BIR Ruling No. 305-13

August 6, 2013 BIR RULING NO. 305-13 RA No. 7279; BIR Ruling No. 109-13 Consolacion Homeowners Association, Inc. Brgy. Indahag, Cagayan de Oro City Attention: Marichu C. Serran President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated December 14, 2012, endorsing the sale transaction between Edna M. Velez Jocom and Consolacion 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 Edna M. Velez Jocom married to Jacobo Jocom (hereinafter referred to as landowner) is the registered owner of a parcel of land, identified as Lot 2849 of the Cadastral Survey of Cagayan covered by Transfer Certificate of Title (TCT) No. T-18826 issued by the Registry of Deeds for City of Cagayan de Oro. The aforesaid property is situated at Sitio of Tipolohon, Upper Camaman-an with an area of Forty Five Thousand Three Hundred Twenty square meters (45,320 sq.m.), more or less. Consolacion Homeowners Association, Inc. (TIN 424-433-031-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On November 9, 2012, the parties executed a Deed of Absolute Sale whereby the owner, thru her Attorney-in-Fact, Jeanette Mae Jocom Rabuyo, transferred and conveyed Fourteen Thousand One Hundred Twenty Six square meters (14,126 sq.m.) portion of the subject property to Consolacion Homeowners Association, Inc. at an agreed price of Seven Million Sixty Three Thousand Pesos (P7,063,000.00). Pursuant to the certification issued by Social Housing Finance Corporation (SHFC), Fourteen Thousand One Hundred Twenty Six square meters (14,126 sq.m.) out of the total Forty Five Thousand Three Hundred Twenty square meters (45,320 sq.m.) covered by TCT No. T-18826 actually comprise a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Consolacion 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). HAICcD 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 of the aforestated property to Consolacion Homeowners Association, Inc. of Fourteen Thousand One Hundred Twenty Six square meters (14,126 sq.m.) portion of the property covered by TCT No. T-18826 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 caused to 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 owner 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. 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. CacTIE 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 Consolacion Homeowners Association, Inc. Brgy. Indahag, Cagayan de Oro City Name of Beneficiary Blk. Lot Total Area No. No. (sq.m.) 1 Pagapuaa-an, Cesar Jr. A. 1 1 158 2 Pagapulaan, Cristopher A. 1 2 151 3 Laguardia, John J. 1 3 158 4 Dacalos, Leah D. 2 1 133 5 Dalidig, Monera C. 2 2 128 6 Otadoy, Joshua C. 2 3 128 7 Larrazabal, Philip M. 2 4 128 8 Larrazabal, May M. 2 5 128 9 Bernasor, Patricia T. 2 6 128 10 Monding, Eleony A. 2 7 128 11 Fabello, Ryan Louie G. 2 8 136 12 Serran, Marichu C. 2 9 148 13 Catalan, Cherrylie V. 2 10 131 14 Arayan, Arnel M. 2 11 136 15 Lee, Milagros M. 2 12 128 16 Botardo, Lovely M. 2 13 128 17 Bicoy, Jefferson C. 2 14 128 18 Lumintad, Reyan A. 2 15 128 19 Jadman, Dines A. 2 16 128 20 Redoble, Marylen A. 2 17 128 21 Redoble, Ferna Grace A. 2 18 128 22 Salon, Analie S. 2 19 128 23 Labe, Donna B. 2 20 151 24 AlatracaA, Ezer P. 3 1 133 25 Alatraca, Archie P. 3 2 128 26 Baclia-an, Jay P. 3 3 128 27 Larrazabal, Rudylyn B. 3 4 128 28 Tanio, Fe M. 3 5 134 29 Calapan, Tadeo A. 3 6 135 30 Lagumen, Al Stephen R. 3 7 128 31 Erejer, Precy Lyn L. 3 8 128 32 Tagadiad, Wella L. 3 9 131 33 Labadan, Edwin R. 3 10 123 34 Mission, Norvin A. 3 11 124 35 Manait, Jocelyn B. 4 1 126 36 Cabatay, Jennifer M. 4 2 126 37 Manait, Julius B. 4 3 128 38 Dano, Renato C. 4 4 128 39 Baloc, Rodolfo P. 4 5 128 40 Tasarra, Leonila B. 4 6 128 41 Larrazabal, Manuela M. 4 7 128 42 Tagadiad, Felipe I. 4 8 128 43 Dela Cruz, Rediza D. 4 9 128 44 Hallasgo, Juradin S. 4 10 128 45 Larrazabal, Jennifer B. 4 11 128 46 Sabunod, Loida S. 4 12 128 47 Rodriguez, Rubyrose E. 4 13 128 48 Rayla, Hannah A. 4 14 128 49 Duquinlay, Lolita B. 4 15 128 50 Magallanes, Maribelle A. 4 16 138 51 Serran, Elsa E. 4 17 128 52 Aisa, Jeffrey Y. 5 1 134 53 Chua, Rona Khristine A. 5 2 135 54 Grafia, Veronica E. 5 3 128 55 Chua, Ronnil Jesse A. 5 4 128 56 Udasco, Jerry P. 5 5 128 57 Udasco, Mico P. 5 6 128 58 Cap-atan, Alquin T. 5 7 128 59 Ligtas, Algwen S. 5 8 128 60 Francisco, Allan A. 5 9 128 61 Cubillas, Abel D. 5 10 128 62 Apal, Eduardo V. 5 11 128 63 Oliveros, Veronica D. 5 12 128 64 Oga, Jo-Ann Z. 5 13 128 65 Abrio, Alma C. 5 14 128 66 Balatiro, Judith V. 5 15 128 67 Ubalde, Aldrin L. 5 16 128 68 Arcaya, Veronica D. 5 17 128 69 Ubalde, Joyce L. 5 18 128 70 Arcaya, Monarc Kim D. 5 19 128 71 Tagactac, Rudger P. 5 20 163 72 Aisa, Floreto II Y. 5 21 152 73 Tabasan, Pacholo C. 6 1 141 74 Bantigue, Arvin Jay M. 6 2 150 75 Bantigue, Al Joey M. 6 3 128 76 Lloren, Dennis C. 6 4 128 77 De Arca, Joey James G. 6 5 128 78 Lloren, Genara M. 6 6 128 79 Balabat, Carlo Jay R. 6 7 128 80 Lloren, Juan Paulo C. 6 8 128 81 Laguardia, Arthur L. 6 9 128 82 Abuzo, Rugelyn G. 6 10 128 83 Castor, Joselyn V. 6 11 128 84 Caeda, Benito 6 12 128 85 Castor, Tzaithal Kamil V. 6 13 128 86 Abuzo, Gesyl May 6 14 128 87 Larrazabal, Rudyfer B. 6 15 128 88 Maandig, Elenitte A. 6 16 128 89 Bautista, Roeva S. 6 17 128 90 Laude, Ricky U. 6 18 133 91 Dacalos, Dexter L. 6 19 128 92 Alvarado, Edson Y. 6 20 130 93 Torres, Julius Q. 7 1 128 94 Gil, Argie L. 7 2 130 95 Walenberg, Chiradee O. 7 3 128 96 Maglangit, Helen B. 7 4 128 97 Andaya, Rhoderick 7 5 128 98 Lazareto, Mary Emily J. 7 6 128 99 Oreta, Ma. Delia 7 7 128 100 Barcelita, Marizza Mae M. 7 8 128 101 Roa, Jepsilina D. 7 9 128 102 Sajulga, Allan Y. 7 10 139 103 Lloren, Mona Mae E. 7 11 128 104 Balistoy, Larkyn Kay U. 7 12 134 105 Chua, Leah A. 8 1 129 106 Chua, Danilo A. 8 2 147 107 Rojas, Ma. Gennylen O. 8 3 130 108 Ligtas, J-jay M. 8 4 144 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.