BIR Ruling No. 337-15

October 7, 2015 BIR RULING NO. 337-15 Sec. 32, RA No. 7279; BIR Ruling No. 109-13 Albuera Urban Poor Homeowners Association, Inc. Albuera, Leyte Attention: Jerome P. Junco President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of the Social Housing Finance Corporation (SHFC) dated May 25, 2015, endorsing the sale transaction between Manuel C. Pore, married to Gertrudes Okasaki, Camilo C. Pore, married to Rachel Maratas, heir of Domingo Pore, Jr., namely: Virginio M. Pore and heirs of Lilia Pore Litada, namely: Anacleto P. Litada, Jr., Marlene P. Litada, married to Wilbur Gersana, Lourdes Janeth L. Crino, married to Frank Crino and Ramon P. Litada and Albuera Urban Poor 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 Manuel C. Pore, married to Gertrudes Okasaki, Camilo C. Pore, married to Rachel Maratas, heir of Domingo Pore, Jr., namely: Virginio M. Pore and heirs of Lilia Pore Litada, namely: Anacleto P. Litada, Jr., Marlene P. Litada, married to Wilbur Gersana, Lourdes Janeth L. Crino, married to Frank Crino and Ramon P. Litada (hereinafter referred to as Landowners) are the registered owners of two (2) parcels of land covered by two (2) Transfer Certificates of Title (TCT): TCT No. Tax Declaration No. Lot No. Area (sq. m.) TP-25752 08-03-0001-03337 3-B 9,113 TP-25753 08-03-0001-03338 4-B 2,997 total area 12,110 ===== both issued by the Registry of Deeds of Province of Southern Leyte. The aforesaid properties are situated at Brgy. Poblacion, Albuera, Leyte. Albuera Urban Poor Homeowners Association, Inc. (TIN 005-762-191-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On March 18, 2015, the parties executed a Deed of Absolute Sale whereby the Landowners through their Attorney-in-Fact, Manuel C. Porre, transferred and conveyed the subject properties to Albuera Urban Poor Homeowners Association, Inc. at an agreed price of Six Million Fifty Five Thousand Pesos (P6,055,000.00). Pursuant to the certification issued by SHFC, the subject properties covered by TCT Nos. TP-25752 and TP-25753 actually comprise a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Albuera Urban Poor 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 April 6, 2015. In support of its request, Albuera Urban Poor Homeowners Association, Inc. has completely submitted on May 29, 2015 the following documents: 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC that the subject properties qualify and is actually a CMP project; 3) SHFC Letter-Guaranty No. 1076; 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 TCTs and Latest Tax Declarations 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: ICHDca xxx xxx xxx (b) Properties sold under the CMP shall be exempted from the capital gains tax; and" the landowners who sold their properties 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 the landowners through their Attorney-in-Fact, Manuel C. Pore to Albuera Urban Poor Homeowners Association, Inc. of the subject properties covered by TCT Nos. TP-25752 and TP-25753 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 Albuera Urban Poor Homeowners Association, Inc. Albuera, Leyte Name of Beneficiary Blk. No. Lot No. Total Area (sq.m.) 1 Rosal, Bernardino B. 1 1 73.07 2 Rosal, Ronald L. 1 2 73.07 3 Mendoza, Ritchie M. 1 3 73.07 4 Mendoza, Lilibeth M. 1 4 73.07 5 Loreto, Arsenio Jr. B. 1 5 73.07 6 Cayangho, Rolando L. 1 6 73.07 7 Cayangho, Jerson E. 1 7 73.07 8 Nabre, Valeriano Jr. L. 1 8 73.07 9 Danieles, Jhomar G. 1 9 73.07 10 Dela Pea, Rose Hashane S. 1 10 73.07 11 Dela Pea, Dyna Lee S. 1 11 73.07 12 Dela Pea, Yodel S. 1 12 73.07 13 Dela Pea, Delia S. 1 13 73.07 14 De Leon, Micole L. 1 14 73.07 15 De Leon, Romulo Jr. C. 1 15 73.07 16 De Leon, Leonarda C. 1 16 73.07 17 Baloro, Adriano B. 2 1 73.07 18 Baloro, Melanie B. 2 2 73.07 19 Baloro, Susana A. 2 3 73.07 20 Baloro, Lorena N. 2 4 73.07 21 Reyes, Basilica S. 2 5 73.07 22 Seno, Joel C. 2 6 73.07 23 Olohan, Julio C. 2 7 73.07 24 Cayangho, Marina J. 2 8 73.07 25 Cayangho, Jomar J. 2 9 73.07 26 Maglasang, Elena C. 2 10 73.07 27 Madula, Roqueta C. 2 11 113.98 28 Araza, Patrick U. 3 1 80.37 29 Araza, Juanito A. 3 2 73.07 30 Echano, Marjorie S. 3 3 73.07 31 Caindoc, Getolia A. 3 4 73.07 32 Ando, Cindy N. 3 5 73.07 33 Nabre, Asuncion M. 3 6 73.07 34 Tudio, Pedrita Maria B. 3 7 73.07 35 Balugo, Emeliana G. 3 8 73.07 36 Abadilla, John Michael D. 3 9 73.07 37 Abadilla, Sergio Paulo D. 3 10 73.07 38 Mercedes, Perla P. 3 11 73.07 39 Sio, Isagani V. 3 12 73.07 40 Gilhang, Susan C. 4 1 99.37 41 Rojas, Ma. Salome B. 4 2 73.07 42 Ando, Lourdes N. 4 3 73.07 43 Ando, James N. 4 4 97.91 44 Laureno, Mark Bryan C. 4 5 73.07 45 Laureno, Lolita C. 4 6 81.83 46 Seno, Delin J. 4 7 81.83 47 Luchavez, Claudia O. 4 8 80.37 48 Olimos, Aristeo M. 4 9 73.07 49 Carenia, Bibiana R. 4 10 93.52 50 Vega, Celestina B. 4 11 73.07 51 Belacho, Imelda C. 4 12 80.37 52 Flores, Merelin A. 4 13 84.76 53 Gilhang, Benigno C. 4 14 81.83 54 Suganob, Eleonor B. 5 1 115.44 55 Redolosa, Fe N. 5 2 128.60 56 Redolosa, Raffy N. 5 3 73.07 57 Redolosa, Leslie Mae N. 5 4 73.07 58 Nabre, Renato L. 5 5 73.07 59 Caon, Nelson V. 5 6 73.07 60 Caon, Mark M. 5 7 73.07 61 Barrientos, Cherryl C. 5 8 73.07 62 Calbonero, Rolando Jr. R. 5 9 73.07 63 Patan-ao, Nicklyn S. 5 10 73.07 64 Taborada, Zenaida D. 5 11 73.07 65 Estupa, Alejo Jimstho C. 5 12 73.07 66 Tudtud, Gaudiosa A. 5 13 73.07 67 Baloro, Elsa C. 5 14 73.07 68 Juanillo, Samson Jr. Gilig 5 15 73.07 69 Peafiel, Larry A. 5 16 73.07 70 Cabrera, Ailyn G. 5 17 73.07 71 Mojado, Diosdada R. 5 18 73.07 72 Mojado, Marilyn C. 5 19 73.07 73 Magpuyo, Ma. Victoria S. 5 20 73.07 74 Magpuyo, Ivy S. 5 21 73.07 75 Madula, Nimpha M. 5 22 73.07 76 Madula, Nicolas M. 5 23 73.07 77 Rivero, Mitchel E. 5 24 73.07 78 Magpuyo, Nia Michelle S. 5 25 73.07 79 Tolero, Myrna C. 6 1 78.91 80 Jumao-as, Dionisio Jr. L. 6 2 73.07 81 Jumao-as, Bernard L. 6 3 73.07 82 Jumao-as, Melody L. 6 4 73.07 83 Jumao-as, Imelda L. 6 5 73.07 84 Sio, Maria Victoria V. 6 6 73.07 85 Eligio, Genendra V. 6 7 73.07 86 Loreto, Roque E. 6 8 73.07 87 Hindang, Alfredo Jr. S. 6 9 73.07 88 Hindang, Analyn S. 6 10 73.07 89 Hindang, Angela Alcel S. 6 11 73.07 90 Flores, Benjamin L. 6 12 73.07 91 Bernardino, Laida V. 6 13 73.07 92 Patan-ao, Romulo Dennis S. 6 14 73.07 93 Perales, Maria Isabel T. 6 15 73.07 94 Sostino, Jerely H. 6 16 73.07 95 Sostino, Rowena H. 6 17 73.07 96 Cabantoy, Larry R. 6 18 73.07 97 Delima, Raquel R. 6 19 73.07 98 Alao, Fedelinda E. 6 20 73.07 99 Rom, Gina G. 6 21 73.07 100 Paulo, Castel D. 6 22 73.07 101 Arbelo, Antonio C. 6 23 73.07 102 Raymundo, Vicenta Q. 6 24 73.07 103 Tudio, Marilyn D. 6 25 73.07 104 Wariza, Hector P. 6 26 73.07 105 Loreto, Edsel E. 6 27 73.07 106 Legaspi, Heidee L. 6 28 73.07 107 Sio, Precilla V. 6 29 73.07 108 Catatoc, Mercedita E. 6 30 73.07 109 Wenceslao, Alona L. 6 31 73.07 110 Wenceslao, Gerald L. 6 32 73.07 111 Bulatin, Anecita T. 6 33 73.07 112 Redolosa, Jose Jr. A. 7 1 93.52 113 Obar, Elvira M. 7 2 73.07 114 Caorte, Lilia A. 7 3 73.07 115 Romero, Annabelle A. 7 4 73.07 116 Arbelo, Johne Rey A. 7 5 73.07 117 Arbelo, Daylinda A. 7 6 73.07 118 Beltran, Darlito P. 7 7 73.07 119 Espina, Carlos C. 7 8 73.07 120 Gencianos, Baltimore C. 7 9 73.07 121 Gencianos, Nio C. 7 10 73.07 122 Loreto, Antonio Jr. A. 7 11 73.07 123 Loreto, Juanita A. 7 12 131.52 124 Abasula, Vergielyn L. 7 13 81.83 125 Abasula, Nila C. 7 14 73.07 126 Abasola, Ciprain-Jonifer L. 7 15 73.07 127 Abasula, Gretchen L. 7 16 73.07 128 Cantiga, Michelle L. 7 17 73.07 129 Carinea, Edwin C. 7 18 73.07 130 Cantiga, Marita L. 7 19 73.07 131 Lora, Elviro L. 7 20 73.07 132 Lora, Pastor Jr. L. 7 21 73.07 133 Dasmarias, Angela T. 7 22 73.07 134 Tidoy, Andrecris L. 7 23 73.07 135 Tidoy, Crispin Jr. V. 7 24 131.52 136 Catatoc, Sammy C. 8 1 146.13 137 Catatoc, Maribel C 8 2 146.13 138 Padilla, Vincent Jeff C. 8 3 134.44 139 Basilla, Alma S. 8 4 122.75 140 Maraon, Ricardo C 8 5 113.98 141 Pontiano, Zenitha A. 8 6 109.60 142 Ario, Jonas M. 8 7 102.29 143 Gencianos, Maria Fe A. 8 8 99.37 144 Martinito, Ma. Melodina C. 8 9 96.45 145 Catatoc, Marites C. 8 10 90.60 146 Lumapas, Lourdes M. 8 11 84.76 147 Gencianos, Beltamor Jr. R. 8 12 80.37 148 Gencianos, Marisa C. 8 13 73.07 149 Casakit, Peregrina J. 8 14 73.07 150 Junco, Jasmin P. 9 1 116.91 151 Junco, Coleen J. 9 2 116.91 152 Junco, Jerome P. 9 3 116.91 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.