BIR Ruling No. 331-13

August 30, 2013 BIR RULING NO. 331-13 RA No. 7279; BIR Ruling No. 109-13 Medalla Melagrosa Village Phase-1 Homeowners Association, Inc. Brgy. Balubal, Cagayan de Oro City Attention: Marites D. Tormis President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated June 11, 2013, endorsing the sale transaction between Vilma D. Solon and Medalla Melagrosa Village Phase-1 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 disclosed that Vilma D. Solon (TIN 426-119-622-000), (hereinafter referred to as landowner) is the registered owner of a parcel of land, identified as Lot 217, Case 1, PLSM-1098 covered by Transfer Certificate of Title (TCT) No. 137-2013000212 issued by the Registry of Deeds for the Cagayan de Oro City. The aforesaid property is situated at Brgy. Balubal, Cagayan de Oro City with an area of Forty Four Thousand Three Hundred square meters (44,300 sq.m.), more or less. Medalla Melagrosa Village Phase-1 Homeowners Association, Inc. (TIN 423-820-006-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB) under Registration No. 12137 dated June 2012. On March 8, 2013, the parties executed a Deed of Absolute Sale whereby the landowner transferred and conveyed, Twenty Thousand square meters (20,000 sq.m.) portion of the subject property to Medalla Melagrosa Village Phase-1 Homeowners Association, Inc. at an agreed price of Six Million Sixty Thousand Pesos (P6,060,000.00). Pursuant to the undated certification issued by SHFC, Twenty Thousand square meters (20,000 sq.m.) out of the total Forty Four Thousand Three Hundred square meters (44,300 sq.m.) covered by TCT No. 137-2013000212 actually comprise a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Medalla Melagrosa Village Phase-1 Homeowners Association, Inc. secured a housing loan under the Community Mortgage Program (CMP), a financing assistance program of the SHFC a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). TSDHCc In support of its request, Medalla Melagrosa Village Phase-1 Homeowners Association, Inc. has completely submitted on July 12, 2013 the following documents: 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC that the subject property qualifies and is actually a CMP project; 3) Certified true copy of the Letter-Guaranty; 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 aIcHSC 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 the landowner to Medalla Melagrosa Village Phase-1 Homeowners Association, Inc. of Twenty Thousand square meters (20,000 sq.m.) portion of the property covered by TCT No. 137-2013000212 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) AIDTHC 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 owner is 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) 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. 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. cDTACE Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX Medalla Melagrosa Village Phase-1 Homeowners Association, Inc. Brgy. Balubal, Cagayan de Oro City Blk. Lot Total Area Name of Beneficiary No. No. (sq.m.) 1 Cagalitan, Micheal S. 1 1 118.61 2 Chan, Jaqueline L. 1 2 118.61 3 Nanol, Sammy M. 1 3 118.61 4 Pabualan, Rosabella L. 1 4 118.61 5 Romero, Nieves F. 1 5 118.61 6 Labiano, Avelina R. 1 6 118.61 7 Labiano, Annarobelle L. 1 7 118.61 8 Jariolne, Mira Luz E. 1 8 118.61 9 Antenorio, Mary Grace 1 9 118.61 10 Caracal, Diane L. 1 10 118.61 11 Dela Cerna, Helen S. 1 11 118.61 12 Tumanda, March Marie J. 1 12 157.59 13 Obrador Harlou L. 1 13 201.64 14 Dabatian, Paul Vincent A. 1 14 118.61 15 Arena, Analyn T. 1 15 118.61 16 Polvoriza, Marte V. 1 16 118.61 17 Rebolledo, Brenda S. 1 17 118.61 18 Dela Cerna, Evelyn C. 1 18 118.61 19 Laborte, Arlin M. 1 19 118.61 20 Azaula, Marilou C. 1 20 118.61 21 So, Malou C. 1 21 118.61 22 Primero, Ma. Placida P. 2 1 157.59 23 Roble, Rizza Marie M. 2 2 166.06 24 Ruina, Sydney R. 2 3 181.31 25 Plonteras, Alan John S. 2 5 118.61 26 Plonteras, Alvin S. 2 6 118.61 27 Lingatong, Rosalita C. 2 7 194.87 28 Dausan, Alma P. 2 8 118.61 29 Pailagao, Jessie S. 2 9 118.61 30 Martinez, Redeliza D. 2 10 118.61 31 Ravidas, Agnes C. 2 11 118.61 32 Ravidas, Janice Kate G. 2 12 118.61 33 Agagdan Sr.,Isagani T. 2 13 118.61 34 Enopia, Leo D. 2 14 118.61 35 Acebu, Leomie M. 2 15 118.61 36 Hallasgo, Gina S. 2 16 118.61 37 Pimentel, Tita C. 2 17 118.61 38 Baconguis, Myrafe Z. 2 18 122.00 39 Ramos, Dante B. 2 19 120.31 40 Galos, Junely H. 2 20 125.39 41 Galos, Rosa Elyra F. 2 21 144.03 42 Rebollido, JC C. 2 22 118.61 43 Rosalejos Jr.,Jemilo A. 2 23 118.61 44 Ventero, Alex A. 2 24 118.61 45 Jagos, Perla M. 2 25 155.89 46 Elman, Renato G. 2 26 169.45 47 Yalung, Anna Lyn N. 2 27 122.00 48 Lluvido, Jimmy D. 2 28 128.78 49 Halina, Mary Glyne J. 2 29 140.64 50 Cosido, Marcelo L. 2 30 118.61 51 Tungao, Alma S. 2 31 181.31 52 Lingatong, Thelma F. 3 1 177.92 53 Arguelles, Florie Mae L. 3 2 147.42 54 Arguelles, Teody L. 3 3 118.61 55 Lingatong, Dandie F. 3 4 118.61 56 Lingatong, Mary Joy P. 3 5 118.61 57 Arguelles, Francis Allen L. 3 6 118.61 58 Paclar, Fetish Kayle A. 3 7 118.61 59 Labo, Nildo G. 3 8 118.61 60 Macabenlar, Dona Mae P. 3 9 118.61 61 Ladores, Asuncion L. 3 10 118.61 62 Pabayo, Paulo C. 3 11 118.61 63 Lim, Julita A. 3 12 118.61 64 Cap-atan, Diane R. 3 13 118.61 65 Salud, Annabelle C. 3 14 118.61 66 Elarmo, Robin Jonel P. 3 15 118.61 67 Pabayo, Lusvizminda A. 3 16 118.61 68 Acut, Rosemarie C. 3 17 118.61 69 Embuscado, Girlie G. 3 18 118.61 70 Lood, Rosemarie Z. 3 19 118.61 71 Caparida, Nestor L. 3 20 118.61 72 Marabiles, Rey Anthony R. 3 21 118.61 73 Alquilos, Crisjan Nino G. 3 22 118.61 74 Jagupit, Queenie Ann C. 3 23 118.61 75 Jagupit, Julito T. 3 24 118.61 76 Robles, Mary Blanch C. 3 25 118.61 77 Silverio, Ignacia B. 3 26 118.61 78 Ermita, Alma S. 3 27 118.61 79 Ermita, Almarie S. 3 28 118.61 80 Hechanova, Marichu Y. 3 29 118.61 81 Tormis, Marites D. 3 30 183.00 82 Lingatong, Aida F. 4 1 132.17 83 Lingatong, Lilio C. 4 2 122.00 84 Jacalan, Odette F. 4 3 118.61 85 Fuentes, Jenelyn C. 4 4 118.61 86 Jacalan, Charie Fe T. 4 5 118.61 87 Jacalan, Christopher Bryan T. 4 6 118.61 88 Yacapin, Christine Joy J. 4 7 118.61 89 Torcende, Karen Rhea S. 4 8 118.61 90 Conol, Marlon S. 4 9 118.61 91 Conde, Dan C. 4 10 118.61 92 Oppus, Ivy Z. 4 11 118.61 93 Parreo, Roxanne V. 4 12 118.61 94 Parreo, Dehlon V. 4 13 118.61 95 Bermudo, Florence L. 4 14 118.61 96 Margate, Marcrecia P. 4 15 118.61 97 Tangara, Irish P. 4 16 118.61 98 Valdehueza II, Philippe Jose C. 4 17 118.61 99 Colanggo, Jean L. 4 18 118.61 100 Morado, Adreanne C. 4 19 118.61 101 Jagos, Mark Louie R. 4 20 118.61 102 Jagos, Federico Jr. R. 4 21 118.61 103 Melgazo, Lotis R. 4 22 118.61 104 Baaclo, Teresita D. 4 23 118.61 105 Damit, Emenita P. 4 24 118.61 106 Napisa, Clavel S. 4 25 118.61 107 Dagus, Venus G. 4 26 118.61 108 Mejares, Marsi J. 4 27 118.61 109 Auxteru, Betty L. 4 28 118.61 110 Loreto, Martina Liza C. 4 29 118.61 111 Duran, Jessilyn P. 4 30 118.61 112 Laurenio, Janeth A. 4 31 118.61 113 Elaba, Christine G. 4 32 118.61 114 Antigua, Hilda S. 4 33 118.61 115 Fabroa, Larse S. 4 34 118.61 116 Napisa, Lilibeth G. 4 35 118.61 117 Japitana, Bryan Kier N. 4 36 118.61 118 Tan, Doris G. 4 37 118.61 119 Villadoled, Raymond G. 4 38 118.61 120 Rebollido, Armida A. 4 39 118.61 121 Espiritu, Reiche B. 4 40 118.61 122 Bayron, Nathaniel C. 4 41 213.51 123 Bayron, Judith C. 4 42 232.14 124 Janoyan, Ramil C. 5 1 118.61 125 Rojas, Edu Nicolas L. 5 2 118.61 126 Lobino, Care R. 5 3 118.61 127 Rebollido, Leocenia S. 5 4 118.61 128 Banoson, Nerissa C. 5 5 118.61 129 Lingatong, Crystal Mea E. 5 6 199.95 130 Laborte, Alma R. 5 7 118.61 131 Malusay, Richard G. 5 8 118.61 132 Sacabin, Earlygyn C. 5 9 118.61 133 Abangan, Lourdes B. 5 10 118.61 134 Abrogenia, Julio L. 5 11 118.61 135 Namanama, Rowena A. 5 12 118.61 136 Namanama, Theresa C. 5 13 118.61 137 Japus, May An D. 5 14 118.61 138 Dela Cerna, Jocelyn U. 5 15 118.61 139 Jacamos, Joanne D. 5 16 118.61 140 Nituda, Rosalie V. 5 17 118.61 141 Pabelic, Geraldine C. 5 18 118.61 142 Melencio, Hernando Roy Jr. C. 5 19 118.61 143 Nanale, Amor L. 5 20 118.61 144 Tan, Arcely L. 5 21 118.61 145 Lagua, Ariel D. 5 22 191.48 146 Sevilla, Jarlo D. 6 1 155.89 147 Dago, Ethel Marie F. 6 2 118.61 148 Fernandez, Helen, Y. 6 3 118.61 149 Tejada, Kerian G. 6 4 118.61 150 Bongolo, Michelle E. 6 5 118.61 151 Lucnagan, Conchita P. 6 6 118.61 152 Jagos, Jesuit Mary M. 6 7 118.61 153 Maandig, Steve R. 6 8 118.61 154 Bayron, Hanna Leah L. 6 9 118.61 155 Peritos, Aster L. 6 10 118.61 156 Cap-atan, Anjone R. 7 8 118.61 157 Pingot, Loche W. 7 9 118.61 158 Maglangit, Analie P. 7 10 118.61 159 Tomarong, Sammy S. 7 11 118.61 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.