BIR Ruling No. 168-15

June 5, 2015 BIR RULING NO. 168-15 RA No. 7279; BIR Ruling No. 294-14; BIR Ruling No. 283-14 Providence Homeowners Association, Inc. Purok Providence, Brgy. Sum-Ag, Bacolod City 6100 Attention: Mr. Jerry B. Canoy President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated September 9, 2014, endorsing the sale transaction between Development Bank of the Philippines and Providence 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". acEHCD Documents submitted disclose that Development Bank of the Philippines , (TIN 000-449-609-000) is the registered owner of two (2) parcels of land covered by Transfer Certificates of Title (TCT), to wit: TCT No. Area (sq. m.) Tax Declaration No. T-182765 975 2005-101531 T-182767 5,083 2005-101534 Total: 6,058 ===== issued by the Registry of Deeds for City of Bacolod. The aforesaid properties are situated at Brgy. Sum-Ag, City of Bacolod. Providence Homeowners Association, Inc. (TIN 429-060-013-000), on the other hand, is a homeowners' organization registered with the Housing and Land Use Regulatory Board (HLURB) under Certificate of Registration No. 15870. On June 3, 2014, the parties executed a Deed of Absolute Sale whereby the owner transferred and conveyed Six Thousand Fifty Eight square meters (6,058 sq.m.) to Providence Homeowners Association, Inc. at a total agreed price of One Million Six Hundred Ninety Five Thousand Nine Hundred Sixty Pesos (Php1,695,960.00), Philippine Currency. The Community Association has already paid an equity in the amount of Two Hundred Twenty Seven Thousand Three Hundred Forty Two Pesos & Thirty Centavos (Php227,342.30) and has a balance of One Million Four Hundred Sixty Eight Thousand Six Hundred Seventeen Pesos & Seventy Centavos (Php1,468,617.70). Pursuant to a Certification issued by SHFC, Five Thousand Two Hundred Forty Six square meters (5,246 sq.m.) out of the Six Thousand Fifty Eight square meters (6,058 sq.m.) covered by TCT Nos. T-182765 and T-182767 actually comprise a CMP Project and shall be proportionately distributed to the association's sixty three (63) qualified member-beneficiaries (Annex A). For this purpose, Providence Homeowners Association, Inc. secured a housing loan under the CMP, a financing assistance program of the Social Housing Finance Corporation, a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). In support of its request, Providence Homeowners Association, Inc. has completely submitted the following documents: 1) Letter application for tax exemption; 2) Certification of the President of the SHFC that the subject property qualifies and is actually a CMP project; 3) Certified true copy of the Letter of Guaranty issued by the SHFC; 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 Declarations of the Properties Sold to the Community Association; 8) Certified true copy of the Location Plan of the Lot Sold to the Community Association; SDHTEC 9) TIN ID/BIR Certificate of Registration of the seller and the Homeowner Association; 10) BIR Form 2000-OT (Documentary Stamp Tax Return); and 11) 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 properties for use in a socialized housing project is exempt from the payment of capital gains tax. Such being the case, the sale by Development Bank of the Philippines to Providence Homeowners Association, Inc. , in so far as the Five Thousand Two Hundred Forty Six square meters. (5,246 sq.m.) portion of the properties covered by TCT Nos. T-182765 and T-182767 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 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. 294-14 dated July 23, 2014) 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 landowner is 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 realty or its fair market value determined in accordance with Section 6 (E) of the said Code, whichever is higher. (BIR Ruling No. 283-14 dated July 7, 2014) 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 Nos. 294-14 dated July 23, 2014 and 283-14 dated July 7, 2014) AScHCD 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. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX A Providence Homeowners Association, Inc. Purok Providence, Brgy. Sum-Ag, Bacolod City Revised Master List of Beneficiaries Name of Beneficiary Blk. No. Lot No. Total Lot Area 1. Cayetano, Maricel D. 1 1 75.14 2. Dela Rosa, Teodorico Jr. 1 2 76.28 3. Ubas, Johnny R. 1 5 45.54 4. Besana, Christ John P. 1 6 75.14 5. Destura, Mary Ann P. 1 7 37.57 6. Nasis, James Marcel C. 1 8 51.23 7. Villanueva, Emily Ann S. 1 9 110.43 8. Sedayon, Virginia E. 1 10 89.24 9. Barsubia, Medilene B. 1 11 86.52 10. Pomperada, Connie 1 12 97.91 11. Emperado, Frael P. 1 13 39.85 12. Nasis, Homer L. 1 14 60.64 13. Arevalo, Teresa N. 1 15 56.92 14. Delos Reyes, Ramon Jr. 1 17 52.37 15. Garcia, Carlos F. 2 1 83.11 16. Pacificar, Lourdes 2 2 79.69 17. Diaz, Joel 2 3 76.28 18. Sapalo, Ramon Nonato F. 2 4 117.26 19. Sumang, Robert M. 2 5 88.80 20. Puertas, Yvonnie D. 2 6 84.25 21. Diaz, Emelona 2 7 87.66 22. Emperado, Lorelle 2 8 79.69 23. Jumayac, Clemente Jr. M. 2 9 64.89 24. Macoy, Rey Gien E. 2 10 124.09 25. Tagonera, Ledjie 2 11 126.37 26. Gellang, Lita 3 1 69.45 27. Dones, Arnel P. 3 2 71.72 28. Del Rosario, Genevive 3 3 69.45 2.9. Miraflores, Analiza B. 3 4 63.75 30. Gabison, Leny P. 3 5 99.05 31. Malungayon, Jose Danilo A. 3 6 95.63 32. Canoy, Jerry E. 3 7 79.69 33. Diafante, Tita M. 3 8 105.88 34. Dueas, Rea T. 3 9 81.97 35. Macoy, Renato C. 3 10 85.38 36. Delfin, Alita 3 11 76.28 37. Muyco, Ma. Luisa L. 3 12 70.28 38. Muyco, April Joy L. 3 13 74.00 39. Salvador, Herman A. 3 14 86.52 40. Dequilla, Nenita L. 3 15 84.25 41. Tibulan, Elvina T. 3 16 80.83 42. Posecion, Roberto G. 3 17 102.46 43. Batislaong, Rosalie C. 3 18 63.75 44. Garcia, Yolanda J. 3 19 92.21 45. Ayson, Ben J. 3 20 66.03 46. De La Rosa, Ricky 3 21 68.31 47. Tomarang, Erminigilda 3 22 68.31 48. Jison, Analyn B. 3 23 68.31 49. Agudelo, Jeffrey 3 24 77.41 50. Cumawas, Ma. Quenciana D. 3 25 79.69 51. Emperado, Erlenda D. 3 26 71.72 52. Jacinto, Mary Grace 3 27 95.63 53. Ganancial, Dennis 3 28 78.55 54. Samorillo, Jonathan 3 29 71.72 55. Navita, Ruel 6 30 80.83 56. Windam, Jamelito 6 721-B-1 94.49 57. Cordero, Jonathan C. 6 721-B-2 107.01 58. Alfonso, Jenalyn B. 6 721-B-3 130.92 59. Separo, Nelia P. 6 721-B-4 130.92 60. De La Rosa, Joji N. 6 721-B-5 134.34 61. Alas, Rona 6 721-B-6 100.18 62. Ocay, Grace 6 721-B-7 89.94 63. Piodena, Liza Mae 6 721-B-8 111.57 Total: 5,246.00 =======