peralta 5 7 50.34 113 Pura Jr., Nestor Peralta 5 8 50.34 114 Peralta, Daybelyn Suyom 5 9 50.34 115 Desalit, Michael Sardon 5 10 50.34 116 Desalit, Doreen Sardon 5 11 50.34 117 Desalit, Janice Sardon 5 12 50.34 118 Orbe, Stephen Coronado 5 13 50.34 119 Orbe, Nissin Coronado 5 14 50.34 120 Felizarta, Virgel Deligero 5 15 50.34 121 Orbe, Ginalie Coronado 5 16 50.34 122 Diaz, Chester Ryan Flordeliz 5 17 50.34 123 Panliboton, Odessa Llantino 5 18 50.34 124 Castillo, Marissa Ruedas 5 19 50.34 125 Marquez, James Jones Balagtas 5 20 70.80 Footnotes 1. Six Thousand Three Hundred Fifteen square meters (6,315 sq.m.) under the CMP at an agreed price of Nine Million Four Hundred Sixty Six Thousand Three Hundred Eleven Pesos and 30/100 (P9,466,311.30) and the remaining area was acquired by direct buyers. 2. See Annex for the masterlist of qualified beneficiaries.