Hon. John G. Bongat

April 5, 2016 BIR RULING NO. 108-16 RA 7279; BIR Ruling No. 066-2011 Hon. John G. Bongat City Mayor City of Naga Sir : This refers to your letter dated September 3, 2013 requesting tax exemption on the sale transaction between the Heirs of Siy Cong Jui and the City of Naga 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. Documents submitted show that the Heirs of Siy Cong Jui (Amparo Siy Cong Jui, Ernesto Siy Cong Jui, Socorro Siy Cong Jui and Alfonso Siy Cong Jui) (hereinafter referred to as Landowners) were the registered owners of a parcel of land, identified as Lot No. 1166 of the Cadastral Survey of Naga, Cadastral Case No. N-3, LRC Cadastral Record No. N-78 covered by Original Certificate of Title (OCT) No. 561 issued by the Registry of Deeds for the City of Naga with an area of Twenty Five Thousand Nine Hundred Seven square meters (25,907 sq.m.), more or less; that Amparo Siy Cong Jui, Ernesto Siy Cong Jui, Socorro Siy Cong Jui and Alfonso Siy Cong Jui died on April 12, 1991, February 20, 1978, July 3, 2001 and September 5, 1960, respectively; that on August 11, 2010, an "Extrajudicial Settlement of the Estate" of the deceased landowners was executed among their respective heirs, to wit: Landowners Heirs Amparo Siy Cong Jui Sunsan Teng Tan, Amelia Teng Yap, Linda Teng Woo, Cecilia Teng Co and Richard Teng Socorro Siy Cong Jui Sonny S. Young, David S. Young, Edward S. Young, Dancy S. Young Lim, Vicky S. Young and Henry S. Young Alfonso Siy Cong Jui Eleonor Siy Tan, Alexander Siy, Azucena Siy Nakagawa, Edward Siy and Elizabeth Siy Ernesto Siy Cong Jui Sunsan Teng Tan, Amelia Teng Yap, Linda Teng Woo, Cecilia Teng Co, Richard Teng, Sonny S. Young, David S. Young, Edward S. Young, Dancy S. Young Lim, Vicky S. Young, Henry S. Young, Eleonor Siy Tan, Alexander Siy, Azucena Siy Nakagawa, Edward Siy and Elizabeth Siy that the heirs divided and adjudicated, among themselves, the above described real property pro-indiviso; and that, Certificates Authorizing Registration (CAR) were issued to the Estates of the Landowners, all dated August 9, 2012, certifying that the said Estates have fully paid their respective estate taxes. On the other hand, the City Government of Naga, a public entity created and existing under the laws of the Philippines, is desirous of purchasing the said property for its socialized housing project; that on February 8, 2012, a Decision based on Compromise Agreement was rendered by the Regional Trial Court, 5th Judicial Region, Branch 22, Naga City on the said parcel of land pursuant to City of Naga Ordinance No. 2011-034 expropriating the subject property to be used by urban poor beneficiaries 1 who are already residing thereon; that said Decision has become final and executory on March 1, 2012; and that in the same decision, the Court fixed the just compensation at Five Million One Hundred Eighty One Thousand Four Hundred Pesos (P5,181,400.00). CAIHTE On April 17, 2012, the Heirs of the landowners, through their attorney-in-fact, Sonny S. Young, transferred the subject realty to the City Government of Naga equivalent to the amount of just compensation; and that the subject property is to be utilized for the Socialized Housing Project for the benefit of the poor and landless. In reply, please be informed that pursuant to Section 20 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: xxx xxx xxx (d) Exemption from the payment of the following: xxx xxx xxx 2) Capital gains tax on raw lands use for the project; xxx xxx xxx" the owner of the raw land is exempt from the payment of capital gains tax or the withholding tax under Revenue Regulations No. 2-98, as amended, on the conveyance of the parcel of land for use in the aforesaid socialized housing project. Such being the case, the sale of the property covered by OCT No. 561 to City Government of Naga is exempt from capital gains tax. (BIR Ruling No. 066-2011 dated March 9, 2011) However, the sale is subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997 based on the actual consideration of the property transferred, considering that one of the contracting parties is the Government. Upon application for exemption, a lien on the titles of the land shall be annotated by the Register of Deeds having jurisdiction over the properties, to the effect that the same is to be applied or is being applied to socialized housing project pursuant to RA 7279. Please take note 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 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 CAR after the submission of the requirement provided under RMO 15-2003, including proof of payment of documentary stamp tax. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX Mabulo Resettlement Project Barangay Mabulo, Naga City Lot No. Beneficiaries Area Sq.M. Block 1 2 Estela, Noe/Elsie 54 4 Estela, Salvador/Alberta 54 5 Cayonte, Salvacion 54 6 Factor, Cerilo/Ma. Francia 54 7 Borbo, Arto/Yolanda 54 8 Nolasco, Mario/Elizabeth 54 9 Parma, Jonathan/Helen 54 12 Capin, Ruben Sr./Evelyn 54 13 Oczon, Nancy (w) 54 14 Manansala, Dennis/Armida 54 17 Obsum, Ruben/Evangeline 54 Block 2 1 Lorente, Christian 54 3 Amador, Jose/Lorna 54 5 Lumapag, Romeo (w) 54 7 Bodoy, Vicente Sr./Eva 54 Block 3 5 Dela Trinidad, Ricardo/Maria 54 Block 4 2 Pempolio, Nepthalie Jr./Marilou 54 3 Martillano, Alberto/Lorenza 54 4 Bolo, Dolores (w) 54 5 Sambrano, Placido/Marisol 54 6 Sotto, Ruperto/Precilla 54 Block 5 2 Asanza Andres/Maria Teresa 54 3 Libranda, Julio/Corazon 54 5 Manansala, Christopher/Hecile 68 Block 6 1 Plegino, Geminiano/Nida 54 7 Dela Trinidad, Nirick/Roselle 54 8 Resco, Jose/December 54 9 Galang, Diomedes/Marie Grace 54 10 San Luis, Freddie/Maria 54 Block 7 2 Modino, Clark/Ma. Luisa 54 4 Pempolio, Virgilio/Melinda 54 5 Dy, Ronilo/Ma. Vienna 54 6 Pempolio, Nicanor/Nieves 54 7 Lumapag, Nelson/Bella 54 9 Batalla, Fernando Jr./Lilia 54 12 Portugal, Alan & Belinda 54 13 Almario, Alfredo/Salvacion 54 15 Manansala, Christopher/Hecile 54 16 Buenzalida, Roderick/Elizabeth 54 Block 8 1 Francisco, Glen/Jesusa 54 2 Arevalo, Danilo/Teresita 54 5 Carillo, Ely/Shirley 54 6 Nicolas, Mapril/Melchie 54 7 Orde, Venus (sp) 54 8 Mandane, Bernardo Jr./Rosemarie 54 9 Sombrero, Alfredo Jr./Christina 54 10 Chua, Rodrigo/Perlita 54 11 Perillo, Edmegio/Carmen 54 12 Zaldivar, Rogelio/Emma 54 Block 9 1 Reyes, Magno T. (c/o Boss RSV.) 54 2 Cabalquinto, Alvin/Emma 54 3 Tresreyes, Marcellano Sr./Amelita 54 4 Mendoza, Roberto/Mary Jean 54 5 Bok, Franco/Analiza 54 6 Portuguez, Virginia (w) 54 7 Burce, Jerry/Amalia 54 8 Portuguez, Noel/Cherry 54 9 Job, Jaime/Salud 54 10 Wong, Leonardo/Lorna 54 11 Sombrero, Romeo/Emily 54 12 Moreno, Luis/Nena 54 13 Sambrano, Romeo/Rodelyn 54 Block 10 2 Quidoles, Pepito/Alicia 54 7 Alano, Wilfredo/Rowena 54 8 Prasquita, Eva (sp) 54 11 Dubas, Joel/Liezl 54 12 Lorente, Nenita *(s) 54 Block 11 1 Cabalquinto, Arnel/Jovie 54 5 David, Fernando/Emelita 54 13 Sadama, Rommel/Daisy 54 15 Pante, Ramon/Rosalinda 54 Block 12 1 Bonto, Eduardo/Elena 54 4 Reyes, Judith (w) 54 5 Calimag, Gregorio/Arlene 54 13 Del Castillo, Joel/Eva 54 15 Lacostales, Jaime/Heide 54 16 Avila, Tomas/Rose 54 19 Lacostales, Elmer/Nellie 54 Block 13 3 Gorospe, Gemma (sp) 54 4 Rego, Randy/Edna 54 6 Capayas, Anselmo (w) 54 7 Lumapag, Marlon/Narissa 54 9 San Jose, Diego/Lourdes 54 10 Buenzalida, Victor/Alma 54 Block 14 1 Romero, Estrella (sp) 54 2 Sambrano, Jose/Michelle 54 3 Adote, Francisco/Elizabeth 54 4 Francisco, Glen/Jesusa 54 Block 14 5 Cadores, Olivia/Leonardo Jr. 54 6 Otero, Purificacion 54 7 San Luis, Ruben/Delia 54 8 Francisco, Ma. Theresa (w) 54 10 Abellano, Ruben Jr./Editha 54 Block 15 1 Avellana, Rodolfo/Imelda 54 3 Husain, Ruel/Shiela 54 4 Espinosa, Benito/Godelia 54 Block 16 1 Magas, Janet 54 2 Alemania, Edna 54 3 Alemania, Alona 54 4 Jardin, Wilson 54 5 Magas, Roberto 54 6 Jardin, Wilhen/Zenaida 54 7 Tejero, Roberto 54 8 Magas, Lourdes 54 Block 17 1 Francisco, Jenelita 54 2 Orlanda, Edda 54 3 Alemania, Nimfa 54 4 Rances, Ronnel 54 5 Alegre, Oscar/Carmen 54 6 Alemania, Conrado (s) 54 7 Delos Santos, Nelson 54 8 Odiame, Junalyn 54 Block 18 3 Magas, Herminia 54 6 Brioso, Ildefonsa 54 7 Malanyaon, Erney 54 8 Malaga, Melda 54 9 Francisco, Jenet 54 10 Floredeliza, Grencio 54 Block 20 4 Lacostales, Gleceria (w) 54 Block 21 1 Pelgino, Marcelina (w) 77 Block 22 4 Verdejo, Walter/Lanie 64 5 Resco, Domingo/Rosela 60 Block 23 1 Sta. Rosa, Gina (w) 54 2 Avila, Isagani/Leonila 54 3 Junsay, Gregorio Jr./Gina 54 4 Cuerdo, Fernando/Jennifer 54 5 Abesa, Cesar 54 6 Belen, Rogen Nick/Ann Belen 54 7 Husain, Ruel/Shiela 54 8 Gallarte, Nelson/Soledad 54 9 Medenilla, Danilo 54 10 Perido, Ricardo Jovito/Aiza 54 Block 24 1 Dela Rosa, Rogelio (w) 54 2 Dela Rosa, Salvador/Creselda 54 3 Baldonado, Marlon/Jenie 54 4 Belando, Mildred/Jocelyn 54 5 Tallion, Joel/Julieta 54 6 Satinyaman, Fernando/Nelia 54 7 Duazo, Efipania (w) 54 8 Dialogo, Luzviminda (Fredisminda) 54 9 Sales, Rebecca (w) 54 10 Villareal, Domingo/Emily 54 11 Galang, Rogelio/Marites 54 12 Clores, Felix/Emilia 54 13 Cardenas, Josefina (w) 54 14 Bermudo, Alejandro/Vangeline 54 15 Bongon, Daric/Elisa 54 16 Bermudo, Angelo Sr./Rosemarie 54 17 Villete, Delia (w) 54 18 Ortega, Marites 54 19 Ortega, Ronelo 54 21 Verdadero, Winefreda & Noda, Antonio 54 22 Arcilla, Arnel/Marilou 54 Block 25 10 Ostil, Gerson/Cristy 54 Block 27 1 Tallion, Marivic 54 2 Bermudo, Maryann 54 3 Rodriguez, Roderick/Rica 54 4 Lorente, Joel 54 5 Garcia, Christopher/Nelia 54 Block 28 1 Dela Trinidad, Lazaro/Vivian 54 2 Potenciano, Bernardo/Melanie 54 4 Gomez, Wilfredo/Rosela 54 Footnotes 1. See annex.