BIR Ruling No. 377-12

June 6, 2012 BIR RULING NO. 377-12 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10 Purok Yanson Phase 2 Homeowners Association, Inc. Brgy. Mandalagan, Bacolod City, Negros Occidental Attention: Efren O. Dacutan 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 2 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 six (6) Transfer Certificates of Title, to wit: TCT No. Area (sq. m.) Property Index No. T-202359 3,844 143-00-051-16-012 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 T-202364 8,095 143-00-051-16-017 issued by the Registry of Deeds for Bacolod City. The aforesaid properties are situated at Bacolod City. Purok Yanson Phase 2 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. 298-905-848-000. On December 7, 2011, the parties executed a Deed of Absolute Sale whereby the owner transfers and conveys the following: TCT No. Area (sq. m.) T-202359 623 out of 3,844 T-202360 612 out of 3,774 T-202361 606 out of 3,851 T-202362 600 out of 3,927 T-202363 1,292 out of 3,059 T-202364 8,095 to Purok Yanson Phase 2 Homeowners Association, Inc. with an aggregate area of eleven thousand eight hundred twenty eight square meters (11,828 sq.m.),more or less at an agreed price of Eleven Million Two Hundred Thirty Six Thousand Six Hundred Pesos (P11,236,600.00).Pursuant to a certification issued by Social Housing Finance Corporation, the eleven thousand seven hundred twenty eight square meters (11,728 sq.m.) 1 portion of the properties covered by TCTs No. T-202359 to T-202364 is actually a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 2 For this purpose, Purok Yanson Phase 2 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). 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: SEAHcT TCT No. Area (sq. m.) T-202359 623 out of 3,844 T-202360 612 out of 3,774 T-202361 606 out of 3,851 T-202362 600 out of 3,927 T-202363 1,292 out of 3,059 T-202364 8,095 by the owner to Purok Yanson Phase 2 Homeowners Association, Inc., in so far as the 11,728 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 Certificates 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 Secs. 20 and 32 of RA 7279. Accordingly, the Philippine National Bank is liable to pay the documentary stamp tax on the document 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 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. 040-10 dated August 27, 2010) 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 2 Homeowners Association, Inc. Purok Yanson 1, Brgy. Mandalagan, Bacolod City Name of Beneficiary Blk. No. Lot Total Area No. (sq.m.) 1 FERNANDEZ, BONIFACIO M. 1 1 78.04 2 GALLENERO, VERNALYN D. 1 2 78.04 3 ARAGON, DIOSDADO E. 1 3 67.81 4 ARAGON, RODEL S. 1 4 66.53 5 VICENTE, ORLANDO, JR. B. 1 5 135.61 6 SALAZA, ELVIRA Z. 1 6 79.32 7 SALAZA, VLADIMER Z. 1 7 79.32 8 CANTOR, PERSIELYN D. 2 1 83.16 9 BESA, JUNALY D. 2 2 83.16 10 APE, RENE S. 2 3 75.48 11 APE, REYNALDO S. 2 4 76.76 12 LONGAKIT, DANIEL A. 2 5 93.39 13 GUASIS, ROCHEL D. 2 6 92.11 14 DUEO, RODOLFO D. 2 7 79.32 15 DUEO, FILOTEO, JR. D. 2 8 80.60 16 OBLIGACION, MIALYNN G. 2 9 139.45 17 TAMBASEN, NOEL B. 2 10 149.69 18 SAGARANG, JOCELYN D. 2 11 144.57 19 SAGARANG, REYNA I. 2 12 152.25 20 BUTA, MERLINDA B. 2 13 76.76 21 BUTA, ROWELL MARVIN B. 2 14 75.48 22 VILLANDO, MARY JERTY J. 2 15 75.48 23 JIMENA, NENITA J. 2 16 76.76 24 HINOGUIN, KARL STEPHENE J. 2 17 75.48 25 HINOGUIN, JAPHTEE J. 2 18 75.48 26 GALOLO, MARIPHEN B. 2 19 57.57 27 BERGAVERA, MARILYN B. 2 20 57.57 28 BERGAVERA, JOHN APRIL B. 2 21 57.57 29 TE, LARRY M. 2 22 57.57 30 CAMPOS, HOMER C. 2 23 58.85 31 BELLO, MARIVIC P. 2 24 74.20 32 BELLO, VICENTE R. 2 25 75.48 33 DACUTAN, EFREN O. 2 26 74.20 34 DACUTAN, FRELIN J. 2 27 75.48 35 AZUELO, ESTRELLITA G. 2 28 117.70 36 INFANTE, RON IAN D. 2 29 102.35 37 INFANTE, MELODY D. 2 30 102.35 38 ARANA, ROWENA J. 2 31 42.22 39 MAGBANUA, JOEL J. 2 32 42.22 40 JOVEN, ROGER D. 2 33 49.90 41 LUMAUAG, CHARLITO N. 2 34 70.37 42 ROSA-OT, CLIFFORD L. 2 35 71.64 43 RESOTAY, RANDY J. 2 36 69.09 44 BAYONA, ELEONOR J. 2 37 67.81 45 PATUBO, ANA MARIA P. 2 38 133.05 46 ARADO, EMILIO, JR. 2 39 62.69 47 SUSAN, RONA S. 2 40 62.69 48 ROSA-OT, EMELIO B. 2 41 63.97 49 ROSA-OT, MHEL BRIAN L. 2 42 76.76 50 LO, RAY ANTHONY L. 2 43 81.88 51 LO, LYN SHAYNE L. 2 44 81.88 52 LO, ROMEO G. 2 45 81.88 53 LO, ANDREW L. 2 46 79.32 54 BANGCAYA, CELIA G. 3 1 76.76 55 LAMAYO, ARLENE 3 2 213.66 56 MANAGUETE, ATENOR G. 3 3 76.76 57 APE, MARK ARVEE C. 3 4 110.03 58 YANSON, JOSELITO A. 3 5 74.20 59 YANSON, ROSANO BRAZZI T. 3 6 74.20 60 VILLANUEVA, EUGENIO T. 3 7 74.84 61 HUGNATAN, RYAN ROY T. 3 8 75.48 62 VILLANUEVA, EUGENE S. 3 9 74.84 63 HUGNATAN, CUTTY SHARK T. 3 10 75.48 64 TAMAGOS, JOJO C. 3 11 76.76 65 CORTEZ, MAE A. 3 12 71.64 66 SANICO, CATHERINE C. 3 13 66.53 67 TAMAGOS, JOSE A. 3 14 97.23 68 BRITANICO, VITO J. 3 15 66.53 69 MONTINOLA, ROWENA S. 3 16 79.32 70 ESTREMOS, BELEN B. 3 17 67.81 71 SANICO, RETCHEL L. 3 18 79.32 72 ANIOG, GREGORIO S. 3 19 71.01 73 HUMBIT, TISHA MAE V. 3 20 92.11 74 SARIL, BERNADETTE A. 3 21 71.01 75 VIVERO, ALMAE ENCARNACION S. 3 22 92.11 76 ABARICO, HELEN S. 3 23 74.20 77 VIVERO, LEONILA S. 3 24 93.39 78 ABARICO, MERKO SEBASTIAN S. 3 25 74.20 79 CADAGAT, SUSAN S. 3 26 81.88 80 FRANCISCO, PAMFILO F. 3 27 53.73 81 CADAGAT, JOSAN S. 3 28 90.84 82 FRANCISCO, ROLLY D. 3 29 53.73 83 FRANCISCO, RODGIL D. 3 30 55.01 84 LIBRON, RODOLFO D. 3 31 51.17 85 LIRAZAN, CECIL C. 3 32 78.04 86 LIBRON, CLAIRE T. 3 33 51.17 87 CORAY, ROMEL D. 3 34 76.76 88 LIBRON, DONNA D. 3 35 51.17 89 PIAMONTE, MARGIE B. 3 36 106.19 90 BALAOBAO, ROMMEL D. 3 37 19.19 91 RESONABLE, VIRGILIO JR. A. 3 38 57.57 92 RESONABLE, VERONICA A. 3 39 57.57 93 RESONABLE, VERMA A. 3 40 56.29 94 BALAOBAO, ARNEL D. 3 41 33.26 95 TAN, MA. ANNIE ROSE 3 42 71.64 96 FUENTESPINA, MAVELYN Y. 3 43 29.43 97 YANSON, SANDY V. 3 44 34.54 98 YANSON, JOSE V. 3 45 85.72 99 ILAO, MA. NECITAS 3 46 72.92 100 RAMOS, CESAR A. 3 47 51.17 101 RAMOS, AIZA ROSE G. 3 48 51.17 102 RAMOS, JOHN CASTER G. 3 49 51.17 103 SOMODIO, RONALD L. 3 50 78.04 104 SOMODIO, ROLANDO, JR. L. 3 51 70.37 105 INFANTE, RENE, SR. P. 4 1 60.13 106 REDONDO, JAN MICHAEL H. 4 2 74.20 107 DELGADO, JANIN MARIE R. 4 3 72.92 108 INFANTE, RENE, JR. T. 4 4 60.13 109 INFANTE, RENDOLF T. 4 5 60.13 110 FAUSTINO, JENNY A. 4 6 81.88 111 AMBINO, ADABELLE S. 4 7 149.69 112 FAUSTINO, REUBEN JAMES P. 4 8 81.88 113 AGNO, ZYNIA D. 4 9 76.76 114 BIDAN SONIA G. 4 10 75.48 115 CANGAS, JOEL 4 11 76.76 116 BIDAN, FORTUNE PAUL II G. 4 12 75.48 117 MAGBANUA, EDEN 4 13 53.73 118 ABQUILAN, ZALDY T. 4 14 72.92 119 SABORDO, RENATO 4 15 53.73 120 ABQUILA, REBO T. 4 16 74.20 121 MAGBANUA, NOEMI L. 4 17 53.73 122 GARDE, EUGENE E. 4 18 75.48 123 ANDARZA, ENRIQUITO G. 4 19 84.44 124 GARDE, EFREN E. 4 20 77.40 125 CORRAL, MARITER P. 4 21 85.72 126 CANDALEZA, MARILOU B. 4 22 77.40 127 LEDESMA, WINTON D. 4 23 57.14 128 LEDESMA, WENLY D. 4 24 57.14 129 DIVINAGRACIA, RAMON E. 4 25 57.14 130 BAWAAN, JOVANIE L. 4 26 79.32 131 MAHILUM, DELIA P. 4 27 78.04 132 RESONABLE, ALFREDO, SR. M. 4 28 81.88 133 LABANDA, JANICE M. 4 29 79.32 134 CASTIDAD, ARNOLD E. 4 30 84.44 135 CABERTE, SAMUEL 4 31 71.64 136 FERRER, MA. GERLIE 4 32 76.76 137 DIVINAGRACIA, DAISY 4 33 72.92 138 ORTIZ, RAMIL T. 4 34 74.20 139 SELLADO, ROBINSON 4 35 72.92 140 CONTRADOR, RUFINO, JR. B. 4 36 76.76 141 SELLADO, ROLLIN 4 37 74.20 142 PATUBO, RIETCHIE P. 4 38 76.76 143 BARRERA, NUELA T. 4 39 80.60 144 MARANDE, ANTONIO E. 4 40 67.81 145 YEE, BENJAMIN M. 4 41 47.98 146 CAMALONGAY, MARICELLE F. 4 42 47.98 147 AGULTO, MARIA ELENA 4 43 88.28 148 SOLIGUEN, NOLI JUSTINIANO S. 4 44 72.92 149 GALE, SAMUEL P. 4 45 65.25 150 PEDROSA, GARRY A. 4 46 78.04 151 PEDROSA, JOCIL C. 4 47 79.32 152 SOYA, ANTHONY M. 4 48 79.32 153 MAHINAY, SALVADOR O. 4 49 93.39 154 MAHINAY, JASON B. 4 50 94.67 Footnotes 1. 100 sq.m. was deducted for public easement from TCT No. T-202364. 2. See Annex for the masterlist of qualified beneficiaries.