BIR Ruling No. 332-13

August 30, 2013 BIR RULING NO. 332-13 RA No. 7279; BIR Ruling No. 109-13 Medalla Melagrosa Village Phase-2 Homeowners Association, Inc. Brgy. Balubal, Cagayan de Oro City Attention: Allen C. Rivera 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-2 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-2 Homeowners Association, Inc. (TIN 423-824-603-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB) under Registration No. 12136 dated June 19, 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-2 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-2 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). EIDaAH In support of its request, Medalla Melagrosa Village Phase-2 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 cSHIaA 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-2 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) cECTaD 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. ADcEST Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX Medalla Melagrosa Village Phase-2 Homeowners Association, Inc. Brgy. Balubal, Cagayan de Oro City Blk. Lot Total Area Name of Beneficiary No. No. (sq.m.) 1 Agbay, Editha G. 1 1 164.79 2 Espanto, Marie Cris D. 1 2 164.79 3 Bantoc, Nora C. 1 3 115.35 4 Bacule, Riza B. 1 4 115.35 5 Meyor, Shieldy N. 1 5 115.35 6 Bantoc, Norbert C. 1 6 115.35 7 Bolivar, Jessie M. 1 7 115.35 8 Ubanan, Preciosa L. 1 8 115.35 9 Jumao-as, Riva L. 1 9 115.35 10 Bolivar, Jonathan M. 1 10 115.35 11 Lacaba, Magdalena B. 1 11 115.35 12 Galbo, Rodulfo L. 1 12 115.35 13 Lapaz, Donalyn P. 1 13 115.35 14 Bolivar, Chatty C. 1 14 115.35 15 Carin, Judy Ann A. 1 15 115.35 16 Carbonilla, Ma. Liza R. 1 16 115.35 17 Castil, Joseph T. 1 17 115.35 18 Meyor, Mirasol N. 1 18 115.35 19 Galorport, Leonardo Jr. T. 1 19 115.35 20 Capirig, Jocelyn C. 1 20 115.35 21 Capirig, Joren C. 1 21 115.35 22 Carin, Robert A. 1 22 115.35 23 Mioza, Julie Pearl D. 1 23 115.35 24 Morales, Emmanuel A. 1 24 115.35 25 Gocon, Joel G. 1 25 115.35 26 Low, Beatriz Joan A. 1 26 115.35 27 Janao, Marlu P. 1 27 115.35 28 Pudalan, Evelio R. 1 28 115.35 29 Morales, Armando A. 1 29 115.35 30 Calapiz, Haydee Joy A. 1 30 115.35 31 Carin, Efren Jr. A. 1 31 115.35 32 Lolarte, Jenipher Rose 1 32 115.35 33 Incila, Madelyn E. 1 33 115.35 34 Dinoy, Danbert Joy A. 1 34 115.35 35 Bongga, Marcelina O. 1 35 182.91 36 Empasis, Marites A. 1 36 173.02 37 Amparado, Randy P. 2 1 149.95 38 Sebusa, Pat D. 2 2 199.39 39 Mancia, Nora A. 2 3 115.35 40 Emata, Adrell G. 2 4 115.35 41 Sapine, Imelda A. 2 5 115.35 42 Bantoc, Emie M. 2 6 115.35 43 Malicay, Baudillo M. 2 7 115.35 44 De Dios, Jumera D. 2 8 115.35 45 Redoblado, Alvin D. 2 9 115.35 46 Lapaz, Joemar P. 2 10 115.35 47 Lapas, Adam P. 2 11 115.35 48 Laguitao, Aldrin O. 2 12 115.35 49 Paigalan, Chona V. 2 13 115.35 50 Gulapo, Robin Z. 2 14 115.35 51 Gayramara, Jaime N. 2 15 115.35 52 Paigalan, Welgien S. 2 16 115.35 53 Pilongo, Victoriano S. 2 17 115.35 54 Amparado, Armila T. 2 18 115.35 55 Maglangit, Elena M. 2 19 115.35 56 Enterina, Rogelio V. 2 20 115.35 57 Cabaero, Ralfh Errol P. 2 21 115.35 58 Fernando, Rolando A. 2 22 115.35 59 Israel, Joseph P. 2 23 115.35 60 Estenzo, Herman T. 2 24 115.35 61 Bonane, Susana B. 3 1 123.59 62 Rivera, Allen C. 3 2 187.85 63 Obasa, Frence A. 3 3 115.35 64 Agum, Rhoda P. 3 4 115.35 65 Abaday, Ophel V. 3 5 115.35 66 Tor, Rinalyn P. 3 6 115.35 67 Badal, Rillan E. 3 7 115.35 68 Santos, Minda R. 3 8 115.35 69 Briones, Zoe S. 3 9 115.35 70 Quidet, Helen J. 3 10 115.35 71 Soreo, Evangeline Q. 3 11 115.35 72 Racero, Rodly Dan A. 3 12 115.35 73 Pailagao, Carmelita C. 3 13 115.35 74 Alivio, May Julie B. 3 14 115.35 75 Quismundo, Eric M. 3 15 115.35 76 Oro, Nicomedes S. 3 16 115.35 77 Dignos, Arlene A. 3 17 115.35 78 Pasco, Rey A. 3 18 115.35 79 Lambiguit, Antonio A. 3 19 115.35 80 Jaraula, Gregoria S. 3 20 115.35 81 Edralin, Richel BR T. 3 21 115.35 82 Abecia, Marlou D. 3 22 115.35 83 Cabilogan, Jean B. 4 1 115.35 84 Maramara, Joey S. 4 2 115.35 85 Logroo, Wilmalyn A. 4 3 115.35 86 Cabilogan, Marlon B. 4 4 115.35 87 Baconga, Mia L. 4 5 115.35 88 Vias, Janet Y. 4 6 115.35 89 Cena, Wilma 4 7 115.35 90 Delaguiron, Mercy Dizan V. 4 8 115.35 91 Enterina, Raul V. 4 9 115.35 92 Llacuna, Mario Q. 4 10 115.35 93 Llagas, Babylyn T. 4 11 115.35 94 Arias, Mary Syl S. 4 12 115.35 95 Lamberte, Roel R. 4 13 210.92 96 Oez, Lolita R. 4 14 171.38 97 Tamarra, Juana G. 4 15 115.35 98 Baconguis, Lynn B. 4 16 115.35 99 Enlawan, Lyrah B. 4 17 115.35 100 Nocyao, Ricardo E. 4 18 115.35 101 Bacol, Nieves Luilyn B. 4 19 115.35 102 Macahilos, Luife B. 4 20 115.35 103 Galos, Ruby Ann A. 4 21 115.35 104 Caballero, Maribel G. 4 22 115.35 105 Lee, Antonio III D. 4 23 115.35 106 Manon-og, Bevelyn C. 4 24 115.35 107 Agcaoili, Rene Allan D. 4 25 115.35 108 Agcaoili, Tito Neil D. 4 26 115.35 109 Zabala, Cecelia Paz I. 4 27 115.35 110 Bantoc, Rico Sr. S. 4 28 115.35 111 Villarmino, Aida S. 4 29 115.35 112 Romero, Nilo T. 4 30 115.35 113 Suarez, Divina P. 4 31 115.35 114 Javier, Teodulo G. 4 32 115.35 115 Agbay, Inoria T. 4 33 115.35 116 Ledon, Cheryl E. 4 34 115.35 117 Artillo, Daryl H. 4 35 115.35 118 Paigalan, Rey V. 4 36 115.35 119 Baconga, Ma. Gerlie D. 4 37 115.35 120 Quilab, Eljen J. 4 38 115.35 121 Jamero, Roselyn L. 4 39 164.79 122 Casio, Jovey R. 5 1 115.35 123 Rivero, Cathlyn Q. 5 2 115.35 124 Tan, Janneth L. 5 3 115.35 125 Rivero, Jover Q. 5 4 115.35 126 Rivero, Fortunato Q. 5 5 115.35 127 Arriola, Isa R. 5 6 115.35 128 Tac-an, Lorena M. 5 7 115.35 129 Lagrito, Nesmin A. 5 8 115.35 130 Yasay, Mary Grace G. 5 9 115.35 131 Bihag, Susan C. 5 10 115.35 132 Lumayag, Eucille F. 5 11 115.35 133 Lagrito, Ericson Jr. Y. 5 12 115.35 134 Juano, Marjun B. 5 13 115.35 135 Faelnar, Marissa T. 5 14 115.35 136 Tadeo, Mary Joy A. 5 15 115.35 137 Mingullo, Luisita E. 5 16 115.35 138 Maarez, Mildred M. 5 17 115.35 139 Tan, Merlyn C. 5 18 115.35 140 Alajay, Merilyn E. 5 19 115.35 141 Ledon, Cindy D. 5 20 115.35 142 Arriola, Analie R. 5 21 115.35 143 Padayao, Benito R. 5 22 115.35 144 Ensoy, Janeth M. 5 23 115.35 145 Ensoy, Robert E. 5 24 115.35 146 Daumar, Audilyn L. 5 25 145.01 147 Dinlay, Analiza A. 5 26 115.35 148 To-ong, Mesel P. 6 1 115.35 149 Llagas, Jerry T. 6 2 115.35 150 Arceta, Gina R. 6 3 115.35 151 Jaraula, Ronald G. 6 4 115.35 152 Dag-um, Reynante L. 6 5 115.35 153 Jumamo, y Joel C. 6 6 115.35 154 Aringo, Martin B. 6 7 115.35 155 Caberto, Mabel Angel L. 6 8 115.35 156 Bacasno, Nilfa T. 6 9 115.35 157 Abragan, Francisco E. 6 10 115.35 158 Casilac, Julito G. 6 11 115.35 159 Barolan, Jucil G. 6 12 115.35 160 Barnido, Rey Agustin M. 6 13 115.35 161 Jimeno, Jimeer R. 6 14 115.35 162 Palma, Fernando B. 6 15 115.35 163 Lim, Maricel L. 6 16 115.35 164 Elbambo, Rafael S. 6 17 115.35 165 Paa, Rocelo C. 6 18 115.35 166 Canatoy, Joeben S. 6 19 115.35 167 Bias, Rosita R. 6 20 115.35 168 Mejila, Alma J. 6 21 115.35 169 Arojo, Rosenda M. 6 22 115.35 170 Jimenez, Tita 6 23 141.72 171 Elbambo, Dina A. 6 24 173.02 172 Sambaan, Ricky S. 7 1 115.35 173 Bantoc, Cresencia S. 7 2 115.35 174 Eniola, Lorna B. 7 3 196.09 175 Baconga, Federico Jr. O. 7 4 115.35 176 Llagas, Marlyn B. 7 5 115.35 177 Babion, Maria Lorena S. 7 6 115.35 178 Sajulan, Rena 7 7 115.35 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.