BIR Ruling No. 242-15

July 10, 2015 BIR RULING NO. 242-15 RA No. 7279; BIR Ruling No. 294-14; BIR Ruling No. 283-14 Carmel Village Homeowners Association, Inc. Brgy. Miranda, Babak District, Island Garden City of Samal Attention: Mr. Feblito S. Dinglasa President Gentlemen : This refers to the letter dated September 23, 2014 of Ms. Ma. Ana R. Oliveros, President, Social Housing Finance Corporation, requesting Certificate of Tax Exemption from the payment of Capital Gains Tax and other taxes of the sale transaction by and between Teresita Palma Gil-Sabas, Marian Francis P. Sabas, George Benigno P. Sabas, Francisco P. Sabas , married to Cecily Tee, Inocencio P. Sabas, Jr. , married to Patricia Serrano, Raymundo P. Sabas , married to Jennifer Tuazon, Josephine S. Bastes , married to Rufino M. Bastes and Carmel Village Homeowners Association, Inc. in accordance with the Republic Act (R.A.) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". HTcADC Documents submitted show that Teresita Palma Gil-Sabas (TIN 137-813-122-000), Marian Francis P. Sabas (TIN 136-371-655-000), George Benigno P. Sabas (TIN 170-344-765), Francisco P. Sabas (TIN 204-371-138-000), married to Cecily Tee, Inocencio P. Sabas, Jr. (TIN 148-637-127-000), married to Patricia Serrano, Raymundo P. Sabas (TIN 204-371-321-000), married to Jennifer Tuazon, Josephine S. Bastes (TIN 131-838-887-000), married to Rufino M. Bastes, are the registered owners (hereinafter collectively referred to as "Landowners") of parcels of land covered by sixty five (65) Transfer Certificates of Title (TCT), to wit: TCT No. Area (sq.m.) Tax Declaration No. 1. 142-2011007530 117 02-01001-03078 2. 142-2011007531 120 02-01001-03077 3. 142-2011007532 120 02-01001-03076 4. 142-2011007533 120 02-01001-03075 5. 142-2011007535 120 02-01001-03073 6. 142-2011007536 120 02-01001-03072 7. 142-2011007537 120 02-01001-02973 8. 142-2011007538 120 02-01001-02972 9. 142-2011007539 120 02-01001-03048 10. 142-2011007540 120 02-01001-03047 11. 142-2011007541 120 02-01001-03046 12. 142-2011007542 120 02-01001-03045 13. 142-2011007543 120 02-01001-03044 14. 142-2011007544 120 02-01001-03043 15. 142-2011007545 120 02-01001-03042 16. 142-2011007546 120 02-01001-02991 17. 142-2011007547 120 02-01001-02990 18. 142-2011007548 120 02-01001-02989 19. 142-2011007549 120 02-01001-02988 20. 142-2011007550 120 02-01001-02987 21. 142-2011007551 206 02-01001-03084 22. 142-2011007552 139 02-01001-03083 23. 142-2011007553 133 02-01001-03082 24. 142-2011007554 152 02-01001-02974 25. 142-2011007555 180 02-01001-03089 26. 142-2011007556 125 02-01001-03088 27. 142-2011007557 144 02-01001-02977 28. 142-2011007558 125 02-01001-03091 29. 142-2011007559 162 02-01001-03092 30. 142-2011007562 116 02-01001-03007 31. 142-2011007563 120 02-01001-03006 32. 142-2011007564 120 02-01001-03005 33. 142-2011007565 120 02-01001-03061 34. 142-2011007566 120 02-01001-03062 35. 142-2011007567 120 02-01001-03063 36. 142-2011007568 120 02-01001-03064 37. 142-2011007569 120 02-01001-03065 38. 142-2011007591 128 02-01001-03051 39. 142-2011007592 128 02-01001-03052 40. 142-2011007593 134 02-01001-03054 41. 142-2011007594 134 02-01001-03053 42. 142-2011007595 140 02-01001-03055 43. 142-2011007596 139 02-01001-03056 44. 142-2011007597 145 02-01001-03058 45. 142-2011007598 145 02-01001-03057 46. 142-2011007599 151 02-01001-03059 47. 142-2011007600 151 02-01001-03060 48. 142-2011007601 157 02-01001-02992 49. 142-2011007602 156 02-01001-03004 50. 142-2011007603 163 02-01001-02993 51. 142-2011007604 162 02-01001-03003 52. 142-2011007605 165 02-01001-02994 53. 142-2011007606 164 02-01001-03002 54. 142-2011007621 100 02-01001-02997 55. 142-2011007622 100 02-01001-02998 56. 142-2011007623 100 02-01001-03009 57. 142-2011007624 100 02-01001-03010 58. 142-2011007626 100 02-01001-03016 59. 142-2011007627 100 02-01001-03020 60. 142-2011007628 100 02-01001-03021 61. 142-2011007629 100 02-01001-03024 62. 142-2011007630 100 02-01001-03025 63. 142-2011007631 100 02-01001-03027 64. 142-2011007632 100 02-01001-03028 65. 142-2011007633 120 02-01001-03029 Total: 8,301 ====== issued by the Registry of Deeds for the province of Davao del Norte. The aforesaid properties are situated at Brgy. Poblacion, Babak, Davao del Norte with an aggregate area of Eight Thousand Three Hundred One square meters (8,301 sq.m.), more or less. Carmel Village Homeowners Association, Inc. (TIN 266-055-499-000), on the other hand, is a homeowners' organization duly registered with the Housing and Land Use Regulatory Board (HLURB) under Certificate of Registration No. 12576. On June 4, 2014, the landowners and Carmel Village Homeowners Association, Inc. executed a Deed of Absolute Sale, whereby the landowners transferred and conveyed the subject properties with an aggregate area of Eight Thousand Three Hundred One square meters (8,301 sq.m.) to the latter at an agreed price of Four Million Seven Hundred Seventy Three Thousand Seventy Five Pesos (Php4,773,075.00). Pursuant to the Certification dated June 4, 2014 issued by Social Housing Finance Corporation (SHFC), Eight Thousand Three Hundred One square meters (8,301 sq.m.) covered by TCT Nos. 142-2011007530 to 33; 142-2011007535 to 59; 142-2011007562 to 69; 142-2011007591 to 606; 142-2011007621 to 624; 142-2011007626 to 633 actually comprise a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's sixty five (65) qualified member-beneficiaries (Annex A). For this purpose, Carmel Village 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). In support of its request, Carmel Village 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; aScITE 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 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 by the landowners to Carmel Village Homeowners Association, Inc. of Eight Thousand Three Hundred One square meters (8,301 sq.m.) covered by TCT Nos. 142-2011007530 to 33; 142-2011007535 to 59; 142-2011007562 to 69; 142-2011007591 to 606; 142-2011007621 to 624; 142-2011007626 to 633, 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 landowners are 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) HEITAD 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) 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. ATICcS Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX A Carmel Village Homeowners Association, Inc. Brgy. Miranda, Babak District, Island Garden City of Samal Master list of Beneficiaries Name of Beneficiary Blk. Lot No. Total Lot No. Area 1. Sulit, Marie Cris E. 3 1 120 2. Chiu, Lyndel H. 3 2 120 3. Rosales, Dario D. 3 3 120 4. Suarez, Nelly T. 3 4 120 5. Dinawanao, Cecel S. 3 6 120 6. Presores, Bethlehem D. 3 7 120 7. Crausos, Rolan L. 3 8 120 8. Pepino, Eleonora G. 3 9 120 9. Ponce, Benson J. 3 10 120 10. Montemayores, Belen S. 3 11 120 11. Deloso, Marisa A. 3 12 120 12. Lopez, Yvony A. 3 13 120 13. Rosete, Mary Ann A. 3 14 120 14. Abeles, Vilma B. 3 15 120 15. Deparine, Rosabel R. 3 16 120 16. Doa, Loreza P. 3 17 120 17. Gono, Nely Joy M. 3 18 120 18. Soquiso, Quimberly S. 3 21 120 19. Sore, Velmore C. 3 22 120 20. Dinglasa, Feblito S. 3 23 120 21. Roxas, Jun Paul A. 4 1 206 22. Damag, Ofelia A. 4 2 139 23. Sorita, Maribel Q. 4 3 133 24. Tolentino, Leonardo D. 4 4 152 25. Camile, Mark Syrel A. 4 5 180 26. De Guia, Ralph M. 4 6 125 27. Pelaypa, Cesar Sr. M. 4 7 144 28. Torculas, Rea Q. 4 8 125 29. Rosales, Nochie C. 4 9 162 30. Gubat, Ricky B. 6 1 116 31. Hesera, Divina G. 6 2 120 32. Mata, Mirasol S. 6 3 120 33. Monteclar, Elmer A. 6 4 120 34. Vivar, Ming Fe B. 6 5 120 35. Cartagena, Jobanie B. 6 6 120 36. Manatad, Ana Marie L. 6 7 120 37. Manatad, Bernadette L. 6 8 120 38. Baluarte, Garry E. 7 13 128 39. Gomez, Jennifer D. 7 14 128 40. Jamisola, Evangeline P. 7 15 134 41. Fanol, Miller P. 7 16 134 42. Jamisola, Floriano P. 7 17 140 43. Formoso, Ell B. 7 18 139 44. Bonite, Estella R. 7 19 145 45. Damag, Bobby B. 7 20 145 46. Dinawanao, Anthony S. 7 21 151 47. Mahipos, Norma P. 7 22 151 48. Dinawanao, Jocille S. 7 23 157 49. Rubio, Evangeline Y. 7 24 156 50. Cabanas, Jonathan C. 7 25 163 51. Gubat, Romil B. 7 26 162 52. Pacquiao, Lloyd T. 7 27 165 53. Pacquiao, Francis T. 7 28 164 54. Alaba, Rosalyn S. 11 2 100 55. Lapinig, Honeylet C. 11 3 100 56. Lenogon, Estilito Jr. D. 11 4 100 57. Atas, Jenepher D. 11 5 100 58. Candol, Lorefe S. 11 9 100 59. Banugbanug, Mary Ann P. 11 10 100 60. Saragena, Lorna B. 11 11 100 61. Tingal, Elizabeth D. 11 12 100 62. Bucton, Lorilyn C. 11 13 100 63. Cuveros, Geraldine N. 11 14 100 64. Nazara, Gemarie D. 11 15 100 65. Alisoso, Leonard B. 11 16 120 Total: 8,301 ======