BIR Ruling No. 109-15

April 14, 2015 BIR RULING NO. 109-15 RA No. 7279; BIR Ruling No. 303-14 SRS-Bright Morning Star Homeowners Assn., Inc. Purok Greenville, Calumpang, General Santos Attention: Regime M. Cerbo President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated November 3, 2014, endorsing the sale transaction between Glenn F. Solana and SRS-Bright Morning Star Homeowners Assn., 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 Glenn F. Solana (TIN 198-744-757-000), (hereinafter referred to as Landowner) is the registered owner of a parcel of land, identified as PLAN F-11-03-014939-D covered by Transfer Certificate of Title (TCT) No. T-41941 issued by the Registry of Deeds for the General Santos. The aforesaid property is situated at Purok Magnolia, Brgy. Calumpang, General Santos City with an area of Fifteen Thousand Three Hundred Thirty Four square meters (15,334 sq.m.), more or less. SRS-Bright Morning Star Homeowners Assn., Inc. (TIN 424-904-274-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On June 25, 2014, the parties executed a Deed of Absolute Sale whereby the former transferred and conveyed Fourteen Thousand Six Hundred Thirty Nine and 60/100 square meters 14,639.60 sq.m.) portion of the subject property to SRS-Bright Morning Star Homeowners Assn., Inc. at an agreed price of Seven Million Three Hundred Nineteen Thousand Eight Hundred One and 99/100 Pesos (P7,319,801.99). Pursuant to the certification issued by SHFC, 14,639.60 sq.m. out of 15,334 sq.m. covered by TCT No. T-41941 actually comprise a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. For this purpose, SRS-Bright Morning Star Homeowners Assn., 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. In support of its request, SRS-Bright Morning Star Homeowners Assn., Inc. has completely submitted on November 19, 2014 the following documents: 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC that the subject property qualifies and is actually a CMP project; 3) Certified true copy of the Deed of Absolute Sale to the Community Association; 4) Certified true copy of the Articles of Incorporation of the Community Association; 5) Certified true copy of the Masterlist of Qualified Beneficiaries duly certified by the SHFC; 6) Certified true copies of the TCT and Latest Tax Declaration of the Property Sold to the Community Association; 7) Certified true copy of the Location Plan of the Lot Sold to the Community Association; 8) TIN ID/BIR Certificate of Registration of the seller and the Homeowner's Association; and ADCETI 9) 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 i ncentives: xxx xxx xxx (b) Properties sold under the CMP shall be exempted from the capital gains tax; and" the landowner who sold his properties for use in a socialized housing project is exempt from the payment of capital gains tax. Such being the case, the sale by the landowner to SRS-Bright Morning Star Homeowners Assn., Inc. of the 14,639.60 portion out of 15,334 sq.m. covered by TCT No. T-41941 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 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. 303-14 dated July 24, 2014) 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 landowner is 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. (BIR Ruling No. 303-14 dated July 24, 2014) 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. 303-14 dated July 24, 2014) 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 SRS-Bright Morning Star Homeowners Assn., Inc. Purok Greenville, Calumpang, General Santos Name of Beneficiary Blk. Lot Total Area No. No. (sq.m.) 1 Salas, Richard Ponce 1 2 131.94 2 Ofamin, Irish Berdeprado 1 3 133.67 3 Reyes, Enrique Bongcac 1 4 173.60 4 Reyes, Enino Bongcac 1 5 173.60 5 Lucero, Feralyn Acenas 1 6 173.60 6 Abenion, Jose Mison Jr. Mison 1 7 173.60 7 Ruales, Arturo Sungahid 1 8 173.60 8 Dairo, Rex Baladiang 1 9 173.60 9 Baustista, Rolly Navarro 1 10 173.60 10 Clarabal, Conrado Bonga 1 11 170.13 11 Apostol, Rhoda Escaro 2 1 170.13 12 Apostol, Fernando Jr. Escaro 2 2 173.60 13 Penecilla, Romanita Evangelista 2 3 173.60 14 Bayoneta, Dennis Parreo 2 4 173.60 15 Beloncio, Deo Acua 2 5 173.60 16 Baladiang, Maritess Mendoza 2 6 173.60 17 Aveno, Danilo Culagbang 2 7 173.60 18 Marcilla, Dorcas Insular 2 8 173.60 19 Cahumnas, Dominador Jr. Ramitan 2 9 138.88 20 Martinez, Roberto Quezon 3 1 128.46 21 Calimbo, Gerald Sabandon 3 2 121.52 22 Maulas, Joannamae Nadela 3 3 170.13 23 Sta. Catalina, Jaypee Calvos 3 4 163.18 24 Maulas, AJ Nadela 3 5 166.66 25 Sta. Catalina, Ronnie Calvos 3 6 161.45 26 Delima, Nerissa Mondia 3 7 163.18 27 Genon, Allan Bordado 3 8 161.45 28 Somosot, Maricel Loreto 3 9 161.45 29 Rempula, Benjamin III Sultan 3 10 161.45 30 Loreto, Novelyn Tuboran 3 11 157.98 31 Tabalba, Virginia Belocora 3 12 161.45 32 Abandula, Dante Onez 3 13 156.24 33 Romero, Gener Mapait 3 14 291.65 34 Ladres, Jenelyn Castillon 3 15 124.99 35 Mabilog, Vincent Matilos 3 16 147.56 36 Wines, Virginia Ballescas 3 17 161.45 37 Bonghanoy, Tirzo Bola 3 18 173.60 38 Ombagin, Roniza Zafra 3 19 173.60 39 Umbahin, Numeriano Paraguya 3 20 173.60 40 Lopez, Rhoda Joy Duhaylungsod 3 21 173.60 41 Baguio, Saturnina Acol 3 22 170.13 42 Kawatsura, Arlene Baguio 3 23 170.13 43 Enarle, Mary Grace Mero 4 1 170.13 44 Mero, Julie Ann Gonzaga 4 2 170.13 45 Mero, Melodina Gonzaga 4 3 173.60 46 Mero, Jayson Gonzaga 4 4 173.60 47 Gonzales, Dennis Sr. Lomotos 4 5 173.60 48 Nocillas, Johnny Empoc 4 6 173.60 49 Arostique, Amalia Gonzales 4 7 173.60 50 Gonzales, Maria Agnes Rosalijos 4 8 173.60 51 Senarillos, Moraminda Castillano 4 9 173.60 52 Augelio, Rico Masion 4 10 173.60 53 Mabilog, Eulogio Matelos 4 11 173.60 54 Mahilum, Arnes Invento 4 12 173.60 55 Timtim, Petronilo Gajucon 4 13 173.60 56 Mahilum, Rodulfo Andrade 4 14 173.60 57 Procorato, Ellyn Invento 4 15 109.37 58 Procorato, Edmundo Invento 4 16 128.46 59 Ruamar, Vivian Gonzaga 5 1 170.13 60 Gonzaga, Bindo Piedad 5 2 156.24 61 Majadas, Jayson Montero 5 3 173.60 62 Sanico, Florienel Morales 5 4 156.24 63 Serundo, Reynaldo Salas 5 5 173.60 64 Abapo, Jacinder Aros 5 6 152.77 65 Castor, Marivic Dorin 5 7 173.60 66 Ramos, Marsha Joy Albinto 5 8 151.03 67 Deloverges, Lorna Bacasmas 5 9 173.60 68 Ramos, Josephine Albinto 5 10 147.56 69 Anas, Chona Bacasmas 5 11 173.60 70 Salibay, Alma Labor 5 12 145.82 71 Pegaro, Dexter Rose Politud 5 13 173.60 72 Gallego, Anarose Panizales 5 14 142.35 73 Pegaro, Jhoanna Fuentes 5 15 142.35 74 Pegaro, Darius Rey Pulitod 5 16 121.52 75 Gregorio, Rogelio Regino 6 1 170.13 76 Navos, Aisah Mae Arca 6 2 173.60 77 Bico, Renante Adajar 6 3 173.60 78 Arcenal, Julieta Ygot 6 4 260.40 79 Sampiano, Bernadette Baguio 6 5 173.60 80 Candado, Adrian Doble 6 6 173.60 81 Parcon, Lorence Dumip-ig 6 7 173.60 82 Nocillas, Aiza Empoc 6 8 173.60 83 Florida, Ardena Consing 6 10 173.60 84 Gabato, Cynthia Aranas 6 14 173.60 85 Cerbo, Concepcion Magbanua 6 15 173.60 86 Cerbo, Regine Magbanua 6 16 173.60 87 Arcenas, Farren Mae Lorodo 6 17 173.60 88 Sabandon, Eduardo Dingon 6 18 140.62