BIR Ruling No. 310-13

August 6, 2013 BIR RULING NO. 310-13 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10 Area 8 & 9 Homeowners Association, Inc. Area 8 & 9, Luzon Avenue Brgy. Old Balara, Quezon City Attention: Rafael G. Urcia President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated March 5, 2013, endorsing the sale transaction between Marilyn Ramos, Rizalina Ramos, Zenaida Ramos, Rose Marie Ramos and Area 8 & 9 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 Marilyn Ramos, Rizalina Ramos, Zenaida Ramos and Rose Marie Ramos (hereinafter referred to as landowners) are the registered owners of a parcel of land, identified as Lot 800-C-2 of the subd. plan (LRC) Psd-216936, being a portion of Lot 800-C, Pcs-13, LRC Rec. No. 5975 covered by Transfer Certificate of Title (TCT) No. RT-83685 (257968) issued by the Registry of Deeds for Quezon City. The aforesaid property is situated at Brgy. Matandang Balara, Quezon City with an area of Five Thousand square meters (5,000 sq.m.), more or less. Area 8 & 9 Homeowners Association, Inc. (TIN 281-559-419-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On September 5, 2012, the parties executed a Deed of Absolute Sale whereby the owners, thru their Attorney-in-Fact, Rizalina Ramos Espinosa, transferred and conveyed the subject property to Area 8 & 9 Homeowners Association, Inc. at an agreed price of Nine Million Eight Hundred Eighty Three Thousand Nine Hundred Sixty Two and 26/100 Pesos (P9,883,962.26). Pursuant to the certification issued by SHFC, the property covered by TCT No. RT-83685 (257968) is actually a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's one hundred twenty six (126) qualified member-beneficiaries. 1 For this purpose, Area 8 & 9 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). aAHISE In reply, please be informed that pursuant to Sections 20 and 32 of RA No. 7279, pertinent portions of which state that: "Sec. 20. Incentives for Private Sector Participating in Socialized Housing . To encourage greater private sector participation in socialized housing and further reduce the cost of housing units for the benefit of the underprivileged and homeless, the following incentives shall be extended to the private sector: (d) Exemption from the payment of the following: (2) Capital gains tax on raw lands used for the project; xxx xxx xxx 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 Area 8 & 9 Homeowners Association, Inc. of the aforestated property covered by TCT No. RT-83685 (257968) 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 landowners thru their Attorney-in-Fact, Rizalina Ramos Espinosa, 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) cSHIaA 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) 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 Area 8 & 9 Homeowners Association, Inc. Area 8 & 9, Luzon Avenue Brgy. Old Balara, Quezon City Blk. No. Lot Total Area Name of Beneficiary No. (sq.m.) 1 TOLEDO, JEFFRY V. 1 1 40.73 2 TOLEDO, MARIO P. 2 40.73 3 DESALES, NESTOR L. 3 40.73 4 GERONIMO, ARIZZA T. 4 40.73 5 GERONIMO, ROLANDO D. 5 40.73 6 AGRADE, MATUSALEM B. 6 40.73 7 AGRADE, PHILIPP ANGELO T. 7 40.73 8 ROXAS, JODEN T. 8 40.73 9 BALTAZAR, LOURDES L. 9 40.73 10 RELAYO, RYAN C. 2 1 40.73 11 RELAYO, RHEA C. 2 40.73 12 TRAGURA, JOHN HERALD Q. 3 40.73 13 ELNAR, MARCELINO S. 4 40.73 14 DAGAPIOSO, JOEBEN N. 5 40.73 15 FERNANDEZ, MARRISSA B. 6 40.73 16 MADRIAGA, HAROLD LOUIE M. 7 40.73 17 NAVARRO, MARIA LUISA B. 8 40.73 18 MADRIAGA, BONIFACIO P. 9 40.73 19 PERALTA, ELDRINE JOY O. 3 1 40.73 20 GABO, ROMEL M. 2 40.73 21 PERALTA, ADELINA O. 3 40.73 22 PELUETA, EDISON M. 4 40.73 23 AGUIRRE, ANGENICA P. 5 40.73 24 ANOR, ANALYN P. 6 40.73 25 PERALTA, VIOLETA J. 7 40.73 26 REVILLA, MARILOU E. 4 1 40.73 27 DE LEON, GINO MICHAEL B. 2 40.73 28 BINARAO, NENITA P. 3 40.73 29 MEDINA, ELY BOY T. 4 25.46 30 OCON, MARGARITA A. 5 39.46 31 ESTEBAN, FLORDELIZA D. 6 40.73 32 AQUILATO, MARIA FE. 7 48.37 33 PUBLICO, VALERIE M. 8 40.73 34 PUBLICO, REYNATO F. 9 40.73 35 CAMACHO, EMERSON U. 10 26.73 36 MONTERO, CRISTINA F. 11 26.73 37 CAMACHO, NELSON U. JR. 12 36.91 38 CINCO, ALMARIO B. 13 36.91 39 CINCO, JESUS B. 14 35.64 40 FRANCISCO, MARVIN L. 15 28.00 41 FRANCISCO, NENITA L. 16 40.73 42 BARIBAL, MELLANIE F. 17 40.73 43 FRANCISCO, PAULO O. 18 40.73 44 VILLANUEVA, ARTHURO A. 19 40.73 45 MANGLICMOT, JANE S. 20 34.37 46 CUHIT, ALEX P. 21 25.46 47 RIBU, ADORA A. 22 25.46 48 LUCES, RAYMUNDO A. 23 36.91 49 MALLILLIN, DOMINGA T. 24 36.91 50 ADAME, BERNADETTE D. 25 50.92 51 ADAME, ROMEO L. 26 40.73 52 LOZANO, JOSEPHINE L. 27 40.73 53 MAMANGON, ARNEL A. 28 40.73 54 BAYBAYON, LOURDES O. 29 40.73 55 CORBITO, JUVIC F. 30 40.73 56 BANGHULOT, MYRONE T. 5 1 40.73 57 BANGHULOT, GELANIE MACAULAY 2 36.91 58 BONODE, MARIA VICTORIA M. 3 50.92 59 SUNGA, ARSENIO M. 4 36.91 60 LACSON, NENITA R. 5 19.09 61 TARPIN, ROEL T. 6 19.09 62 MESIAS, ROGELIO B. 7 40.73 63 CAANES, JASMINE C. 8 40.73 64 MOTA, RODNEY B. 9 40.73 65 URCIA, RAFAEL G. 10 40.73 66 URCIA, ROBERT KENEDDY A. 11 40.73 67 JUANZO, JEROME B. 6 1 40.73 68 DELA CRUZ, MARIO V. 2 40.73 69 ABONALES, JOEL F. 3 40.73 70 BAYBAYON, JENNIFER G. 4 40.73 71 MORALETA, RANULFO H. 5 40.73 72 URCIA, ARLISA M. 6 40.73 73 RECLAMANTE, LIRIO O. 7 40.73 74 FERNANDO, MARY MAGDALEN M. 8 40.73 75 FERNANDO, MARK LEONARD M. 9 40.73 76 FERNANDO, MERCELYN M. 10 40.73 77 DUMLAO, JESSICA A. 7 1 40.73 78 ROMULO, BATTUNG M. JR. 2 40.73 79 SALBAGO, GAUDENCIO V. JR. 3 40.73 80 NOROMBABA, MARY ANNE V. 4 40.73 81 GRAJO, VICTOR, SR. G. 5 40.73 82 MAGHANOY, FELIPE L. 6 40.73 83 ARAFILES, ALEX M. 7 40.73 84 ARAFILES, MA. MARILOU A. 8 40.73 85 CARDINAL, EDUARDO R. 8 1 50.92 86 PAMA, JOYCEE V. 2 40.73 87 ALCURIZA, MARY GRACE V. 3 40.73 88 ALFARO, MA. CECILIA V. 4 40.73 89 MANGSAT, JOAN V. 5 40.73 90 MANGSAT, JOECRIS V. 6 40.73 91 MINIANO, CONSTANCIO D. 7 40.73 92 MINIANO, MARIO D. 8 40.73 93 DOMINCEL, RODERICK P. 9 40.73 94 GABIJAN, KENNETH B. 10 40.73 95 CORNELIO, EVELYN A. 11 40.73 96 BICOY, EDUARDO E. 12 40.73 97 JUANZO, ARMAN A. 13 40.73 98 DE GUZMAN, RAMON E. JR. 14 40.73 99 LONTOC, RICHARD C. 15 40.73 100 BUSTAMANTE, CYNTHIA L. 16 40.73 101 CAEZO, ROMMEL O. 17 40.73 102 ARALAR, JOCELYN FE A. 18 40.73 103 CORNELIO, MA. LOURDES A. 19 40.73 104 PATRICIO, JOE ANN T. 20 40.73 105 TOLEDO, VERGEL A. 21 40.73 106 PALAPAS, JESNAR A. 22 40.73 107 FRANCISCO, ROLANDO V. 23 40.73 108 MANALASTAS, FELIPA N. 24 40.73 109 VELASCO, MELINDA S. 25 40.73 110 MATUTINAO, ROBERTO D. 26 40.73 111 MANGLICMOT, RELLOSA D. 27 40.73 112 CABUDOL, GABRIEL F. 28 40.73 113 CABUDOL, RIZALINA F. 29 40.73 114 ESCANILLA, ENNA G. 30 40.73 115 NARCISO, ROGIE I. 31 40.73 116 VALDEZ, JOSEPHINE B. 32 40.73 117 VALDEHUEZA, MICHAEL C. 33 40.73 118 VALDEHUEZA, MA. ELENA C. 34 40.73 119 FORBES, FERNANDO M. 35 40.73 120 MORAN, CESAR C. 36 40.73 121 RONGGAKIT, ANILFA D. 37 40.73 122 SO, HERNA M. 38 40.73 123 CUARESMA, DOLIETA B. 39 40.73 124 GALOLA, DONA B. 40 40.73 125 BANIQUED, ROMMEL A. 41 35.64 126 ESTEBAN, ELLEN JOY D. 42 40.73 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.