BIR Ruling No. 332-15

October 7, 2015 BIR RULING NO. 332-15 RA No. 7279; BIR Ruling No. 109-13; BIR Ruling No. 304-13 Bellas Survivor Homeowners Association, Inc. Purok Rosal, Barangay Cogon, Ormoc City Attention: Lorenzo B. Yap President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated April 1, 2015, endorsing the sale transaction between Tan-Martinez Corporation and Bellas 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 disclose that Tan-Martinez Corporation (TIN: 000-905-219-000) is the registered owner of a parcel of land, identified as Lot No. 2135-C-3, Plan No. Psd-08-030710-D, being a portion of Lot 2135-C, Psd-08-019687-D covered by Transfer Certificate of Title (TCT) No. 121-2014001818 issued by the Registry of Deeds for Ormoc City. The aforesaid property is situated at Brgy. Can-Ontog, Ormoc City with an area of Twenty Three Thousand Eight Hundred Fifty Seven square meters (23,857 sq. m.), more or less. Bellas Homeowners Association, Inc. (TIN: 270-177-457-000), on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB). On March 3, 2015, the parties executed a Deed of Absolute Sale whereby the Landowner transferred and conveyed Twenty Three Thousand Eight Hundred Fifty Six square meters (23,856 sq. m.) portion of the subject property to Bellas Homeowners Association, Inc. at an agreed price of Nine Million Five Hundred Forty Two Thousand Four Hundred Pesos (P9,542,400.00) under Community Mortgage Program (CMP) of the SHFC. Pursuant to the certification issued by SHFC, 23,856 sq. m. out of 23,857 sq. m. covered by TCT No. 121-2014001818 actually comprise a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Bellas 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. cTDaEH In support of its request, Bellas Homeowners Association, Inc. has completely submitted on April 10, 2015 the following documents: 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC that the subject properties actually comprise 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 Properties 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 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 Bellas Homeowners Association, Inc. of the 23,856 sq. m. out of 23,857 sq. m. covered by TCT No. 121-2014001818 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 Certificates 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 properties, to the effect that the said properties shall be used for socialized housing pursuant to RA No. 7279. (BIR Ruling No. 109-13 dated March 21, 2013) 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 landowner is liable to pay the documentary stamp tax on the documents conveying the afore-stated properties 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) Moreover, under Section 109 (1) (P) of the Tax Code of 1997, as amended by R.A. 9337, the sale of real properties utilized for low-cost and socialized housing as defined by R.A. No. 7279 shall be exempt from value-added tax (VAT), thus, the sale of the 23,856 sq. m. out of 23,857 sq. m. covered by TCT No. 121-2014001818 by the landowner to Bellas Homeowners Association, Inc. is exempt from the imposition of VAT. (BIR Ruling No. 304-2013 dated August 6, 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 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) 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. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX Bellas Survivor Homeowners Association, Inc. Purok Rosal, Barangay Cogon, Ormoc City Name of Beneficiary Blk. Lot Total Area No. No. (sq.m.) 1 Ceniza, Angelyn L. 1 1 155.20 2 Salve, Adelfa C. 1 2 147.81 3 Iwan, Nilma A. 1 3 147.81 4 Iwan, Madeline A. 1 4 147.81 5 Ramos, Raymundo Jr. B. 1 5 155.20 6 Tado, Ana P. 1 6 153.72 7 Tado, Roberto E. 1 7 147.81 8 Lucernas, Rosello C. 1 8 147.81 9 Polmentera, Lorenza A. 1 9 147.81 10 Ceniza, Ma. Cristina Brigett L. 1 10 155.20 11 Ramos, Ronald Hazel B. 2 1 144.85 12 Ramos, Rhemson B. 2 2 144.85 13 Kadusali, Arlene V. 2 3 144.85 14 Ofredo, Marina A. 2 4 144.85 15 Congson, Terell O. 2 5 144.85 16 Obedencio, Jeser R. 2 6 144.85 17 Aplasca, Rogelio Jr. S. 2 7 144.85 18 Garson, Ma. Crestina B. 2 8 144.85 19 Egido, Virginia A. 2 9 144.85 20 Luchavez, Jeffrey B. 2 10 144.85 21 Luchavez, Teotimo A. 2 11 144.85 22 Vitovina, Benjamin Jr. V. 2 12 144.85 23 Bero, Shenyl S. 2 13 144.85 24 Celemente, Radelio Jr. B. 2 14 144.85 25 Obedencio, Je-ann A. 2 15 144.85 26 Bero, Edwin C. 2 16 144.85 27 Bero, Jiecer P. 2 17 144.85 28 Bero, Junjie P. 2 18 144.85 29 Codilla, Loren M. 2 19 144.85 30 Codilla, Jurelyn C. 2 20 144.85 31 Pame, Apolinario Jr. L. 2 21 144.85 32 Andrino, Meliza R. 2 22 144.85 33 Pino, William G. 2 23 144.85 34 Pino, Ernesto G. 2 24 144.85 35 Penserga, Jennifer B. 3 1 135.98 36 Paragat, Kizzy Kaye P. 3 2 135.98 37 Alferez, Julie Ann R. 3 3 135.98 38 Obedencio, Dhores Faith B. 3 4 135.98 39 Sabando, Sanora C. 3 5 135.98 40 Cuenco, Lourie ann C. 3 6 135.98 41 Cuenco, Andy C. 3 7 135.98 42 Casimero, John Rel R. 3 8 135.98 43 Bacus, Benedicto F. 3 9 135.98 44 Bacus, Haide M. 3 10 135.98 45 Hagonoy, Erwin C. 3 11 135.98 46 Bero, Isabelo S. 3 12 138.94 47 Penserga, Juvy P. 3 13 135.98 48 Abandonado, Felipe Jr. T. 3 14 135.98 49 Sanorjo, Jeralyn M. 3 15 135.98 50 Sanorjo, Arlen P. 3 16 135.98 51 Dicdican, Melisa C. 3 17 135.98 52 Payod, Lucila C. 3 18 135.98 53 Payod, Andrew P. 3 19 135.98 54 Casimero, Donata R. 3 20 135.98 55 Lloren, Gembert P. 3 21 135.98 56 Cuas, Jilson C. 3 22 135.98 57 Arela, Archie M. 3 23 135.98 58 Nuez, Heracleo II C. 3 24 140.42 59 Valmores, Eugenio B. 4 1 133.03 60 Valmores, Eumar P. 4 2 133.03 61 Pedralba, Cleo Faye P. 4 3 133.03 62 Arceo, Richel O. 4 4 133.03 63 Palacio, Gregorio Jr. D. 4 5 133.03 64 Palacio, Edgardo D. 4 6 131.55 65 Valmores, Geno P. 4 7 133.03 66 Pedralba, Gabino Jr. O. 4 8 133.03 67 Fabroa, Melodina R. 4 9 133.03 68 Cayanong, Bernabe L. 4 10 133.03 69 Cayanong, Junrey L. 4 11 133.03 70 Plerda, Sarah Mae V. 4 12 130.07 71 Metran, Armando A. 5 1 138.94 72 Lazarte, Fedelina A. 5 2 133.03 73 Lazarte, Letecia A. 5 3 133.03 74 Lazarte, Melisa A. 5 4 133.03 75 Laguna, Iluminada S. 5 5 133.03 76 Donarie, Nick Jed B. 5 6 133.03 77 Metran, Jeremias A. 5 7 138.94 78 Baco, Allan Philip A. 5 8 133.03 79 Timosa, Jesegil A. 5 9 133.03 80 Timosa, Semforiano A. 5 10 133.03 81 Aris, Rhea G. 5 11 133.03 82 Bero, Josephine C. 5 12 133.03 83 Adlawan, Elpiedelisa S. 6 1 147.81 84 Baco, Crescilda A. 6 2 133.03 85 Camarote, Melchor M. 6 3 133.03 86 Delgado, Marisa B. 6 4 133.03 87 Omega, Glenda S. 6 5 133.03 88 Santiago, Darlene S. 6 6 133.03 89 Celedorio, Arlyn A. 6 7 147.81 90 Sanchez, Lusviminda V. 6 8 133.03 91 Donarie, Jonathan B. 6 9 133.03 92 Sanorjo, Ma. Jesalyn M. 6 10 133.03 93 Sanorjo, Virginia M. 6 11 133.03 94 Donarie, Jasher B. 6 12 133.03 95 Wenceslao, Rey F. 7 1 118.25 96 Tanza, Rebecca W. 7 2 118.25 97 Dagar, Elenita P. 7 3 118.25 98 Pasturan, Benjamin Jr. P. 7 4 118.25 99 Pasturan, Rodel P. 7 5 118.25 100 Tria, Adelina S. 7 6 118.25 101 Caraan, Nancy P. 7 7 110.86 102 Nuez, Marvie L. 7 8 118.25 103 Dalton, John Timothy L. 7 9 118.25 104 Linggas, Reynolds L. 7 10 118.25 105 Linggas, Ann L. 7 11 118.25 106 Boromeo, Renante C. 7 12 118.25 107 Casimero, Marilou C. 7 13 118.25 108 Juntilla, Elson W. 7 14 112.33 109 Gososo, Rita M. 8 1 147.81 110 Gososo, Teresita M. 8 2 147.81 111 Gososo, Rhina M. 8 3 147.81 112 Colo, Patrocinio Jr. T. 8 4 147.81 113 Taghoy, Sandro C. 8 5 147.81 114 Mainit, Michael A. 8 6 147.81 115 Resuera, Edson B. 8 7 147.81 116 Resuera, Erla Jane B. 8 8 147.81 117 Tajores, Jennifer M. 8 9 147.81 118 Andrino, Jay S. 8 10 147.81 119 Resuera, Elizabeth B. 8 11 147.81 120 Flauta, Nicholas James A. 8 12 147.81 121 Flauta, Nicel S. 8 13 133.03 122 Resuera, Normeta B. 8 14 133.03 123 Flauta, Nichole R. 8 15 133.03 124 Cemafranca, Nicksel L. 8 16 133.03 125 Aure, Raul A. 8 17 133.03 126 Catimpohan, Angela C. 8 18 133.03 127 Yap, Lorenzo B. 8 19 133.03 128 Yap, Windy V. 8 20 133.03 129 Wenceslao, Elmer D. 8 21 133.03 130 Rota, Roger M. 8 22 133.03 131 Colo, Patrocinio Sr. P. 8 23 118.25 132 Gabuya, Gratchen N. 8 24 118.25 133 Wenceslao, Pelita O. 8 25 118.25 134 Wenceslao, Amelito F. 8 26 118.25 135 Wenceslao, Venilda D. 8 27 118.25 136 Omega, Karren P. 8 28 118.25 137 Reponte, Dindo C. 8 29 118.25 138 Reponte, Plurita C. 8 30 118.25 139 Diendo, Jocelyn R. 8 31 118.25 140 Japitana, Ariel F. 8 32 118.25 141 Dalton, Wilbur L. 8 33 118.25 142 Dalton, Arleen Grahambell B. 8 34 118.25 143 Colo, Albert T. 8 35 118.25 144 Pino, Samuel G. 8 36 118.25 145 Bernal, Mary Grace C. 8 37 118.25 146 Bernal, Gemmalyn C. 8 38 162.59 147 Bernal, Raymund C. 8 39 162.59 148 Bernal, Richard Jr. C. 8 40 118.25 149 Cabyao, Perlita G. 8 41 118.25 150 Legoro, Reycel P. 8 42 118.25 151 Galicia, Virginia M. 8 43 118.25 152 Dalton, Alexander Jr. L. 8 44 118.25 153 Raga, Rio N. 8 45 118.25 154 Juntilla, Dia A. 8 46 118.25 155 Nacario, Rina B. 8 47 133.03 156 Nacario, Riza B. 8 48 133.03 157 Pagalan, Garry B. 8 49 133.03 158 Masong, Jema S. 8 50 133.03 159 Mesias, Fritzie Lynn B. 8 51 133.03 160 Fabriga, Florizel Joy B. 8 52 133.03 161 Bero, Vin Donald A. 8 53 133.03 162 Pelipel, Odessa B. 8 54 133.03 163 Pelipel, Norberto Jr. B. 8 55 133.03 164 Laurente, Martiniano V. 8 56 133.03 165 Montes, Nenita R. 8 57 147.81 166 Lopez, Jocelyn L. 8 58 147.81 167 Luchavez, Fortunato A. 8 59 147.81 168 Lucero, Rosenda A. 8 60 147.81 169 Luchavez, Leonora A. 8 61 147.81 170 Luchavez, Diosdado A. 8 62 147.81 171 Anoos, Lizlee B. 8 63 147.81 172 Tagailo, Leonesa C. 8 64 147.81 173 Anoos, Elisa F. 8 65 147.81 174 Penserga, Jules D. 8 66 147.81 175 Penazo, Ejiel Y. 8 67 147.81 176 Carcagente, Rhea D. 8 68 147.81 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.