BIR Ruling No. 240-15

July 10, 2015 BIR RULING NO. 240-15 RA No. 7279; BIR Ruling No. 294-14; BIR Ruling No. 283-14 Golden Maon Phase I Homeowners Association, Inc. Purok Ube, Maon, Butuan City 8600 Attention: Ms. Remedios I. Onso President Gentlemen : This refers to the letter of Eduardo T. Manicio, Executive Vice President of Social Housing Finance Corporation (SHFC) dated May 28, 2014, endorsing the sale transaction between Uraya Land Development, Inc. and Golden Maon Phase I 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 Uraya Land Development, Inc. , (TIN 003-988-640-000) is the registered owner of a parcel of land covered by Transfer Certificate of Title (TCT), to wit: TCT No. Area (sq.m.) Tax Declaration No. RT-412-64 26,961 08-07-0003-00522 issued by the Registry of Deeds for City of Butuan. The aforesaid property is situated at Brgy. Maon, City of Butuan. Golden Maon Phase I Homeowners Association, Inc . (TIN 409-664-141-000), on the other hand, is a homeowners' organization registered with the Housing and Land Use Regulatory Board (HLURB) under Certificate of Registration No. 00820. On July 3, 2013, the parties executed a Deed of Absolute Sale whereby the owner transferred and conveyed Twelve Thousand One Hundred Twenty Six square meters (12,126 sq.m.) portion of the subject property to Golden Maon Phase I Homeowners Association, Inc. at a total agreed price of Seven Million Seven Hundred Thousand Ten Pesos (Php7,700,010.00), Philippine Currency. Pursuant to a Certification issued by the Social Housing Finance Corporation (SHFC), Twelve Thousand One Hundred Twenty Six square meters (12,126 sq.m.) out of the Twenty Six Thousand Nine Hundred Sixty One square meters (26,961 sq.m.) covered by TCT No. RT-412-64 actually comprise a CMP Project and shall be proportionately distributed to the association's one hundred nine (109) qualified member-beneficiaries (Annex A). For this purpose, Golden Maon Phase I 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, Golden Maon Phase I 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 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; 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 property for use in a socialized housing project is exempt from the payment of capital gains tax. Such being the case, the sale by Uraya Land Development, Inc. to Golden Maon Phase I Homeowners Association, Inc. , in so far as the Twelve Thousand One Hundred Twenty Six square meters (12,126 sq.m.) portion of the property covered by TCT No. RT-412-64 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 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. 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 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 Nos. 294-14 dated July 23, 2014 and 283-14 dated July 7, 2014) 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 Golden Maon Phase I Homeowners Association, Inc. Purok Ube, Maon, Butuan City Master list of Beneficiaries Name of Beneficiary Block No. Lot No. Total Lot Area 1 Bacalso, Al Ryan B. 1 1 98.22 2 Bacalso, Allan Jr. B. 2 1 102.61 3 Aranton, Antonietta B. 3 1 146.59 4 Aranton, Andyfer 4 1 117.27 5 Aranton, Anniefe 5 1 117.27 6 Bacalso, Albert Louie 6 1 117.27 7 Bacalso, Arnulfo M. 7 1 117.27 8 Jamero, Julieto L. 8 1 96.75 9 Lausa, Bernard Quincy G. 9 1 87.95 10 Gendeve, Marito C. 10 1 117.27 11 Enot, Bob 11 1 102.61 12 Arbis, Rolando S. 12 1 117.27 13 Lao, Ronald A. 13 1 83.56 14 Magalona, Aubrey Shien A. 14 1 83.56 15 Magalona, Zenia A. 15 1 83.56 16 Magalona, Nimfa A. 16 1 117.27 17 Maclay, Salvacion P. 17 1 126.07 18 Jamero, Joel C. 18 1 124.60 19 Ayuban, Anabel G. 1 2 92.35 20 Gerandoy, Roque S. 2 2 92.35 21 Rodriguez, John Mark A. 3 2 79.16 22 Onso, Remedios I. 4 2 102.61 23 Illana, Antonio P. 5 2 104.08 24 Onso, Daisy Jane I. 6 2 67.43 25 Illana, Ma. Anafie S. 7 2 112.88 26 Lausa, Virginia G. 8 2 104.08 27 Giducos, Roberto M. 9 2 105.55 28 Cirera, Pryci 10 2 74.76 29 Maghuyop, Annaliza T. 11 2 117.27 30 Dela Pea, Darlin April 12 2 45.44 31 Cirera, Euberta A. 13 2 117.27 32 Mendoza, Precy B. 1 3 112.88 33 Abcede, Jeremias M. 2 3 36.65 34 Coralde, Guilberto G. 3 3 167.11 35 Abcede, Anita M. 4 3 117.27 36 Maglente, Lolita C. 5 3 133.40 37 Warquez, Darwin C. 6 3 117.27 38 Maglinte, Kenneth C. 7 3 117.27 39 Mendoza, Rogelio R. 8 3 104.08 40 Curato, Diomedes R. 9 3 117.27 41 Eguna, Juvy Ann D. 10 3 55.70 42 Eguna, Gloria D. 11 3 115.81 43 Matias, Lucky Mae A. 12 3 152.45 44 Ajoc, Gemma D. 13 3 117.27 45 Abesamis, Roel C. 1 4 117.27 46 Abesamis, Marites C. 2 4 117.27 47 Polintan, Alyssa Mary Y. 3 4 104.08 48 Yamit, Editha P. 4 4 101.15 49 Yamit, Judith P. 5 4 102.61 50 Morgado, Eugene B. 6 4 115.81 51 Pacultad, Jingfe B. 7 4 117.27 52 Bongosia, Gerald R. 8 4 117.27 53 Cocon, Mary Grace R. 9 4 118.74 54 Caete, Jose 10 4 117.27 55 Auxtero, Zeneta G. 11 4 117.27 56 Caete, Charise Mae I. 12 4 117.27 57 Albulario, Francis Ronald B. 13 4 117.27 58 Caete, Cherry Lyn I. 14 4 117.27 59 Mamac, Rovi Fay C. 15 4 117.27 60 Calipayan, Jayryl M. 16 4 77.69 61 Cirera, Melody M. 17 4 109.94 62 Calipayan, Bonifacio 18 4 102.61 63 Lucot, Reyna C. 19 4 117.27 64 Bangahon, Celsa G. 20 4 87.95 65 Anub, Melanio A. 21 4 76.23 66 Sarco, Antonio A. 22 4 117.27 67 Eboa, Jacqueline Y. 23 4 117.27 68 Manalo, Margarita L. 24 4 117.27 69 Eguna, Norma E. 25 4 109.94 70 Manalo, Christopher L. 26 4 117.27 71 Besaes, Teodoro E. 27 4 117.27 72 Abonito, Felipa G. 28 4 117.27 73 Lagura, Eric B. 29 4 117.27 74 Erigan, Ma. Estela N. 30 4 117.27 75 Sarco, Robert G. 31 4 117.27 76 Musico, Allan P. 32 4 117.27 77 Balbes, Fiel P. 1 5 117.27 78 Castro, Bernard T. 2 5 117.27 79 Ferrer, Ellen C. 3 5 117.27 80 Pangcatan, Noradin N. 4 5 117.27 81 Datuhaon, Alioden P. 5 5 117.27 82 Bongato, Jerlyn T. 6 5 117.27 83 Micayabas, Florita C. 7 5 117.27 84 Arais, Subair 8 5 117.27 85 Capitania, Emelyn C. 9 5 117.27 86 Bonotan, Matilde L. 10 5 117.27 87 Bonotan, Raymundo L. 11 5 117.27 88 Ipanag, Elmie S. 12 5 117.27 89 Marzon, Samson E. 13 5 117.27 90 Dagaraga, Rudyardino 14 5 117.27 91 Dulanas, Florape B. 15 5 115.81 92 Barrios, Alex O. 1 6 117.27 93 Barrios, Alejo Jr. 2 6 117.27 94 Gatchalian, Jerwin Bryan B. 3 6 131.93 95 Gatchalian, Jescel Clark A. 4 6 117.27 96 Gatchalian, Cheryl Joy A. 5 6 117.27 97 Barandino, Liezl B. 6 6 127.53 98 Caballero, Raul Jr. 7 6 117.27 99 Caballero, Ruel F. 8 6 117.27 100 Cabanban, Johanna Joy C. 9 6 117.27 101 Vocal, Jevelita C. 10 6 143.66 102 Vocal, Jovito C. 11 6 117.27 103 Dupa, Roselyn D. 12 6 117.27 104 Odtojan, Guadalupe C. 13 6 117.27 105 Pajo, Carlito S. 14 6 117.27 106 Salabsab, Reynaldo N. 15 6 117.27 107 Lobitaa, Nonita B. 16 6 117.27 108 Sagario, Gemma F. 17 6 117.27 109 Vicente, Lindabeth B. 18 6 117.27 Total: 12,126.00 ========