Request for Certificate of Tax Exemption from Sale of Land Pursuant to RA No. 7279 (Urban Development and Housing Act of 1992)

June 28, 2016 BIR RULING NO. 318-16 RA No. 7279; BIR Ruling No. 294-14 Integrated Settlers Association, Inc. of Toril, Inc. Rovical Village, Daliao, Toril, Davao City 8000 Attention: Mr. Neptali C. Batucan, Jr. President Gentlemen : This refers to your letter dated March 24, 2014, requesting Certificate of Tax Exemption from payment of capital gains tax on the sale of a land containing a total area of Twenty Six Thousand Five Hundred Twenty Four (26,524) square meters, more or less, covered by Transfer Certificate of Title (TCT) No. T-322683 pursuant to Republic Act (RA) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". Documents submitted show that Angela Calizo-Lam (married to Eduardo Lam), Emmanuel B. Calizo (married to Purita Jalandoni), and Roque Vicente B. Calizo (married to Melva Mabaslay Durico), (hereinafter referred to as Landowners) are the registered owners of a parcel of land, without improvement, containing a total area of Twenty Six Thousand Five Hundred Twenty Four (26,524) square meters, more or less, covered by Transfer Certificate of Title (TCT) No. T-322683 situated in Brgy. Daliao, City of Davao. The Integrated Settlers Association, Inc. of Toril, Inc. (ISATI) 1 (TIN: 004-748-305-000), on the other hand, is a homeowners organization registered with the Securities and Exchange Commission (SEC) with Registration No. DN-093000410 dated May 21, 1993 and enrolled with the Housing and Land Use Regulatory Board (HLURB) on October 11, 2010. On January 7, 1997, the landowners (vendors) and ISATI, represented by its then President, Edgar Gajunera and Secretary Angelyn Catulpas, executed a Deed of Conditional Sale whereby the former agreed to sell the above-described parcel of land to ISATI (vendee) at Two Hundred Fifty Pesos (P250.00) per square meter or at a total agreed price of Six Million Six Hundred Thirty One Thousand Pesos (P6,631,000.00), Philippine Currency. That in acquiring the said property, ISATI was assisted by the City Government of Davao through its City Mayor, Rodrigo R. Duterte and shouldered a portion of the purchase price in an amount equivalent to One Hundred Fifty Pesos (P150.00) per square meter for a total amount of Three Million Nine Hundred Seventy Eight Thousand Six Hundred Pesos (P3,978,600.00); that the remaining balance of the purchase price in the amount of Two Million Six Hundred Fifty Two Thousand Four Hundred Pesos (P2,652,400.00) shall be paid by ISATI for a period of Three (3) Years beginning from March 12, 1997; that the landowners/vendors have already died and their respective estate tax clearances were properly issued. On March 10, 2014, a Deed of Confirmation of Sale was executed among the heirs confirming the sale executed by their respective predecessors in the document denominated as Deed of Conditional Sale dated January 7, 1997. TAacHE Pursuant to a Certification dated November 18, 2009 issued by the Office of the City Mayor, City of Davao, Sangguniang Panlungsod No. 9065-95 series of 1995, approved the purchase of the said property for the establishment of a socialized housing project under the Urban Land Reform Program (ULRP) of the City Government of Davao for the members of INTEGRATED SETTLERS ASSOCIATION, INC. OF TORIL, INC.; and that ISATI is a project beneficiary of Urban Land Reform Program (ULRP) of the City Government of Davao and has availed a financial assistance thru a loan under the ULRP which was financed by the City Government of Davao as certified by the Officer-in-Charge, Housing and Homesite Development Division, Office of the City Planning and Development Coordinator, City of Davao dated August 4, 2014. In reply, please be informed that pursuant to Section 20 of Republic Act (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: xxx xxx xxx (d) Exemption from the payment of the following: (1) . . . (2) Capital Gains Tax on raw lands used for the project; xxx xxx xxx" The landowners who sold their property for use in a socialized housing project are exempt from the payment of the capital gains tax. Such being the case, the sale by Angela Calizo-Lam, Emmanuel B. Calizo , and Roque Vicente B. Calizo , to ISATI of Twenty Six Thousand Five Hundred Twenty Four (26,524) square meters, more or less, covered by Transfer Certificate of Title (TCT) No. T-322683 is exempt from the capital gains tax. (BIR Ruling No. 294-14 dated July 23, 2014) 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 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. 294-14 dated July 23, 2014) 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 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. 294-14 dated July 23, 2014) 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. 294-14 dated July 23, 2014) Notwithstanding the foregoing, the Bureau of Internal Revenue shall conduct verification and post-audit that the actual occupants of the property transferred under the ULRP are qualified members-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 A Integrated Settlers Association, Inc. of Toril, Inc. Rovical Village, Daliao, Toril, Davao City Master List of Members 1. Abadia, Alelih 2. Abellanosa, Elaisa Jade 3. Abellanosa, Noeme 4. Abellanosa, Roberta 5. Abibiner, Corazon 6. Abregana, Alan 7. Abregana, Sofronio 8. Adal, Arsenio, Jr. 9. Alcaria, Marvin 10. Alcayde, Calixto 11. Allan, Danilo 12. Alvarez, Elody 13. Amancio, Nelia 14. Amparado, Rowena 15. Apostol, Lolita 16. Ardepolla, Juneva 17. Augis, Delia 18. Bale, Jay 19. Baquiano, Cresilda 20. Baricaua, Teresita 21. Batucan, Marilyn 22. Balleza, Mario 23. Boko, Gloria 24. Bonghanoy, Mamerto 25. Buligan, Juliet 26. Cabanas, Glenda 27. Cabo, Fe 28. Cael, Venancia 29. Calzada, Imelda 30. Calzada, Remedios 31. Campaa, Estrella 32. Campaa, Remedios 33. Canonoy, Wilson 34. Capuyan, Teofilo 35. Carcueva, Rosalim 36. Canoy, Catalino 37. Catam-Isan, Delia 38. Catam-Isan, Ed Micahel 39. Catam-Isan, Ritchel 40. Catulpos, Angelyn 41. Catulpos, Maria Teresa 42. Chen, Mayrielan 43. Chio, Joven 44. Coloma, Irma 45. Corcuera, Oliver 46. Corcuera, Rachel 47. Cristino, Aida 48. Cudiamat, Jean 49. Cudiamat, Reyanaldo 50. Cudino, Lani 51. Culiao, Gonoforte, Sr. 52. Domingcil, Jefrey 53. Doos, Lilian 54. Edilo, Baselisa 55. Emata, Erwin 56. Esposado, Manuel 57. Flores, Felicidad 58. Fortuna, Sheryl Joy 59. Gadingan, Candido 60. Gajunera, Concepcion 61. Gajunera, Edgar 62. Gajunera, Edwin 63. Gajunera, Liezel 64. Gajunera, Porferio 65. Galvez, Rogelio 66. Garsuta, Gina 67. Gil, Cecilia 68. Gloria, Gina 69. Gocotano, Lauriano 70. Gomez, Paul, Jr. 71. Gonzaga, Maricel 72. Hormillada, Roger 73. Itil, Melodina 74. Juaton, Emelie 75. Juaton, Rufina 76. Julian, Marilyn 77. Kojima, Annaliza 78. Layague, Helen 79. Layague, Nelson 80. Ligan, Victoria 81. Llesis, Leonardo 82. Lobrigas, Teresita 83. Lumantas, Gerry 84. Limantas, Lenny 85. Mabanag, Ludem 86. Malaque, Rey 87. Mangle, Gloria 88. Manliquez, Placido 89. Manon-og, Beatriz 90. Manon-og, Wilma 91. Marganitez, Remegelio 92. Masanegra, Ana 93. Medina, Rogelio 94. Mesina, Jenny 95. Mesina, Ruel 96. Mier, Eve Rose 97. Mirambel, Luisa 98. Morandante, Eulita 99. Morata, Teresita 100. Murillo, Constancio 101. Naingue, Linda/Abelo, Jerrybel 102. Navales, Juvelyn 103. Nerie, Alfonso 104. Niadas, Sergio 105. Nortiga, Gloria 106. Nuez, Cherry 107. Onde, Eleuterio 108. Oranza, Fatima 109. Oranza, Mary Joy 110. Orocio, Elba 111. Ortiz, Marietta 112. Pacatang, Vilma 113. Pagdatu, Cristita 114. Perez, Eunice 115. Polenio, Charles 116. Poster, Evangeline 117. Retiza, Edgar 118. Rojo, Edgar 119. Romero, Mary Ann 120. Rosales, Emilita 121. Rosales, Mario 122. Roxas, Filomena 123. Sayago, Cecilia 124. Semil, Anariza 125. Sicad, Margie 126. Sicuya, Ian 127. Sicuya, Maria Mediatrix 128. Tabay, Rodolfo 129. Tabay, Teresita 130. Tilo, Marlyn 131. Tingson, Fe Camila 132. Tizon, Felipe 133. Tumbaga, Aries Troy 134. Vallente, Eduardo 135. Vallente, Sheila 136. Ventinella, Henry 137. Vergara, Gemma 138. Vilalongha, Julie Marie 139. Villame, Elpidio 140. Villame, Jocely 141. Villota, Ernesto 142. Ybaez, Marcian 143. Ybaez, Milagros 144. Boko, Felicisima 145. Danno, Lea Footnotes 1. On May 27, 2016 an Affidavit was executed by Neptali Batucan Jr. President of Integrated Settlers Association Incorporated of Toril, Inc. that the name Integrated Settlers Association Incorporated of Toril, Inc. and Integrated Settlers Association of Toril, Inc. are one and the same association.