BIR Ruling No. 133-14

May 16, 2014 BIR RULING NO. 133-14 RA No. 7279; BIR Ruling No. 109-13 Mergeville Homeowners Association, Inc. Indahag, Cagayan de Oro City Attention: James V. Ego-Ugan President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated September 16, 2013, endorsing the sale transaction between Lelia B. Lunar, * et al. and Mergeville 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 Leila B. Lunar (TIN 139-939-710-000), Charito B. Villalobos (TIN 134-402-425-000) and Brenda B. Padilla (TIN 123-404-913-000) (hereinafter referred to as Landowners) are the registered owners of a parcel of land, identified as Lot-2761 of cadastral survey of Cagayan covered by Transfer Certificate of Title (TCT) No. 137-2013000209 issued by the Registry of Deeds for Cagayan de Oro City. The aforesaid property is situated at Brgy. Indahag, Cagayan de Oro City with an area of Thirty Six Thousand Three Hundred Fifteen square meters (36,315 sq.m.), more or less. Mergeville Homeowners Association, Inc. (TIN 427-610-429-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On March 8, 2013, the parties executed Absolute Deed of Sale whereby the Landowners, thru their Attorney-in-Fact, Leila B. Lunar, transferred and conveyed the subject property to Mergeville Homeowners Association, Inc. at an agreed price of Seventeen Million Two Hundred Forty Nine Thousand Six Hundred Twenty Five Pesos (P17,249,625.00). Pursuant to the certification issued by SHFC, the property covered by TCT No. 137-2013000209 is actually a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Mergeville 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). cDCHaS In support of its request, Mergeville 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 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" ACTaDH 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 Mergeville Homeowners Association, Inc. of the property covered by TCT No. 137-2013000209 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) 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. AECacT Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX Mergeville Homeowners Association, Inc. Indahag, Cagayan de Oro City Name of Beneficiary Blk. Lot Total Area No. No. (sq.m.) 1 Cagungun, Carmelita O. 1 1 122.47 2 Cenarosa, Meschille L. 1 2 122.47 3 Cambaya, Harold S. 1 3 122.47 4 Cambaya, Jose S. 1 4 122.47 5 Opo, Winifredo O. 1 5 122.47 6 Ego-Ugan, Sheena Joy R. 1 6 122.47 7 Generalao, Nonito C. 1 7 122.47 8 Ocang, Angel Lou H. 1 8 122.47 9 Sanchez, Jun Mark Q. 1 9 122.47 10 Jalalon, Rogelio D. 1 10 122.47 11 Obsiana, Garry D. 1 11 122.47 12 Egargo, Ronnel M. 1 12 122.47 13 Lucero, Elma S. 1 13 122.47 14 Billones, Jeffrey A. 1 14 122.47 15 Saldo, Elizabeth B. 1 15 122.47 16 Billones, Ma. Theresa A. 1 16 122.47 17 Villamil, Philip T. 1 17 122.47 18 Bacleon, Paulita B. 1 18 122.47 19 Maghinay, Cristnier T. 1 19 122.47 20 Saliring, Renato H. 1 20 122.47 21 Oliveros, Mark John O. 1 21 122.47 22 Encoy, Mayette C. 1 22 122.47 23 Periodico, Arlyn M. 1 23 122.47 24 Amparo, Dionisio O. 1 24 122.47 25 Janao, Renante T. 1 25 122.47 26 Villarosa, Ralph Don S. 1 26 122.47 27 Olape, Shyrah Mecha S. 2 1 122.47 28 Laborte, Josephine R. 2 2 122.47 29 Jabiniao, Charmie L. 2 3 122.47 30 Manansala, Kathrina B. 2 4 122.47 31 Manansala, Kelly Ray B. 2 5 122.47 32 Estrada, Donissa Mhia O. 2 6 122.47 33 Dequinion, Julieta O. 2 7 122.47 34 Embralinag, Alvin O. 2 8 122.47 35 Taghap, Eliezer P. 2 9 122.47 36 Babia, Pastor Jr. D. 2 10 122.47 37 Bajao, Raimabeth P. 2 11 122.47 38 Hayag, Jesusa P. 2 12 122.47 39 Ambrad, Jamesler M. 2 13 122.47 40 Sepulveda, Edelino G. 2 14 122.47 41 Minister, Geovanni M. 2 15 122.47 42 Sarinas, Dorocita T. 2 16 122.47 43 Cagungun, Jenie A. 2 17 122.47 44 Palarca, Rey O. 2 18 122.47 45 Banguis, Benjie L. 2 19 122.47 46 Monares, Elmo M. 2 20 122.47 47 Deligos, Lexter P. 2 21 122.47 48 Laquina, Gavino B. 2 22 122.47 49 Caylo, Bob S. 2 23 122.47 50 Baliao, Willy O. 2 24 122.47 51 Bacan, Irma B. 2 25 122.47 52 Bendanillo, Victor A. 2 26 122.47 53 Requilme, Dionisio B. 2 27 122.47 54 Saldana, Miraluz R. 3 1 122.47 55 Alamban, Rezay D. 3 2 122.47 56 Caballes, Lorna M. 3 3 122.47 57 Arias, Raymundo B. 3 4 122.47 58 Florentino, Jennifer O. 3 5 122.47 59 Hill, Maryjane O. 3 6 122.47 60 Escolta, Cherry F. 3 7 122.47 61 Arias, Rey N. 3 8 122.47 62 Lodovico, Olympio L. 3 9 122.47 63 Sabellina, Jovelyn Y. 3 10 122.47 64 Caniamo, Emmalinda S. 3 11 122.47 65 Janao, Christine Angeli O. 3 12 122.47 66 Payla, Earlie O. 3 13 122.47 67 Quisit, Joenalyn S. 3 14 122.47 68 Cruz, Marylou M. 3 15 122.47 69 Patagoc, Juanita N. 3 16 122.47 70 Demacale, Angelina D. 3 17 122.47 71 Amantiad, Rubylinda D. 3 18 124.22 72 Rojas, Jeanne Brigida D. 4 1 122.47 73 Preciado, Susan A. 4 2 122.47 74 Nene, Alexander Q. 4 3 122.47 75 Castillo, Catsteven C. 4 4 122.47 76 Salamanca, Merlen M. 4 5 122.47 77 Lu, Janet A. 4 6 122.47 78 Pacaa, Delia D. 4 7 122.47 79 Barrette, Sherwin T. 4 8 122.47 80 Narisma, Renato J. 4 9 122.47 81 Valde, Louie F. 4 10 122.47 82 Tan, Vicenta G. 4 11 134.71 83 Matin-Ao, Marites R. 4 12 134.71 84 Bayron, Victor Ian G. 4 13 134.71 85 Malangen, Loremie M. 4 14 134.71 86 Liquit, Ariston L. 4 15 134.71 87 Ricarte, Jessebeth P. 4 16 134.71 88 Rafal, Marilyn T. 4 17 134.71 89 Entac, Jeffrey I. 5 1 122.47 90 Cezar, Nio Kristi P. 5 2 122.47 91 Pricillas, Kelly R. 5 3 122.47 92 Sanchez, Dulce Q. 5 4 122.47 93 Garganera, Ladyfair P. 5 5 122.47 94 Lagahit, Marshal B. 5 6 122.47 95 Cahoy, Allan L. 5 7 122.47 96 Capito, Minvilu A. 5 8 122.47 97 Santua, Fe C. 5 9 122.47 98 Verana, Loda L. 5 10 122.47 99 Santua, Efren C. 5 11 122.47 100 Puno, Augusto Ricky VIII O. 5 12 122.47 101 Rontal, Leonil C. 5 13 124.22 102 Dadang, Manilyn B. 5 14 124.22 103 Cezar, Joel C. 5 15 124.22 104 Aquino, Roldan C. 5 16 124.22 105 Peas, Nelieta W. 5 17 127.72 106 Aguto, Juvelyn B. 5 18 127.72 107 Salas, Larissa H. 6 1 122.47 108 Maglangit, Elmer Q. 6 2 122.47 109 Boholst, Ian T. 6 3 122.47 110 Eroy, Sunny M. 6 4 122.47 111 Bensing, Rubilyn T. 6 5 122.47 112 Fernando, Elizabeth M. 6 6 122.47 113 Golo, Eugene Victor L. 6 7 122.47 114 Baigad, Bonifacio B. 6 8 122.47 115 Cezar, Cristina M. 6 9 122.47 116 Deligos, Jelyn B. 6 10 122.47 117 Maglacion, Jose E. 6 11 122.47 118 Balagosa, Janice Cecillien E. 6 12 131.21 119 Nabe, Villa Q. 6 13 131.21 120 Deligos, Hazel E. 7 1 122.47 121 Watas, Janneth D. 7 2 122.47 122 Caayupan, Maria Agnes P. 7 3 122.47 123 Principe, Rene A. 7 4 122.47 124 Go, Milagros J. 7 5 122.47 125 Tubal, Anaflor O. 7 6 122.47 126 Cagaitan, Eddie C. 7 7 122.47 127 Ebueng, Arvin T. 7 8 122.47 128 Cahoy, George A. 7 9 122.47 129 Sales, Warren P. 7 10 122.47 130 Orgada, Wellma F. 7 11 122.47 131 Arengo, Cyle Louise G. 7 12 122.47 132 Mangubat, Marvin D. 7 13 132.96 133 Valdehueza, Edilberto S. 7 14 132.96 134 Constantino, Maridyl M. 7 15 132.96 135 Abrogar, Solraque B. 7 16 132.96 136 Cal, Estrella D. 7 17 132.96 137 Diapolet, Arniel D. 7 18 132.96 138 Villamor, Roxanne E. 8 1 122.47 139 Sabang, Cardeliza A. 8 2 122.47 140 Paculba, Hazel Gueen S. 8 3 122.47 141 Mentopa, Melvin P. 8 4 122.47 142 Gomocay, Primitivo Z. 8 5 122.47 143 Ceno, Nikka O. 8 6 122.47 144 Comia, Francis Xavier A. 8 7 122.47 145 Areja, Roy C. 8 8 122.47 146 Tenebroso, Nancy A. 8 9 122.47 147 Beja, Pocholo T. 8 10 122.47 148 Estela, Ma. Nycie A. 9 1 122.47 149 Abonitalla, Eva Y. 9 2 122.47 150 Veloso, Edgar L. 9 3 122.47 151 Malunes, Mary May V. 9 4 122.47 152 Galacio, Marina B. 9 5 122.47 153 Yaez, Vilma G. 9 6 131.21 154 Evangelista, Aaron P. 9 7 131.21 155 Santillan, Daylinda A. 9 8 131.21 156 Pabunan, Jennette A. 9 9 131.21 157 Gulfan, Jovanne S. 9 10 122.47 158 Cezar, Quennielove B. 9 11 122.47 159 Raagas, Liezl B. 9 12 122.47 160 Eniola, Claudino S. 9 13 139.96 161 Estrada, Kirstie Marisse B. 10 1 122.47 162 Paje, Arman D. 10 2 122.47 163 Rabor, Hermosa Q. 10 3 122.47 164 Caruz, Amy A. 10 4 122.47 165 Dador, Gemma N. 10 5 122.47 166 Cataylo, May P. 10 6 122.47 167 Meliton, Welyn J. 10 7 122.47 168 Bequilla, Imelda C. 10 8 122.47 169 Jumawan, Victoria R. 10 9 122.47 170 Ehong, Joberth A. 10 10 122.47 171 Hoyohoy, Eleonor M. 10 11 122.47 172 Sabijon, Sylvia S. 10 12 122.47 173 Madlos, Ladylyn C. 10 13 125.97 174 Flores, Maricel C. 10 14 125.97 175 Navarra, Teddy D. 10 15 125.97 176 Udtohan, Rhium Truce O. 10 16 125.97 177 Divinagracia, Ireneo C. 10 17 125.97 178 Udtohan, Sheryl O. 10 18 125.97 179 Enriquez, Noemi M. 10 19 125.97 180 Casimero, Aniolita L. 11 1 122.47 181 Entac, Ernesta I. 11 2 122.47 182 Seoron, Elizabeth C. 11 3 122.47 183 Jalalon, Myra May N. 11 4 122.47 184 Patriana, Romy B. 11 5 122.47 185 Pe Benito, Nona C. 11 6 122.47 186 Codera, Glenn E. 11 7 122.47 187 Polio, Lendi R. 11 8 122.47 188 Jalalon, Julieto D. 11 9 122.47 189 Requilme, Lerni Y. 11 10 122.47 190 Gundaya, Nathaniel C. 11 11 122.47 191 Villalobos, Philip B. 11 12 122.47 192 Carane, Jesseca L. 11 13 127.72 193 Mojo, Janeth Y. 11 14 127.72 194 Cordero, Mark Richmond Y. 11 15 127.72 195 Gumahad, Bonifacia R. 11 16 127.72 196 Pacatang, Cezara M. 11 17 129.47 197 Pantullana, Marilou M. 11 18 129.47 198 Dandoy, Glenda G. 13 1 122.47 199 Tamsi, Irene N. 13 2 122.47 200 Simene, Alexito G. 13 3 122.47 201 Banaag, Judit M. 13 4 122.47 202 Arranchado, Maresty V. 13 5 122.47 203 Laput, Emmanuel O. 13 6 122.47 204 Sales, Rocky P. 13 7 122.47 205 Borres, Angelyn A. 13 8 122.47 206 Libres, Arlinda V. 13 9 122.47 207 Roldan, Rhona G. 13 10 122.47 208 Roldan, Portia G. 13 11 122.47 209 Dela Cruz, Rhepel Jean M. 13 12 122.47 210 Dayao, Fe T. 13 13 122.47 211 Navarra, Christopher Eric D. 13 14 122.47 212 Tamala, Leonila B. 13 15 122.47 213 Dongque, Max L. 13 16 169.70 214 Ego-Ugan, James B. 13 17 169.70 215 Alquizar, Allan C. 14 1 122.47 216 Pancho, Michel M. 14 2 122.47 217 Acabo, Marilyn P. 14 3 122.47 218 Ranile, Jonelyn N. 14 4 122.47 219 Cabalan, Ronnel K. 14 5 122.47 220 Ehong, Joy A. 14 6 122.47 221 Tamala, Margie E. 14 7 122.47 222 Cahoy, Avelyn G. 14 8 122.47 223 Prado, Bernardo L. 14 9 122.47 224 Labandia, Alona B. 14 10 122.47 225 Larotin, Christoffer V. 14 11 122.47 226 Pueblas, Lloyd P. 14 12 122.47 227 Coronel, Josephine O. 14 13 125.97 228 Caangay, Armando A. 14 14 125.97 229 Salindato, Rene G. 14 15 132.96 230 Ipanag, Albert P. 14 16 132.96 231 Codilla, Wenifredo C. 14 17 134.71 232 Maghinay, Agnes T. 15 1 122.47 233 Yamomo, Gildie A. 15 2 122.47 234 Babia, Nancy D. 15 3 122.47 235 Guevarra, Lemuel S. 15 4 122.47 236 Sinto, Jimmy B. 15 5 122.47 237 Melendez, Roy L. 15 6 122.47 238 Tambiga, Myla R. 15 7 122.47 239 Tacbobo, Larry B. 15 8 122.47 240 Goc-Ong, Bernadeth G. 15 9 122.47 241 Napiere, Noralyn S. 15 10 122.47 242 Maglangit, Rodel M. 15 11 122.47 243 Ocoy, Ella Mae M. 15 12 122.47 244 Puno, Ofelia B. 15 13 122.47 245 Lunar, Warren Keith B. 15 14 122.47 246 Betonio, Angelita C. 15 15 122.47 247 Jimenez, Julieto Jr. V. 16 1 122.47 248 Morden, Merlyn D. 16 2 122.47 249 Ignalig, Alma S. 16 3 122.47 250 Ignalig, Ismaelita S. 16 4 122.47 251 Gonzales, Abelardo T. 16 5 122.47 252 Villarta, Rhenna L. 16 6 122.47 253 Malones, Tessie V. 16 7 122.47 254 Malto, Felix B. 16 8 122.47 255 Gumahad, Carlos A. 16 9 122.47 256 Saguindel, Landy L. 16 10 122.47 257 Soriano, Loreta T. 16 11 122.47 258 Cabrezos, Rico G. 16 12 122.47 259 Sumampong, Hermogenia I. 16 13 122.47 260 Cezar, Evelyn R. 16 14 122.47 261 Abante, Samuel M. 16 15 122.47 262 Bahian, Evangeline G. 16 16 122.47 263 Torres, Jessica V. 16 17 122.47 264 Bunayog, Roberto T. 16 18 122.47 265 Villaganas, Daisy M. 16 19 122.47 266 Cabigon, Jay Kenny Roger D. 16 20 122.47 267 Flores, Marife R. 16 21 122.47 268 Torniado, Mario Warlito T. 16 22 122.47 269 Dacanay, Letty S. 17 1 122.47 270 Flores, Glenda T. 17 2 122.47 271 Pitogo, Tiffany June Z. 17 3 122.47 272 Bunao, Monaliza L. 17 4 122.47 273 Gorgonio, Rosbie A. 17 5 122.47 274 Martinez, Cynthia E. 17 6 122.47 275 Lorezo, Jonna H. 17 7 122.47 276 Laborte, Liza Jane L. 17 8 122.47 277 Apat, Levi M. 17 9 122.47 278 Maglangit, Jimmy B. 17 10 122.47 279 Atienza, Renato E. 17 11 122.47 280 Echeveria, Ma. Jalyn Y. 17 12 122.47 281 Echeveria, Jose Jonald Y. 17 13 122.47 282 Serot, Rito G. 17 14 122.47 283 Maregmen, Sally M. 17 15 122.47 284 Bienes, Rosalia R. 17 16 122.47 285 Lapura, Mary Ann M. 17 17 122.47 286 Perocho, Wilfredo Jr. B. 17 18 122.47 287 Coto, Laura C. 17 19 122.47 288 Caete, Henry B. 17 20 122.47 289 Lorezo, Juna O. 17 21 122.47 290 Libradilla, Griselda C. 17 22 122.47 291 Pilones, Marjorie A. 17 23 122.47 292 Cabahug, Joven T. 17 24 122.47 293 Salindato, Florian S. 17 25 122.47 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.