BIR Ruling No. 136-12

February 27, 2012 BIR RULING NO. 136-12 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10 St. Mark's Ville Homeowners Association, Inc. Marcos Alvarez Ave. Talon Uno, Las Pias City Attention: Jossel B. Duco President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation dated May 18, 2011, received by this Office on May 19, 2011, requesting tax exemption from the payment of Capital Gains Tax and other taxes in accordance with Republic Act No. 7279, otherwise known as the Urban Development and Housing Act of 1992. It appears that Lilia S. Cruz with Tax Identification Number 413-982-350-000 is the registered owner of a parcel of land, identified as Lot 3-C, of the subdivision plan (LRC) Psd-274500 covered by Transfer Certificate of Title (TCT) No. 36774 with an area of nine hundred fifty three square meters (953 sq.m.), more or less. Oscar F. Santos with Tax Identification Number 413-981-908-000 is the registered owner of a parcel of land, identified as Lot 3-D, of the subdivision plan (LRC) Psd-274500 covered by Transfer Certificate of Title (TCT) No. T-9331 with an area of nine hundred fifty three square meters (953 sq.m.), more or less and Roberto F. Santos with Tax Identification Number 413-982-594-000, is the registered owner of a parcel of land, identified as Lot 3-D, of the subdivision plan (LRC) Psd-274500 covered by Transfer Certificate of Title (TCT) No. S-91047 with an area of nine hundred fifty three square meters (953 sq.m.), more or less. The aforesaid properties are situated at Brgy. Talon, Las Pias City with an aggregate area of two thousand eight hundred fifty nine square meters (2,859 sq.m.), more or less. Saint Mark's Ville Homeowners, Inc. with Tax Identification Number 233-846-631-000, on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB). On May 9, 2011, the parties executed a Deed of Sale whereby the owners thru their Attorney-in-Fact, Salvador F. Santos, Jr. with Tax Identification Number 128-905-341-000 transfer and convey two thousand eight hundred fifty nine square meters (2,859 sq.m), more or less of the subject properties to Saint Mark's Ville Homeowners, Inc. at an agreed price of Eight Million Five Hundred Seventy Seven Pesos (P8,577,000.00). 1 Pursuant to a certification issued by Social Housing Finance Corporation, nine hundred fifty three square meters (953 sq.m.), more or less of the property covered by TCT No. 36774, nine hundred fifty three square meters (953 sq.m.), more or less of the property covered by TCT No. T-9331 nine hundred fifty three square meters (953 sq.m.), more or less of the property covered by TCT No. S-91047, are actually a CMP Project and shall be proportionately distributed to the association's ninety one (91) qualified member-beneficiaries. 2 For this purpose, Saint Mark's Ville Homeowners, Inc. secured a housing loan under the Community Mortgage Program (CMP), a financing assistance program of the Social Housing Finance Corporation (SHFC) a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). cSITDa 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" 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 of the aforestated properties by the owners thru their Attorney-in-Fact, Salvador F. Santos, Jr. to Saint Mark's Ville Homeowners, Inc. is exempt from the capital gains tax. Upon issuance of this letter of exemption, and upon registration of the documents of sale, a lien on the Certificates of Title of the lands to be issued in the name of the Homeowners Association shall be caused to be annotated by the Register of Deeds having jurisdiction over the properties, to the effect that the said property shall be used for socialized housing pursuant to R.A. No. 7279. (BIR Ruling No. 130-10 dated December 1, 2010) 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 owners thru their Attorney-in Fact, Salvador F. Santos, Jr. are liable to pay the documentary stamp tax on the documents conveying the afore-stated properties imposed under Section 196 of the Tax Code of 1997, based on the consideration contracted to be paid for such realties or their fair market value determined in accordance with Section 6 (E) of the said Code, whichever is higher. (BIR Ruling No. 130-10 dated December 1, 2010) cTDECH 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 titles 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 RMO15-2003. (BIR Ruling No. 040-10 dated August 27, 2010) Notwithstanding the foregoing, the Bureau of Internal Revenue shall conduct verification and post-audit that the actual occupants of the properties 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 ST. MARK'S VILLE HOMEOWNERS ASSOCIATION, INC. MARCOS ALVAREZ AVENUE, TALON I, LAS PIAS CITY Name of Beneficiary Blk. No. Lot Total Area No. (sq.m.) 1 JHANE POLO B. DUCO 1 1 35.85 2 MARK JULIUS B. DUCO 1 2 35.85 3 FERNALYN CAETE 1 3 31.18 4 ALLAN A. CAETE 1 4 31.18 5 FRANCHETTE T. REYES 1 5 31.18 6 FLERISSA REYES GUNTANG 1 6 31.18 7 PABLITO A. PACULBA 1 7 31.18 8 EMETERIO L. DERMIL JR. 1 8 31.18 9 JOSSEL B. DUCO 1 9 31.18 10 PETRONILO F. CABRAL 1 10 31.18 11 ELY ROY A. BARTOLOME 1 11 31.18 12 VICTORIA R. MADERAZO 1 12 31.18 13 NORBERTO E. AZUCENA 1 13 31.18 14 ROGELIO E. ROXAS 1 14 31.18 15 JESTONI H. ALARCON 1 15 31.18 16 LANZ R. BAUTISTA 1 16 40.53 17 ROBERTO R. LANZA 1 17 31.18 18 ARTRIZZA G. ANIPAN 2 1 31.18 19 VIRGILIO S. BAGAY 2 2 31.18 20 JEFFREY B. BAGAY 2 3 31.18 21 BELINDA J. BOYO 2 4 31.18 22 BERNARD F. MUNAR 2 5 31.18 23 EDNA A. FRANCISCO 2 6 31.18 24 BERNABE T. DOLINA 2 7 31.18 25 ZALDY V. BABAGAY 2 8 31.18 26 GEORGE H. ZUIGA 2 9 35.85 27 ROWEL Q. ANGULO 3 1 35.85 28 FERDINAND S. REMULLA 3 2 31.18 29 JOHN HAROLD S. VERGARA 3 3 31.18 30 FREDERIC F. ESPIRITU 3 4 31.18 31 GENARO O. GALPO 3 5 31.18 32 SHIRLEY C. ROMERO 3 6 31.18 33 DANILO B. ARGUELLES 3 7 31.18 34 ARLYN T. MAGBANUA 3 8 31.18 35 JUANCHO B. BABOL 3 9 31.18 36 GODOFREDO J. REYES JR. 3 10 31.18 37 NOMEL B. DEVELEZ 3 11 31.18 38 WILLIAM J. BAGAPORO 3 12 34.30 39 NORMITA T. PARALES 4 1 17.75 40 ILUMINADA B. PALOMADO 4 2 31.18 41 EFREN I. CERVANTES 4 3 31.18 42 LUCILA R. ROBLEZA 4 4 31.18 43 JEFFREY P. NUQUI 4 5 31.18 44 RAMON F. OSCILLADA 4 6 31.18 45 ANTONIO F. BEROSA 4 7 31.18 46 PERCIVAL G. DIVINA 4 8 31.18 47 JOEAN K. ESCALONA 4 9 31.18 48 DANILO M. AGUILA 4 10 31.18 49 REY E. PALMES 4 11 31.18 50 CASAMIRO D. ANGALA JR. 5 1 31.18 51 ARTEMIO E. PURA 5 2 31.18 52 MAE S. ANGALA 5 3 31.18 53 MARLON C. DELA IGLESIA 5 4 31.18 54 LEONCIO D. CATOLOS 5 5 31.18 55 EDUARDO B. GUARIN 5 6 31.18 56 ELPIDIO M. PEREZ 5 7 31.18 57 HERMY D. AZUELO 5 8 31.18 58 RONALD D. SALMORIN 5 9 31.18 59 ANNIE G. FROYALDE 5 10 31.18 60 JOSEPH B. DEVELEZ 5 11 31.18 61 CHRISTINE JOY B. DEVELEZ 5 12 31.18 62 GLORIA C. GAMELO 6 1 34.30 63 JESSA G. BACTON 6 2 32.74 64 JULIO B. BOLALIN 6 3 31.18 65 RYAN P. ALARCON 6 4 31.18 66 RHODA R. LUSUEGRO 6 5 31.18 67 MA. JEANETTE S. ALMARIO 6 6 31.18 68 DINA B. ARCENAL 6 7 31.18 69 NOEL G. ARCENAL 6 8 31.18 70 ANTONIO U. GORINO 6 9 31.18 71 JACQUELINE F. TAGANAP 6 10 31.18 72 AMERIE A. CRUSIS 6 11 31.18 73 LEILANI C. BELARMINO 6 12 31.18 74 BENJAMIN ABENDAO 7 1 31.18 75 ANGELITO B. TUBAY 7 2 31.18 76 ADELAIDA C. BASCO 7 3 31.18 77 JOSEFINA A. ROXAS 7 4 31.18 78 MINERVA T. DOLINA 7 5 31.18 79 SALVADOR B. VALENCIA JR. 7 6 31.18 80 GERARDO B. TUBAY 7 7 31.18 81 ENGRACIA C. DABU 7 8 31.18 82 RAFAEL Q. ANGULO 7 9 31.18 83 JENICA C. DABU 7 10 31.18 84 ANTHONY R. TORRES 7 11 31.18 85 JAMIL C. CERA 7 12 31.18 86 WILMA B. BAGUINAS 7 13 31.18 87 JOY C. CERA 7 14 31.18 88 JIMMY F. GURO 7 15 31.18 89 EDNA B. BUSTAMANTE 7 16 31.18 90 TESSIE T. CORDERO 7 17 31.18 91 MIGUEL M. SANTIAGO 7 18 31.18 Footnotes 1. P7,117,212.88 shall be paid by Social Housing Finance Corporation and P1,459,787.12 shall be paid by Saint Mark's Ville Homeowners, Inc. 2. See Annex for the masterlist of qualified beneficiaries.