BIR Ruling No. 321-12

May 3, 2012 BIR RULING NO. 321-12 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10 Laurel Village-Sta. Rosa I Homeowners Association, Inc. Brgy. Sta. Rosa I Marilao, Bulacan Attention: Susan D. Capili President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation dated August 23, 2011, requesting tax exemption from the payment of Capital Gains Tax and other taxes in accordance with Republic Act No. 7279, otherwise known as the Urban Development and Housing Act of 1992. It appears that Angel B. Laurel Jr. with Tax Identification Number 219-857-253-000 married to Evelyn Laurel, is the registered owner of a parcel of land, identified as Lot 889-B of the Subd. Plan Psd-03-031402 being a portion of Lot 889, Lolomboy Estate, LRC Rec. No. covered by Transfer Certificate of Title (TCT) No. 040-2010003929 issued by the Registry of Deeds for Province of Bulacan, Meycauayan Branch. The aforesaid property is situated at Brgy. Sta. Rosa, Marilao, Bulacan with an area of ten thousand five hundred sixteen square meters (10,516 sq.m.), more or less. Laurel Village-Sta. Rosa I Homeowners Association, Inc. with Tax Identification Number 253-221-304-000, on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB). On July 18, 2011, the parties executed a Deed of Sale whereby the owner transfers and conveys six thousand one hundred thirty five square meters and sixty three decimeters (6,135.63 sq.m.) of the subject property to Laurel Village-Sta. Rosa I Homeowners Association, Inc. at an agreed price of Eleven Million Forty Four Thousand One Hundred Thirty Four Pesos (11,044,134.00). Pursuant to a certification issued by Social Housing Finance Corporation, six thousand one hundred thirty five square meters and sixty three decimeters (6,135.63 sq.m.) of the property covered by TCT No. 040-2010003929 is actually a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Samahang Laurel Village-Sta. Rosa I Homeowners Association, Inc. secured a housing loan under the Community Mortgage Program (CMP), a financing assistance program of the Social Housing Finance Corporation (SHFC) a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). SDTaHc 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 of the aforestated property by the owner to Laurel Village-Sta. Rosa I Homeowners Association, Inc., in so far as the six thousand one hundred thirty five square meters and sixty three decimeters (6,135.63 sq.m.) portion thereof is concerned 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 R.A. No. 7279. (BIR Ruling No. 130-10 dated December 1, 2010) ETDHSa However, the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Sec. 20 of RA 7279. Accordingly, Angel B. Laurel Jr. is 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. (BIR Ruling No. 130-10 dated December 1, 2010) 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 RMO15-2003. (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. SDHITE Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ATTACHMENT Laurel Village-Sta. Rosa I Homeowners Association, Inc. Brgy. Sta. Rosa I, Marilao, Bulacan Name of Beneficiary Blk. No. Lot Total Area No. (sq.m.) 1 Alfredo Q. Llavore, Jr. 1 1 47.61 2 Sonny L. Pantua 1 3 47.61 3 Robin Jay B. Serrano 1 4 47.61 4 Raffy Centeno 1 5 47.61 5 Roldan John B. Serrano 1 6 47.61 6 Eliza B. Serrano 1 7 47.61 7 Armando S. Bulanadi 1 8 47.61 8 Jocelyn Hedia 1 13 47.61 9 Rowena H. Tayamen 1 14 47.61 10 Roland Vite 1 15 47.61 11 Ma. Gladys Pitero 1 18 47.61 12 Cherry Anne V. de Aza 1 19 47.61 13 Haide B. Rayos 1 20 47.61 14 Simeona C. Ayap 1 21 52.07 15 Isagani C. Suico 2 1 49.09 16 Raymart F. Sebastian 2 3 47.61 17 Marinette Erlano 2 4 49.09 18 Florencio A. Delen 2 6 49.09 19 Margery Daiz 2 7 47.61 20 Darius D. Dimaculangan 2 8 47.61 21 Fernando Baguio 2 9 47.61 22 Myrna Santos 2 10 44.63 23 Ricardo Baguio 2 11 47.61 24 Mark Brian Santos 2 12 47.61 25 Jonathan S. Maninang 2 14 50.58 26 Dionisio V. Sison, Jr. 2 15 52.07 27 Charizza Tuazon 3 1 47.61 28 Wilhermina Tuazon 3 3 47.61 29 Emmanuel Tuazon 3 4 47.61 30 Wilfredo Tuazon 3 5 47.61 31 Marilyn F. Gallego 3 6 47.61 32 Jhona Ann Balgoa Ranallo 3 7 47.61 33 Jean Balgoa Jopongco 3 9 47.61 34 Anthony Magpantay 3 11 47.61 35 Sheila M. Gunce 3 12 47.61 36 Marnellie Soliman 3 13 47.61 37 Susana M. Gunce 3 14 47.61 38 Ma. Nene Montenegro 3 15 47.61 39 Nelly M. De Jesus 3 18 47.61 40 Evelyn A. Malaya 3 20 47.61 41 Merlina Era 3 22 47.61 42 Russell San Luis Maninang 3 23 47.61 43 Reynaldo Era 3 24 47.61 44 Jocelyn Salacup 3 25 47.61 45 Felix V. Matandag 3 26 47.61 46 Gerald dela Cruz Flores 3 28 47.61 47 Catherine L. Rufo 3 31 47.61 48 Nita Rufo 3 33 47.61 49 Milagros L. Mamaril 3 35 47.61 50 Lito M. Mamaril 3 37 47.61 51 Rustico O. Cruz 3 38 47.61 52 Maryanne M. Cruz 3 39 47.61 53 Deogracias B. Lim 3 40 47.61 54 Rita L. Sacdalan 3 41 47.61 55 Melody Caguiat 3 42 47.61 56 Maricel F. Raman 4 1 187.46 57 Alfredo Lamprea, Jr. 4 2 46.12 58 Nenita P. Lamprea 4 4 46.12 59 Lorrien S. Fontanilla 4 9 46.12 60 Alex D. Bollosa 4 11 47.61 61 Salvador A. Corona 4 13 47.61 62 Ruperto G. Mendiola, Jr. 4 17 47.61 63 Edgar O. Virtudazo 4 23 47.61 64 Eladio L. Matias 4 24 47.61 65 John Kenneth T. Nartates 4 26 47.61 66 Raquel T. Nartates 4 28 47.61 67 Jonathan B. Tabirao 4 30 47.61 68 Lorna Calizo 4 31 47.61 69 Elizalde Santiago 4 33 47.61 70 Antonio R. Torres 4 34 47.61 71 Roxanne C. Regalario 4 37 47.61 72 Jaime Sandino Regalario 4 44 44.63 73 Aldino S. Guevarra 4 45 46.12 74 Joel S. Galon 4 46 44.63 75 Estrella Pacala 5 3 47.61 76 Florido Ocno Masing, Jr. 5 4 47.61 77 Ronaldo B. Germedia 5 5 47.61 78 Eduardo R. Sumalinog 5 7 47.61 79 Adelyn C. Sumalinog 5 9 47.61 80 Merlie San Martin 5 11 47.61 81 Mary Grace O. Gloria 5 12 47.61 82 Edgar Reyes 5 13 47.61 83 Rodolfo J. Garcia 5 15 47.61 84 Norberto S. Ferrer 5 16 47.61 85 Belina B. Garcia 5 17 47.61 86 Rowena J. Garcia 5 18 47.61 87 Leonie D. Rance 5 19 47.61 88 Alexis San Diego 5 20 47.61 89 Luzviminda Leano 5 21 47.61 90 Elisa E. Factor 5 22 47.61 91 Lorna Urian 5 23 47.61 92 Danilo C. Gayap 5 24 47.61 93 Ryan Jane A. Dela Rosa 5 29 47.61 94 Edwin B. Quisote 5 30 47.61 95 Roy C. Dela Rosa 5 31 47.61 96 Noel V. Sevillano 5 32 47.61 97 Susan Capili 5 34 47.61 98 Brenda Fe Buba Villafania 6 1 47.61 99 Eileen J. Bustamante 6 4 47.61 100 Demetrio J. Policarpio 6 5 47.61 101 Virginia Pamplona 6 6 47.61 102 Jesusa Quijano 6 6 47.61 103 Emelyn T. Robel 6 12 47.61 104 Enrico Francisco 6 14 47.61 105 Mylene M. Estomo 6 15 47.61 106 Roland N. Advincula 6 18 47.61 107 Roberto M. Malig 6 19 47.61 108 Joel F. Faderanga 6 20 47.61 109 Alfredo Llavore, Sr. 6 22 47.61 110 Maricel L. Placio 6 23 52.07 111 Aurora M. Basa 7 3 50.58 112 Rodolfo C. Basa, Sr. 7 4 52.07 113 Rodolfo M. Basa, Jr. 7 5 53.56 114 Noel V. Macatuno 7 6 55.04 115 Rosalie C. Gutierrez 8 7 52.07 116 Gary de Guzman 8 8 44.63 117 Jose Dondon A. Salvidar 9 1 47.61 118 Janet S. Paracale 9 2 62.48 119 Nilenda Borja Go 9 3 46.12 120 Eufrocina Cabansag 9 4 47.61 121 Lolita D. Quimson 9 6 46.12 122 Ellen B. Bueno 10 1 53.56 123 Elsa de Guzman 10 6 47.61 124 Remedios C. Castillo 10 7 47.61 125 Lorenzo T. Capinin 10 8 46.12 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.