BIR Ruling No. 372-14

October 3, 2014 BIR RULING NO. 372-14 RA No. 7279; BIR Ruling No. 109-13 Balgan Ville Homeowners' Association, Inc. Palmera Spring 5 corner Senate Avenue Brgy. Bagumbong, Caloocan City Attention: Dennis P. Del Mundo President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated February 26, 2014, endorsing the sale transaction between Sps. Cirilo L.V. Balgan and Annette F. Balgan and Balgan Ville 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 Sps. Cirilo L.V. Balgan (TIN 111-645-259-000) and Annette F. Balgan (TIN 111-645-267-000) (hereinafter referred to as Landowners) are the registered owners of a parcel of land, identified as Lot 4, of the conso subd., plan Pcs-00-012869, being a portion of the conso. of Lot 4-A, Lot 4-B, Lot 4-C, Lot 4-D and Lot 4-N, Psd-00-7501-027000-D, L.R.C. Record No. covered by Transfer Certificate of Title (TCT) No. C-402644 issued by the Registry of Deeds for the Kaloocan City. The aforesaid property is situated at Brgy. Bagumbong, Caloocan City with an area of Six Thousand Nine Hundred square meters (6,900 sq.m.), more or less. Balgan Ville Homeowners' Association, Inc. (TIN 270-902-401-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB) under Certificate of Registration No. 14481. On December 18, 2013, the parties executed a Deed of Absolute Sale whereby the Landowner transferred and conveyed the subject property to Balgan Ville Homeowners' Association, Inc. at an agreed price of Twelve Million One Hundred Twenty Two Thousand Six Hundred Ten Pesos (P12,122,610.00). Pursuant to the certification issued by SHFC, the property covered by TCT No. C-402644 is actually a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Balgan Ville 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 December 23, 2013. SAHITC In support of its request, Balgan Ville Homeowners' Association, Inc. has completely submitted on March 7, 2014 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 Deed of Absolute Sale to the Community Association; 4) Certified true copy of the Articles of incorporation of the Community Association; 5) Certified true copy of the Masterlist of Qualified Beneficiaries duly certified by the SHFC; 6) Certified true copies of the TCT and Latest Tax Declaration of the Property Sold to the Community Association; 7) Certified true copy of the Location Plan of the Lot Sold to the Community Association; 8) TIN ID/BIR Certificate of Registration of the seller and the Homeowner Association; and 9) 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: EcDSHT 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 landowners to Balgan Ville Homeowners' Association, Inc. of the property covered by TCT No. C-402644 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 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 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. (BIR Ruling No. 109-13 dated March 21, 2013) HCEcaT 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 Bureau of Internal Revenue ANNEX Balgan Ville Homeowners' Association, Inc. Palmera Spring 5 corner Senate Avenue Brgy. Bagumbong, Caloocan City Name of Beneficiary Blk. Lot Total Area No. No. (sq.m.) 1 Montuya, May B. 1 1 40.02 2 Florita, Ricks G. 1 2 40.02 3 Montuya, Armando B. 1 3 40.02 4 Montuya, Fe Francia B. 1 4 40.02 5 Blanco, Renee Ann F. 1 5 40.02 6 Gernandizo, Candelaria G. 1 6 40.02 7 Avila, Roselyn F. 1 7 40.02 8 Bote, Joseph G. 1 8 40.02 9 Bote, Jenny Rose G. 1 9 40.02 10 Gernandizo, Adelina G. 1 10 40.02 11 Demate, Sami R. 2 1 41.45 12 Demate, Evangeline R. 2 2 40.02 13 Garcia, Anna Dahlia V. 2 3 40.02 14 Garcia, Glenn Jordan V. 2 4 40.02 15 Alvindo, Amado P. 2 5 40.02 16 Amper, Mylene DV. 2 6 40.02 17 Peralta, Marivie C. 2 7 40.02 18 Balisi, Marlon B. 2 8 52.89 19 Bangquillo, Rosevelt S. 2 9 52.89 20 Leonardo, Liezel A. 2 10 68.61 21 Leonardo, Reyzel A. 2 11 67.18 22 Balisi, Jocelyn J. 2 12 57.18 23 Gonzales, Robert C. 2 13 57.18 24 Gumba, Leonel S. 2 14 55.75 25 Legaspi, Ryan E. 2 15 60.04 26 Belleza, Luthgard A. 2 16 74.33 27 Legaspi, Beverly E. 2 17 82.91 28 Calimlim, Jonathan DV. 2 18 38.60 29 Gideon, Primo DC. 2 19 40.02 30 Edos, Leah P. 2 20 40.02 31 Andaya, Jacqueline M. 2 21 40.02 32 Redulfin, Rogelio M. 2 22 40.02 33 Andaya Jr., Juanito M. 2 23 40.02 34 Apolinario Jr., Wilson C. 2 24 40.02 35 Ojeda, Marieta P. 2 25 40.02 36 Tagle, Mary Jane O. 2 26 40.02 37 Ramos, Mary Cristine P. 2 27 40.02 38 Bandong, Virginia P. 2 28 40.02 39 Gamboa, Eleazar E. 2 29 40.02 40 Valenciano, Minda M. 3 1 40.02 41 Rabago, Karen Jane R. 3 2 40.02 42 Valenciano, Mary Avis M. 3 3 40.02 43 Ojeda, Romalaine E. 3 4 40.02 44 Olaso, Ronald O. 3 5 40.02 45 Cordova, Carmelita G. 3 6 40.02 46 Olaso, Roland O. 3 7 40.02 47 Cordova, Jill Anne G. 3 8 40.02 48 Olaso, Ruel O. 3 9 40.02 49 Cordova, Jasper Rae G. 3 10 40.02 50 Banal, Glen Ford O. 3 11 40.02 51 Perlas Jr., Jose J. 3 12 40.02 52 Mateo, Vanessa I. 3 13 40.02 53 Araa, Anabella L. 3 14 40.02 54 Lagunero, Lazaro J. 3 15 40.02 55 Campo, Jimmy D. 3 16 40.02 56 Campo, Francisco D. 3 17 40.02 57 Campo, Rodrigo D. 3 18 40.02 58 Siman, Josefa B. 3 19 40.02 59 Magallanes, Ramy B. 3 20 40.02 60 Leao, Hector M. 3 21 40.02 61 Talan, Amparo P. 3 22 40.02 62 Doming, Carlito C. 3 23 40.02 63 Etoh, Catherine R. 3 24 40.02 64 Sy, Marietta D. 3 25 40.02 65 Divina, Sarah Jane R. 3 26 40.02 66 Sabrine, Bayani F. 3 27 40.02 67 Edejer, Richard B. 3 28 40.02 68 Domingo, Ruth S. 3 29 40.02 69 Eguita, Jesseca E. 3 30 40.02 70 Buiza, Victor B. 3 31 40.02 71 Quiday, Bernie DL. 3 32 40.02 72 Ong, Karen Diane L. 3 33 40.02 73 Olavario, Arnel N. 3 34 40.02 74 Barrairo, Erinillo C. 3 35 40.02 75 Sagum, Marites F. 3 36 40.02 76 De Veyra, Lea Analyn D.R. 3 37 40.02 77 Maquiling, Dominga P. 3 38 40.02 78 Aguas, Michelle Ann Q. 3 39 40.02 79 Maquiling, Angelo James P. 3 40 40.02 80 Secang, Erlinda G. 3 41 40.02 81 Secang, Ana Krishna Mae G. 3 42 40.02 82 Espera, Roberto L. 4 1 40.02 83 Rapsing, Jerlyn W. 4 2 40.02 84 Alvendia, Ferdinand B. 4 3 40.02 85 Benitez, Joel N. 4 4 40.02 86 Gualvez, Alberto A. 4 5 40.02 87 Magdaraog, Charlie L. 4 6 40.02 88 Dionson, Sherlita L. 4 7 40.02 89 Isaig, Rey John R. 4 8 40.02 90 Aniversario, Jennilyn P. 4 9 40.02 91 Sarsosa, Rowena S. 4 10 40.02 92 Taruc, Emelia F. 4 11 40.02 93 Farias, Richard A. 4 12 40.02 94 Corpin, Edgar B. 4 13 40.02 95 Fama Jr., Celedonio C. 4 14 40.02 96 Fama, Jennet L. 4 15 40.02 97 Ilac, Reynelda I. 4 16 40.02 98 Manding, Divina Elvira I. 4 17 40.02 99 Ibea, Marjorie A, 4 18 40.02 100 Longalong, Rolando T. 4 19 40.02 101 Tapalgo, Susan F. 4 20 40.02 102 Olorvida, Charmine O. 4 21 40.02 103 Carbonilla, Leizel D. 4 22 40.02 104 Morales, John Joven M. 4 23 40.02 105 Morales, Erlinda M. 4 24 40.02 106 Ramos, Nestor P. 4 25 40.02 107 Nobleza, Jonel F. 4 26 40.02 108 Mendoza, Jose Teofilo Ray R. 4 27 40.02 109 Vacaro, Ariel V. 4 28 40.02 110 Atanacio, Raland G. 4 29 40.02 111 Matillano, Warren S. 4 30 40.02 112 Linda, Denise Jean M. 4 31 40.02 113 Guiriba, Ariet C. 4 32 40.02 114 Irene, Bienvenido B. 4 33 40.02 115 Lusanta, Ludy B. 4 34 40.02 116 Ampong, Milagros N. 5 1 80.05 117 Ampong, Ernie N. 5 2 80.05 118 Del Mundo, Dennis P. 5 3 78.62 119 Del Mundo, Cielo P. 5 4 40.02 120 Dumali, Ricky A. 5 5 40.02 121 Paulo, Julieto R. 5 6 40.02 122 Ibarra, Roslyn M. 5 7 40.02 123 Aniversario, Julieta P. 5 8 40.02 124 Zablan, Kneddie I. 5 9 40.02 125 Credo, Ronald S. 5 10 40.02 126 Lopez, Alvin A. 5 11 40.02 127 Lopez, Lea A. 5 12 37.17 128 Aguilar, Myrna H. 5 13 37.17 129 Dagal, Teodoro M. 6 1 74.33 130 Dagal, Ma. Jenny M. 6 2 74.33 131 Nebrida, Jesus D. 6 3 75.76 132 Evangelista, Dennis R. 6 4 47.17 133 Avelino, Earl Eric E. 6 5 44.31 134 Darping, Zalika S. 6 6 40.02 135 Avelino, Emmaline E. 6 7 40.02 136 Corpuz, Gina G. 6 8 40.02 137 Avila, Dante E. 6 9 40.02 138 Porton, Arden T. 6 10 41.45 139 Abobo, Nelia D. 6 11 41.45 140 Dagal, Serafina M. 6 12 41.45 141 Muoz, Jasmin B. 7 1 40.02 142 Cimanes, Charlie 7 2 50.03 143 Marciano, Danilo I. 7 3 50.03 144 Rabago, Imee Grace R. 7 4 40.02 145 Dagohoy, Jocelyn D. 7 5 40.02 146 Salting, Stella H. 7 6 40.02 147 Cruz, Normita H. 7 7 45.74 148 Villanueva, Carmelita 7 8 40.02 149 Peralta, Jimmy H. 7 9 40.02 150 Villanueva, Michael Richard 7 10 40.02 151 Celestino, Mylene C. 7 11 40.02 152 Bayotas, Romel M. 7 12 57.18 153 Belarmino, Aries P. 7 13 40.02 154 Villacarlos, Warren L. 8 1 50.03 155 Villacarlos, Josephine L. 8 2 47.17 156 Arranchado, Joseph A. 8 3 45.74 157 Sanchez, Ana Marivic G. 8 4 44.31 158 Ugarte, Veronica C. 8 5 42.88 159 Conlu, Jinalyn P. 8 6 41.45 Footnotes 1. see Annex for the masterlist of qualified beneficiaries.