BIR Ruling No. 336-15

October 7, 2015 BIR RULING NO. 336-15 RA No. 7279; BIR Ruling No. 109-13 Aguso Homeowners Association, Inc. Sitio Maligaya, Brgy. Aguso, Tarlac City Attention: Ma. Lourdes C. Dela Vega President Gentlemen : This refers to the letter of Eduardo T. Manicio, Executive Vice President of the Social Housing Finance Corporation (SHFC) dated May 29, 2015, endorsing the sale transaction between Josephine C. Landingin and Aguso 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 Josephine C. Landingin (hereinafter referred to as Landowner) is the registered owner of a parcel of land, identified as Lot No. 3240-J-3-E, portion of Lot 3240-J-3, Plan No. (LRA) Psd-E2013001769 covered by Transfer Certificate of Title (TCT) No. 043-2014003489 issued by the Registry of Deeds for Province of Tarlac. The aforesaid property is situated at Brgy. Aguso, Tarlac City with an area of Five Thousand Seven Hundred Nine square meters (5,709 sq.m.), more or less. Aguso Homeowners Association, Inc. (TIN 459-556-342-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On April 20, 2015, the parties executed a Deed of Absolute Sale whereby the Landowner transferred and conveyed the subject property to Aguso Homeowners Association, Inc. at an agreed price of Nine Million Nine Hundred Seventy One Thousand Nine Hundred Ten Pesos and 30/100 (P9,971,910.30). Pursuant to the certification issued by SHFC, the subject property covered by TCT No. 043-2014003489 is actually a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Aguso 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. In support of its request, Aguso Homeowners Association, Inc. has completely submitted on June 5, 2015 the following documents: HEITAD 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) SHFC Letter-Guaranty No. 1080; 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 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 landowner who sold her property under CMP for use in a socialized housing project are exempt from the payment of capital gains tax. Such being the case, the sale by Josephine C. Landingin to Aguso Homeowners Association, Inc. of the subject property covered by TCT No. 043-2014003489 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 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) 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) 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 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 Aguso Homeowners Association, Inc. Sitio Maligaya, Brg. Aguso, Tarlac City Name of Beneficiary Blk. Lot Total No. No. Area (sq.m.) 1 Bautista, Brian Dale Layagui 1 1 62.45 2 Amacan, Jordan Romero 1 2 53.34 3 Innes, Jane Kathlene Amacan 1 3 53.34 4 Romero, Zaire Faye Nudo 1 4 53.34 5 Romero, Gener Tabahac 1 5 53.34 6 Tapallas, Jomar Juralbal 1 6 53.34 7 Calindong, Maria Magdalena Tapallas 1 7 53.34 8 Escoto, Desiree Jane Fermilan 1 8 53.34 9 Ang, Roselle Miosa 1 9 52.04 10 Blanco, Arnel Mata 1 10 54.64 11 Lacson, Carlos Jr. Legaspi 1 11 92.37 12 Camayra, Angelie Omandac 2 1 93.68 13 Baking, Redgie Pider 2 2 54.64 14 Baking, Domingo Sr. Pider 2 3 52.04 15 Gardanozo, Janelyn Garces 2 4 53.34 16 Cantonjos, Lovely Joy Perez 2 5 52.04 17 Masam, Armida Perez 2 6 52.04 18 Rombaoa, Candida Perez 2 7 52.04 19 Perez, Graciel Ayson 2 8 52.04 20 Tipay, Lady Bird Espinosa 2 9 52.04 21 Dela Vega, Ma. Lourdes Carrillo 2 10 76.76 22 Cunanan, Belinda Magat 2 11 52.04 23 Balajadia, Bernadette Magat 2 12 52.04 24 Dela Pea, Raymon Soriano 2 13 52.04 25 Ramos, Rosemarie Valdez 2 14 57.25 26 Calma, Jayson Nevado 3 1 50.74 27 Cuaresma, Elvira Sy 3 2 76.76 28 Calma, Jessie May Nevado 3 3 50.74 29 Cuaresma, Kathleen Joy Sy 3 4 52.04 30 Calma, Jenessa Nevado 3 5 52.04 31 Cuaresma, Kutzmhyrr Sy 3 6 53.34 32 Calma, Pacifico Gutierrez 3 7 63.75 33 Delos Santos, Isagin Pavico 3 8 52.04 34 Delos Santos, Gloria Pavico 3 9 52.04 35 Caada, Edelweiss Capili 4 1 72.86 36 Pangilinan, Abner Marasigan 4 2 74.16 37 Capili, Edelyn Capulong 4 3 50.74 38 Gacutan, Rea Lapada 4 4 49.44 39 Catubig, Natelio Nellas 4 5 53.34 40 Samson, Conrado III Calma 4 6 49.44 41 Zacarias, Teofilo Jr. Villamin 4 7 49.44 42 Teofilo, Angelyn Mallari 4 8 48.14 43 Rivales, Willy Samson 4 9 53.34 44 Garcia, Joan Cruz 4 10 53.34 45 Cruz, Anthony Quizon 5 1 80.66 46 Tariman, Sherie Joy Mangalino 5 2 72.86 47 Cruz, Sherwin Quizon 5 3 57.25 48 Lagman, Sally Diantan 5 4 50.74 49 Cruz, Ryan Quizon 5 5 57.25 50 Lagman, Marlyn Aquino 5 6 52.04 51 Yalung, Arnaldo Sese 5 7 54.64 52 Garcia, Jennifer Cruz 5 8 49.44 53 Cariaga, Raquel Batang 5 9 54.64 54 Taban, Ronnie Boy Motol 5 10 50.74 55 Martinez, Rebecca Chua 6 1 75.46 56 Paras, Susan Mallari 6 2 72.86 57 Rafol, Jinky Caburnay 6 3 57.25 58 Pangan, Eliseo Jr. Macaraeg 6 4 53.34 59 Caburnay, Jenny Ramos 6 5 54.64 60 De Belen, Allan Madayag 6 6 53.34 61 Ang, Catherine Diaz 6 7 59.85 62 Tarangco, Reynaldo Lesenia 6 8 54.64 63 Ang, Jayson Diaz 6 9 57.25 64 Ringor, Erlinda Bicarme 6 10 53.34 65 Nialda, Delano La-Torre 7 1 74.16 66 Dela Cruz, Jessica Lapada 7 2 70.26 67 Gaufo, Daniel Obligar 7 3 54.64 68 Lacson, Jereco Virron Gonzales 7 4 50.74 69 Morcillos, Joanna Pacampara 7 5 58.55 70 Lacson, Jerey Hope Gonzales 7 6 61.15 71 Morcillos, Darwin Pacampara 7 7 54.64 72 Mendaros, Ederlina De Leon 7 8 57.25 73 Tomaroy, Alvin Landingin 7 9 54.64 74 Catingco, Rose Ann Galang 7 10 59.85 75 Naranjo, Jeramie Mabini 8 1 71.56 76 Naranjo, Mark Alfon Mabini 8 2 71.56 77 Tilan, Jennifer Calma 8 3 53.34 78 Calma, Jeneva Nevado 8 4 55.95 79 Tilan, Arlyn Dueas 8 5 50.74 80 Trinidad, Jenivie Calma 8 6 54.64 81 Chua, Jaeson Rodriguez 8 7 52.04 82 Chua, Bengson Rodriguez 8 8 53.34 83 Porlucas, Ariel Santos 8 9 52.04 84 Lopez, Rhea Porlucas 8 10 54.64 85 Mamucod, Joan Dela Cruz 9 1 74.16 86 Valencia, Kimberly Joaquin 9 2 78.06 87 Mamucod, Jesus Jr. Dela Cruz 9 3 52.04 88 Taban, Cheryle Tonelada 9 4 53.34 89 Mamucod, Jennifer Dela Cruz 9 5 55.95 90 Mamucod, Jomel Dela Cruz 9 6 57.25 91 Conde, Maria Corazon Ortego 9 7 53.34 92 Atole, Arnel Nicol 9 8 54.64 93 De Leon, Elaine Billoso 9 9 54.64 94 Conde, Maria Luisa Ortego 9 10 55.95 95 Dela Pea, Daisy Soriano 10 1 68.96 96 Dela Pea, Rodolfo Soriano 10 2 62.45 97 Esmenda, Marvin Joaquin 10 3 52.04 98 Mandi, Rosalyn Cunanan 10 4 52.04 99 Cario, Ace Manalili 10 5 49.44 Footnotes 1. Note from the Publisher: Missing footnote text.