BIR Ruling No. 365-12

May 31, 2012 BIR RULING NO. 365-12 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10 Purok Yanson Phase 3 Homeowners Association, Inc. Brgy. Mandalagan, Bacolod City, Negros Occidental Attention: Melvin S. Gatuslao President Gentlemen : This refers to your letter dated December 8, 2011 requesting for a tax exemption on the sale of real properties by the Philippine National Bank in favor of Purok Yanson Phase 3 Homeowners Association, Inc. pursuant to Republic Act 7279 otherwise known as the "Urban Development and Housing Act of 1992". It appears that Philippine National Bank with Tax Identification Number 000-188-209, is the registered owner of parcels of land covered by five (5) Transfer Certificates of Title, to wit: TCT No. Area (sq. m.) Property Index No. T-202358 3,773 143-00-051-16-011 T-202360 3,774 143-00-051-16-013 T-202361 3,851 143-00-051-16-014 T-202362 3,927 143-00-051-16-015 T-202363 3,059 143-00-051-16-016 issued by the Registry of Deeds for Bacolod City. The aforesaid properties are situated at Bacolod City. Purok Yanson Phase 3 Homeowners Association, Inc., on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB) with Tax Identification No. 298-906-638-000. On November 4, 2011, the parties executed a Deed of Absolute Sale whereby the owner transfers and conveys the following: TCT No. Area (sq. m.) T-202358 2,427 out of 3,733 T-202360 1,890 out of 3,774 T-202361 3,245 out of 3,851 T-202362 3,327 out of 3,927 T-202363 1,767 out of 3,059 to Purok Yanson Phase 3 Homeowners Association, Inc. with an aggregate area of twelve thousand six hundred fifty six square meters (12,656 sq.m.), more or less at an agreed price of Twelve Million Twenty Three Thousand Two Hundred Pesos (P12,023,200.00). Pursuant to a certification issued by Social Housing Finance Corporation, the twelve thousand six hundred fifty six square meters (12,656 sq.m.) portion of the properties covered by TCTs No. T-202358 and T-202360 to T-202363 is actually a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Purok Yanson Phase 3 Homeowners Association, Inc. secured a housing loan under the Community Mortgage Program (CMP), a financing assistance program of the Social Housing Finance Corporation (SHFC) a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). caCSDT 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: 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 of the following: TCT No. Area (sq. m.) T-202358 2,427 out of 3,733 T-202360 1,890 out of 3,774 T-202361 3,245 out of 3,851 T-202362 3,327 out of 3,927 T-202363 1,767 out of 3,059 by the owner to Purok Yanson Phase 3 Homeowners Association, Inc., insofar as the 12,656 sq.m. portion thereof is concerned, 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 properties, to the effect that the said properties shall be used for socialized housing pursuant to R.A. No. 7279. (BIR Ruling No. 130-10 dated December 1, 2010) 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 Philippine National Bank is liable to pay the documentary stamp tax on the documents conveying the afore-stated properties 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 value determined in accordance with Section 6 (E) of the said Code, whichever is higher. (BIR Ruling No. 130-10 dated December 1, 2010) 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. 040-10 dated August 27, 2010) EDHCSI Notwithstanding the foregoing, the Bureau of Internal Revenue shall conduct verification and post-audit that the actual occupants of the properties 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 ATTACHMENT Purok Yanson Phase 3 Homeowners Association, Inc. Purok Yanson 1, Brgy. Mandalagan, Bacolod City Name of Beneficiary Blk. No. Lot Total Area No. (sq.m.) 1 ALIB, WILMER 1 1 78.69 2 ALIB, WILFRED 1 2 78.69 3 FERNANDEZ, SEBASTIAN B. 1 3 86.83 4 PABALATE, ALLAN K. 1 4 138.39 5 PEROLINO, JOSEFA A. 1 5 105.83 6 GARIBAY, TERESITA A. 1 6 70.55 7 LORAYNA, GLADYS T. 1 7 63.77 8 AMABLE, JOSE T. JR. 1 8 56.98 9 PASTERA, MA. THERESA 1 9 63.77 10 GAMING, GILBERT A. 1 10 23.07 11 AGRAMON, JAY T. 1 11 118.04 12 FUDOLIG, VILMA S. 1 13 29.85 13 ROJO, RENE P. 1 14 66.48 14 ROJO, RICARDO P. 1 15 66.48 15 PAYONAN, ROLANDO D. 2 1 104.47 16 PAYONAN, RONALD S. 2 2 132.96 17 BOCADO, EFREN 2 3 143.82 18 DESPI, TERESITA 2 4 61.05 19 DESPI, JENELYN 2 5 69.20 20 PABALATE, FERNANDO 2 6 99.04 21 FERNANDEZ, RALF JOHN 2 7 59.70 22 FERNANDEZ, IANA THESSA 2 8 90.90 23 KAQUILLA, RICARDO 2 9 145.17 24 TUPAS, GERTRUDES 2 10 46.13 25 AQUINO, HOMER S. 3 1 118.04 26 FRANCO, MA. KRISTINE S. 3 2 118.04 27 MATILLANO, MAY GRACE 3 3 78.69 28 DEOCADIZ, RENA V. 3 4 71.91 29 MATILLANO, RAYMUNDO 3 5 78.69 30 BASA, TERESA O. 3 6 153.32 31 DE LA CRUZ, ANTONIO 3 7 59.70 32 ESTRAERO, JOSE GENARO 3 8 131.61 33 PABALATE, RONIE 3 9 80.05 34 PLANTILLO, RUTH R. 3 10 62.41 35 ROJO, ROSELYN 3 11 62.41 36 BRENDER, CLAUDETTE B. 3 12 132.96 37 DETOYATO, ELEONOR 3 13 69.20 38 BRODITH, JOSSAR RAY 3 14 70.55 39 BERDEN, JOCELYN 3 15 74.62 40 MAGBANUA, MARJORIE 3 16 70.55 41 PAGADO-AN, MERVIN 3 17 59.70 42 PAGADU-AN, SALLY 3 18 59.70 43 BATERNA, ANIE MARIE 3 19 66.48 44 DIONES, ANECITO, JR. 3 20 67.84 45 BRINGAS, ALDRIN 3 21 63.77 46 BRINGAS, ROMEO G. 3 22 54.27 47 BACOLI, TERESITA 3 23 134.32 48 BRINGAS, JOEVIN 3 24 82.76 49 BANA-AY, MAGDALENA 3 25 80.05 50 BRINGAS, ALICIA 3 26 81.41 51 SALIMBOT, LUZVIMINDA 3 27 84.80 52 PAGADUAN, TONY 3 28 40.70 53 SALIMBOT, MARKBEN 3 29 84.80 54 LUCEIO, TERESITA 3 30 40.70 55 DIONEO, ROENA V. 4 1 138.39 56 VERDAD, ROMEL O. 4 2 59.70 57 VERDAD, RONALD 4 3 59.70 58 GELLACO, JOMELA 4 4 169.60 59 VILLA, RODOLFO S. 4 5 143.82 60 GELLACO, MICHAEL 4 6 54.27 61 GELLACO, NOEL 4 7 52.91 62 NUGUID, VICTORINO 4 8 75.98 63 NUGUID, CHEENEE 4 9 77.34 64 DINGLE, JOANNA MARIE 4 10 90.90 65 ALMEDA, LANE MARIE 4 11 58.34 66 CAETE, NOELLA 4 12 90.90 67 GRAPA, MARBEN 4 13 58.34 68 FERNANDEZ, KATRINA 4 14 71.91 ANGELA 69 NIO, JOEY 4 15 71.91 70 DINGLE, NOEL 4 16 89.55 71 GONZALES, ANGELITO 4 17 99.04 72 GARIBAY, MARAH 4 18 89.55 73 GARIBAY, JANESE 4 19 88.19 74 BRINGAS, CARMELA 4 20 48.84 75 BRINGAS, ERIC 4 21 48.84 76 EMBLARINAG, JOVELYN 4 22 65.13 77 EMBLARINAG, GASPAR 4 23 65.13 78 DIONES, MA. LOURDES 4 24 74.62 79 VELARA, RHEA MAE B. 4 25 59.70 80 VELARA, MARIO JR. 4 26 59.70 81 LAUDEREZ, ROSS 4 27 59.70 82 DIONES, JOSE JOEL 4 28 74.62 83 ALOMBRO, NORMAN 4 29 43.42 84 DIONES, ROLANDO 4 30 43.42 85 BORNALES, RONELO 4 31 92.26 86 BORNALES, MARILOU 4 32 55.63 87 ROBLES, LOVELY 5 1 69.20 88 DELACERNA, MARYLAND A. 5 2 71.91 89 DELACERNA, JOEL 5 3 71.91 90 JONG, JOSEPHINE 5 4 116.68 91 AUSTRIA, NIDJUN 5 5 69.20 92 BOMBAN, MARY ANN 5 6 92.26 93 AUSTRIA, NIDA 5 7 69.20 94 VITO, MARIVIC 5 8 145.17 95 LIBAJAN, MARY 5 9 66.48 96 LANGHA, MARIANO 5 10 65.13 97 SOLUTAN, SAINT ANTHONY 5 11 66.48 98 GARDE, EVELYN 5 12 74.62 99 BAHIL, MARIE LOU 5 13 67.84 100 GARDE, EDEN MAE E. 5 14 75.98 101 HUMBIT, MARNIE 5 15 75.98 102 PIMENTEL, JOEFFRIE 5 16 73.27 103 HUMBIT, JOEL L. 5 17 75.98 104 BERITON, JERCEL 5 18 74.62 105 NAVARRA, HONESTY 5 19 65.13 106 CASTIDAD, KIM JOHN 5 20 65.13 107 ROBLES, ROGER 5 21 69.20 108 ROBLES, PABLO 5 22 63.77 109 LEDESMA, LORNA 5 23 93.62 110 DIONES, NARCISO JR. L. 5 25 66.48 111 DIONES, VICTOR V. 5 26 66.48 112 ESTAOL, BONIE 5 27 89.55 113 ESTAOL, JEANNY 5 28 89.55 114 JUAYANG, RENANTE 5 29 88.19 115 PLACERO, MHARVIN 5 30 70.55 116 PLACERO, MHEROWBEL 5 31 70.55 117 CISNEROS, CELESTY S. 5 32 69.20 118 PUDADERA, HAZEL A. 5 33 100.40 119 CISNEROS, REUBEN S. 5 34 69.20 120 SAGA, RAFFY 5 35 99.04 121 BUNCAL, MARY JOY C. 5 36 118.04 122 CASTRO, CZAR EMIR 5 37 134.32 123 DURAN, EURECTO 5 38 81.41 124 TALIDONG, RALIN 5 39 93.62 125 ALSONADO, ANDRES 5 40 94.97 126 CABALLERO, JOANNA MARIE 5 41 94.97 127 ROJO, ROLANDO 5 42 97.69 128 BACLAGON, JIREH JOHN 5 43 27.14 129 CASTIDAD, IVES 6 1 18.99 130 CALDEA, ELIZABETH 6 2 35.28 131 CASTILLO, HILSMART 6 3 47.49 132 CASTILLO, MARILYN 6 4 47.49 133 FAUSTINO, JERRY 6 5 82.76 134 FAUSTINO, KEN P. 6 6 81.41 135 SOYA, ROBERTO, SR. 6 7 59.70 136 FAUSTINO, JOSEPHINE 6 8 81.41 137 SOYA, RONA 6 9 58.34 138 GRECIA, JESSICA 6 10 59.70 139 LUMABANG, GILDA P. 6 11 58.34 140 PABUAYA, RANDY 6 12 46.13 141 PABUAYA, CARLOTA 6 13 46.13 142 PABUAYA, MA. THERESA 6 14 46.13 143 VILLACAMPA, RHODORA 6 15 74.62 144 ESPINA, ARMANDO 6 16 97.69 145 VILLACAMPA, NARCISO 6 17 74.62 146 MOSQUEDA, RAMON 6 18 120.75 147 VILLACAMPA, CHONA 6 19 74.62 148 MOLLENO, ROGER 6 20 73.27 149 CALIMUTAN, JUDITH 6 21 54.27 150 DAJAY, NORMAN 6 22 54.27 151 PO, JOSE MANUEL I. 6 23 54.27 152 QUIJANO, MARY ANN 6 24 97.69 153 FRANCISCO, ANIE 6 25 56.31 154 CABANGAL, ADELA 6 26 56.31 155 DELA PEA, NARCISO 6 27 48.84 156 DELA PEA, JENELYN 6 28 48.84 157 ESPINA, DORIE LYNN T. 6 29 58.34 158 SALCEDO, RONEL 7 1 82.76 159 NERVES, GUILLERMO 7 2 116.68 160 SALCEDO, ROSANNA 7 3 82.76 161 VASQUEZ, LORENA ANA 7 4 113.97 162 MARA, MYLENE L. 7 5 51.56 163 GATUSLAO, MELVIN S. 7 6 77.34 164 PAGADUAN, HILDA D. 7 7 51.56 Footnotes 1. see Annex for the masterlist of qualified beneficiaries.