BIR Ruling No. 151-13

April 17, 2013 BIR RULING NO. 151-13 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10 Bagong Pagasa Homeowners Assn., Inc., Phase 2 Barangay Mabuhay, General Santos City Attention: Lemuel F. Dato-on President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation dated October 30, 2012, requesting tax 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 Federico Limjuco (TIN 931-751-504-000) married to Beverly Alunan, Anita F. Catotal (TIN 102-665-906-000), Jeffrey F. Catotal (TIN 123-944-425) married to Margarita Paz Catotal and Nenita Catotal-Delos Santos (TIN 179-381-392-000) married to Nilo de los Santos (hereinafter referred to as Owners) are the registered owners of a parcel of land, identified as Lot-802-B of the Subdivision Plad Psd-12-059365 being portion of Lot-802, Pls-209-D-11 covered by Transfer Certificate of Title (TCT) No. 147-2012001800 issued by the Registry of Deeds for General Santos City. The aforesaid property is situated at Brgy. Mabuhay, General Santos City with an area of twenty five thousand square meters (25,000 sq.m.), more or less. Bagong Pagasa Homeowners Assn., Inc., Phase 2 (TIN 273-699-081-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On September 3, 2012, the parties executed a Deed of Absolute Sale whereby the owners, thru their Attorney-in-Fact, Anita F. Catotal, transferred and conveyed Twelve Thousand Seven Hundred Sixty One and 77/100 square meters (12,761.77 sq.m.) of the subject property to Bagong Pagasa Homeowners Assn., Inc., Phase 2 at an agreed price of Six Million Nine Hundred Twenty Nine Thousand Six Hundred Forty One and 11/100 Pesos (P6,929,641.11). Pursuant to the certification issued by Social Housing Finance Corporation (SHFC), Twelve Thousand Seven Hundred Sixty One and 77/100 square meters (12,761.11 sq.m.) out of Twenty Five Thousand square meters (25,000 sq.m.) covered by TCT No. 147-20120018000 actually comprise a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Bagong Pagasa Homeowners Assn., Inc., Phase 2 secured a housing loan under the Community Mortgage Program (CMP), a financing assistance program of the SHFC a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). 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 property by the owners to Bagong Pagasa Homeowners Assn., Inc., Phase 2 in so far as the Twelve Thousand Seven Hundred Sixty One and 77/100 square meters (12,761.11 sq.m.) portion thereof of the property covered by TCT No. 147-20120018000 is concerned 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 caused to 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. 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, Anita F. Catotal, 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. 130-10 dated December 1, 2010) ADECcI 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. 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 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. SaCIAE Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX Bagong Pagasa Homeowners Assn., Inc., Phase 2 Barangay Mabuhay, General Santos City Name of Beneficiary Blk. No. Lot Total Area No. (sq.m.) 1 Pono, Rolly Tomas 1 1 198.64 2 Fredeluces, Keith Ruel 1 2 168.34 3 Oriana, Robert T. 1 3 168.34 4 Maniago, Dante A. 1 4 168.34 5 Bullos, Mylyn G. 1 8 168.34 6 Ocampo, Bridget R. 1 9 168.34 7 Valdez, Ronaldo B. 1 10 168.34 8 Amoyo, Precy S. 1 11 168.34 9 Alconera, Sheryn T. 2 1 186.86 10 Soldevilla, Jocelyn B. 2 2 168.34 11 Napila, Noemi G. 2 7 168.34 12 Agno, Ronald B. 2 9 168.34 13 Ong, Linalyn T. 2 10 168.34 14 Alianza, Agnes V. 2 14 168.34 15 Catalan, Jaymar E. 2 15 186.86 16 De Guzman, Chester C. 5 3 168.34 17 Alcantara, Alma O. 5 9 168.34 18 Mutia, Rammel D. 5 11 168.34 19 Mutia, Randy D. 5 12 168.34 20 Cantallopez, Roy C. 5 13 168.34 21 Sosoban, Edwin B. 5 14 168.34 22 Sevilla, Jaime R. 5 15 183.49 23 Rein, Gemma L. 5 16 186.86 24 Nalugon, Janice 5 17 183.49 25 Matillano, Roderic S. 6 5 168.34 26 Plaza, Annie B. 6 6 168.34 27 Amarille, Leonora B. 6 7 168.34 28 Jandog, Amalu A. 6 8 168.34 29 Calahat, Eladio O. 6 9 168.34 30 Torres, Mercy Y. 6 10 168.34 31 Segura, Marycris R. 6 11 168.34 32 Segura, Vincent R. 6 12 168.34 33 Pascua, Elisa Y. 6 13 168.34 34 Benian, Mirasol T. 6 14 168.34 35 Rojas, Mitchell A. 6 16 186.86 36 Simbajon, Elma T. 6 17 183.49 37 Lansang, Jennilyn E. 7 1 168.34 38 Ungkal, Tuades K. 7 2 166.66 39 Albarado, Darrel Q. 7 5 168.34 40 Villaplana, Glenda Y. 7 6 168.34 41 Dela Cruz, Rowena B. 8 1 232.31 42 Pino, Rosalina H. 9 1 164.97 43 Hincgco, Helen B. 9 2 163.29 44 Dalaygon, Robert T. 9 3 168.34 45 Patio, Roldan Arvin V. 9 4 168.34 46 Galindo, Reynaldo 9 5 168.34 47 Dejega, Daniel C. 9 6 168.34 48 Seniedo, Hannah E. 9 8 163.29 49 Montalban, Rosalie 10 1 185.17 50 Makanta, Jonathan C. 10 2 183.49 51 Maramba, Joel E. 10 3 168.34 52 Benitez, Cherryl M. 10 4 168.34 53 Impang, Jerry I. 10 6 168.34 54 Dato on, Lemuel F. 10 7 168.34 55 Nicolas, Ramil S. 10 9 168.34 56 Parreas, Michelle Grace A. 10 11 168.34 57 Bernasor, Julieta Y. 11 1 185.17 58 Estorba, Joey B. 11 3 168.34 59 Bernasor, Juleus Ray S. 11 5 168.34 60 Villarosa, Nelrose O. 11 7 168.34 61 Ureta, Marife M. 11 15 181.81 62 Caspillo, Rosselin J. 11 16 186.86 63 Canoy, Lydia G. 11 17 183.49 64 Aplal, Mogier S. 12 2 168.34 65 Aplal, Mogawan S. 12 3 168.34 66 Mahimpit, Manasseh G. 12 5 168.34 67 Peria, Marivic C. 12 6 168.34 68 Romereo, Ryan Kenneth B. 12 7 168.34 69 Estares, Erwin L. 12 8 168.34 70 Cajegas, Allan A. 12 9 168.34 71 Cajegas, Ernie A. 12 10 168.34 72 Fontanilla, Chonamy G. 12 11 168.34 73 Jopson, Mercy F. 12 14 168.34 74 Ayo, Margie Bel S. 12 15 178.44 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.