BIR Ruling No. 132-14

May 16, 2014 BIR RULING NO. 132-14 RA No. 7279; BIR Ruling No. 109-13 Sitio Mapahiubsanon Homeowners Association, Inc. Cabangcalan II, Bulacao, Cebu City Attention: Rebecca N. Delima President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated February 24, 2014, endorsing the sale transaction between Constancia A. Castaares and Josefina C. Concial married to Tani L. Concial and Sitio Mapahiubsanon 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 Constancia A. Castaares (TIN 407-921-638-000) and Josefina C. Concial (TIN 264-364-889-000) (hereinafter referred to as Landowners) are the registered owners of a parcel of land, identified as Lot 5328-B of the Subdivision Plan (LRC) Psd-214914, being a portion of Lot 5328, Cebu Cadastre LRC Rec. No. 9467 covered by Transfer Certificate of Title (TCT) No. 107-2013000745 issued by the Registry of Deeds for Cebu City. The aforesaid property is situated at Cabangcalan II, Bulacao, Cebu City with an area of Two Thousand Five Hundred Fifty Seven square meters (2,557 sq.m.),more or less. Sitio Mapahiubsanon Homeowners Association, Inc. (TIN 433-522-245-000),on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB).On October 2, 2013, the parties executed a Deed of Absolute Sale whereby the Landowners transferred and conveyed transferred and conveyed Two Thousand Four Hundred Forty square meters (2,440 sq.m.) of the subject property to Sitio Mapahiubsanon Homeowners Association, Inc. at an agreed price of Eight Million Five Hundred Forty Thousand Pesos (P8,540,000.00).Pursuant to the certification issued by SHFC, Two Thousand Four Hundred Forty square meters (2,440 sq.m.) out of Two Thousand Five Hundred Fifty Seven square meters (2,557 sq.m.) covered by TCT No. 107-2013000745 actually comprise a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. For this purpose, Sitio Mapahiubsanon 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 on January 16, 2014. EScaIT In support of its request, Sitio Mapahiubsanon Homeowners Association, Inc. has completely submitted on February 28, 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 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 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 the landowners to Sitio Mapahiubsanon Homeowners Association, Inc. of Two Thousand Four Hundred Forty square meters (2,440 sq.m.) portion of the property covered by TCT No. 107-2013000745 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 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. 109-13 dated March 21, 2013) cHAaEC 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 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. 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 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. 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 Sitio Mapahiubsanon Homeowners Association, Inc. Cabangcalan II, Bulacao, Cebu City Name of Beneficiary Blk. No. Lot Total Area No. (sq.m.) 1 Java, Rodel A. 1 1 40.81 2 Java, Adela A. 1 2 26.40 3 Blasco, Maricel H. 1 3 27.60 4 Amancia, Glenn A. 1 4 15.60 5 Chan, Celsa H. 1 5 9.60 6 Padon, Rodgelia T. 1 6 25.20 7 Saraga, Eufemia T. 1 7 21.60 8 Dela Cerna, Beberly T. 1 8 16.80 9 Aparicio, Lucelle T. 1 9 14.40 10 Bucao, Rosa M. 1 10 25.20 11 Caballero, Josephine H. 1 11 24.00 12 Labajo, Emmanuel P. 1 12 20.40 13 Labajo, Wilma P. 1 13 21.60 14 Bacalso, Snooky S. 2 1 22.80 15 Duat, Leah N. 2 2 26.40 16 Delima, Maricel P. 2 3 26.40 17 Delima, Mamerto III N. 2 4 27.60 18 Delima, Mardion N. 2 5 27.60 19 Delima, Rebecca N. 2 6 27.60 20 Abendan, Christopher S. 2 7 18.00 21 Petalcorin, Reynaldo A. 2 8 19.20 22 Minao, Debbie M. 2 9 30.00 23 Bato-Bato, Heide B. 2 10 22.80 24 Bato-Bato, Marcela B. 2 11 24.00 25 Lopez, Ursula B. 2 12 34.81 26 Pardoncillo, Leny C. 2 13 21.60 27 Pardoncillo, Windy C. 2 14 21.60 28 Bacalso, Benjie A. 2 15 26.40 29 Bacalso, Matheas C. 2 16 26.40 30 Berbo, Benjamin L. 2 17 20.40 31 Berbo, Erlinda L. 2 18 21.60 32 Dicdican, Raniel P. 2 19 13.20 33 Tabo-Tabo, James Lored B. 3 1 20.40 34 Robles, Rejidjohn B. 3 2 20.40 35 Lauron, Virginia C. 3 3 21.60 36 Arante, Precylinda C. 3 4 15.60 37 Yu, Lelanie Grace Marie M. 3 5 20.40 38 Sandoval, Joy T. 3 6 20.40 39 Villoces, Jocelyn B. 3 7 20.40 40 Tabuana, Norcasa T. 3 8 34.81 41 Lanete, Mary Ann R. 3 9 27.60 42 Bocado, Grace R. 3 10 26.40 43 Suede, Leslie Ann B. 3 11 21.60 44 Bequilla, Maria Joy R. 3 12 22.80 45 Parba, Rubi C. 3 13 25.20 46 Parba, Emelia C. 3 14 26.40 47 Ragados, Ethel N. 4 1 36.01 48 Parba, Felicio C. 4 2 25.20 49 Quilicot, Nenita B. 4 3 25.20 50 Ragados, Judith N. 4 4 21.60 51 Labandero, Junifer C. 4 5 32.41 52 Ciro, Maricres L. 4 6 25.20 53 Ciro, Jujie L. 4 7 26.40 54 Baguio, Jasmin A. 4 8 28.80 55 Escopete, Hazel B. 4 9 28.80 56 Aguilar, Maribel A. 4 10 30.00 57 Cavite, Evangeline C. 4 11 34.81 58 Yap, Juvelyn C. 4 12 27.60 59 Mila, Rosalinda D. 4 13 18.00 60 Sangalang, Silvino G. 4 14 25.20 61 Ugsod, Janette M. 4 15 26.40 62 Ugsod, Timmy D. 4 16 26.40 63 Abanto, Maricar B. 4 17 30.00 64 Bacanggoy, Zaldy M. 4 18 30.00 65 Miano, Janice E. 4 19 24.00 66 Arante, Julieto T. 4 20 26.40 67 Arante, Lino P. 4 21 26.40 68 Tabar, Ma. Joy M. 4 22 25.20 69 Leanza, Carmel S. 4 23 25.20 70 Gabijan, Minchi B. 4 24 24.00 71 Balanay, Alrich L. 4 25 24.00 72 Barcobero, Ethel E. 4 26 33.61 73 Rahil, Neolito M. 4 27 31.21 74 Rahil, Jayson F. 4 28 28.80 75 Badayos, Ma. Liza B. 4 29 32.41 76 Sergio, Fatima Grace B. 4 30 33.61 77 Rosa, Rosalinda O. 4 31 31.21 78 Sagrado, Jeffe A. 4 32 19.20 79 Perez, Reynaldo A. 4 33 21.60 80 Aguilar, Elenita T. 5 1 26.40 81 Tabal, Cesaria D. 5 2 30.00 82 Tagalog, Noel C. 5 3 30.00 83 Reboton, Anabelle M. 5 4 32.41 84 Mandahuyan, Vicente Jr. M. 5 5 33.61 85 Balido, Jasmine B. 5 6 25.20 86 Dimaporo, Jocelyn A. 5 7 20.40 87 Padayao, Ellyn C. 5 8 31.21 88 Cereo, Felanvern C. 5 9 19.20 89 Tangaha, Janice P. 5 10 21.60 90 Padayao, Jevy C. 5 11 19.20 91 Padayao, Gaudencio Jr. A. 5 12 20.40 92 Rizada, Meri Luna M. 5 13 20.40 93 Comendador, Juemetchi P. 5 14 26.40 94 Comendador, Jebson P. 5 15 24.00 95 Arnejo, Gary J. 5 16 24.00 96 Arnejo, Bona Jean J. 5 17 24.00 97 Baguio, Ethel P. 5 18 34.81