BIR Ruling No. 339-15

October 7, 2015 BIR RULING NO. 339-15 RA No. 7279; BIR Ruling No. 109-13 Tanjay City Homeowners Association, Inc. Brgy. San Jose, Tanjay City, Negros Oriental Attention: Perchie O. Bacud President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of the Social Housing Finance Corporation (SHFC) dated February 13, 2015, endorsing the sale transaction between Shiela H. Fabie married to Gerald Fabie, Natasha V. Hueyswan and Tanjay City 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". HTcADC Documents submitted disclose that Shiela H. Fabie married to Gerald Fabie and Natasha V. Hueyswan (hereinafter referred to as Landowners ) are the registered owners of a parcel of land, identified as Lot 2076-F-2-B-2-A of the subdivision plan (LRA) Psd-404234 approved as a non-subdivision project, being a portion of Lot 2076-F-2-B-2, Psd-07-062341 L.R.C. Cad. Record No. 311 covered by Transfer Certificate of Title (TCT) No. 103-2010000051 issued by the Registry of Deeds for Province of Negros Oriental. The aforesaid property is situated at Brgy. San Jose, Tanjay City with an area of Forty Thousand Three square meters (40,003 sq.m.), more or less. Tanjay City Homeowners Association, Inc. (TIN 005-188-116-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On May 6, 2014, the parties executed a Deed of Absolute Sale whereby the Landowners transferred and conveyed Twenty Four Thousand Nine Hundred Seventy Three and 10/100 square meters (24,973.10 sq.m.) portion of the subject property to Tanjay City Homeowners Association, Inc. at an agreed price of Eleven Million Two Hundred Thirty Seven Thousand Eight Hundred Ninety Five Pesos (P11,237,895.00). Pursuant to the certification issued by SHFC, 24,973.10 sq.m. out of 40,003 sq.m. covered by TCT No. 103-2010000051 actually comprise a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Tanjay City 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 February 2, 2015. In support of its request, Tanjay City Homeowners Association, Inc. has completely submitted on February 20, 2015 the following documents: 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC that 24,973.10 sq.m. portion of the subject property qualifies and is actually a CMP project; 3) SHFC Letter-Guaranty No. 0547; 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 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 Shiela H. Fabie married to Gerald Fabie and Natasha V. Hueyswan to Tanjay City Homeowners Association, Inc. of the 24,973.10 sq.m. portion out of 40,003 sq.m. covered by TCT No. 103-2010000051 is exempt from the capital gains tax. aScITE 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. 20 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 Tanjay City Homeowners Association , Inc. Brgy. San Jose, Tanjay City, Negros Oriental Name of Beneficiary Blk. No. Lot No. Total Lot Area (sq.m.) 1 Girasol, Victoria S. 1 1 134.39 2 Caf, Rosalinda G. 1 2 137.25 3 Torres, Michael R. 1 3 137.25 4 Moleta, Ma. Fern Ann A. 1 5 137.25 5 Matillano, Mechelyn P. 1 6 137.25 6 Palomares, May Ar R. 1 9 137.25 7 Santiago, Robert William B. 1 11 137.25 8 Estoquia, Lilita N. 1 13 144.39 9 Sedigo, Rosan Z. 2 1 200.15 10 Padongao, Josephine C. 2 2 168.70 11 Vincoy, Buena Marie A. 2 6 137.25 12 Dagodog, Zalilang R. 2 7 137.25 13 Mellorin, Lorena G. 2 8 154.40 14 Tagud, Jocelyn C. 2 9 154.40 15 Capino, Librada T. 2 10 137.25 16 Abatayo, Melanila J. 2 14 127.24 17 Futalan, Sergio R. 2 15 127.24 18 Roda, Joven D. 2 16 127.24 19 Recaa, Cresencia R. 3 2 137.25 20 Oracoy, Ana Marie 3 3 137.25 21 Oracoy, Judesa 3 4 137.25 22 Reyes, Nenita O. 3 5 137.25 23 Reyes, Nimfa G. 3 6 137.25 24 Lopez, Fernando S. 3 9 137.25 25 De Asis, Arnold V. 3 12 161.55 26 Reyes, Ronnie B. 3 13 137.25 27 Gayo, Leslie May P. 3 14 137.25 28 Gayo, Lady Chesas P. 3 15 137.25 29 Banogon, Jameson T. 3 16 137.25 30 Cornelio, Nestor R. 3 17 137.25 31 Casil, Mary Ann S. 3 18 137.25 32 Sayson, Juniet V. 4 7 137.25 33 Sayson, Edwin V. 4 8 137.25 34 Dayan, Filecidad R. 4 9 137.25 35 Mira, Jemson S. 4 10 142.96 36 Sido, Joyfa E. 4 11 200.15 37 Evangelio, Renato P. 4 13 152.97 38 Bayon-On, Ludivina C. 4 14 137.25 39 Buquiran, Ronald E. 4 15 137.25 40 Baldonaza, Evelyn B. 4 16 137.25 41 De Los Santos, Marilyn 4 17 137.25 42 Anion, Al Dennis C. 4 18 137.25 43 Anion, Honey Josel C. 4 19 137.25 44 Jaluag, Miguel C. 6 1 185.85 45 Carimat, Gina A. 6 2 137.25 46 Yuvienco, Hilda C. 6 3 137.25 47 Ledesma, Froilyn B. 6 4 137.25 48 Catacutan, Mercedita M. 6 7 137.25 49 Seguiwan, Ethamar T. 6 9 137.25 50 Morales, Liza K. 6 11 137.25 51 Valencia, Nilda L. 6 12 137.25 52 Tuyak, Dynn D. 6 13 137.25 53 Seguiwan, Ma. Liza T. 6 15 137.25 54 Seguiwan, Mario T. 6 16 137.25 55 Apoli, Randy S. 6 21 137.25 56 Ojeda, Angela A. 6 23 200.15 57 Japinan, Mary Rose Grace E. 7 1 165.84 58 Limbaga, Ma. Theresa C. 7 3 137.25 59 Limbaga, Teresa M. 7 4 172.99 60 Alforque, Marianita C. 7 7 124.38 61 Castro, Marilyn M. 7 8 124.38 62 Quimada, Ma. Teresa B. 8 1 200.15 63 Lopez, Ulbatico, Sr. 8 6 137.25 64 Lopez, Marlou M. 8 7 137.25 65 Polinar, Pelita L. 8 13 180.14 66 Torres, Edward 8 15 142.96 67 Gabasa, Arnold R. 8 16 157.26 68 Ojeda, Deogracias S. 8 17 200.15 69 Ojeda, Jamson C. 8 18 147.25 70 Lim, Nice C. 8 19 162.98 71 Mananquil, Rosemary S. 8 23 137.25 72 Mananquil, Windell Ian C. 8 24 137.25 73 Tapis, Mary Ann L. 8 28 137.25 74 Castro, Donny Rey R. 8 29 137.25 75 Cuartos, Teopines H. 8 30 137.25 76 Quimada, Jayson B. 8 31 150.11 77 Silva, Francis F. 9 1 138.68 78 Silva, Emmanuel 9 2 137.25 79 Dumaog, Ana M. 9 3 137.25 80 Mirata, Raquel D. 9 4 137.25 81 Angulo, Marichu 9 5 137.25 82 Angulo, Krishel 9 6 137.25 83 Saycon, Leah 9 7 137.25 84 Jarmin, Mendy Lian L. 9 8 137.25 85 Saga, Ruth F. 9 9 137.25 86 Torres, Henrito T. 9 10 137.25 87 Limbaga, Arnel C. 9 11 137.25 88 Cabello, Marilyn 9 12 137.25 89 Cabello, Chelo Marie L. 9 13 137.25 90 Barot, Auda R. 9 18 200.15 91 Vargas, Mercedita F. 10 1 145.82 92 Teves, Reynaldo V. 10 2 137.25 93 Teves, Roderick D. 10 3 137.25 94 Teves, Ryan Joseph D. 10 4 137.25 95 Concepcion, Reynaldo S. 10 7 137.25 96 Banosing, Arfajad C. 10 8 137.25 97 Banosing, Ramonita C. 10 9 137.25 98 Adalid, Japhet 10 11 131.53 99 Cardio, Judith T. 13 2 137.25 100 Duran, Joan T. 13 7 137.25 101 Duran, Jocelyn T. 13 8 137.25 102 Aba, Mercy T. 13 11 137.25 103 Villanueva, Antonia T. 13 12 137.25 104 Torres, Alona R. 13 14 137.25 105 Butalid, Gina V. 13 15 137.25 106 Real, Rolando, Jr. B. 13 16 137.25 107 Duran, Randu R. 13 17 137.25 108 Balbon, Yally S. 13 20 137.25 109 Ignacio, Ruilo O. 13 21 137.25 110 Retada, William C. 14 1 137.25 111 Ferrolino, Virgenia R. 14 2 137.25 112 Macay, Maria Paz F. 14 3 137.25 113 Bantilan, Cerina L. 14 4 137.25 114 Romano, Ceicil L. 14 5 148.68 115 Cuevas, Rosemarie O. 14 7 167.27 116 Limatoc, Constantina A. 14 8 137.25 117 Fabe, Anna Margarita S. 15 2 137.25 118 Fabe, Ma. Sharon J. 15 3 137.25 119 Saga, Estela C. 15 5 137.25 120 Manila, Crestina G. 15 6 135.82 121 Gadingan, Agueda D. 15 7 157.26 122 Silva, Guillermo 15 8 137.25 123 Silva, Esmeralda 15 9 137.25 124 Cuevas, Jesilou 15 10 137.25 125 Tulabing, Rosana C. 15 11 137.25 126 Defensor, Maria Fe T. 15 12 137.25 127 Aliste, Rodolfo, Jr. C. 16 1 137.25 128 Malero, Ma. Sorena C. 16 2 137.25 129 Capilla, Rosedale R. 16 3 137.25 130 Bacud, Perchie O. 16 6 121.52 131 Oracion, Gilbert S. 16 7 130.10 132 Noble, Neil Anthony B. 16 8 140.11 133 Estoya, Jenilyn M. 16 9 137.25 134 Pantinople, Roel R. 16 11 137.25 135 Aliste, Cerri Ann C. 16 12 137.25 136 Aliste, Carmelita C. 16 13 137.25 137 Vallega, Efren R. 17 2 137.25 138 Clemente, Charlie L. 17 3 137.25 139 Divinagracia, Liezl L. 17 4 137.25 140 Uy, George 17 5 137.25 141 Rasonable, Aloma T. 17 6 137.25 142 Glodove, Charlemagne S. 17 9 137.25 143 Villegas, Genevieve R. 17 10 147.25 144 Ramirez, Carmelita P. 17 11 167.27 145 Glodove, Caroline S. 17 12 137.25 146 Uy, Gerardo Ignacio D. 17 15 137.25 147 Banogon, Daniel, Jr. T. 17 17 137.25 148 Banogon, Angeles T. 17 18 137.25 149 Malayo, Elsie T. 17 19 137.25 150 Torres, Garry G. 17 20 137.25 151 Pacatang, Warren 18 1 204.44 152 Tolomia, Melito 18 2 137.25 153 Catubig, Domiciano, Jr. R. 18 3 137.25 154 Catubig, Edmund R. 18 4 137.25 155 Celis, Edibrando T. 18 5 137.25 156 Royo, Niel Fe C. 18 8 137.25 157 Girasol, Gelin M. 18 9 137.25 158 Tabio, Memita R. 18 10 137.25 159 Sasahara, Madlyn T. 18 11 137.25 160 Tabio, Richard M. 18 12 177.28 161 Malero, Evangeline G. 18 15 137.25 162 Tabio, Myra M. 18 16 137.25 163 Garet, Salvador, Jr. A. 18 17 137.25 164 Rosario, Glenn G. 18 18 137.25 165 Aba, James C. 19 1 191.57 166 Limbaga, Marites A. 19 2 137.25 167 Vivar, Arnel O. 19 3 137.25 168 Vivar, Rofel O. 19 4 137.25 169 Vivar, Zaldie O. 19 5 137.25 170 Enriquez, Sarah T. 19 6 137.25 171 Zerna, Marlowe S. 19 8 137.25 172 Zerna, Marla S. 19 9 137.25 173 Abaniel, Jorette A. 19 10 137.25 174 Burce, Ritchell A. 19 11 137.25 175 Zerna Bernadita M. 19 16 178.71 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.