BIR Ruling No. 273-14

July 2, 2014 BIR RULING NO. 273-14 RA No. 7279; BIR Ruling No. 109-13 San Ramon Homeowners Association, Inc. Brgy. Talisayan, Zamboanga City Attention: Geraldine A. Flores President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated March 6, 2014, endorsing the sale transaction between Luzbella Jamosin Gecolea married to Romeo Gecolea, Jaime S. Munson and San Ramon 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 Luzbella Jamosin Gecolea (TIN 425-213-884-000) and Jaime S. Munson (TIN 420-681-701-000) (hereinafter referred to as Landowners) are the registered owners of a parcel of land, identified as Lot 386-B-2-F-2-A of the subdivision plan, Psd-49-071101, being a portion of Lot 386-B-2-F-2, Psd-09-056682 covered by Transfer Certificate of Title (TCT) No. 129-2013000477 issued by the Registry of Deeds for Zamboanga City. The aforesaid property is situated at Brgy. Talisayan, Zamboanga City with an area of Thirty One Thousand Seven Hundred Seventy Seven square meters (31,777 sq.m.), more or less. San Ramon Homeowners Association, Inc. (TIN 006-286-754-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB) under Certificate of Registration No. 11957. On June 3, 2013, the parties executed a Deed of Absolute Sale whereby the Landowners transferred and conveyed the subject property to San Ramon Homeowners Association, Inc. at an agreed price of Twelve Million Seven Hundred Ten Thousand Eight Hundred Pesos (P12,710,800.00). Pursuant to the certification issued by SHFC, the property covered by TCT No. 129-2013000477 is actually a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose San Ramon 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 on February 25, 2014. DTIACH In support of its request, San Ramon Homeowners Association, Inc. has completely submitted on March 14, 2014 the following documents: 1) SHFC 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 Deed of Absolute Sale to the Community Association; 4) Certified true copy of the Articles of Incorporation of the Community Association; 5) Certified true copy of the Masterlist of Qualified Beneficiaries duly certified by the SHFC; 6) Certified true copies of the TCT and Latest Tax Declaration of the Property Sold to the Community Association; 7) Certified true copy of the Location Plan of the Lot Sold to the Community Association; 8) TIN ID/BIR Certificate of Registration of the seller and the Homeowner Association; and 9) 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 landowner to San Ramon Homeowners Association, Inc. of the property covered by TCT No. 129-2013000477 is exempt from the capital gains tax. AIECSD 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. 109-13 dated March 21, 2013) 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 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. 109-13 dated March 21, 2013) 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. 109-13 dated March 21, 2013) 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 San Ramon Homeowners Association, Inc. Brgy. Talisayan, Zamboanga City Name of Beneficiary Blk. Lot Total Area No. No. (sq.m.) 1 Lucia San Juan 1 1 206.15 2 Gerald F. Caindoy 1 2 194.79 3 Grace S. Irabon 1 3 194.79 4 Cris-an S. Tabotabo 1 4 194.79 5 Jerry S. Salvador 1 5 194.79 6 Noe F. Nicolas 1 6 194.79 7 Shahani M. Abdulkarim 1 7 194.79 8 Clent Anthony Clavecillas 1 8 194.79 9 Adamson B. Clavesillas 1 9 194.79 10 Ronnie U. Montes 1 10 194.79 11 Anna Marie Flores 1 11 194.79 12 Susan A. Santillan 1 12 194.79 13 Leonides Infante 1 13 194.79 14 Marjon Meramonte 1 14 194.79 15 Jocarm John Balignot 1 15 194.79 16 Aubrey Mae Flores 1 16 194.79 17 Bedeline T. Melo 1 17 194.79 18 Arlene T. Melo 1 18 194.79 19 Lorraine T. Abubakar 1 19 194.79 20 Erwin M. Valen 1 20 194.79 21 Darwin M. Valen 1 21 211.02 22 Sherilyn Mojares 1 22 269.46 23 Elpedio Mojares, Jr. 1 23 194.79 24 Ma. Kristine Merino 1 24 194.79 25 Nora F. Valcorza 1 25 194.79 26 Joel D. Ramos 1 26 194.79 27 Omar B. Basing 1 27 194.79 28 Arcelie G. Villacin 1 28 194.79 29 Kaycee S. Lumapas 1 29 194.79 30 Corazon T. Maningo 1 30 194.79 31 Elvie R. Delgado 1 31 194.79 32 Romeo C. Natividad 1 32 194.79 33 Leomar E. Visitacion 2 1 243.49 34 Amor L. Espulgar 2 2 194.79 35 Jorelyn S. Matulac 2 3 194.79 36 Arie1 B. Navarrete 2 4 194.79 37 Jaypee G. Caruana 2 5 194.79 38 Riziel A. Mahusay 2 6 194.79 39 Ma. Graciana T. Mijares 2 7 194.79 40 Berdine S. Tocop 2 8 194.79 41 Jocelyn O. Basera 2 9 194.79 42 Luciano S. Calo 2 10 194.79 43 Emmanuel F. Mendoza 2 11 194.79 44 Edgardo F. Mendoza, Jr. 2 12 194.79 45 Myrna B. Repolidon 2 13 194.79 46 Clyde Denzel Guinilac 2 14 194.79 47 Wilmerline B. Roblica 2 15 194.79 48 Edriza V. Solano 2 16 194.79 49 Rocky A. Torino 2 17 194.79 50 Roldan A. Torino 2 18 194.79 51 Romel Q. Atilano 2 19 194.79 52 Benedict Q. Atilano 2 20 194.79 53 Jobert A. Obiera 2 21 194.79 54 Ma. Cristina A. Cubian 2 22 194.79 55 Ma. Joan C. Cubian 2 23 194.79 56 Roderick T. Patricio 2 24 259.72 57 Julises A. Ordeniza 3 1 170.44 58 Junifer A. Ordeniza 3 2 172.07 59 Jenelyn G. Rebanal 3 3 194.79 60 Salacia A. Galindo 3 4 194.79 61 Francisco D. Ramos 3 5 194.79 62 Purisimo A. Labanacruz 3 6 194.79 63 Reyniel T. Lee 3 7 194.79 64 Reynaldo P. Georfo 3 8 194.79 65 Josie R. delos Santos 3 9 194.79 66 Restil C. Caruana 3 10 194.79 67 Myrna Cercado 3 11 194.79 68 Emery L. Torre 3 12 194.79 69 Anabel P. Amorte 3 13 194.79 70 Baby Injil A. Taub 3 14 194.79 71 Joseph P. Amorte 3 15 172.07 72 Lourdes T. Ansoc 3 16 172.07 73 Leonito E. Agado 4 1 173.69 74 Allen B. Bacolod 4 2 176.94 75 Carlos E. Agado 4 3 194.79 76 Acsehylus B. Bacolod 1 1 194.79 77 Ma. Lourdes E. Agado 4 5 194.79 78 Liberty E. Falcasantos 4 6 194.79 79 Nazario E. Agado 4 7 194.79 80 Virginia E. Concepcion 4 8 194.79 81 Juanito E. Agado 4 9 194.79 82 Flordeliza E. Cabaral 4 10 194.79 83 Estrella G. Maru 4 11 194.79 84 Freddie Melendres 4 12 194.79 85 Sanny L. Maghanoy 4 13 194.79 86 Romel Bajade 4 14 194.79 87 Eduard Branzuela 4 15 175.31 88 Eugene S. Domingo 4 16 175.31 89 Ma. Daniline O. Manuel 5 1 175.31 90 Patrick L. Manuel 5 2 178.56 91 Joanna Bianca Galea 5 3 194.79 92 James M. Saracho 5 4 194.79 93 Emmie I. Niduaza 5 5 194.79 94 Archie M. Sisnorio 5 6 194.79 95 Edwardo Fernandez 5 7 194.79 96 Eric M. Parra 5 8 194.79 97 Danilo B. Cabaltera 5 9 194.79 98 Marilou Solis 5 10 194.79 99 Jan-jan V. Ramacho 5 11 194.79 100 Warren Christian Serna 5 12 194.79 101 Dominador S. Andatar 5 13 194.79 102 Chona P. Selisana 5 14 194.79 103 Anelyn G. Andatar 5 15 178.56 104 Nancy Gamores 5 16 178.56 105 Raynand B. Azucena 6 1 175.31 106 Rommel B. Azucena 6 2 178.56 107 Vanessa Azucena 6 3 194.79 108 Raymond Azucena 6 4 194.79 109 Jean Y. Somblingo 6 5 194.79 110 Maria Venus Somblingo 6 6 194.79 111 Raphael Salih 7 1 185.05 112 Sheryll S. Lee 7 2 186.68 113 Editha E. Salig 7 3 194.79 114 Faizal Salih 7 4 194.79 115 Christelyn Dejos 7 5 194.79 116 Nila S. Pason 7 6 194.79 117 Lumen Perico 7 7 194.79 118 Gemma Fe Javier Andagan 7 8 194.79 119 Ma. Clara S. Olivo 7 9 194.79 120 Venus M. Villanueva 7 10 194.79 121 Khyll Hasil 7 11 194.79 122 Jonald M. dela Torre 7 12 194.79 123 Desiderio Ilalto 7 13 194.79 124 Rosalinda Villano 7 14 194.79 125 Idymar Ilalto 7 15 186.68 126 Rolf Marcus Villano 7 16 186.68 127 Dioscoro Ello 8 1 188.30 128 Mizpha Fabugais 8 2 191.55 129 Katherine Fabugais 8 3 194.79 130 Analyn Calipusan 8 4 194.79 131 Nomar Vicente 8 5 194.79 132 Myrna J. Esperat 8 6 194.79 133 Marlou M. Tumamak 8 7 194.79 134 Lorgin Fausto 8 8 194.79 135 Monina L. Fausto 8 9 194.79 136 Nerissa Rojas 8 10 194.79 137 Evangeline Gano 8 11 194.79 138 Katherine Barraquias 8 12 194.79 139 Edrelyn Camiro 8 13 194.79 140 Leonor Barraquias 8 14 194.79 141 Elaine Lungakit 8 15 189.92 142 Daisy Lozada 8 16 189.92 143 Geraldine Flores 9 1 124.99 144 Leonardo Noble 9 2 194.79 145 Sigfredo Cago 9 3 194.79 146 Marites Feliciano 9 4 193.17 147 Jason Adjani 9 5 243.49 148 Ramil S. Degamo 9 6 243.49 149 Ericson Navarite 9 7 194.79 150 Evelyn R. Villanueva 9 8 241.87 151 Phoebe Hasil 10 1 162.33 152 Jennifer Dumalag 10 2 162.33 153 Jaiel D. Davis 10 3 194.79 154 Eusales Baguio 10 4 194.79 155 Victor A. Lingatong 10 5 194.79 156 Danilo Gundran 10 6 194.79 157 Stephanie A. Ballaho 10 7 121.74 158 Eric G. Elumbra 10 8 121.74 159 Reynaldo C. Tadifa 11 1 159.08 160 Romeo S. Villacorte 11 2 194.79 161 Sharmina M. Abdulkarim 11 3 194.79 162 Shirley T. Maglangit 11 4 124.99 163 Edgar D. Setit 11 5 136.35 164 Mary Ann D. Porquillo 11 6 227.26 165 Mildred Macasa 11 7 212.65 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.