BIR Ruling No. 308-13

August 6, 2013 BIR RULING NO. 308-13 RA No. 7279; BIR Ruling No. 109-13; BIR Ruling No. 040-10 Arzadon Urban Poor Homeowners Association, Inc. Brgy. Recodo, Zamboanga City Attention: Romulus Cabeltes President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated March 14, 2013, endorsing the sale transaction between Teresita Arzadon, et al., and Arzadon Urban Poor 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 Teresita Arzadon, Noel Villena, Roel Villena, Joel Villena, Allen Villena, Joyce Villena, Rey Villena, Consesa Carpio, Ma. Lourdes Arzadon, Ma. Lydia Arzadon, Maximino Arzadon III, Ma. Serafina Arzadon, Melissa Sue Arzadon, Erlinda Arzadon, Jose Ma. Sta. Teresa, Frederick Sta. Teresa, Porfirio Sta. Teresa, Philipp Sta. Teresa and Kristee Sta. Teresa, (hereinafter referred to as landowners) are the registered owners of parcels of land covered by two (2) Transfer Certificates of Title, to wit: TCT No. Area (sq. m.) Tax Declaration No. T-129-2012001648 5,121 1101006301388 T-129-2012001649 15,332 1101006301410 20,453 ====== issued by the Registry of Deeds for Zamboanga City . The aforesaid properties are situated at Brgy. Recodo, Zamboanga City. Arzadon Urban Poor Homeowners Association, Inc. (TIN 287-732-177-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On November 29, 2012, the parties executed a Deed of Absolute Sale whereby the owners, thru their Attorney-in-Fact, Jose Ma. Sta. Teresa, transferred and conveyed Nineteen Thousand Nine Hundred Fifty Two square meters (19,952 sq.m.) portion of the subject property to Arzadon Urban Poor Homeowners Association, Inc. at an agreed price of Nine Million Nine Hundred Seventy Six Thousand Pesos (P9,976,000.00). Pursuant to the certification issued by Social Housing Finance Corporation (SHFC), Nineteen Thousand Nine Hundred Fifty Two square meters (19,952 sq.m.) out of the total Twenty Thousand Four Hundred Fifty Three square meters (20,453 sq.m.) covered by TCT Nos. T-129-2012001648 and T-129-2012001649 actually comprise a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Arzadon Urban Poor 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). cEISAD 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 Arzadon Urban Poor Homeowners Association, Inc. of Nineteen Thousand Nine Hundred Fifty Two square meters (19,952 sq.m.) portion of the properties covered by TCT Nos. T-129-2012001648 and T-129-2012001649 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. (BIR Ruling No. 040-10 dated August 27, 2010) HCDAac 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 Arzadon Urban Poor Homeowners Association, Inc. Brgy. Recodo, Zamboanga City Name of Beneficiary Blk. Lot Total Area No. No. (sq.m.) 1 LAILA OTOALIH 1 1 122.00 2 WARID HANDI 1 2 120.00 3 FATRIA HAIRAL 1 3 121.00 4 AYATULLA AMINULLA 1 4 145.00 5 JULPICAR AMINULA 1 5 143.00 6 SHERMINA H. AMINULA 1 6 143.00 7 GILBERT A. BARON 1 7 143.00 8 JELIEMAE D. SUBIDO 1 8 143.00 9 REYMART E. MALLORCA 1 9 143.00 10 RENNIE C. MALLORCA 1 10 143.00 11 REYNALDY Y. PONDEVIDA 1 11 145.00 12 RICARDO Y. PONDEVIDA, JR. 1 12 143.00 13 MARISON P. CASIAS 1 13 143.00 14 JOSEPHINE L. CANOY 1 14 142.00 15 ARNEL J. VILLANUEVA 1 15 143.00 16 MARICHU R. PEREZ 1 16 143.00 17 ABDULGAFAR K. HARISON 1 17 143.00 18 VIVIAN P. BORRES 1 18 179.00 19 BERNARDO L. AGOO 1 19 182.00 20 MARIROSE C. DE CASTRO 1 20 143.00 21 FREDEZWINDA A. BIENE 1 21 143.00 22 RUBY L. DE CASTRO 1 22 143.00 23 JEFFREY A. BIENE 1 23 143.00 24 ANTONIA C. ATAN 1 24 143.00 25 REGULUS C. SARDOMA 1 25 143.00 26 JUNIE E. GOJO 1 26 143.00 27 RODERICK C. SARDOMA 1 27 144.00 28 CECILE P. BESIRA 2 1 120.00 29 GERARDO B. BESIRA 2 2 115.00 30 ABBY GAIL I. CALIPUSAN 2 3 101.00 31 MARILOU Q. TUBAN 2 4 115.00 32 ROMULUS CABELTES 2 5 141.00 33 ROFFELYN F. CABELTES 2 6 143.00 34 JACQUELINE F. GUEVARRA 2 7 143.00 35 MERLYN R. MOLATO 2 8 143.00 36 LALYN A. MOLATO 2 9 143.00 37 AMALIA A. CALIPUSAN 2 10 143.00 38 NENA V. CARIAGA 2 11 143.00 39 JOYLYN T. ARNAN 2 12 143.00 40 EVELYN A. VILLANUEVA 2 13 143.00 41 SALI D. ALIAN 2 14 143.00 42 SHERFA R. CALUPINDO 2 15 143.00 43 UDI A. ADDIN 2 16 143.00 44 MAYMONA A. ADDIN 2 17 143.00 45 SARAYA P. ESCOBAL 2 18 143.00 46 ROWENA D. LAURIO 2 19 143.00 47 REYMUNDO C. EVANGELISTA 2 20 143.00 48 RENANTE C. EVANGELISTA 2 21 143.00 49 ARLYN M. CABARIES 2 23 143.00 50 ERLINDA E. YURONG 2 24 143.00 51 MERCY L. TACTICA 2 25 143.00 52 JESUS A. PESCADERO 2 26 143.00 53 CORAZON O. PADILLA 2 27 143.00 54 NORA B. OTOALIH 2 28 143.00 55 RICO C. SARDOMA 2 29 143.00 56 JOCELYN B. MACING 2 30 143.00 57 REYNALDO I. BAUTRO 2 31 143.00 58 RICHARD G. QUINIQUITO 2 32 143.00 59 NURHUDA SARABI 2 33 143.00 60 RENATO M. YWAYAN 2 34 164.00 61 JENNIFER C. BARROCA 3 2 146.00 62 CHARMANE C. BARROCA 3 3 145.00 63 JANREY V. DELA CRUZ 3 4 145.00 64 CARLITO D. TESLO 3 5 145.00 65 ARIEL G. AZUCENAS 3 6 145.00 66 MARICRIS G. PIMENTEL 3 7 145.00 67 MELANIE B. KALL 3 8 145.00 68 NORMA M. EDADES 3 9 145.00 69 MARCELO T. LOQUILLANO 3 10 145.00 70 JAMIL NORMANSUL 4 1 111.00 71 JERECO T. TINAGAN 4 2 143.00 72 NURUL-IN S. JEMILIANO 4 3 143.00 73 NURHANA M. ABUBAKAR 4 4 143.00 74 MUNAIRA M. ABUBAKAR 4 5 143.00 75 MARICEL D. NATIVIDAD 4 6 143.00 76 MARIO M. LOMONDAYA 4 7 143.00 77 ROSIEBEL P. CAERLANG 4 8 143.00 78 ALMA D. TANHAJI 4 9 143.00 79 IVAN NOEL ALINAS 4 10 143.00 80 MERCEDITA CANIZARES 4 11 148.00 81 WILFREDO D. DINOY 4 12 143.00 82 EFREN V. TUBIL 4 13 143.00 83 EPEFANIO H. TABOCO 4 14 143.00 84 RICKY G. DADIVAS 4 15 143.00 85 TEDDY L. DALUSUNG 4 16 143.00 86 MAEBELLE DAWN A. BARAC 4 17 143.00 87 NAOMIE A. BATAC 4 18 143.00 88 ALLAN RELL C. VILLACRUSIS 4 19 143.00 89 ANGEL C. GAYOMALE 4 20 143.00 90 GINA G. BESIRA 4 21 143.00 91 ERIC R. CABILLES 4 22 143.00 92 EMILY D. SUBIDO 4 23 143.00 93 DOLLY A. CALIPUSAN 4 24 143.00 94 EMMA V. ESMERO 4 25 143.00 95 RAMIL Q. TANGINAN 4 26 143.00 96 LORETTA A. RUSTE 4 27 106.00 97 MAY M. SUGANO 4 28 l17.00 98 ALBERT R. AGOO 4 29 124.00 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.