BIR Ruling No. 341-13

September 2, 2013 BIR RULING NO. 341-13 RA No. 7279; BIR Ruling No. 109-13 Courage Water Homeowners Association, Inc. Patag, Opol, Misamis Oriental Attention: Cheryl P. Gerongco President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated February 13, 2013, endorsing the sale transaction between Maria Lourdes G. Dadang and Courage Water 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 Maria Lourdes G. Dadang (TIN 921-804-166-000) (hereinafter referred to as landowner) is the registered owner of a parcel of land, identified as Lot 3280-A, Psd-10-062697, being a portion of Lot 3280, Cad-237 Cagayan Cadastre covered by Transfer Certificate of Title (TCT) No. T-56772 issued by the Registry of Deeds for the Province of Misamis Oriental. The aforesaid property is situated at Patag, Opol, Misamis Oriental with an area of Thirty Six Thousand Two Hundred Fifty Eight square meters (36,258 sq.m.), more or less. Courage Water Homeowners Association, Inc. (TIN 430-304-995-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On December 7, 2012, the parties executed a Deed of Absolute Sale whereby the landowner transferred and conveyed Thirty Thousand square meters (30,000 sq.m.) 1 portion of the subject property to Courage Water Homeowners Association, Inc. at an agreed price of Fifteen Million Pesos (P15,000,000.00). Pursuant to the certification dated December 7, 2012 issued by SHFC, Thirty Thousand square meters (30,000 sq.m.) out of the total Thirty Six Thousand Two Hundred Fifty Eight square meters (36,258 sq.m.) covered by TCT No. T-56772 actually comprise a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 2 For this purpose, Courage Water 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). SEcADa In support of its request, Courage Water Homeowners Association, Inc. has completely submitted on June 28, 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 10) Other pertinent documents. In reply, please be informed that pursuant to Section 32 of RA No. 7279, pertinent portions of which state that: cHEATI "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 Courage Water Homeowners Association, Inc. of Thirty Thousand square meters (30,000 sq.m.) portion of the property covered by TCT No. T-56772 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) 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 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 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) SEDaAH 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. (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 Courage Water Homeowners Association, Inc. Patag, Opol, Misamis Oriental Blk. Lot Total Area Name of Beneficiary No. No. (sq.m.) 1 Abella Jovic M. 1 9 107.10 2 Aquilam Elman E. 1 7 107.10 3 Baguio Feller P. 1 6 107.10 4 Brazil Nellie B. 1 12 107.10 5 Cartagen Marites B. 1 1 107.10 6 Dablio Myrna B. 1 5 107.10 7 Espina Joseph Q. 1 3 107.10 8 Flordeliz Jenifer B. 1 11 107.10 9 Florida Billy R. 1 4 107.10 10 Legaspi Fe C. 1 10 107.10 11 Palad Larelie A. 1 13 107.10 12 Pimentel Hayley Z. 1 15 165.66 13 Ramirez Leonora L. 1 14 107.10 14 Tabinas Josie J. 1 2 107.10 15 Zambrano Dhalia T. 1 8 107.10 16 Pastrana Pedro Jr. G. 2 3 107.10 17 Perocho Margarita A. 2 1 107.10 18 Vallar Glendave P. 2 4 190.76 19 Asiero Sherryl S. 3 1 107.10 20 Cailing Charmie A. 3 6 107.10 21 Calderon Jenny A. 3 4 107.10 22 Corpuz Dexiejoy T. 3 2 107.10 23 Daayata Leo G. 3 8 122.16 24 Ipanag Daniel Francis B. 3 7 125.50 25 Jenisan Andy 3 5 107.10 26 Mangao Marife N. 3 3 107.10 27 Palma Lilibeth H. 4 4 107.10 28 Parlingayan Junmar R. 4 6 107.10 29 Parlingayan Nida R. 4 5 107.10 30 Pareo Evangeline A. 4 7 107.10 31 Simoy Annie Lyn M. 4 8 107.10 32 Simoy Isabelina M. 4 9 112.12 33 Topia Robert M. 4 1 107.10 34 Urbin Nelly A. 4 2 107.10 35 Yecyec Ronnie Y. 4 3 107.10 36 Abella Jerlyn W. 5 4 107.10 37 Barlomento Robert E. 5 14 143.91 38 Culaste Rustico Jr. C. 5 3 107.10 39 Eslate Tita C. 5 7 107.10 40 Galacio Daisy G. 5 9 107.10 41 Gorre Antonio Jr. T. 5 6 107.10 42 Licanda Bernela S. 5 2 150.60 43 Maata Elvie B. 5 13 135.54 44 Maictin Rotchie B. 5 12 107.10 45 Navarro Walter. C. 5 10 107.10 46 Nuena Jeffrey L. 5 1 107.10 47 Tolentino Jonathan 5 5 107.10 48 Vallon Florentino G. 5 8 107.10 49 Villanuev Charrilin R. 5 11 107.10 50 Amarille Evelyn R. 6 1 107.10 51 Amilao Arturo B. 6 9 107.10 52 Bernados Albertson G. 6 6 107.10 53 Butac Marlyn S. 6 7 107.10 54 Cantina Henry D. 6 4 107.10 55 Daayata Mike G. 6 3 107.10 56 Follosco Emma Concepcion G. 6 5 107.10 57 Gabo Junrey H. 6 2 107.10 58 Go Reynaldo M. 6 8 107.10 59 Herro Jocelyn A. 6 11 107.10 60 Jabiquero Glenn R. 6 13 112.12 61 Masinger Josephine M. 6 12 107.10 62 Parreo Kliff A. 6 10 107.10 63 Pateo Gemma O. 6 14 120.48 64 Abao Marites E. 7 8 107.10 65 Aero Angelita A. 7 11 107.10 66 Aras Helen B. 7 9 107.10 67 Broces Groverdan L. 7 5 107.10 68 Carpesano Roberto E. 7 13 88.69 69 Castulo Arnel L. 7 12 107.10 70 Fuentes Genesis J. 7 7 107.10 71 Maquiling Robinson M. 7 2 107.10 72 Matulin Vergelio H. 7 14 97.05 73 Otoc Angelie C. 7 4 107.10 74 Sabelita Larry R. 9 7 107.10 75 Salicona Edna B. 7 10 107.10 76 Sismar Vilma C. 7 6 107.10 77 Ucab Emma O. 7 3 107.10 78 Zabate Paul E. 7 1 117.14 79 Abaya Lina G. 9 2 107.10 80 Baja Julie M. 9 11 110.44 81 Bandibas Adelfa N. 9 10 107.10 82 Helia Jr. Matildo G. 9 1 174.03 83 Rabino Larito M. 9 3 107.10 84 Rellon Marites B. 9 4 107.10 85 Roa Glenter R. 9 5 107.10 86 Romero Divina A. 9 6 107.10 87 Sacoso Reynaldo M. 9 8 107.10 88 Talolong Aldie D. 9 9 107.10 89 Antiga Marygrace S. 10 9 107.10 90 Ambaco Maylene R. 10 1 107.10 91 Briones Merlyn L. 10 3 107.10 92 G Neven C. 10 7 107.10 93 Lago Ma. Lourdes C. 10 6 107.10 94 Neri Chona B. 10 5 107.10 95 Paderes Evangeline B. 10 4 107.10 96 Suralta Christina A. 10 2 107.10 97 Vacalares Joselito D. 10 8 177.38 98 Abasolo Edelin P. 11 2 107.10 99 Abella Simplicio R. 11 9 123.83 100 Bactalan Lilibeth M. 11 3 107.10 101 Belaneso Jennifer T. 11 10 117.14 102 Fuentes Nerlita E. 11 1 107.10 103 Herro Perlita G. 11 7 107.10 104 Pon Antonio C. 11 6 107.10 105 Rodriguez Janeth J. 11 5 107.10 106 Sanchez Estanela G. 11 4 107.10 107 Sanchez Jonel G. 11 8 107.10 108 Castillon Henry M. 12 7 107.10 109 Flores Ma. Melanie G. 12 1 107.10 110 Gonzaga Vetsaida E. 12 2 138.89 111 Lauron Amparo T. 12 5 107.10 112 Madridano Liberty O. 12 3 107.10 113 Palma Teodulo III L. 12 4 107.10 114 Reyes Joseph Joe L. 12 6 107.10 115 Roxas Sandy G. 12 8 107.10 116 Arante Wilfredo C. 13 17 107.10 117 Arazo Oliva A. 13 16 107.10 118 Avancea Gil P. 13 26 110.44 119 Bajuyo May Jean O. 13 7 107.10 120 Bequiso Jemalyn T. 13 9 107.10 121 Botona Noel T. 13 14 107.10 122 Canillas Sergia G. 13 10 107.10 123 Carumba Virginia A. 13 23 107.10 124 Cervantes Richard A. 13 13 107.10 125 Dangoy Danny P. 13 19 107.10 126 Dechos Julieta R. 13 15 107.10 127 Fuentes July III J. 13 20 107.10 128 Gabor Diosdado R. 13 12 107.10 129 Gamba Romy C. 13 1 107.10 130 Jamis Roseann S. 13 8 107.10 131 Jemenia Stem D. 13 18 107.10 132 Kilat Jogeljun M. 13 3 128.85 133 Ladera Joanna Faith S. 13 11 107.10 134 Magan Warlita Z. 13 4 107.10 135 Mercado Cecelia P. 13 6 107.10 136 Ondiano Cecilia L. 13 21 107.10 137 Quilistiono Felex B. 13 25 107.10 138 Roquillas Marieta L. 13 5 107.10 139 Sarceno Flordeliza A. 13 24 107.10 140 Soriano Rondina Nilda A. 13 22 107.10 141 Tabasa Marizel E. 13 2 107.10 142 Aldepolla Janeth A. 14 29 195.78 143 Aquilam Annaliza E. 14 13 107.10 144 Baylosis Arnold E. 14 9 107.10 145 Bayron Jetha M. 14 2 132.20 146 Cabaero Belinda N. 14 19 107.10 147 Capito Saturnia J. 14 7 107.10 148 Gaamil Dennis P. 14 12 107.10 149 Gonzales Janlehven C. 14 27 107.10 150 Gultiano Daisy S. 14 1 107.10 151 Herro Allan R. 14 16 107.10 152 Lore Ricardo L. 14 26 107.10 153 Managaytay Amabel M. 14 30 113.79 154 Matanandao Dennis S. 14 25 107.10 155 Namocot Rosemarie L. 14 18 107.10 156 Ocay Emelyn C. 14 21 107.10 157 Pacheco Michelle R. 14 3 107.10 158 Padinit Cathlyleen T. 14 8 107.10 159 Pagapulaan Sarah C. 14 22 107.10 160 Palasol Danilo D. 14 4 107.10 161 Peloton Miradel S. 14 20 107.10 162 Ramos William G. 14 5 107.10 163 Reyes Reygen S. 14 15 107.10 164 Rivera Ronnie A. 14 24 107.10 165 Sabejon Maribel G. 14 6 107.10 166 Sacramento Carlos 14 23 107.10 167 Sambaan Flory A. 14 17 107.10 168 Talolong Marvin D. 14 10 107.10 169 Villasor Anamarie B. 14 28 107.10 170 Woo Elizabeth A. 14 14 107.10 171 Zaragosa Rosie M. 14 11 107.10 172 Abasolo Allan G. 15 37 107.10 173 Abella Joe Rhandy R. 15 3 107.10 174 Abella Olga A. 15 8 107.10 175 Diango Diosdada L. 15 33 107.10 176 Ebdalin Cheryl C. 15 11 125.50 177 Ebdalin Russell C. 15 10 107.10 178 Entera Annaliza H. 15 6 107.10 179 Escasinas Anecita G. 15 30 107.10 180 Gaabon Jackielou B. 15 31 107.10 181 Gabo Lucena H. 15 32 107.10 182 Galinada Elsa B. 15 34 107.10 183 Gomez Darcielou B. 15 35 107.10 184 Kilat Brian B. 15 36 107.10 185 Laput Mariano R. 15 13 107.10 186 Leandicho Antonio C. 15 12 224.23 187 Lebita Lolita R. 15 14 107.10 188 Loyloy Romeo B. 15 15 107.10 189 Magdale Elizabeth C. 15 16 107.10 190 Magsalay May Jane V. 15 17 107.10 191 Marqueses Vicenta M. 15 18 107.10 192 Montecalbo Dolly V. 15 19 107.10 193 Nangkas Samson M. 15 20 107.10 194 Navarro Jerry D. 15 21 107.10 195 Neri Analisa M. 15 22 107.10 196 Ochavo Bethel C. 15 23 107.10 197 Onyot Rey R. 15 24 107.10 198 Orinay Rolando L. 15 25 107.10 199 Ortega Felmax V. 15 26 107.10 200 Paderes Melanie B. 15 27 107.10 201 Padinit Rhea T. 15 28 107.10 202 Pimentel Perla L. 15 38 163.99 203 Tapia Nestor T. 15 9 107.10 204 Tapon Gemalyn S. 15 7 107.10 205 Togonon Eric R. 15 29 107.10 206 Torres Jeansen B. 15 5 107.10 207 Valmorida Joelisa M. 15 1 107.10 208 Valmorida Restituto M. 15 2 107.10 209 Vergara Ma. Teresa B. 15 4 107.10 210 Bernal Anastacio V. 16 12 107.10 211 Biloy Renelyn O. 16 11 107.10 212 Besnar Hurelyn Joy E. 16 13 107.10 213 Boligol Annabel B. 16 14 107.10 214 Broces Dilegen B. 16 15 107.10 215 Cabigas Lilibeth R. 16 17 107.10 216 Cabusog Alma R. 16 19 117.14 217 Ginos Vilma F. 16 7 107.10 218 Guiral Lorna F. 16 8 107.10 219 Helia Jenifer A. 16 9 107.10 220 Labe Karen H. 16 10 107.10 221 Saldua Gemma R. 16 1 107.10 222 San Pedro Marites F. 16 18 107.10 223 Sarabosquiz Letecia E. 16 3 107.10 224 Sarangga Bernie G. 16 2 107.10 225 Sarmiento Albert H. 16 4 107.10 226 Seronay Ricciame R. 16 5 107.10 227 Tabaa Felipe Jr. D. 16 20 117.14 228 Tacang Jereco A. 16 6 107.10 229 Cabaling Celestina L. 16 16 107.10 230 Argayoso Ernesto Erlito S. 17 7 117.14 231 Canama Genaliza A. 17 3 125.50 232 Ipanag Corazon B. 17 2 117.14 233 Labalan Roger Y. 17 4 235.94 234 Gamba Jerry C. 18 4 122.16 235 Herro Susan R. 18 3 127.18 236 Libre Ruth Z. 18 1 107.10 237 Zulieta Lucita L. 18 2 132.20 238 Caga-anan Alfredo A. 19 2 107.10 239 Calamba Beatriz L. 19 3 107.10 240 Cimene Maryann C. 19 4 107.10 241 Cortez Maricris P. 19 6 117.14 242 Daayata John G. 19 5 107.10 243 Gerongco Cheryl P. 19 1 107.10 244 Aranas Adelita M. 20 6 107.10 245 Calanod Christopher Y. 20 7 175.70 246 Cordon Camilo A. 20 2 107.10 247 Daang Nida A. 20 1 107.10 248 Doloquin Lucia T. 20 3 107.10 249 Dotdot Sirecket R. 20 4 107.10 250 Dumo Norma E. 20 5 107.10 251 Acain Alma D. 21 8 107.10 252 Acain Prima N. 21 7 107.10 253 Amilao Elvie P. 21 3 107.10 254 Arbues Mary Jones A. 21 4 107.10 255 Autor Erlinda C. 21 1 107.10 256 Babas Emily L. 21 2 107.10 257 Bagtong Ludy C. 21 5 107.10 258 Baledio My Gilf 21 6 107.10 259 Dingco Henry B. 21 9 125.50 260 Aquilam Alan E. 22 1 107.10 261 Banzon Betty L. 22 2 107.10 262 Barlomento Rodolfo E. 22 3 107.10 263 Barriga Celito C. 22 4 107.10 264 Cauza Jerson L. 22 5 120.48 265 Ebdalin Alfred C. 22 9 145.58 266 Lalantacon Ellyn Pearl P. 22 8 132.20 267 Laping Elma R. 22 7 132.20 268 Laping Romeo D. 22 6 132.20 Footnotes 1. Lot 3280-A-1 (26,502 sq. m.), Lot 3280-A-2 (2,735 sq. m.) and Lot 3280-A3 (763 sq. m.). 2. See Annex for the masterlist of qualified beneficiaries.