PDAAP Village 2 Homeowners Association, Inc.

April 18, 2016 BIR RULING NO. 137-16 RA No. 7279; BIR Ruling No. 053-15 PDAAP Village 2 Homeowners Association, Inc. Brgy. Binuntucan Pontevedra, Capiz Attention: Rima B. Capulso 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 2 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. 2, 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. 089-2014000413 issued by the Registry of Deeds for Roxas, Capiz. The aforesaid property is situated at Brgy. Binuntucan, Pontevedra, Capiz with an area of Twenty Three Thousand Six Hundred Forty Two square meters (23,642 sq.m.), more or less. PDAAP Village 2 Homeowners Association, Inc. (TIN 457-557-595-000), 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 Twenty Three Thousand Three Hundred Thirty Nine square meters (23,339 sq.m.) portion of the subject property to PDAAP Village 2 Homeowners Association, Inc. at an agreed price of Ten Million Two Hundred Sixty Nine Thousand One Hundred Sixty Pesos (P10,269,160.00). Pursuant to the certification issued by SHFC, 23,339 sq.m. out of 23,642 sq.m. covered by TCT No. 089-2014000413 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 2 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 2 Homeowners Association, Inc. has completely submitted on December 9, 2015 the following documents: 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC that 23,339 sq.m. portion of the subject properties qualifies and is actually a CMP project; 3) SHFC Letter-Guaranty No. CMP-1123; CAIHTE 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 2 Homeowners Association, Inc. of the 23,339 sq.m. out of 23,642 sq.m. covered by TCT No. 089-2014000413 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 23,339 sq.m. out of 23,642 sq.m. covered by TCT No. 089-2014000413 by the landowner to PDAAP Village 2 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. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX PDAAP Village 2 Homeowners Association, Inc. Brgy. Binuntucan, Pontevedra, Capiz Name of Beneficiary Blk. Lot Total Area No. No. (sq.m.) 1 Almonguera, Marlou Baril 1 1 179.85 2 Almonguera, Cherry Baril 1 2 135.27 3 Yosa, Mona Lourdes Reyes 1 3 189.07 4 Almonguera, Jose Jhun Baril 1 4 135.27 5 Dalo, Lorjoefre Villariez 1 5 189.07 6 Villariez, Mark Sherwin Morales 1 6 135.27 7 Dalo, Jun Alfred Villariez 1 7 189.07 8 Dalo, Florence Joy Villaraiez 1 8 135.27 9 Villa, Mary Grace Borci 1 9 189.07 10 Dumapig, Annaliza Villariez 1 10 135.27 11 Capulso, Rima Baril 1 11 189.07 12 Decena, Rowena Baril 1 12 135.27 13 Dapilaga, Jayson Looc 2 1 164.48 14 Reyes, Ma. Jimely Dapilaga 2 2 122.97 15 Tosalem, Bernisa Arlos 2 3 172.16 16 Arlos, Dolorosa Duran 2 4 122.97 17 Dequina, Jessita Delfin 2 5 172.16 18 Dequina, Kean Delfin 2 6 122.97 19 Dorado, Jose Sewar Deseo 2 7 172.16 20 Hortillas, Frizel Gonzales 2 8 122.97 21 Arguilles, Marilyn Severino 2 9 172.16 22 Eiselt, Lylyn Arguilles 2 10 122.97 23 Arguilles, Ronald Severino 3 1 129.12 24 Arguilles, Michael Severino 3 2 124.51 25 Arguilles, Michelle Severino 3 3 138.35 26 Arguilles, Leonard Severino 3 4 138.35 27 Cadusale, Emily Ocay 3 5 138.35 28 Denolo, Ruben Paciente 3 6 138.35 29 Edelman, Analiza Denolo 3 7 122.97 30 Edelman, Reniel Jay Denolo 3 8 122.97 31 Bacudo, Eden Buhat 3 9 122.97 32 Denolo, Ruel Paciente 3 10 122.97 33 Balsote, Zayber Sarito 3 11 127.59 34 Virtuoso, Edilberto Doloso 3 12 127.59 35 Bacudo, Erwin Buhat 3 13 122.97 36 Monaque, David Aranda 3 14 122.97 37 Flaviano, Emmanuel Dela Raya 3 15 122.97 38 Navarra, Maridel Bacero 3 16 122.97 39 Agarrado, Jay R Batuigas 3 17 138.35 40 Benias, Joseph Biba 3 18 138.35 41 Agarrado, Jay Batuigas 3 19 138.35 42 Upod, Feliciano Santiago 3 20 138.35 43 Agarrado, James Batuigas 3 21 130.66 44 Upod, Franklin Ancheta 3 22 130.66 45 Bacomo, Herman Sr. Lunajo 4 1 122.97 46 Biclar, Joenel Bibit 4 2 127.59 47 Bacomo, Herman Jr. Denaga 4 3 138.35 48 Deocampo, Jesi Dominic Biclar 4 4 138.35 49 Bacomo, Jaypee Denaga 4 5 138.35 50 Denolo, Ronnie Paciente 4 6 138.35 51 Denolo, Mary Ann Albaladejo 4 7 122.97 52 Denolo, Mary Joy Albaladejo 4 8 122.97 53 Oliveros, Clara Bertuso 4 9 122.97 54 Bulaquena, Razhel Carillo 4 10 122.97 55 Asis, Evan Albaladejo 4 11 127.59 56 Asis, Hermalyn Albaladejo 4 12 127.59 57 Alvarez, Gelene Roda Inion 4 13 122.97 58 Asis, Rayman Albaladejo 4 14 122.97 59 Alvarez, Guillermo Barlan 4 15 122.97 60 Onas, Merry Grace Araque 4 16 122.97 61 Mamburam, Carlo Jay Cruz 4 17 138.35 62 Bandilla, Marites Magbanua 4 18 138.35 63 Begas, Blance Rose De Erio 4 19 138.35 64 Mamburam, Karen Cruz 4 20 138.35 65 Cordenillo, Judy Lyn Degala 4 21 133.73 66 Cordenillo, Cherryll Mamburam 4 22 130.66 67 Almonguera, Jose Generie Baril 5 1 126.05 68 Baulite, Josephine Dadivas 5 2 121.44 69 Almonguera, Robert Baril 5 3 138.35 70 Baulite, Rex Dadivas 5 4 138.35 71 Almonguera, Marivic Baril 5 5 138.35 72 Almonguera, Antonio Mata 5 6 138.35 73 Barrogo, Lyzel Almonguera 5 7 122.97 74 Barrogo, Christian Rey Almonguera 5 8 122.97 75 Dollete, Rochel Dacles 5 9 122.97 76 Carian, Stephen Estalar 5 10 122.97 77 Bulquerin, Robertson Bechayda 5 11 127.59 78 Dollete, Roxan Guadalupe Dacles 5 12 127.59 79 Bulquerin, Rosie May Bechayda 5 13 122.97 80 Albaladejo, Santiago Upod 5 14 122.97 81 Bulquerin, Robert Bechayda 5 15 122.97 82 Albaladejo, Arjie Barrientos 5 16 122.97 83 Belo, Swellen Abello 5 17 138.35 84 Belo, Allen Abello 5 18 138.35 85 Falcunit, Charry Belo 5 19 138.35 86 Benosa, Claire Belo 5 20 138.35 87 Belo, Arlyn Abello 5 21 130.66 88 Bibit, Anthony Alpanosa 5 22 133.73 89 Tablate, Edna Asis 6 1 124.51 90 Severino, Elna Acolentaba 6 2 129.12 91 Denaga, Leah Candelario 6 3 138.35 92 Severino, Paul Matthew Acolentaba 6 4 138.35 93 Severino, Ma. Riza Acolentaba 6 5 138.35 94 Severino, Lida Acolentaba 6 6 138.35 95 Severino, Mary Therese G. Acolentaba 6 7 122.97 96 Severino, Ma. Lara Acolentaba 6 8 122.97 97 Albaladejo, Francis Nol Severino 6 9 122.97 98 Albaladejo, Paul Hyacinth Severino 6 10 122.97 99 Billones, Gloria Taghap 6 11 122.97 100 Billones, Mark Gil Taghap 6 12 122.97 101 Billones, Jayson Taghap 6 13 122.97 102 Billones, Shyden Taghap 6 14 122.97 103 Dador, Ma. Elsa Villaraiz 6 15 122.97 104 Batuigas, Patty Jane Yap 6 16 122.97 105 Ruado, Fernando Dela Cruz 6 17 138.35 106 Batuigas, Maileen Buenafe 6 18 138.35 107 Patalinghod, Ma. Erna Villaraiz 6 19 138.35 108 Agpalo, Florita Ame 6 20 138.35 109 Bernales, Susan Beldia 6 21 133.73 110 Salvador, Stephanie Agpalo 6 22 130.66 111 Resente, Nerissa Albaladejo 7 1 138.35 112 Resente, Irah Albaladejo 7 2 135.27 113 Borbon, Violeta Bulaquena 7 3 138.35 114 Ilag, Merysol Albaldejo 7 4 138.35 115 Borbon, Lovelyn Bulaquena 7 5 132.20 116 Capulso, Ailyn Linas 7 6 132.20 117 Upod, Rowelyn Bulquerin 7 7 122.97 118 Capulso, Reymark Linas 7 8 122.97 119 Upod, Ronald Bulquerin 7 9 122.97 120 Capulso, Renante Albaladejo 7 10 132.20 121 Upod, Wenifreda Bulquerin 7 11 122.97 122 Osorio, Lovelyn Roxas 7 12 133.73 123 Clarito, Rene Boy Altoveros 7 13 132.20 124 Osorio, Roxanee Roxas 7 14 138.35 125 Clarito, Christine Altoveros 7 15 138.35 126 Capulso, Reinaldo Denaga 7 16 138.35 127 Alba, Jessica Beltran 7 17 138.35 128 Capulso, Tenyrose Borbon 7 18 138.35 129 Fermin, Salvacion Doroteo 8 1 135.27 130 Dillera, Caren Dilla 8 2 126.05 131 Dillera, Mark Gil Dilla 8 3 124.51 132 Dequino, Edilberto Dorado 8 4 124.51 133 Diaz, Ruby Fernandez 8 5 127.59 134 Trono, Teresita Barrosa 9 1 138.35 135 Barrosa, Victor Agustin 9 2 135.27 136 De Jesus, Ruby Jean Ramirez 9 3 122.97 137 Barrosa, Victorico Blacano 9 4 129.12 138 Makiling, John Vincent Barrosa 9 5 122.97 139 Barrosa, Johnric Calibuyot 9 6 133.73 140 Makiling, Jeserie Barrosa 9 7 129.12 141 Makiling, Jenny Joy Barrosa 9 8 133.73 142 Makiling, Riza Barrosa 9 9 122.97 143 Ramirez, Jovyl John Barrosa 9 10 133.73 144 Borbon, Gemma Duya 9 11 122.97 145 Palmes, Catherine Doloso 9 12 133.73 146 Borbon, Arnel Duya 9 13 122.97 147 Ricarte, Analyn Santiago 9 14 133.73 148 Adao, Mary Grace Dordas 9 15 138.35 149 Celoso, Carmela Villanueva 9 16 133.73 150 Bismanos, Werlin Dequina 10 1 135.27 151 Dequina, Mary Grace Dador 10 2 138.35 152 Dorado, Wendy Dequina 10 3 133.73 153 Belo, Joel Ordines 10 4 122.97 154 Dorado, Fernando Jr. Dequina 10 5 135.27 155 Dorado, Fharlyn Grace Dequina 10 6 122.97 156 Balle, Geraldine Bulquerin 10 7 135.27 157 Cullamco, Glynn Balle 10 8 132.20 158 Contreras, Maria Felomina Haguisan 10 9 135.27 159 Cullamco, Gwynn George Mercado 10 10 122.97 160 Bacallan, Ronel Magallanes 10 11 135.27 161 Basquez, Joseph Baril 10 12 122.97 162 Bacallan, Rogen Magallanes 10 13 135.27 163 Bacallan, Rogelio Lumampao 10 14 138.35 164 Badoles, Leovi Arguelles 11 1 129.12 165 Arguelles, Vicente Dapilaga 11 2 129.12 166 Cabali, Jaun Hernandez 11 3 129.12 167 Borbon, Sheila Mae Bulaquena 11 4 129.12 168 Borbon, Jayven Bulaquena 11 5 129.12 169 Palmes, Edgar Doloso 11 6 129.12 170 Palmes, Eduardo Doloso 11 7 126.05 171 Palmes, Elmer Doloso 11 8 126.05 172 Palmes, Edwin Doloso 11 9 126.05 173 Bulaquena, Ronel Bertuso 11 10 126.05 174 Bulaquena, Genelyn Bertuso 11 11 126.05 175 Bulaquena, Janice Celoso 11 12 127.59 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.