BIR Ruling No. 294-14

July 23, 2014 BIR RULING NO. 294-14 RA No. 7279; BIR Ruling No. 109-13 Flores-Ville Homeowners' Association, Inc. Palmera Spring 5 corner Senate Avenue Brgy. Bagumbong, Caloocan City Attention: Marcelo C. Susano, Jr. President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated February 26, 2014, endorsing the sale transaction between Sps. Cirilo L.V. Balgan and Annette F. Balgan and Flores-Ville 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 Sps. Cirilo L.V. Balgan (TIN 111-645-259-000) and Annette F. Balgan (TIN 111-645-267-000) are the registered owner of parcels of land covered by two (2) Transfer Certificates of Title (TCT), to wit: TCT No. Area (sq. m.) Tax Declaration No. C-393373 2,405 25-171-01705-08-R (C-402640) C-402642 5,451 25-173-00536-12-R 7,856 ====== issued by the Registry of Deeds for the Caloocan City. The aforesaid properties are situated at Brgy. Bagumbong, Caloocan City. Flores-Ville Homeowners' Association, Inc. (TIN 271-343-762-000), on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB) under Certificate of Registration No. 14481. On December 18, 2013, the parties executed a Deed of Absolute Sale whereby the owner transferred and conveyed Seven Thousand Four Hundred Ninety Two square meters (7,492 sq.m.) portion of the subject properties to Flores-Ville Homeowners' Association, Inc. at an agreed price of One Thousand Seven Hundred Eighty Seven and 24/100 Pesos (P1,787.24) per square meter or Thirteen Million Three Hundred Ninety Thousand Two and 8/100 Pesos (P13,390,002.08). Pursuant to a certification issued by SHFC, Seven Thousand Four Hundred Ninety Two square meters (7,492 sq.m.) out of the Seven Thousand Eight Hundred Fifty Six square meters (7,856 sq.m.) covered by TCT Nos. C-393373 and (C-402640) C-402642 actually comprise a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Flores-Ville 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). Documentary Stamp Tax (DST) due on the sale has been paid on December 23, 2013. DISHEA In support of its request, Flores-Ville Homeowners' Association, Inc. has completely submitted on March 7, 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 TCTs and Latest Tax Declarations of the Properties 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; 9) BIR Form 2000-OT (Documentary Stamp Tax Return); 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: 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 Flores-Ville Homeowners' Association, Inc. in so far as the Seven Thousand Four Hundred Ninety Two square meters (7,492 sq.m.) portion thereof of the properties covered by TCT Nos. C-393373 and (C-402640) C-402642 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) SCEHaD 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 Flores-Ville Homeowners' Association, Inc. Palmera Spring 5 corner Senate Avenue Brgy. Bagumbong, Caloocan City Name of Beneficiary Blk. Lot Total Area No. No. (sq.m.) 1 Matias, Ronaldo l 1 37.62 2 Matias, Rodel 1 2 37.62 3 Borromeo, Orlando M. 1 3 39.01 4 Cayetano Jr., Anacleto C. 1 4 39.01 5 Cayetano, Camille B. 1 5 39.01 6 Luzon, Giovanni Govense V. 1 6 39.01 7 Balduman, Riza P. 1 7 39.01 8 Baniqued, Elizabeth 1 8 39.01 9 Moscosa, Joel 1 9 39.01 10 Jaradal, Janet 1 10 39.01 11 Rodriguez, Domingo G. 2 1 33.44 12 Papna, Annie Lyn U. 2 2 34.83 13 Costales, Elmie P. 2 3 34.83 14 Papna, Romy P. 2 4 39.01 15 Rodriguez, Evangeline E. 2 5 39.01 16 Dela Pea, Romel C. 2 6 39.01 17 Gualberto, Josephine T. 2 7 39.01 18 Dela Pea, Mercedes C. 2 8 39.01 19 Dalogdog, Lilibeth C. 2 9 39.01 20 Reyes, Veronica M. 3 1 36.23 21 Dumlao, Nenita S. 3 2 41.80 22 Reyes, Billy John M. 3 3 39.01 23 Usares, Regina M. 3 4 39.01 24 Ramos, Jervis M. 3 5 39.01 25 Lopez, Adelyn 3 6 39.01 26 Tumala, Elsa R. 3 7 39.01 27 Balbin, Troy Cristoffer 3 8 39.01 28 Mangaliman Jr., German D. 4 1 34.83 29 Perez, Jean J. 4 2 34.83 30 Mangaliman, Ronnel D.R. 4 3 59.91 31 Diego, Henry G. 4 4 39.01 32 Buglosa, Ruby M. 4 5 39.01 33 Galleta, Veejee H. 4 6 39.01 34 Bacay, Roselyn G. 4 7 39.01 35 Gulla, Nikole Josh O. 5 1 50.16 36 Gulla, Noel F. 5 2 54.34 37 Vacaro, Lindolito M. 5 3 39.01 38 Collado, Ramon S. 5 4 39.01 39 Vacaro, Vincent 5 5 39.01 40 Collado, Rowena Lynne L. 5 6 39.01 41 Sagum, Alberto C. 6 1 37.62 42 Mirandilla, Maria Melisa D. 6 2 41.80 43 Verbo, Gemalyn M. 6 3 39.01 44 Masiglat, Rachael S. 6 4 39.01 45 Ramirez, Ma. Luisa M. 6 5 39.01 46 Diola, Melchor T. 6 6 39.01 47 Pacaco, Wilna G. 7 1 39.01 48 Gilo, Arnie Joy G. 7 2 47.37 49 Gerzan, Armando M. 7 3 58.52 50 Cariaga, Adoracion M. 7 4 41.80 51 Cariaga Jr., Pepito S. 7 5 40.41 52 Tupino, Fely T. 7 6 40.41 53 Lorenzo, Estela F. 8 1 40.41 54 Balajadia, John Lorenzo R. 8 2 45.28 55 Zarasate, Zshiegler M. 8 3 40.41 56 Zarasate, Kwellsuyinn M. 8 5 40.41 57 Quiday, Lolita B. 8 6 45.98 58 Vigil, Edgar F. 8 7 40.41 59 Marto, Michael Julius Q. 8 8 45.98 60 Vigil, Francisco F. 8 9 40.41 61 Susano Jr., Marcelo C. 8 10 45.98 62 Santos, Richmond B. 8 11 41.80 63 Santos, Russell B. 8 12 43.19 64 Beltran, Carlie B. 8 13 43.19 65 Rodriguez, Ethel 8 14 38.32 66 Sarabia, Evelyn P. 9 1 42.50 67 Limasac, Imy Rose P. 9 2 42.50 68 Pilotos, Jay-Ann O. 9 3 41.80 69 Magaypo, Marie Ann B. 9 4 41.80 70 Corbita, Maribel D. 9 5 41.80 71 Corbita Jr., Ceferino D. 9 6 41.80 72 Dela Cruz, Juan Paolo B. 9 7 41.80 73 Corbita, Margie D. 9 8 41.80 74 Dela Cruz, Reynaldo F. 9 9 41.80 75 Giron, Roberto F. 9 10 41.80 76 Giron, Emelita F. 9 11 41.80 77 Catud, Bayani R. 9 12 40.41 78 Cruz, Sheryl Anne G. 9 13 40.41 79 Cruz, Mercedita G. 9 14 40.41 80 Sadiasa, Nida T. 10 1 39.01 81 Demain, Elvie G. 10 2 39.01 82 Tajan-Tajan, Wilfredo A. 10 3 39.01 83 Yague, Noel A. 10 4 39.01 84 Gumila, Nelson A. 10 5 39.01 85 Maniago, Marissa C. 10 6 39.01 86 Gumila, Alberto A. 10 7 39.01 87 Cejalvo, Veronica T. 10 8 39.01 88 Aldover, Joel R. 10 9 39.01 89 Sy, Evelyn P. 10 10 39.01 90 Merina, Luzviminda T. 10 11 41.80 91 Merina, Luis T. 10 12 41.80 92 Aldover, Marlon R. 10 13 33.44 93 Caligan, Mary Claire I. 11 1 39.01 94 Espadilla, Adelaida M. 11 2 39.01 95 Isaig, Gerry D. 11 3 39.01 96 Espedillon, Nelia E. 11 4 39.01 97 Isaig, Michael I. 11 5 39.01 98 Delos Santos, Helen A. 11 6 39.01 99 Del Rosario, Analiza E. 11 7 39.01 100 Caspillo, Darwina 11 8 39.01 101 Battung, Rhodora E. 11 9 39.01 102 Tuazon, Ma. Christina 11 10 39.01 103 Matias, Michael DJ. 11 11 39.01 104 Santiago, Ginalyn M. 11 12 39.01 105 Lalaguna, Liza E. 11 13 39.01 106 Cariazo, Emmanuel 12 1 39.01 107 Betaizar, Crispina Q. 12 2 39.01 108 Gonzaga, Juliet B. 12 3 39.01 109 Cariazo, Jeyama P. 12 4 39.01 110 Carolino, John Paul E. 12 5 39.01 111 Escalante, Vivencio R. 12 6 39.01 112 Erazo, Julie A. 12 7 39.01 113 Dela Cruz, Luis M. 12 8 39.01 114 Alcarmen, Ma. Consuelo F. 12 9 39.01 115 Dela Cruz, Jaypee C. 12 10 39.01 116 Quiday Jr., Felipe B. 12 11 39.01 117 Laurente, Mary Joy Q. 12 12 39.01 118 Laurente, Veronica Q. 12 13 39.01 119 Del Rosario, Jenneth C. 13 1 40.41 120 Herrera, Angelina E. 13 2 40.41 121 Escala, Fernando P. 13 3 37.62 122 Herrera, Harren Jane E. 13 4 39.01 123 Del Rosario, Jeramay C. 13 5 36.23 124 Herrera, Ma. Hiezl E. 13 6 39.01 125 Morales Jr., Jose A. 13 7 37.62 126 Ansagay, Teresita C. 13 8 37.62 127 Villapaa, Virgilio C. 13 9 37.62 128 Partosa, Adelito E. 13 10 37.62 129 Longabela, Terelene H. 13 11 37.62 130 Lamigo, Dulce M. 13 12 37.62 131 Gregorio, Rosita L. 13 13 37.62 132 Ybaez, Desiree M. 14 1 40.41 133 Bailon, Marlon R. 14 2 39.01 134 Ybaez, Aileen M. 14 3 39.01 135 Bailon, Gerson R. 14 4 36.23 136 Faustino, Joseph E. 14 5 41.80 137 Baadera, Emily M. 14 6 36.23 138 Malicse, Samuel B. 14 7 41.80 139 Serdan, Sandra S. 14 8 36.23 140 Taruc, Brylle Benjiemar B. 14 9 41.80 141 Fuentes, Gerald Vincent Q. 14 10 36.23 142 Taruc, Mary Rose B. 14 11 41.80 143 Sevilla, Michelle Q. 14 12 36.23 144 Quiday Jr., Jaime M. 14 13 39.01 145 Fuentes, Riavic Q. 14 14 39.01 146 Quiday, Maria Pia M. 14 15 39.01 147 Quiday, Victor M. 14 16 39.01 148 Quiday, Romelyn M. 14 17 39.01 149 Napile, Salvador B. 14 18 39.01 150 Henson, Jeniffer Ruth S. 14 19 39.01 151 Sarmiento, Ricamor N. 14 20 39.01 152 Henson, Junhero John S. 14 21 39.01 153 De Aro, Xavier M. 14 22 39.01 154 Alday, Rommel A. 14 23 39.01 155 De Aro, Tristan M. 14 24 39.01 156 Alday, Ronaldo A. 14 25 39.01 157 Benaid, Russell B. 14 26 39.01 158 Bailon, Rosana F. 14 27 39.01 159 Cabalquinto, Rosita B. 14 28 39.01 160 Paz, Concepcion F. 14 29 39.01 161 Benaid, Nicolas B. 14 30 39.01 162 Barredo, Dahlia V. 14 31 39.01 163 Juanino, James P. 14 32 39.01 164 Vacaro, Joenalyn M. 14 33 39.01 165 Juanino, John Dexter P. 14 34 39.01 166 Irene, Tolentino B. 15 1 39.01 167 Ronquillo, Marissa B. 15 2 39.01 168 Ragonjan, Carlo R. 15 3 39.01 169 Santiago, Luzviminda R. 15 4 39.99 170 Comedia, Leonila G. 15 5 38.04 171 Omega, Marites C. 15 6 39.01 172 Eraa, Ma. Vilma C. 15 7 39.01 173 Balao, Ronald S. 15 8 39.01 174 Taran, Jennifer T. 15 9 39.01 175 Arabia, Helen A. 15 10 39.01 176 Tamula, John Michael S. 15 11 39.01 177 Tamula, Ryan S. 15 12 39.01 178 Prado, Joyce T. 15 13 39.01 179 Isuela, Victoria C. 15 14 39.01 180 Agrade, Teodoro S. 15 15 39.01 181 Bacamante, Montano O. 15 16 39.01 182 Bacamante, Moises O. 15 17 39.01 183 Gumapac, Leopoldo M. 15 18 37.62 184 Quibuyen, Rosalia M. 15 19 39.01 185 Mercado, Rodrigo S. 15 20 39.01 186 Panliboton, Aimee A. 16 1 50.16 187 Panlibuton, Sherwin M. 16 2 52.25 188 Panuelos, Juan P. 16 3 48.07 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.