BIR Ruling No. 307-13

August 6, 2013 BIR RULING NO. 307-13 RA No. 7279; BIR Ruling No. 109-13 TreasureVille Homeowners Association, Inc. East Ulingan St., Brgy. Lawang Bato, Valenzuela City Attention: Melinda P. Diez President Gentlemen : This refers to the letter of Eduardo T. Manicio, Officer in Charge of Social Housing Finance Corporation (SHFC) dated May 2, 2013, endorsing the sale transaction between Elena B. Dela Cruz, et al., and TreasureVille 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 Elena B. Dela Cruz (TIN 427-406-638-000), Felipe B. Dela Cruz (TIN 147-234-793-000) married to Evelyn G. Mesa, Rodolfo B. Dela Cruz (427-406-840-000) married to Julita M. Tolentino, Maximo B. Dela Cruz (TIN 154-478-181-000), Veronica B. Dela Cruz (427-499-491-000) and Julieta B. Dela Cruz (TIN 111-059-133-000) (hereinafter referred to as landowners) are the registered owners of a parcel of land, identified as Lot 183-D-2-B of the subd. plan (LRC) Psd-52045, being a portion of Lot 183-D-2, described on plan Psd-48191, LRC (GLRO) Rec. No. 5941, covered by Transfer Certificate of Title (TCT) No. V-97022 issued by the Registry of Deeds for Valenzuela City. The aforesaid property is situated at Brgy. Lawang Bato, Valenzuela City with an area of Two Thousand square meters (2,000 sq.m.), more or less. TreasureVille Homeowners Association, Inc. (TIN 408-260-765-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On March 7, 2013, the parties executed a Deed of Absolute Sale whereby the landowners, thru their Attorney-in-Fact, Felipe B. Dela Cruz, transferred and conveyed One Thousand Nine Hundred Sixty Five and 95/100 square meters (1,965.95 sq.m.) portion of the subject property to TreasureVille Homeowners Association, Inc. at an agreed price of Five Million One Hundred Eleven Thousand Four Hundred Seventy Pesos (P5,111,470.00). Pursuant to the certification dated March 7, 2013 issued by SHFC One Thousand Nine Hundred Sixty Five and 95/100 square meters (1,965.95 sq.m.) out of the total Two Thousand square meters (2,000 sq.m.) covered by TCT No. V-97022 actually comprise a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, TreasureVille Homeowners Association, Inc. secured a housing loan under the Community Mortgage Program (CMP), a financing assistance program of the SHFC a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). In support of its request, TreasureVille Homeowners Association, Inc. has completely submitted on May 10, 2013 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: xxx xxx xxx (b) Properties sold under the CMP shall be exempted from the capital gains tax; and" AIDTHC 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 TreasureVille Homeowners Association, Inc. of One Thousand Nine Hundred Sixty Five and 95/100 square meters (1,965.95 sq.m.) portion of the property covered by TCT No. V-97022 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. 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. TcICEA Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX TreasureVille Homeowners Association, Inc. East Ulingan St.,Brgy. Lawang Bato, Valenzuela City Blk. Lot Total Area Name of Beneficiary No. No (sq.m.) 1 BARCELINO CHRISTOPHER C. 1 1 33.10 2 BARCELINO CRISTOBAL C. 1 2 32.26 3 VENUS JENIE V. 1 3 39.27 4 SALVADOR JOEL G. 1 4 39.27 5 TESORERO NILDA T. 1 5 39.27 6 LAURENTE ADONIS A. 1 6 39.27 7 FLORES LOIDA C. 1 7 39.27 8 MONDO HERMOGENES JR. A. 1 8 39.27 9 DONGUYA ROLANDO D. 2 1 39.27 10 GERON OLIVA B. 2 2 39.27 11 TORREVILLA RODEL JR. C. 2 3 39.27 12 VALLEJOS ROSALIE B. 2 4 39.27 13 VALERA JONALYN B. 2 5 39.27 14 VALERA JEFFERSON B. 2 6 39.27 15 VALERA BOY CHRISTOPHER B. 2 7 38.85 16 CASIMIRO ALONA R. 3 1 35.06 17 CASIMIRO ANGELICA R. 3 2 35.06 18 PATERNO CHRISTOPHER V. 3 3 35.06 19 DELA CRUZ GINA E. 3 4 35.06 20 MONTEBON GERARDO C. 3 5 35.06 21 DELA CRUZ JUDITHA M. 3 6 35.06 22 FABIAN ANNA MARIE C. 3 7 34.22 23 ORCULLOO FERNANDO S. 3 8 35.06 24 FERRERAS ROWENA C. 3 9 35.06 25 FERRERAS SHAYNE NICOLE C. 3 10 35.06 26 CASIMIRO CARMELA P. 3 11 35.06 27 ARSUA MARY JANE T. 3 12 35.06 28 MALLE AIZA D. 4 1 42.22 29 MACATULAD ELIZABETH I. 4 2 40.81 30 MACATULAD MARY GRACE I. 4 3 40.81 31 AGUSTIN GLORIA ANN U. 4 4 39.97 32 CLAROS BENITA A. 4 5 40.32 33 CABERO DOROTEA T. 4 6 40.32 34 PAMUGAS LUIS A. 4 7 40.32 35 GAERLAN ALMA P. 4 8 41.72 36 BESA MILDRED E. 5 1 37.24 37 BESA ELSIE E. 5 2 37.24 38 CASTILLO MICHAEL A. 5 3 37.24 39 REINTEGRADO ABNER M. 5 4 37.24 40 REINTEGRADO ALEXIS M. 5 5 37.24 41 BAYUCOT MARITES C. 5 6 37.24 42 MADELO ROLAND M. 5 7 37.24 43 KATALBAS JIMMY D. 5 8 37.24 44 TUTO ROMEO B. 5 9 37.24 45 CLAVES ROCILLE G. 5 10 37.24 46 CLAVES FLORIDETTE G. 5 11 37.38 47 DIEZ MELINDA P. 6 2 39.27 48 LOBO ALVIN S. 6 3 39.27 49 TAHL CRESENCIO V. 6 4 39.27 50 COTIN MARY CHIRST T. 6 5 39.27 51 BLANCE REYNALDO JR. A. 6 6 39.27 52 LAZARO LINDA P. 6 7 38.01 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.