BIR Ruling No. 348-13

September 11, 2013 BIR RULING NO. 348-13 RA No. 7279; BIR Ruling No. 109-13 Bermundo Village Homeowners Association, Inc. Brgy. Indahag, Cagayan de Oro City Attention: Precioso T. Bangoy Jr. President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated February 19, 2013, endorsing the sale transaction between Daria Z. Bermundo and Bermundo 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". SDHITE Documents submitted disclosed that Daria Z. Bermundo (TIN 428-864-277-000), married to Timoteo B. Bermundo (hereinafter referred to as landowner) is the registered owner of a parcel of land, identified as Lot 2818 of the cadastral survey of Cagayan covered by Transfer Certificate of Title (TCT) No. T-34537 issued by the Registry of Deeds for the City of Cagayan de Oro. The aforesaid property is situated at Brgy. Indahag, Cagayan de Oro City with an area of Sixteen Thousand Seven Hundred Fifty Four square meters (16,754 sq.m.), more or less. Bermundo Village Homeowners Association, Inc. (TIN 424-109-525-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB) under Registration No. 12139 dated June 27, 2012. On December 7, 2012, the parties executed a Deed of Absolute Sale whereby the landowner transferred and conveyed the subject property to Bermundo Village Homeowners Association, Inc. at an agreed price of Nine Million Two Hundred Fourteen Thousand Seven Hundred Pesos (P9,214,700.00). Pursuant to the certification dated December 7, 2013 issued by SHFC, the property covered by TCT No. T-34537 actually comprise a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Bermundo Village Homeowners Association, Inc. secured a housing loan under the Community Mortgage Program (CMP), a financing assistance program of the SHFC a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). In support of its request, Bermundo Village Homeowners Association, Inc. has completely submitted on July 12, 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; ACcaET 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 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 Bermundo Village Homeowners Association, Inc. of the property covered by TCT T-34537 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) aHECST 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 owner is liable to pay the documentary stamp tax on the documents 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) 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. 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. CacEIS Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX Bermundo Village Homeowners Association, Inc. Brgy. Indahag, Cagayan de Oro City Blk. Lot Total Area Name of Beneficiary No. No. (sq.m.) 1 PILAPIL, PETE OSCAR EDRITZ G. 1 1 110.67 2 PILAPIL, PATRICK CAESAR EDRITZ G. 1 2 110.67 3 GABUTAN, MICHAEL C. 1 3 110.67 4 CASINO, GROVER A. 1 4 110.67 5 CASINO, MA. THERESA W. 1 5 110.67 6 EXCHAURE, MORRIS C. 1 6 110.67 7 EXCHAURE, VIRGENCITA C. 1 7 110.67 8 BALILI, REYNA Z. 1 8 110.67 9 CABATUAN, RODERICK G. 1 9 124.90 10 MINAO, VIRGINIA C. 1 10 175.49 11 CASINILLO, JOSEPH B. 1 11 134.39 12 GUNAYAN JR.,REDEL APOLINAR M. 1 12 110.67 13 GUNAYAN, REY M. 1 13 110.67 14 ABANSADO, EMELIE A. 1 14 110.67 15 MONTE, LORETO P. 1 15 110.67 16 LUNGAY, MARLOU C. 1 16 110.67 17 SANCHEZ, DIONESE P. 1 17 110.67 18 SANCHEZ, JR. DANILO M. 1 18 110.67 19 CUEL, CLIENT MICHAEL B. 1 19 110.67 20 WABE, SHEMIDA L. 1 20 110.67 21 RAPIRAP JR.,VICTOR L. 1 21 110.67 22 RAPIRAP, HOPE CHARMINE L. 1 22 150.20 23 SUMAOY, XELMARC CESANNE DAWN B. 2 1 110.67 24 PRADO, HEXON E. 2 2 110.67 25 CLERIGO, BOY HOMAR T. 2 3 110.67 26 PASTRANO, NESTOR B. 2 4 110.67 27 WABAN, EMERSON C. 2 5 110.67 28 CABEGUIN, JULIE Y. 2 6 110.67 29 CANALES, MARIGEN C. 2 7 110.67 30 CANETE, DULCE CORAZON O. 2 8 110.67 31 JUMALON, NORMELITA R. 2 9 110.67 32 JUMALON, MERLY E. 2 10 129.64 33 OMONGOS, BETTY L. 2 11 145.45 34 MAGADA, GREGORIA D. 2 12 116.99 35 TORREGOZA, FENINA A. 2 13 110.67 36 UBA, MARY JEAN M. 2 14 110.67 37 SOLLESTA, EMELIE H. 2 15 112.25 38 AHAT, IRENE B. 2 16 218.18 39 FUENTES, ISRAEL A. 2 17 113.83 40 AJAN, GAMANIEL C. 2 18 110.67 41 COLLADO, JEANINA B. 2 19 110.67 42 UBA, GINALYN M. 2 20 110.67 43 TEOFILO, NOLY B. 2 21 110.67 44 MAGTUBA, JESSIE M. 2 22 110.67 45 COMBONG, ZEP ANTHONY N. 2 23 110.67 46 ABABA, BULANDO B. 2 24 110.67 47 MEDIANTE, MARILOU C. 2 25 110.67 48 MACABAYA, EFREN G. 2 26 110.67 49 MAURIN, REYNALDO Y. 3 1 140.71 50 AMBAL, BERLY A. 3 2 126.48 51 BERSALUNA, CLIFF LLYNEY V. 3 3 110.67 52 AMBAL JR.,ANTONIO A. 3 4 110.67 53 REGUALOS, GAY V. 3 5 110.67 54 ARELLANO, MARQUIN D. 3 6 110.67 55 VISTAL, NENITA L. 3 7 110.67 56 LUMACAD, JUNE ANN ISABEL D. 3 8 110.67 57 VISTAL, JOSELITO A. 3 9 110.67 58 LUMACAD, NOVA PEARL MARIE D. 3 10 110.67 59 MAURIN, CARMEN V. 3 11 110.67 60 JABLA, ARGIE JUNE G. 3 12 110.67 61 OBEDENCIO, OLIVER B. 3 13 110.67 62 UBAY-UBAY, RICHOVEN G. 3 14 110.67 63 JARAULA, EMMALINE C. 3 15 178.65 64 JARAULA, ADELINE C. 3 16 110.67 65 JARAULA, MANUEL C. 3 17 115.41 66 BANGOY JR.,PRECIOSO T. 4 1 166.01 67 ABADIES, MA. ESTRELLA B. 4 2 151.78 68 MAGLUNSOD, EVENICER C. 4 3 110.67 69 MONTES, MARY CRIS J. 4 4 110.67 70 LANGIT JR.,FRANCISCO A. 4 5 110.67 71 LUMACAD, YASSER FRITZ E. 4 6 110.67 72 PADERE JR.,MANUEL R. 4 7 110.67 73 BRONOLA, JULIETA L. 4 8 110.67 74 GALVE, MARITES P. 4 9 110.67 75 AMBROY, MARISSA G. 4 10 110.67 76 LIM, DOGIE M. 4 11 110.67 77 AMBROY, JULIETA G. 4 12 110.67 78 JALAPADAN, ELISEA R. 4 13 180.24 79 HAMBRE, PRISPAUL A. 4 14 110.67 80 FLORIG, FRANCISCO L. 4 15 116.99 81 CABIGUIN, GEMMA TERESA A. 5 1 110.67 82 WABAN, MARK IAN C. 5 2 110.67 83 WABAN, STANLEY DAVE C. 5 3 101.18 84 CABEGUIN, ANTONIO Y. 5 4 110.67 85 GALON, JUDY B. 5 5 110.67 86 BUTRON, JULIUS P. 6 1 118.58 87 JABLA, NICODEMO A. 6 2 105.93 88 ENOBIO, JOSEPHINE J. 6 3 105.93 89 ROMERO, VERNA S. 6 4 105.93 90 VELEZ, RUDYARD S. 6 5 105.93 91 LUMANDA, TERESITA N. 6 6 105.93 92 MEPRANOM, ROBELIN V. 6 7 105.93 93 ELLANOR, NOWEN M. 6 8 105.93 94 BAKAN, MARITES I. 6 9 105.93 95 DINGCONG, ROSALIE V. 6 10 105.93 96 SABUGA-A, EVELYN S. 6 11 115.41 97 EMBUDO, MARK B. 6 12 115.41 98 BAUTISTA JR.,EDWARD A. 6 13 121.74 99 IMBAT, ROWENA T. 7 1 124.90 100 PEPITO, NYMAR T. 7 2 115.41 101 TABAMO, ROSELYN P. 7 3 110.67 102 MAGHINAY, ROBERT C. 7 4 110.67 103 ICAMEN JR.,BERNARDO J. 7 5 110.67 104 FELIZARTA, FIDEL P. 7 6 110.67 105 ICAMEN, BERNIE J. 7 7 110.67 106 ROSEL, ROMNICK A. 7 8 110.67 107 AMORTIZADO, RYNHART L. 7 9 110.67 108 OSIN, DAPHODILE P. 7 10 110.67 109 SUMARIA, GABBY B. 7 11 110.67 110 SALINAS, JEXZIEL P. 7 12 112.25 111 BONGGAY, FELOMINO M. 7 13 113.83 112 SALINAS, FEBE P. 7 14 126.48 113 ELAGO, ERIC T. 7 15 128.06 114 GABACA, GIOVANI B. 7 16 110.67 115 LAGURA, RONILO B. 7 17 110.67 116 SANIPA, MIRAFLOR G. 7 18 110.67 117 LAGURA, TERESITA B. 7 19 110.67 118 GABACA, SALOME B. 7 20 110.67 119 LARIOSA, RUTHSELYN V. 7 21 110.67 120 GREGORIO, JENELYN B. 7 22 110.67 121 YCHON, NOEL D. 7 23 110.67 122 BULAWAN, JORRIE L. 7 24 145.45 123 YCHON, MARY JANE L. 7 25 110.67 124 YCHON, MAR D. 7 26 140.71 125 SABANDAL, CARLITO B. 8 1 110.67 126 RUGAY, GINALYN S. 8 2 110.67 127 LAGANG, MARILOU S. 8 3 110.67 128 JAKOSALEM, PHILIPDEN S. 8 4 110.67 129 JAKOSALEM, KERILL S. 8 5 110.67 130 JAKOSALEM, AYKIN S. 8 6 110.67 131 JAKOSALEM, DITZEL S. 8 7 110.67 132 ESTOQUE, MICELLE JANE A. 8 8 110.67 133 DELLOTAMOS, RICKY D. 8 9 110.67 134 DILLOTAMOS, RENE D. 8 10 110.67 135 GUARIN, MIGUEL B. 8 11 110.67 136 SANOH, LEONIDA S. 8 12 110.67 137 SABANDUQUIA, RUEL P. 8 13 110.67 138 ESTRERA, JANET S. 8 14 110.67 139 PEGALAN, DENNIS A. 8 15 110.67 140 DUMADAG, ROMY H. 8 16 110.67 141 ARIRAYA, TEDDY AGUSTINE S. 8 17 110.67 142 ORIO, CYNTHIA B. 8 18 110.67 143 HEMBRADOR III, JOSE Y. 8 19 110.67 144 MEDALLA, AVELINA BEULAH H. 8 20 110.67 145 LIRA, PABLITO S. 8 21 113.83 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.