BIR Ruling No. 342-13

September 2, 2013 BIR RULING NO. 342-13 RA No. 7279; BIR Ruling No. 109-13 Suqui Sunrise Village Homeowners Association, Inc. Brgy. Suqui, Calapan City, Oriental Mindoro Attention: Juliena M. Panganiban President Gentlemen : This refers to the letter of Eduardo T. Manicio, Officer in Charge of Social Housing Finance Corporation (SHFC) dated May 3, 2013, endorsing the sale transaction between Edna T. Arce Ignacio and Suqui Sunrise Village 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 Edna T. Arce Ignacio (TIN 901-987-444-000) is the registered owner of a parcel of land, identified as Lot 436-E of the subdivision plan, Psd-045205-070227, being a portion of Lot 436, Cad-104, Calapan Cadastre, L.R.C. Record No. covered by Transfer Certificate of Title (TCT) No. T-143553 issued by the Registry of Deeds for Calapan City. The aforesaid property is situated at Brgy. Suqui, Calapan City with an area of Twenty Nine Thousand Seven Hundred Sixty square meters (29,760 sq.m.), more or less. Suqui Sunrise Village Homeowners Association, Inc. (TIN 006-093-159-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On March 12, 2013, the parties executed a Deed of Absolute Sale whereby the transferred and conveyed Nineteen Thousand Four Hundred Thirty Six and 61/100 square meters (19,436.61 sq.m.) of the subject property to Suqui Sunrise Village Homeowners Association, Inc. at an agreed price of Ten Million Six Hundred Sixty Five Thousand Sixty Two and 27/100 Pesos (P10,665,062.27). Pursuant to the certification issued by SHFC, Nineteen Thousand Four Hundred Thirty Six and 61/100 square meters (19,436.61 sq.m.) out of Twenty Nine Thousand Seven Hundred Sixty square meters (29,760 sq.m.) covered by TCT No. T-143553 is actually a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Suqui Sunrise Village 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). In support of its request, Suqui Sunrise Village Homeowners Association, Inc. has completely submitted on June 14, 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; HEcaIC 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 Sections 20 and 32 of RA No. 7279, pertinent portions of which state that: "Sec. 20. Incentives for Private Sector Participating in Socialized Housing . To encourage greater private sector participation in socialized housing and further reduce the cost of housing units for the benefit of the underprivileged and homeless, the following incentives shall be extended to the private sector: (d) Exemption from the payment of the following: (2) Capital gains tax on raw lands used for the project; xxx xxx xxx. Sec. 32. Incentives . To encourage its wider implementation, participants in the CMP shall be granted with the following privileges or incentives: aCSHDI 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 Suqui Sunrise Village Homeowners Association, Inc. of Nineteen Thousand Four Hundred Thirty Six and 61/100 square meters (19,436.61 sq.m.) portion of the property covered by TCT No. T-143553 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 properly 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) 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) CEHcSI 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 Suqui Sunrise Village Homeowners Association, Inc. Brgy. Suqui, Calapan City, Oriental Mindoro Blk. Lot Total Area Name of Beneficiary No. No. (sq.m.) 1 Irang, Princess Grace O. 1 1 84.31 2 Ong, Randy A. 1 2 81.07 3 Panganiban, Sarah Jane Valene M. 1 3 81.07 4 Panganiban, Juliana M. 1 4 81.07 5 Panganiban, Julius Benny M. 1 5 144.30 6 Banawa, Florderico B. 1 6 132.95 7 Militar, Marissa A. 1 7 121.60 8 Militar, Diomedes A. 1 8 108.63 9 Manalo, Priscila T. 1 9 81.07 10 Palaganas, Genaro C. 3 1 142.68 11 Garcia, Ernesto T. 3 2 121.60 12 Garcia, Anna Liza K. 3 3 113.49 13 Arellano, Julius Jake M. 3 6 162.13 14 Soriano, Florentina D. 3 7 81.07 15 Tobillo, Lorna L. 3 8 162.13 16 Barro, Jayrmie Laine L. 3 10 162.13 17 Atilano, Nimfa D. 3 11 81.07 18 Galindez, Emily D. 3 12 81.07 19 Delos Reyes, Ryan T. 3 13 81.07 20 Perin, Clarizza T. 3 14 81.07 21 Delos Reyes, Arnel T. 3 15 81.07 22 Gaa, Jaime P. 3 16 81.07 23 Paglumutan, Ellen C. 3 17 81.07 24 Cunanan, Ebona S. 3 18 81.07 25 Sy, Eugene R. 3 19 81.07 26 Tamfungan, Analyn M. 3 20 81.07 27 Mallari, Vivian L. 3 21 162.13 28 Alea, Kent G. 3 22 81.07 29 Barrientos, Maria Khristine A. 3 23 81.07 30 Zubiri, Joseph A. 3 24 204.29 31 Lorica, Ramchrisen S. 3 25 81.07 32 Borromeo, Renel B. 3 26 81.07 33 Escarez, Daniel A. 3 27 81.07 34 Atilano, Jocelyn E. 3 28 81.07 35 Alfante, Ramil D. 3 29 81.07 36 Valles, Ranniel A. 3 30 103.77 37 Panganiban, Ana Emelita R. 4 1 116.74 38 Panganiban, Efren R. 4 2 81.07 39 Gueco, Josephine V. 4 3 81.07 40 Gueco, Ross Joseph V. 4 4 81.07 41 Maibo, Rufina Z. 4 5 116.74 42 Comia, Ramil V. 4 6 84.31 43 Panganiban, Merla C. 4 7 81.07 44 Fillarca, Cristina G. 4 8 81.07 45 Pascual, Lolita G. 4 9 81.07 46 Sobremonte, Rebecca A. 4 10 363.18 47 Balbada, Leah S. 4 11 565.85 48 Atayde, Rosa G. 5 1 94.04 49 Genato, Maria Susan A. 5 2 84.31 50 Genato, Catherine B. 5 3 84.31 51 Albo, Febe G. 5 4 82.69 52 Benedicto, Bernadette V. 5 5 82.69 53 Benedicto, Baby Joleena V. 5 6 81.07 54 Santos, Marilyn M. 5 7 98.90 55 Genato, Jane Antonette B. 5 8 98.90 56 Montejo, Analiza S. 5 9 163.76 57 Olandria, Arthur A. 6 1 90.79 58 Lunar, Celso O. 6 2 81.07 59 Lunar, Maricel M. 6 3 81.07 60 Manuel, Isabel D. 6 4 81.07 61 Labay, Analiza N. 6 5 81.07 62 Baculo, Elvin M. 6 6 81.07 63 Sanchez, Leslie Ann D. 6 7 81.07 64 Mastorillas, Elvira E. 6 8 119.98 65 Ariola, Maycel E. 6 11 81.07 66 Ada, Eugenio Jr. H. 6 12 81.07 67. Zoleta, Mervin J. 6 13 81.07 68. Cabungcal, Armando D. 6 14 81.07 69. Sianquita, Adoracion P. 7 1 115.12 70 Panaligan, Amelia H. 7 5 162.13 71 Ramos, Lucia I. 7 6 115.12 72 Abes, Dominador C. 7 7 85.93 73 Baxa, Marvivien Ann Kristia S. 7 8 81.07 74 Rosco, Richard O. 7 11 115.12 75 Castillo, Jeremie C. 8 1 85.93 76 Dizon, Merly M. 8 2 87.55 77 Belgera, Mila M. 8 3 144.30 78 Castro, Evangeline M. 8 4 141.06 79 Papa, Marvin D. 8 5 136.19 80 Zoleta, Erwin J. 8 7 128.09 81 Fillarca, Bhenson L. 8 9 119.98 82 Baculo, Lizle M. 8 10 115.12 83 Hernandez, Rex S. 8 11 111.87 84 Delica, Wilson P. 8 12 209.15 85 Rodriguez, Marife D. 8 13 98.90 86 Agustin, Virginia B. 8 14 113.49 87 Remis, Arischel A. 9 1 82.69 88 Lorica Norileen D. 9 2 84.31 89 Datinggaling, Gloria C. 9 3 81.07 90 Aldaba, Ma. Theresa G. 9 4 81.07 91 Rios, Ernest Robert D. 9 6 81.07 92 Alabastro, Nathalie Niez R. 9 7 81.07 93 Carmona, Josephine L. 9 8 81.07 94 Rios, Marina M. 9 9 81.07 95 Macalalad, Mary Grace Z. 9 10 81.07 96 Rios, Ferdinand E. 9 11 81.07 97 Carpio, Demetrio V. 9 12 81.07 98 Jimenez, Jennielyn M. 9 13 81.07 99 Mendoza, Maria Jinky C. 9 14 81.07 100 Panganiban, Reynaldo R. 9 16 81.07 101 Panganiban, Larry R. 9 17 81.07 102 Afable, Elaine Reina B. 9 18 81.07 103 Afable, Aileen Queen B. 9 20 81.07 104 Gabriel, Marie Bella V. 9 22 162.13 105 Bacarro, Ascencion T. 9 23 81.07 106 Albano, Honorata B. 9 24 81.07 107 Bacarro, Loida T. 9 25 81.07 108 Martinez, Teresita D. 9 26 81.07 109 Morales, Elsa M. 9 27 81.07 110 Domanico, Dalla D. 9 28 81.07 111 Libanan, Luzviminda B. 9 29 81.07 112 Cervantes, Genarosa T. 9 30 81.07 113 Rosales, Eric M. 9 31 123.22 114 Ternida, Sharon F. 10 2 115.12 115 Villas, Robin Clement M. 10 4 324.27 116 Castro, Levi Jr. M. 10 5 81.07 117 Carable, John Wilfred C. 10 6 81.07 118 Carable, Efrenia L. 10 7 81.07 119 Mendoza, Decena B. 10 8 81.07 120 Macaraig, Jerrymie G. 10 9 81.07 121 Alea, Adelaida C. 10 10 162.13 122 Cuento, Joey Emmanuel J. 10 11 121.60 123 Mendoza, Marites C. 10 13 81.07 124 Abejero, Emily F. 10 15 121.60 125 Sardalla, Ernesto C. 10 17 81.07 126 Mendoza, Roldan B. 10 18 81.07 127 Mendoza, Crisanto L. 10 19 81.07 128 Piego, Angelito M. 10 20 81.07 129 Catibog, Maycelle C. 10 21 81.07 130 Ante, Ralph Vincent R. 10 22 162.13 131 Icalla, Marcela S. 10 23 162.13 132 Guyada, Erwin P. 10 24 81.07 133 Aquino, Randy A. 10 25 81.07 134 Bilog, Eliseo M. 10 26 81.07 135 Salazar, Maria Gezevel G. 10 27 81.07 136 Ambito, Anita A. 10 28 124.84 137 Viduya, William F. 11 1 152.41 138 Supleo, Maricel V. 11 2 162.13 139 Artajo, Veronica B. 11 3 81.07 140 Bautista, Lorena D. 11 4 81.07 141 Monteza, Virginia F. 11 5 81.07 142 Alvarez, Aurelio Jr. D. 11 6 81.07 143 Villanueva, Marietta D. 11 7 81.07 144 Sikat, Leonilina M. 11 8 243.20 145 Aruino, Samuel N. 13 4 84.31 146 Hatulan, Emerson E. 13 7 105.39 147 Ramirez, Joebert P. 14 1 81.07 148 Somera, Ma. Liza D. 14 2 81.07 149 Marcos, Oliver M. 14 3 81.07 150 Versoza, Rosario G. 14 5 81.07 151 Versoza, Virginia G. 14 6 81.07 152 Caringal, Lea D. 14 7 81.07 153 Adarlo, Charlot S. 14 8 81.07 154 Jurado, Herrick A. 14 9 107.01 155 Montoya, Leila Fe T. 15 3 144.30 156 Mendoza, Michelle G. 15 4 81.07 157 Unson, Regina D. 15 5 81.07 158 Asi, Myra R. 15 6 81.07 159 Arellano, Mylene R. 15 7 81.07 160 Marasigan, Alex M. 16 1 115.12 161 Valenton, Magdaleno Jr. A. 16 2 89.17 162 Remis, Luz A. 16 7 162.13 163 Cajayon, Rosa A. 16 9 243.20 164 Cajayon, Antonio A. 16 10 162.13 165 Embate, Gideon M. 16 11 162.13 166 Embate, Princess Lyndon B. 16 12 162.13 167 Dinglasan, Von Jaryd R. 16 14 81.07 168 Abu, Lovielyn H. 16 15 81.07 169 Soriano, Teresa A. 16 17 81.07 170 Pamentuan, Lito R. 16 18 113.49 171 Alfante, Alex D. 17 1 82.69 172 Lopez, Eduard A. 17 3 81.07 173 Reyes, Mercy L. 17 4 81.07 174 Alejo, Leon Fortunato Y. 17 6 81.07 175 Bersabal, Vanessa P. 17 7 81.07 176 Guyada, Gringo P. 17 11 162.13 177 Ordanza, Edwin O. 17 13 81.07 178 Marzo, Genalyn S. 17 14 81.07 179 Magboo, Roberto J. 17 15 162.13 180 Acosta, Janeth A. 17 16 81.07 181 Santillan, Ceria M. 17 18 81.07 182 Santos, Nio Paulo A. 17 19 304.81 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.