BIR Ruling No. 283-14

July 7, 2014 BIR RULING NO. 283-14 RA No. 7279; BIR Ruling No. 109-13 Barangay Paon Homeowners Association, Incorporated Barangay Paon, Estancia, Iloilo Attention: Consuelo N. Duardo President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated February 24, 2014, endorsing the sale transaction between Amando Cudilla Lim, Jr. married to Marilyn B. Lim and Barangay Paon Homeowners Association, Incorporated 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 Amando Cudilla Lim, Jr. (TIN 166-481-851-000) (hereinafter referred to as Landowner) is the registered owner of a parcel of land, identified as Lot 1618-A-1, Psd-06-075504, being a portion of Lot 1618-A, Psd-06-060660 covered by Transfer Certificate of Title (TCT) No. 090-2011002255 issued by the Registry of Deeds for Iloilo, Iloilo. The aforesaid property is situated at Brgy. Paon, Estancia, Iloilo with an area of Twenty Six Thousand Three Hundred Fifty Nine square meters (26,359 sq.m.), more or less. Barangay Paon Homeowners Association, Incorporated (TIN 433-010-002-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On November 25, 2013, the parties executed a Deed of Absolute Sale whereby the Landowner transferred and conveyed the subject property to Barangay Paon Homeowners Association, Incorporated at an agreed price of Nine Million Two Hundred Twenty Five Thousand Six Hundred Fifty Pesos (P9,225,650.00). Pursuant to the certification issued by SHFC, the property covered by TCT No. 090-2011002255 is actually a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Barangay Paon Homeowners Association, Incorporated 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 17, 2014. cCAaHD In support of its request, Barangay Paon Homeowners Association, Incorporated has completely submitted on February 28, 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 Letter-Guaranty; 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 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: HICEca 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 Barangay Paon Homeowners Association, Incorporated of the property covered by TCT No. 090-2011002255 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. 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) cSICHD 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 Barangay Paon Homeowners Association, Incorporated Barangay Paon, Estancia, Iloilo Name of Beneficiary Blk. No. Lot. No. Total Area (Sq.M.) 1 Sanchez, Edgar C. 1 1 158.47 2 Saul, Hilbert G. 1 2 130.96 3 Saul, Samuel G. 1 3 121.80 4 Minguez, Niel T. 1 4 191.21 5 Balete, Robelyn B. 1 5 136.2 6 Tuang, Dorcas A. 1 6 138.82 7 Delos Santos, Elsa C. 1 7 158.47 8 Delfin, Jesa 1 8 104.77 9 Jugo, Mark Rhomel 2 1 69.41 10 Bataga, Aileen S. 2 2 82.51 11 Tuang, Gerardo S. 2 3 193.83 12 Bulanon, Rene T. 2 4 82.51 13 Belmis, Juvy M. 2 5 130.96 14 Martinez, Gay S. 2 6 128.34 15 Borres, Manny P. 2 7 72.03 16 Lianto, Marlyn D. 2 8 58.93 17 Dumali, Mario B. 2 9 151.92 18 Dela Cruz, Leo A. 2 10 104.77 19 Ducay, Rosie D. 2 11 161.08 20 Franco, Melchor Jr. I. 2 12 179.42 21 Arinaza, Evangeline D. 2 13 120.49 22 Abiden, Penalyn D. 2 14 130.96 23 Duardo, Consuelo N. 2 15 130.96 24 Duardo, Ellen D. 2 16 128.34 25 Barrios, Elsie D. 2 17 188.59 26 Delos Santos, Elmer 2 18 178.11 27 Teodosio, Florentina P. 2 19 125.72 28 Carido, Regina D. 2 20 176.80 29 Robles, Josephine M. 2 21 153.23 30 Barredo, Myla A. 2 22 121.80 31 Mansueto, Relyn D. 2 23 171.56 32 Mijares, Cynthia S. 2 24 161.08 33 Mijares, Jacynth 2 25 145.37 34 Nepangue, Robelita H. 2 26 112.63 35 Tiano, Alem P. 2 27 116.56 36 Silverio, Robert M. 2 28 72.03 37 Villamor, Susan S. 2 29 69.41 38 Dumali, Gima B. 2 30 62.86 39 Limson, Joel Jr. C. 3 1 106.08 40 Bayot, Ronila M. 3 2 73.34 41 Siasico, John Rey 3 3 124.42 42 Siasico, Jenelyn 3 4 89.06 43 Mangaring, Rodrigo R. 3 5 155.85 44 Decina, Joy W. 3 6 163.70 45 Sandoval, Bryant Wile 3 7 165.01 46 Verayo, Mercedes P. 3 8 208.23 47 Cangas, Roberto P. 3 9 79.89 48 Berbasa, Edward 3 10 92.98 49 Mendoza, Rhealyn M. 3 11 108.70 50 Sanchez, Revelina B. 3 12 96.91 51 Alpasan, Pee M. 3 13 132.27 52 Talisay, Edna S. 3 14 90.36 53 Alpasan, Baby Jane 3 15 128.34 54 Bantillo, Joemar 3 16 130.96 55 Rogales, Ma. Willa V. 3 17 102.15 56 Base, Juanita M. 3 18 157.16 57 Tuang, Remia L. 3 19 182.04 58 Salaver, Lea H. 3 20 183.35 59 Banting, Marilyn 3 21 146.68 60 Labang, Daisy C. 3 22 91.67 61 Chavez, Rosita 4 1 96.91 62 Martinez, Rouila 4 2 92.98 63 Delos Santos, Jocelyn B. 4 3 94.29 64 Doyongan, Norma B. 4 4 113.94 65 Doyongan, Noren L. 4 5 95.60 66 Villaflor, Susan D. 4 6 96.91 67 Omelan, Julie R. 4 7 98.22 68 Magnate, Cheryl O. 4 8 157.16 69 Omelan, Raffy R. 4 9 130.96 70 Venancio, Melvin B. 4 10 165.01 71 Venancio, Gil 4 11 110.01 72 Sandoval, Mary Jane O. 5 1 120.49 73 Catalan, Charlie S. 5 2 120.49 74 Sandoval, Elizabeth D. 5 3 134.89 75 Casas, Jhona O. 5 4 106.08 76 Labaroza, Fanny B. 5 5 138.82 77 Vega, Jerry L. 5 6 146.68 78 Labaroza, Arthur V. 5 7 85.13 79 Vasquez, Maxiel R. 5 8 79.89 80 Siasico, Roberto Jr. B. 5 9 66.79 81 Pangilinan, Perlito C. 5 10 120.49 82 Azarga, Marites M. 5 11 141.44 83 Masendo, Rosita D. 5 12 113.94 84 Labaroza, Josephine D. 5 13 141.44 85 Duardo, Elna 6 1 78.58 86 Martinez, Apple 6 2 95.60 87 Agustin, Divina Grace 6 3 167.63 88 Garcia, Marilyn V. 6 4 185.97 89 Omelan, Lydia R. 6 5 157.16 90 Omelan, Diana 6 6 120.49 91 Magnate, Norlito B. 6 7 117.87 92 Domingo, Armando S. 6 8 91.67 93 Solis, Elisa G. 6 9 130.96 94 Gallardo, Carmencita B. 6 10 123.11 95 Lorca, Ailyn 6 11 104.77 96 Magbanua, Og E. 6 12 127.03 97 Magbanua, Antonio L. 6 13 127.03 98 Magbanua, Reynaldo L. 6 14 125.72 99 Dela Pea, Jose Bingor M. 6 15 196.45 100 Magbanua, Manny L. 6 16 166.32 101 Magtiza, Sally U. 7 1 98.22 102 Magtiza, Archie 7 2 96.91 103 Uy, Virginia 7 3 189.90 104 Degoma, Phoebe A. 7 4 191.21 105 Lacsi, Rosario N. 7 5 123.11 106 Sanchez, Welnie B. 7 6 144.06 107 Dela Cruz, Wilien U. 7 7 144.06 108 Flores, Raoul Rey G. 8 1 130.96 109 Villa, Anie G. 8 2 130.96 110 Dividina, Nyan T. 8 3 130.96 111 Naysayo, Benito A. 8 4 130.96 112 Ablaya, Melanie A. 8 5 98.22 113 Tolentino, Joerix N. 8 6 130.96 114 Duardo, Elnie N. 8 7 110.01 115 Buenafe, Reymundo N. 8 8 137.51 116 Naysayo, Ronie S. 8 9 144.06 117 Varela, Florabelle B. 8 10 144.06 118 Bolivar, Susan C. 8 11 150.61 119 Sanchez, Ma. Luz G. 8 12 130.96 120 Bolivar, Johnny C. 8 13 144.06 121 Lachica, Rosa D. 8 14 138.82 122 Pabilona, Antonio Jr. N. 8 15 149.30 123 Obligar, Arnold P. 8 16 153.23 124 Tolentino, Serafin Jr. N. 8 17 73.34 125 Benedicto, Rita A. 8 18 100.84 126 Malunda, Douglas Jr. B. 8 19 167.63 127 Temporosa, Segundo A. 8 20 157.16 128 Bolivar, Apollo C. 8 21 142.75 129 Bolivar, Eva C. 8 22 127.03 130 Siasico, Ruel B. 8 23 108.70 131 Reyes, Maruja B. 9 1 187.28 132 Siasico, Rex B. 9 2 130.96 133 Siasico, Rowe B. 9 3 99.53 134 Porras, Lucita T. 9 4 154.54 135 Taniedo, Marites A. 9 5 136.20 136 Pabilona, Laura S. 9 6 172.87 137 Billioned, Daisy A. 10 1 180.73 138 Posadas, Amylou B. 10 2 179.42 139 Babas, Merly B. 10 3 157.16 140 Flores, Rowelyn 10 4 159.78 141 Flores, Wilbert P. 10 5 136.20 142 Flores, Wilma P. 10 6 192.52 143 Omelan, Ramil R. 10 7 159.78 144 Amante, Elsa C. 10 8 137.51 145 Villaflor, Jocelyn B. 10 9 117.87 146 Pabilona, Mark Anthony N. 10 10 85.13 147 Cordero, Hana Mae B. 10 11 77.27 148 Delos Santos, Flora Joy 10 12 142.75 149 Perote, Vilma T. 10 13 120.49 150 Buenafe, Esparanza N. 10 14 163.70 151 Heroldo, Marcos C. 10 15 161.08 152 Mermida, Ennie M. 10 16 87.75 153 Mermida, Sanny M. 10 17 130.96 154 Delos Santos, Arnold M. 10 18 102.15 155 Sementilla, Rebecca T. 10 19 178.11 156 Arinaza, Jocelyn 10 20 121.80 157 Buenafe, Rosward N. 10 21 103.46 158 Lopez, Riza O. 10 22 167.63 159 Molita, Francis T. 10 23 218.71 160 Gallenero, Eurose P. 10 24 130.96 161 Gallenero, Lorly 10 25 70.72 162 Araque, Hernan V. 10 26 106.08 163 Giganto, Gideon E. 10 27 117.87 164 Tuang, Elna T. 10 28 154.54 165 Tuang, Ronilo G. 10 29 159.78 166 Vergara, Yulo M. 10 30 174.18 167 Villarante, Allen M. 10 31 103.46 168 Colongon, Helen F. 10 32 129.65 169 Magtiza, Arleen B. 10 33 183.35 170 Teodosio, Ma. Cristina T. 10 34 124.42 171 Teodosio, Jona B. 11 1 102.15 172 Gaspar, Arnold D. 11 2 94.29 173 Vergara, Salia D. 11 3 172.87 174 Teodosio, Fatima B. 11 4 113.94 175 Tolentino, Jolan N. 11 5 111.32 176 Aying, Ritchelle B. 11 6 162.39 177 Campos, Mateo S. 11 7 110.01 178 Sasil, Roda C. 11 8 157.16 179 Villaruz, Myra M. 11 9 137.51 180 Campos, Danilo B. 11 10 124.42 181 Aparecio, Elena D. 11 11 85.13 182 Delos Santos, Rolando B. 11 12 111.32 183 Pradas, Gina C. 11 13 123.11 184 Ramrez, Palma V. 11 14 125.72 185 Espineda, Dario D. 11 15 94.29 186 Delos Reyes, Ma. Shiela D. 12 1 106.08 187 Tuang, Regie G. 12 2 106.08 188 Watanabe, Suzzete D. 12 3 210.85 189 Cahilig, Homberto A. 12 4 142.75 190 Cahilig, Remia P. 12 5 179.42 191 Lacsi, Gloria C. 12 6 165.01 192 Cahilig, Roger 12 7 130.96 193 Jawod, Cecile B. 12 8 197.75 194 Aguilar, Merlinda A. 12 9 91.67 195 Paduga, Felix O. 12 10 130.96 196 Aparecio, Jessa P. 13 1 170.25 197 Odicta, Rio E. 13 2 104.77 198 Gepana, Aida C. 13 3 162.39 199 Diaz, Floridy D. 13 4 92.98 200 Abila, Rebecca E. 13 5 140.13 201 Oliva, Nilo O. 13 6 145.37 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.