Lady of Fatima Homeowners Association, Inc.

May 4, 2016 BIR RULING NO. 167-16 RA No. 7279; BIR Ruling No. 053-15 Lady of Fatima Homeowners Association, Inc. Puting Buhangin, Orion, Bataan Attention: Ruby C. Labandillo President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of the Social Housing Finance Corporation (SHFC) dated September 16, 2015, endorsing the sale transaction between Rafael O. Quicho and Lady of Fatima 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 Rafael O. Quicho (married to Mary Jane P. Quicho) (TIN 422-564-987-000) (hereinafter referred to as Landowner) is the registered owner of a parcel of land, identified as Lot No. 1162 of Cad. Survey of Orion covered by Transfer Certificate of Title (TCT) No. 038-2013006948 issued by the Registry of Deeds for Balanga, Bataan. The aforesaid property is situated at Puting Buhangin, Orion, Bataan with an area of Twelve Thousand Sixty Two square meters (12,062 sq.m.), more or less. Lady of Fatima Homeowners Association, Inc. (TIN 442-158-892-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On July 20, 2015, the parties executed a Deed of Absolute Sale whereby the Landowner transferred and conveyed Seven Thousand Six Hundred Six square meters (7,606 sq.m.) portion of the subject property to Lady of Fatima Homeowners Association, Inc. at an agreed price of Seven Million Six Hundred Six Thousand Pesos (P7,606,000.00). Pursuant to the certification issued by SHFC, 7,606 sq.m. out of 12,062 sq.m. covered by TCT No. 038-2013006948 actually comprises a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Lady of Fatima 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. In support of its request, Lady of Fatima Homeowners Association, Inc. has completely submitted on December 23, 2015 the following documents: 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC, 7,606 sq.m. portion of the subject property qualifies and is actually a CMP project; 3) SHFC Letter of Guaranty No. 1115; 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 HEITAD 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 for use in a socialized housing project are exempt from the payment of capital gains tax. Such being the case, the sale by Rafael O. Quicho to Lady of Fatima Homeowners Association, Inc. of the 7,606 sq.m. out of 12,062 sq.m. covered by TCT No. 038-2013006948 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 Homeowner's 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 realty or its fair market value determined in accordance with Section 6 (E) of the said Code, whichever is higher. 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. 053-15 dated February 27, 2015) 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 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 ANNEX LADY OF FATIMA HOMEOWNERS ASSOCIATION, INC. Puting Buhangin, Orion, Bataan Blk. Lot Total Area Name of Beneficiary No. No. (sq.m.) 1 PEREZ FRANCISCO P. 1 7 71.90 2 DUMAGAS JONNAHLEE A. 1 10 101.74 3 ARSENIO MARIA L. 1 11 58.33 4 LIMBOC MARDEN MARIE G. 1 12 54.26 5 LABONG ALDRIN E. 2 1 67.83 6 LABONG RUBEN E. 2 2 71.90 7 LABONG NIKKO E. 2 3 90.89 8 LABONG ESTRELLITA E. 2 4 77.32 9 APOLINAR MARICEL C. 2 5 97.67 10 ARSENIO JELYN C. 2 6 115.30 11 ARSENIO JESSALYN C. 2 7 66.47 12 ARTUZ OLGA C. 2 8 123.44 13 HIPOLITO ERLINDA A. 2 9 120.73 14 SERRANO MARLON A. 2 10 67.83 15 SERRANO NENITA S. 2 11 70.54 16 MALASAN ANNA ANDREA T. 2 12 35.27 17 BAYBAY YOLANDA B. 3 1 82.75 18 PEREZ CHARITO R. 3 2 33.91 19 BUENACEDA TOM-TOM M. 3 3 66.47 20 BUENACEDA ROSANABETH M. 3 4 46.12 21 ANIAG OCTAVIO S. 3 7 70.54 22 RAMIREZ CESAR P. 3 8 81.39 23 ANIAG EMERITA S. 3 9 54.26 24 UBIA OMAR M. 3 10 118.02 25 HERNANDEZ JERALD M. 3 13 67.83 26 HERNANDEZ EDITHA M. 3 14 67.83 27 BUCUD JESSICA H. 3 15 67.83 28 NAVARRO ROMEO D. 3 16 198.05 29 CHUA CRISTINA C. 3 17 67.83 30 ALMERIA TOMAS M. 3 18 77.32 31 ORDOA ARJAY C. 3 20 126.16 32 ORDOA JOHN DHONIEL A. 3 22 74.61 33 ALVAREZ ERLINDA P. 3 24 150.57 34 MORIDO RHONA AMOR M. 3 28 96.31 35 MORIDO JERICK M. 3 29 67.83 36 MORIDO SANTOS M. 3 30 103.10 37 MORIDO JEMALYN M. 3 31 67.83 38 CARINGAL ELIZABETH C. 4 2 104.45 39 SAHAGON MYLA L. 4 5 55.62 40 LABANDILO RUBY C. 4 6 132.94 41 TORRES SONIA L. 4 7 199.41 42 AURELIO DEMBER E. 4 8 70.54 43 AURELIO ROSS JOIE V. 4 9 70.54 44 DIZON ELVIS I. 4 10 120.73 45 TORRES SUZANNE L. 4 11 63.76 46 LABANDILO EDGARDO G. 4 12 55.62 47 CRUZ DOMINGO B. 4 13 101.74 48 CHICO DONALD LEE L. 4 14 74.61 49 CHICO DONATO L. 4 15 78.68 50 DIMLA MARRIANE KC Y. 6 1 81.39 51 PAGUIO RUSTAN R. 6 2 81.39 52 VILLUAN SILVINO JR. G. 6 4 103.10 53 TORCATO CESARIO JR. B. 6 5 50.19 54 DE JESUS NENITA P. 6 6 90.89 55 TANGONAN ERICKSON P. 6 7 58.33 56 TANGONAN IMELDA P. 6 8 67.83 57 TANGONAN WILSON JR. P. 6 9 67.83 58 PERALTA CINDY F. 6 10 67.83 59 ORIEL ROSAURO SR. B. 6 11 77.32 60 PEREZ JASON A. 6 12 73.25 61 PEREZ JESSIE A. 6 13 77.32 62 VERANO ROMEO Q. 6 14 101.74 63 BAUTISTA ROMEO JR. M. 6 15 103.10 64 VOLANTE MILAGROS B. 6 16 86.82 65 PEREZ RACQUEL T. 6 17 70.54 66 DE LEON ROSALIE P. 6 18 70.54 67 DE LEON ERWIN I. 6 20 67.83 68 BALUYOT VILMA D. 6 21 63.76 69 SALENGA RAQUEL V. 6 25 67.83 70 PASTORES FRANCIS PAUL C. 7 1 203.48 71 REODIQUE RANDY A. 9 1 233.32 72 DELA CRUZ LIBERTY D. 9 3 67.83 73 TAMAYO SUSANA M. 9 4 62.40 74 REYES REYNALDO DC. 9 5 65.11 75 HERNANDEZ NELSON B. 9 6 55.62 76 GERVACIO MARRIEL A. 10 1 82.75 77 PAGUIO JACK KAVIN A. 10 2 46.12 78 PAGUIO CESAR C. 10 3 80.03 79 TAMAYO JOJO M. 10 4 119.37 80 CONSTANTINO ROMANA B. 10 5 67.83 81 BARRUN HENRY A. 10 6 67.83 82 BARRUN MABEL S. 10 7 67.83 83 BARRUN VILMA S. 10 8 80.03 84 SANTOS CHRIS A. 11 1 88.17 85 SANTOS DANILO A. 11 2 82.75 86 TAMAYO ROMALYN A. 11 3 73.25 87 JERMIA RANDY C. 11 4 71.90 88 MANGILIMAN ROLDAN B. 11 5 61.04 89 CINIO JUNE R. 11 6 101.74 90 CINIO JIMBOY R. 11 7 92.24 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.