PDAAP Village 1 Homeowners Association, Inc.

April 18, 2016 BIR RULING NO. 136-16 RA No. 7279; BIR Ruling No. 053-15 PDAAP Village 1 Homeowners Association, Inc. Sitio Esperanza, Brgy. Binuntucan Pontevedra, Capiz Attention: Leoname A. Bordo President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated December 1, 2015, endorsing the sale transaction between Philippine Distressed Asset Asia Pacific (SPV-AMC) 2, Inc. and PDAAP Village 1 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 Philippine Distressed Asset Asia Pacific (SPV-AMC) 2, Inc. (TIN 006-916-749-000) (hereinafter referred to as Landowner) is the registered owner of a parcel of land, identified as Lot No. 3, Plan No. (LRA) PCS-E2014000261, Portion of Cons.-Subd. of Lots 967-A and 967-B, Psd-06-003054, LRC (CLR) Rec. No. 9058 covered by Transfer Certificate of Title (TCT) No. 089-2014000414 issued by the Registry of Deeds for Roxas, Capiz. The aforesaid property is situated at Brgy. Binuntucan, Pontevedra, Capiz with an area of Twenty Six Thousand Five Hundred Eighteen square meters (26,518 sq.m.), more or less. PDAAP Village 1 Homeowners Association, Inc. (TIN 462-180-341-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On October 8, 2015, the parties executed a Deed of Absolute Sale whereby the Landowner transferred and conveyed Seventeen Thousand Eight Hundred Sixty Three square meters (17,863 sq.m.) portion of the subject property to PDAAP Village 1 Homeowners Association, Inc. at an agreed price of Seven Million Eight Hundred Fifty Three Thousand Five Hundred Sixty Four Pesos and 95/100 (P7,853,564.95). Pursuant to the certification issued by SHFC, 17,863 sq.m. out of 26,518 sq.m. covered by TCT No. 089-2014000414 actually comprise a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, PDAAP Village 1 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 November 5, 2015. In support of its request, PDAAP Village 1 Homeowners Association, Inc. has completely submitted on December 9, 2015 the following documents: 1) SHFC letter application for tax exemption; CAIHTE 2) Certification of the President of the SHFC that 17,863 sq.m. portion of the subject properties qualifies and is actually a CMP project; 3) SHFC Letter-Guaranty No. CMP-1122; 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 copy 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 landowner who sold its property under CMP for use in a socialized housing project are exempt from the payment of capital gains tax. Such being the case, the sale by the landowner, Philippine Distressed Asset Asia Pacific (SPV-AMC) 2, Inc., to PDAAP Village 1 Homeowners Association, Inc. of the 17,863 sq.m. out of 26,518 sq.m. covered by TCT No. 089-2014000414 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. 053-15 dated February 27, 2015) 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 realties or their fair market values determined in accordance with Section 6 (E) of the said Code, whichever is higher. (BIR Ruling No. 053-15 dated February 27, 2015) 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 RMO 15-2003. (BIR Ruling No. 053-15 dated February 27, 2015) Moreover, under Section 109 (1) (P) of the Tax Code of 1997, as amended by R.A. 9337, the sale of real properties utilized for low-cost and socialized housing as defined by R.A. No. 7279 shall be exempt from value-added tax (VAT), thus, the sale of the 17,863 sq.m. out of 26,518 sq.m. covered by TCT No. 089-2014000414 by the landowner to PDAAP Village 1 Homeowners Association, Inc. is exempt from the imposition of VAT. (BIR Ruling No. 304-2013 dated August 6, 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 sellers are entitled to exemption from capital gains tax or income tax imposed under Sec. 27 (D) (5) the Tax Code of 1997, as amended. 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. DETACa Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX PDAAP Village 1 Homeowners Association, Inc. Sitio Esperanza, Brgy. Binuntucan, Pontevedra, Capiz Name of Beneficiary Blk. Lot Total Area No. No. (sq.m.) 1 Suerte, Gina Orocio 1 1 241.26 2 Orocio, Sally Belo 1 2 133.50 3 Orocio, Eduardo Belo 1 3 207.48 4 Orocio, Ernesto Belo 1 4 135.11 5 Dichopo, Analie Villar 1 5 181.75 6 Dueno, Merna Orocio 2 1 175.32 7 Mikunog, Melinda Orocio 2 2 183.36 8 Pullona, Nestor Dela Cruz 3 2 128.67 9 Pullona, Christian Orocio 3 3 128.67 10 Barnes, Margarita Dumanil 3 4 128.67 11 Buenavides, Felyn Dumanil 3 5 128.67 12 Severino, Elizalde Delos Reyes 3 6 128.67 13 Galor, Michael Aguirre 3 7 128.67 14 Acta, Florencio Jr. Alitaptap 3 8 128.67 15 Barrera, Jose Ricky Batuampo 3 9 128.67 16 Camacho, Nid John Galino 3 10 128.67 17 Ortizo, George Dipitran 3 11 128.67 18 Bautista, George Jr. Denolo 3 12 128.67 19 Bautista, Junar Daynolo 3 13 128.67 20 Beltran, Josephine Ortega 3 14 128.67 21 Marasigan, Ma. Fe Villar 3 15 128.67 22 Marasigan, Angelica Villar 3 16 128.67 23 Donado, Jose Neril Delfin 3 17 128.67 24 Almodal, Madona Albaladejo 3 18 128.67 25 Albaladejo, Luis Mantong 3 19 128.67 26 Albaladejo, Diosdado Mantong 3 20 128.67 27 Julian, Alfie Cordero 3 21 135.11 28 Lisares, Leonardo Dievinion 3 22 135.11 29 Julian, Angie Cordero 3 23 135.11 30 Tumlos, Rodel Tayco 5 1 133.50 31 Bibit, John Kenn Tumlos 5 2 143.15 32 Pimentel, Rhodora Villar 5 3 128.67 33 Bibit, Keisy Jade Tumlos 5 4 144.76 34 Aluad, Analina Dadivas 5 5 130.28 35 Bibit, Maria Rowena Tumlos 5 6 149.58 36 Ecto, Analyn Cabangal 6 1 128.67 37 Brillo, Cheryl Hontiveros 6 2 144.76 38 Agana, Ma. Diosie Acta 6 3 128.67 39 Dichosa, Analyn Candelon 6 4 144.76 40 Dichopo, Analou Deocampo 6 5 128.67 41 Dichopo, Remy Deocampo 6 6 136.71 42 Dichopo, Rona Deocampo 6 7 131.89 43 Dichopo, Robelyn Deocampo 6 8 144.76 44 Manzon, Violeta Orocio 10 1 162.45 45 Albaladejo, Elsa Delfin 10 2 209.09 46 Balle, Glycel Bulquerin 10 3 144.76 47 Biclar, Rique De Honor 10 4 144.76 48 Balle, Gerald Bulqlerin 10 5 144.76 49 Barros, Dema Buenafe 10 6 144.76 50 Arguelles, Rommel Inocencio 10 7 128.67 51 Arguelles, James Inocencio 10 8 128.67 52 Orocio, Edwin Belo 10 9 128.67 53 Duerte, Penelope Betita 10 10 128.67 54 Basinang, Rosita Nemreda 10 11 128.67 55 Balpongo, Artemio Villar 10 12 128.67 56 Agris, Josephine Javier 10 13 144.76 57 Agris, Rolly Balcena 10 14 144.76 58 Puyong, Gemma Beronio 10 15 144.76 59 Macario, Ma. Fe Arizola 10 16 144.76 60 Orocio, Creezja Gwen Macahilig 10 17 128.67 61 Villarina, Ruby Nepomuceno 10 18 128.67 62 Machilig, Leny Chan 10 19 128.67 63 Agris, Rowel Balcena 10 20 128.67 64 Dinglasan, Christian Ian Latoza 10 21 128.67 65 Subere, Chimene Biadog 10 22 128.67 66 Borja, Emelyn Baylon 10 23 144.76 67 Borja, Ernesto Buni 10 24 144.76 68 Buenavides, May Capote 10 25 144.76 69 Orocio, Jocelyn Severino 10 26 144.76 70 Manzon, Beverly Joy Orocio 10 27 139.93 71 Orocio, Bernabe Severino 10 28 143.15 72 Badoles, Leah Arguelles 11 1 180.14 73 Villaraiz, Alfonso Albaladejo 11 2 136.71 74 Nool, Lilibeth Baldoles 11 3 180.14 75 Doce, Sandra Galleno 11 4 138.32 76 Galleno, Joemar Albaladejo 11 5 180.14 77 Alamo, Araceli Arguelles 11 6 128.67 78 Doce, Selma Galleno 11 7 180.14 79 Alamo, Kimberly Arguelles 11 8 128.67 80 Delos Santos, Jose Francisco 11 9 180.14 81 Doriquez, Alma Legaspi 9 1 136.71 82 Decrepito, Mary Ann Legaspi 9 2 133.50 83 Baes, Ma. Sarah Carmelo 9 3 144.76 84 Areno, Christopher Laysa 9 4 144.76 85 Dumali, Judy Decrepito 9 5 144.76 86 Decrepito, Eufemio Dumulong 9 6 144.76 87 Pullona, Jeffrey Orocio 9 7 128.67 88 Pullona, Girlie Orocio 9 8 128.67 89 Gamido, Melody Avendano 9 9 128.67 90 Pullona, Ernesto Orocio 9 10 128.67 91 Dupal-Ag, Marilou Orocio 9 11 133.50 92 Dupal-Ag, Raffy Lou Orocio 9 12 133.50 93 Agris, Josa Duron 9 13 128.67 94 Dupal-Ag, Karlo James Orocio 9 14 128.67 95 Agris, Leah Baldona 9 15 128.67 96 Manalad, Concepcion Manzon 9 16 128.67 97 Bacomo, Herlene Delfin 9 17 144.76 98 Galvez, Elvina Bito-On 9 18 144.76 99 Dadivas, Renante Sobron 9 19 144.76 100 Dedios, Lani Sobron 9 20 144.76 101 Manalac, Benjie Francisco 9 21 136.71 102 Dadivas, Ricky Sobron 9 22 139.93 103 Dangan, Bernabeth Anoche 7 1 135.11 104 Burbano, Carolyn Londres 7 2 141.54 105 Anoche, Reynald Dadivas 7 3 128.67 106 Francisco, Arnel Ibanez 7 4 143.15 107 Daliva, Nancy Rizon 7 5 128.67 108 Francisco, Mary Grace Beltran 7 6 143.15 109 Dela Torre, Emily Panoga 7 7 128.67 110 Galang, Cristina De Jesus 7 8 143.15 111 Distor, Angie Olid 7 9 138.32 112 Diestro, Michelle Beltran 7 10 143.15 113 Sartaguda, Lloyd Martin Cabalquinto 8 1 143.15 114 Dianala, Maricar Orona 8 2 139.93 115 Bordo, Leoname Albaladejo 8 3 128.67 116 Dianala, Christopher Orona 8 4 144.76 117 Bordo, Leonardo Jr. Bulao 8 5 128.67 118 Dianala, Cyrel Orona 8 6 143.15 119 Espino, Danilo Jr. Batan 8 7 128.67 120 Dianala, Charles Orona 8 8 143.15 121 Espino, Troy Batan 8 9 128.67 122 Ballejo, Dallia Espino 8 10 143.15 123 Espino, Maribel Dichosa 8 11 144.76 124 Cayanan, Dorothy Espino 8 12 143.15 125 Dela Torre, Analiza Panoga 3 1 172.10 126 Biclar, Arlene Balle 4 1 128.67 127 Biclar, Ignacio III De Honor 4 2 131.89 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.