BIR Ruling No. 328-15

October 7, 2015 BIR RULING NO. 328-15 Sec. 32, RA No. 7279; BIR Ruling No. 109-13 Bloomington Ville Homeowners' Association, Inc. Pag-Asa Compound, Brgy. Pilar, Las Pias City Attention : Nimfa A. Dulay President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of the Social Housing Finance Corporation (SHFC) dated February 27, 2015, endorsing the sale transaction between Maria A. Gadioma, Maria Lourdes A. Gadioma, Daniel Anthony Gadioma and Ma. Cecilia Gadioma and Bloomington Ville 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". ETHIDa Documents submitted disclose that Maria A. Gadioma, Maria Lourdes A. Gadioma, Daniel Anthony Gadioma and Ma. Cecilia Gadioma (hereinafter referred to as Landowners) are the registered owners of a parcel of land with an area of Seven Thousand square meters (7,000 sq.m.), more or less, identified as Lot 3-B, of the subd. plan (LRC) Psd-256227, being a portion of Lot 3, Psu-25909, L.R.C. Rec. No. N-34558 covered by Transfer Certificate of Title (TCT) No. 005-2013001084 issued by the Registry of Deeds for Las Pias City. The aforesaid property is situated at Pag-Asa Compound, Mahabang Tubing, Brgy. Almanza Uno, Las Pias City. Bloomington Ville Homeowners' Association, Inc. (TIN 262-487-914-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On October 10, 2014, the parties executed a Deed of Absolute Sale whereby the Landowners, through their attorney in fact, Atty. Alexes M. Enriquez, transferred and conveyed the subject property to Bloomington Ville Homeowners' Association, Inc. for an agreed price of Fourteen Million Pesos (P14,000,000.00). Pursuant to the certification issued by SHFC, the subject property covered by TCT No. 005-2013001084 is actually a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Bloomington Ville 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). Documentary Stamp Tax (DST) due on the sale has been paid on November 3, 2014. In support of its request, Bloomington Ville Homeowners' Association, Inc. has completely submitted on March 13, 2015 the following documents: 1) SHFC letter application for tax exemption; 2) Original Certification of the President of the SHFC that the subject property qualifies and is actually a CMP project; 3) Certified true copy of the SHFC Letter-Guaranty No. 1007; 4) Certified true copy of the Deed of Absolute Sale to the Community Association; 5) Certified true copies of the Certificate of Registration with HLURB, Articles of Incorporation of the Community Association and By-laws; 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; 10) Certified true copies of the Special Power of Attorney; and 11) 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 the landowners, Maria A. Gadioma, Maria Lourdes A. Gadioma, Daniel Anthony Gadioma and Ma. Cecilia Gadioma, to Bloomington Ville Homeowners' Association, Inc. of the subject property covered by TCT No. 005-2013001084 is exempt from the capital gains tax. 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 realties or their fair market values determined in accordance with Section 6 (E) of the said Code, whichever is higher. (BIR Ruling No. 109-13 dated March 21, 2013) cSEDTC 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 titles 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. 109-13 dated March 21, 2013) 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. 109-13 dated March 21, 2013) 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 Sec. 24 (D) (1) the Tax Code of 1997, as amended. 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 BLOOMINGTON VILLE HOMEOWNERS' ASSOCIATION, INC.Pag-Asa Compound, Brgy. Pilar, Las Pias City Name of Beneficiary Blk. No. Lot No. Total Area (sq.m.) 1 Basaez, Victoria A. 1 1 21.13 2 Baya, Rosalinda R. 1 2 30.95 3 Ramos, Edgardo N. 1 3 30.95 4 Noel, Jing-Jing M. 1 4 67.93 5 De Castro, Carlota V. 1 5 52.84 6 Dulay, Manolo Jr. A. 1 6 30.19 7 Dulay, Nimfa A. 1 7 30.19 8 Francisco, Vilma P. 1 8 40.76 9 Francisco, Segundo Jr. P. 1 9 33.66 10 Alejo, Manuel A. 1 10 42.27 11 Vargas, Elsa B. 1 11 41.21 12 Gaviola, Michael C. 1 12 56.46 13 Bernardino, Ricardo G. 2 1 46.80 14 Solomon, Ricardo Jr. B. 2 2 45.29 15 Delumen, Nelson D. 2 3 45.29 16 Delumen, Merlina D. 2 4 42.27 17 Laca, Maria Fatima Erika B. 2 5 57.36 18 Aquino, Mary Ann L. 2 6 38.49 19 Cabase, Rhea D. 3 1 57.36 20 Bagares, Daniel L. 3 2 48.31 21 Bello, Jowie G. 3 3 48.31 22 Sangat, Ma. Rosita M. 3 4 48.31 23 Dela Cruz, Nora D. 3 5 48.31 24 Malbuezo, Mylyn C. 3 6 48.31 25 Seo, Emmanuel L. 3 7 48.31 26 Javier, Marie M. 3 8 48.31 27 Cabiles, Jolly A. 3 9 48.31 28 De Guia, Magligtas S. 3 10 31.70 29 Villamor, Elena M. 3 11 31.70 30 Prado, Gloria A. 4 1 45.29 31 Delgado, Elmer C. 4 2 49.82 32 Ramos, Rose Marie S. 4 3 53.59 33 Verano, Julie T. 4 4 52.84 34 Pulga, Geron V. 4 5 55.86 35 Javier, Jennifer B. 4 6 51.33 36 Verano, Theresa R. 4 7 52.84 37 De Guzman, Joan A. 4 8 52.08 38 Agonion, Elmer D. 4 9 53.59 39 Romero, Jennifer C. 4 10 52.08 40 Vera, Jocelyn T. 4 11 53.59 41 Nabablit, Aaron Paul S. 4 12 52.08 42 Corminal, Edmark P. 4 13 53.59 43 Liquiran, Arturo D. 4 14 52.08 44 Tolentino, Ma. Anna V. 4 15 53.59 45 Mediona, Ariel F. 4 16 52.08 46 Villanueva, Zaldy G. 4 17 52.08 47 Liquiran, Milane A. 4 18 52.08 48 Cautiver, Meriam B. 4 19 49.82 49 Bernal, Ma. Hazel A. 4 20 52.08 50 Siso, Noel B. 4 21 49.06 51 Bernal, Calixto P. 4 22 52.08 52 Organo, Antonieta M. 4 23 49.06 53 Ramos, Rolando N. 4 24 59.63 54 Basaez, Epifanio Jr. A. 4 25 53.59 55 Gaviola, Bienvenido Jr. L. 4 26 63.40 56 Atinen, Daricel C. 5 1 49.82 57 Cuevas, Celso Jr. P. 5 2 30.19 58 Cuevas, Celso Sr. B. 5 3 61.89 59 Jingco, Nedy O. 5 4 55.10 60 Olores, Joefrey Brando A. 5 5 52.08 61 Castillo, Christopher S. 5 6 46.04 62 De Guzman, Christina M. 5 7 64.16 63 Mercado, Joselito F. 5 8 46.04 64 Martin, Cherrie B. 5 9 62.65 65 Ortega, Rachini T. 5 10 44.53 66 Rebadomia, Billy D. 5 11 59.63 67 Verano, Brando O. 5 12 48.31 68 Gregorio, Mel P. 5 13 49.82 69 Cuevas, Ernesto B. 5 14 48.31 70 Bon, Judith B. 5 15 49.82 71 Reyes, Odessa Marie C. 5 16 44.53 72 Bon, Vianney Sr. L. 5 17 49.06 73 Dris, Mariane C. 5 18 49.82 74 Baares, Philip Jhon V. 5 19 49.06 75 Lozano, Renato Sr. Z. 5 20 50.57 76 Eduardo, Annabele B. 5 21 49.06 77 Villabano, Rhodora L. 5 22 48.31 78 Abao, Ramon J. 5 23 49.06 79 Abila, Allan C. 5 24 48.31 80 Sta. Cruz, Romeo M. 5 25 46.04 81 Luha, Reynaldo H. 5 26 49.06 82 Palmengco, Rosalie M. 5 27 40.76 83 Seo, Nida M. 5 28 49.06 84 Palmengco, Raymond M. 5 29 61.89 85 Tabamo, Merlyn S. 5 30 49.06 86 Jandoc, Jocelyn D. 5 31 43.78 87 Mascareas, Rene S. 5 32 46.80 88 Austero, Herminigildo B. 5 33 55.86 89 Jubelea, Kevin D. 6 1 55.10 90 Saba, Pete SP. 6 2 55.10 91 De San Andres, Johannes L. 6 3 48.31 92 Saba, Joel S. 6 4 48.31 93 Aldana, Jonathan B. 6 5 48.31 94 Relles, Evelyn A. 6 6 48.31 95 Santos, Manilyn E. 6 7 48.31 96 Sanchez, Marilyn L. 6 8 48.31 97 Montillano, Sandra S. 6 9 48.31 98 Ednalaguim, Alvin E. 6 10 48.31 99 Bernal, Myrna D. 6 11 50.57 100 Vidad, Aiban B. 6 12 52.08 101 Turiaga, Noime M. 7 1 35.48 102 Villanueva, Nicetas T. 7 2 36.23 103 Turiaga, Nemesio M. 7 3 36.23 104 Paraiso, Eduardo P. 7 4 36.23 105 Andrade, Henry D. 7 5 36.23 106 Olores, Sonny B. 7 6 36.23 107 Garcia, Marivic P. 7 7 39.25 108 Balisacan, Jean P. 7 8 38.49 109 Perillo, Marlon B. 7 9 36.23 110 Omadto, Thelma T. 7 10 36.23 111 Tacubanza, Teresita R. 7 11 36.23 112 Amaro, Linda V. 7 12 36.23 113 Domingo, Edward G. 7 13 36.23 114 Alzate, Ric B. 7 14 40.76 115 De Guzman, Ernesto R. 8 1 61.89 116 Rickard, Rosalinda C. 8 2 87.56 117 Dela Cruz, Rogelio P. 8 3 52.84 118 Olarte, Generosa Johna J. 8 4 52.84 119 Dela Cruz, Samuel Dante S. 8 5 52.84 120 Cabalquinto, Sharon L. 8 6 52.84 121 Bernal, Sheila D. 8 7 52.84 122 Miranda, Dennis L. 8 8 45.29 123 Tabuzo, Eric P. 8 9 52.84 124 Dela Cruz, Roberto S. 8 10 43.78 125 Callo, Joseph Sr. F. 8 11 49.82 126 Lopez, Racquel G. 8 12 43.78 127 Gaborno, Ronald R. 9 1 30.95 128 Recto, Bernard L. 9 2 30.95 129 Sarno, Jonathan M. 9 3 48.31 130 Lucero, Celia D. 9 4 48.31 131 Lucero, Rebecca S. 9 5 51.33 132 Maglaque, Glendalyn S. 9 6 51.33 133 Amores, Lanny C. 9 7 51.33 134 Casiroman, Roque C. 9 8 51.33 135 Dela Pea, Romeo O. 9 9 51.33 136 Macaraeg, Rodelio D. 9 10 51.33 137 Teves, Arsenio A. 9 11 52.84 138 Alipio, Edna B. 9 12 50.57 139 Villafuerte, Adela A. 9 13 59.63 140 Samar, Marlowe Ian B. 10 1 56.61 141 Adia, Ireene S. 10 2 52.84 142 Martin, Gregorio M. 10 3 52.84 143 Ladigno, Jonathan G. 10 4 52.84 144 Padua, Bayani M. 10 5 52.84 145 Miranda, Maria Teresa F. 10 6 58.87 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.