Endorsement of Sale between Roderick B. Bella and Don Vicente Villas Homeowners Association, Inc. Ph-7 for Exemption from Capital Gains Tax and Other Taxes

June 28, 2016 BIR RULING NO. 311-16 Section 32, RA No. 7279; BIR Ruling No. 053-15 Don Vicente Villas Homeowners Association, Inc. Ph-7 Brgy. Pulo, Cabuyao, Laguna Attention: Danilo F. Palma President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of the Social Housing Finance Corporation (SHFC) dated September 15, 2015, endorsing the sale transaction between Roderick B. Bella and Don Vicente Villas Homeowners Association, Inc. Ph-7 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 Roderick B. Bella (hereinafter referred to as Landowner) is the registered owner of a parcel of land, identified as Lot 1-A of the subd. Plan Psd-04-1955332, being a portion of Lot 1, Psu-69751 covered by Transfer Certificate of Title (TCT) No. T-674578 issued by the Registry of Deeds for the Calamba City. The aforesaid property is situated at Brgy. Pulo, Cabuyao, Laguna with an area of Twelve Thousand Eleven square meters (12,011 sq.m.), more or less. Don Vicente Villas Homeowners Association, Inc. Ph-7 (TIN 251-847-294-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On April 20, 2015, the parties executed a Deed of Absolute Sale whereby the Landowner, through his Attorney-in-Fact, Roland Rex B. Bella, transferred and conveyed the subject property 1 to Don Vicente Villas Homeowners Association, Inc. Ph-7 at an agreed price of Nineteen Million One Hundred Twenty Five Thousand Two Hundred Thirty Four Pesos (P19,125,234.00). Pursuant to the certification issued by SHFC, 5,381 sq.m. out of 12,011 sq.m. covered by TCT No. T-674578 actually comprises a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 2 For this purpose, Don Vicente Villas Homeowners Association, Inc. Ph-7 secured a housing loan under the CMP, a financing assistance program of the SHFC a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). Documentary Stamp Tax (DST) due on the sale has been paid. ISHCcT In support of its request, Don Vicente Villas Homeowners Association, Inc. Ph-7 has completely submitted on September 18, 2015 the following documents: 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC that 5,381 sq.m. portion of the subject property qualifies and is actually a CMP project; 3) SHFC Letter of Guaranty No. 1085; 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" 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 Roderick B. Bella to Don Vicente Villas Homeowners Association, Inc. Ph-7 of 5,381 sq.m. out of 12,011 sq.m. covered by TCT No. T-674578 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 Homeowner's 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. 053-15 dated February 27, 2015) However, the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Sec. 32 of RA 7279. Accordingly, the landowners are liable to pay the documentary stamp tax on the document 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. 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. 053-15 dated February 27, 2015) 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 sellers are 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 Don Vicente Villas Homeowners Association, Inc. Ph-7 Brgy. Pulo, Cabuyao, Laguna Name of Beneficiary Blk. Lot Total Area No. No. (sq.m.) 1 Sambo, Domingo Jr., Quimbao 1 1 68.73 2 Ramos, Christopher Landicho 1 3 59.44 3 Ramos, Annaliza Landicho 1 4 59.44 4 Padilla, Andrew Reyes 1 5 59.44 5 Diplomo, Danilo Legaspi 1 6 59.44 6 Diplomo, Amy Legaspi 1 8 59.44 7 Pauyo Jr., Danilo National 1 9 59.44 8 Abihay, Cherry Alaon 1 10 59.44 9 Avila, Melanie Arellano 1 11 59.44 10 Rossin, Marichu Asaytono 1 12 59.44 11 Lego, Michael Tongol 1 13 59.44 12 Tabelisma, Gavino Belarde 1 16 59.44 13 Pingol, Federico Buot 1 17 59.44 14 Ugan, Analiza Cananas 1 18 59.44 15 Aba, Marissa Dequet 1 19 59.44 16 Aspacio, Hanellia Pamintuan 1 20 59.44 17 Silao, Rogelio Calbo 1 21 59.44 18 Miralles, Brayan Lego 1 22 59.44 19 Camacho, Melchor Camantigue 1 23 59.44 20 Jarque, Rosanna Orijuela 1 24 59.44 21 Orijuela, Thelma Ratio 1 26 59.44 22 Alata, Ferdinand Dela Cruz 1 28 59.44 23 Ferasol, Billy Furatero 1 29 59.44 24 Marquez, Chona Arellano 1 30 59.44 25 Moral, Myrna Mirasol 1 31 59.44 26 Solo, Rogelia Botona 1 32 59.44 27 Tud, Michael Angelo Tapen 1 33 59.44 28 Solo, Jophet Botona 1 34 59.44 29 Solo, Rey Botona 1 36 59.44 30 Aoso, Iris Lapuz 2 2 68.73 31 Valenton, Paulino Pingol 2 10 59.44 32 Mendoza, Luzviminda Bangcolita 2 12 59.44 33 Bueno, Jiona Nabarte 2 14 59.44 34 Tica, Salvador Alipala 2 18 59.44 35 Torente, Ellen Garcia 2 20 59.44 36 Sabosap, Gemma Ariaga 2 21 59.44 37 Rosales, Wilma Factor 2 22 59.44 38 Dela Cerna, Paulito Jr. Bon 2 23 59.44 39 Tica, Cristina Alipala 2 33 59.44 40 Tica, Guillermo Alipala 2 35 59.44 41 Tica, Edencia Ramos 2 36 59.44 42 Lucing, Mary Ann Batucabe 2 37 59.44 43 Marave, Silvino De Castro 2 38 59.44 44 Lucing, Ramil Batucabe 2 39 65.01 45 Barbasa, Artemio T. 3 5 59.44 46 Nano, Efren Guerrero 3 6 59.44 47 Arcilla, Baby Jean D. 3 7 59.44 48 Nano, Veronica Guerrero 3 8 59.44 49 Albo, Meriam Batolinao 3 16 59.44 50 Albo, May Batolinao 3 18 59.44 51 Tuting, Andres Jr. U. 3 19 59.44 52 Delos Santos, Leylanie Ramos 3 22 59.44 53 Sallan, Babylin Roncejero 3 24 59.44 54 Palma, Jose Aldrin Adoral 3 25 59.44 55 Roncejero, Benito Bermas 3 26 59.44 56 Morales, Cristita Ocampo 3 27 59.44 57 Roncejero, Marites Bermas 3 28 59.44 58 Hernandez, Jonalyn Berog 3 29 59.44 59 Arcilla, Jayson D. 4 3 59.44 60 Mendoza, Mylona Zuela 4 8 59.44 61 Tablang, Ervin Abalos 4 9 59.44 62 Salvador, Marissa Valdez 4 11 59.44 63 Abece, Leandro Kileope 4 20 59.44 64 Berog, Emmanuel Vecina 4 22 59.44 65 Apila, Wenelyn Frogosa 5 9 59.44 66 Bagando, Grace J. 5 19 59.44 67 Forton, Jenny Roxas 5 21 59.44 68 Forton, Joeven Roxas 5 23 59.44 69 Beredo, Wilfredo Roquero 5 25 59.44 70 Palma, Catherine Betiko 5 26 59.44 71 Nace, Jocephine Forton 5 27 59.44 72 Palma, Danilo Flores 5 28 59.44 73 Recto, Sergio Jr. Peralta 5 29 61.30 74 Recto, Marivic Peralta 5 31 61.30 75 Muzares, Ronilo Sanchez 6 19 59.44 76 Muzares, Nio Mamangun 6 21 59.44 77 Lacorte, Jacinto Luna 6 31 61.30 78 Ferrer, Janeth Alvarez 7 21 59.44 79 Rosario, Jerry Valerio 7 22 59.44 80 Alvarez, Saint John Santiago 7 23 59.44 81 Isturis, Claribel Sauza 7 24 59.44 82 Bravo, Nilo Amaro 7 26 59.44 83 Sayago, Jonel Brondo 8 7 59.44 84 Leron, Henry Bigkas 8 8 59.44 85 Nitullano, Rogelio Jr. Alzona 8 9 59.44 86 Pongos, Lucena Diano 8 10 59.44 87 Leonen, Glenda Valenton 8 11 59.44 88 Benitez, Rhea Valenton 8 15 59.44 89 Campilan, Joan Torion 8 26 59.44 90 Deguit, Dennis Veroy 8 27 61.30 Footnotes 1. Five Thousand Three Hundred Eighty One square meters (5,381 sq.m.) under the CMP at an agreed price of Eight Million Five Hundred Sixty Eight Thousand Two Hundred Twenty Pesos and 11/100 (P8,568,220.11) and the remaining area was acquired by direct buyers. 2. See Annex for the masterlist of qualified beneficiaries.