BIR Ruling No. 380-14

October 8, 2014 BIR RULING NO. 380-14 RA No. 7279; BIR Ruling No. 109-13 Brgy. San Ignacio Homeowners Association, Inc. Brgy. San Ignacio, San Pablo City, Laguna Attention: Felix C. Pernia President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of the Social Housing Finance Corporation (SHFC) dated June 20, 2014, endorsing the sale transaction between Dorina C. Manalo and Brgy. San Ignacio 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 Dorina C. Manalo (TIN 189-770-988-000) (hereinafter referred to as Landowner) is the registered owner of a parcel of land, identified as Lot No. 3-C, Plan No: PSD-04-219570, Portion of: Lot 3, PSU-2374 covered by Transfer Certificate of Title (TCT) No. 075-2014000632 issued by the Registry of Deeds of San Pablo City. The aforesaid property is situated at Brgy. San Ignacio, San Pablo City, Laguna with an area of Twelve Thousand square meters (12,000 sq.m.), more or less. Brgy. San Ignacio Homeowners Association, Inc. (TIN 248-511-228-000), 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. 13457-R4A-06-11. On May 8, 2014, the parties executed a Deed of Absolute Sale whereby the Landowner transferred and conveyed the subject property to Brgy. San Ignacio Homeowners Association, Inc. at an agreed price of Ten Million Four Hundred Forty Thousand Pesos (P10,440,000.00). Pursuant to the certification issued by SHFC, the subject property covered by TCT No. 075-2014000632 is actually a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Brgy. San Ignacio 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 May 22, 2014. SIAEHC In support of its request, Brgy. San Ignacio Homeowners Association, Inc. has completely submitted on June 20, 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: 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 Brgy. San Ignacio Homeowners Association, Inc. of the property covered by TCT No. 075-2014000632 is exempt from the capital gains tax. aCSTDc 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 landowner 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. (BIR Ruling No. 109-13 dated March 21, 2013) 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 Brgy. San Ignacio Homeowners Association, Inc. Brgy. San Ignacio, San Pablo City, Laguna Name of Beneficiary Blk. No. Lot No. Total Area (Sq.M.) 1 Guevarra, Lanilyn M. 2 10 74.78 2 Guevarra, Lorelie M. 2 11 74.78 3 Guevarra, Larry M. 2 12 74.78 4 Hernandez, Lorena P. 2 13 74.78 5 Baldonado, Rolando C. 2 14 74.78 6 Baldonado, Christopher P. 2 15 74.78 7 Marinay, Jasper Aldrech B. 2 16 74.78 8 Molina, Nestor B. 2 17 74.78 9 Delloso, Enrico T. 2 18 74.78 10 Delloso, Angelica Glenda T. 2 19 74.78 11 Cristo, Lalaine C. 2 20 74.78 12 Ambray, Marilou G. 2 21 74.78 13 Flores, Eduardo D. 2 22 74.78 14 Merin, Dolores M. 2 23 74.78 15 Refama, Antonio B. 2 24 74.78 16 Relos, Grace D. 2 25 74.78 17 Aramil, Reymalyn F. 2 26 74.78 18 Gesmundo, Gemma E. 2 27 101.71 19 Eseo, Bryan Edison J. 3 3 74.78 20 Eseo, Mark Edison J. 3 4 74.78 21 Judilla, Mellicent E. 3 5 74.78 22 Judilla, Genevie S. 3 6 74.78 23 Viernes, Benigno B. 3 7 74.78 24 Sabalboro, Adelfa C. 3 8 74.78 25 Candelario, Ruby F. 3 9 74.78 26 Puti, Noel Jr. D. 3 10 74.78 27 Bautista, Jayson A. 3 11 85.25 28 Manalaysay, Maria Myrna P. 3 12 103.20 29 Arellano, Merly L. 4 1 101.71 30 Samiano, Gwendolyn A. 4 2 101.71 31 Bolado, Shane Marie A. 4 3 74.78 32 Asegurado, Ricardo S. III 4 4 74.78 33 Ramos, Alexis M. 4 5 74.78 34 Marasigan, Alejandro E. 4 6 74.78 35 Ramos, Cleofe M. 4 7 74.78 36 Evangelista, Marty B. 4 8 74.78 37 Cagitla, Evangeline T. 4 9 74.78 38 Ebora, Marvin B. 4 10 74.78 39 Briones, Annalyn S. 4 11 74.78 40 Tolentino, Jean Marie M. 4 12 74.78 41 Gianan, Teresa B. 4 13 74.78 42 Tolentino, Jonjillyn O. 4 14 74.78 43 Briones, Merlina B. 4 15 74.78 44 Pangilinan, Andrea D. 4 16 74.78 45 Briones, Mandy B. 4 17 74.78 46 Mansit, Marylyn B. 4 18 74.78 47 Estiva, Roydan B. 4 19 74.78 48 Brucal, Emerson G. 4 20 74.78 49 Madulin, Reynard P. 4 21 74.78 50 Aningalan, Gloria M. 4 22 74.78 51 Pacencia, Isidro A. 4 23 74.78 52 Villarba, Rico E. 4 24 74.78 53 Austria, Arnel T. 4 25 74.78 54 Carillo, Hilda D. 4 26 74.78 55 Grimaldo, Shahani E. 4 27 74.78 56 Duran, Rogelio Jr. D. 4 28 74.78 57 Estiva, Ma. Cynthia Hyaxinth B. 4 29 74.78 58 Mistola, Rosalie R. 4 30 74.78 59 Paulino, Corazon P. 4 31 74.78 60 Facundo, Roberto B. 4 32 74.78 61 Escondo, Rhiel E. 4 33 95.72 62 Moreno, Joanne C. 4 34 107.69 63 Linatoc, Nancy Grace T. 5 1 76.28 64 Talavera, Lourdes B. 5 2 76.28 65 Recio, Rhodora D. 5 3 74.78 66 Talavera, Florencio M. 5 4 74.78 67 Dela Cruz, Lorna P. 5 5 74.78 68 Aquino, Soledad I. 5 6 74.78 69 Dela Cruz, Analee P. 5 7 74.78 70 Mendoza, Hilario C. 5 8 74.78 71 Villarba, Emma E. 5 9 74.78 72 Saldua, Arnold P. 5 10 74.78 73 Falsario, Alona G. 5 11 74.78 74 Panaligan, Marierose R. 5 12 74.78 75 Villaruel, Antonio Jr. H. 5 13 74.78 76 Alejandrino, Jayson A. 5 14 74.78 77 Magtibay, Arnold F. 5 15 74.78 78 Tejada, Leonora B. 5 16 74.78 79 Laza, Christina O. 5 17 74.78 80 Siena, Lucita B. 5 18 74.78 81 Rivera, Eva H. 5 19 74.78 82 Cabrera, Carmelita A. 5 20 74.78 83 Cabrera, Junel A. 5 21 74.78 84 Villeza, Gilleuz M. 5 22 74.78 85 Ortile, Carolina A. 5 23 74.78 86 Villeza, Zandrew M. 5 24 74.78 87 Oliveros, Larry A. 5 25 74.78 88 Ilao, Cherry B. 5 26 74.78 89 Burgos, Ma. Caren A. 5 27 74.78 90 Ilao, Reynante R. 5 28 74.78 91 Mansit, Marian B. 5 29 74.78 92 Labini, Alona C. 5 30 74.78 93 Mansit, Crisostomo B. 5 31 74.78 94 Manzanilla, Eric Boy M. 5 32 74.78 95 Mendoza, Edelyn L. 5 33 74.78 96 Perolina, Christopher B. 5 34 74.78 97 Perez, Mary Grace M. 5 35 76.28 98 Alcontado, Josel A. 5 36 88.25 99 Belarmino, Arnel A. 6 1 79.27 100 Belarmino, Mylen A. 6 2 92.73 101 Magnaye, Jenan T. 6 3 74.78 102 Magnaye, Joel A. 6 4 74.78 103 Largo, Leilalyn B. 6 5 74.78 104 Latayan, Edwin M. 6 6 74.78 105 Largo, Ernaldo B. 6 7 74.78 106 Bunyi, Roxanne M. 6 8 74.78 107 Semilla, Isagani D. 6 9 74.78 108 Montemayor, Kristine B. 6 10 74.78 109 Medina, Rachel E. 6 11 74.78 110 Bargados, Afulgenio P. 6 12 74.78 111 Yanga, Elenita M. 6 13 74.78 112 Rollan, Jackielyn H. 6 14 74.78 113 Vibal, Sheralyn Joy P. 6 15 83.76 114 Rollan, Nancelyn H. 6 16 103.20 115 Pernia, Felix C. 7 1 79.27 116 Boncajes, Maricel L. 7 2 103.20 117 Escueta, Richard B. 7 3 74.78 118 Lopez, Princess Estefhanie R. 7 4 74.78 119 Coro, Ronald S. 7 5 74.78 120 Par, Yolanda A. 7 6 74.78 121 Viejo, Mylene A. 7 7 74.78 122 Loreto, Mario B. 7 8 74.78 123 Avenio, Luzviminda C. 7 9 74.78 124 Resuma, Edna O. 7 10 74.78 125 Moral, Eddie D. 7 11 74.78 126 Montilla, Ardiano D. 7 12 74.78 127 Fernandez, Allan A. 7 13 74.78 128 Mortilla, Norielyn D. 7 14 74.78 129 Fernandez, Edison A. 7 15 74.78 130 Angcana, Nelson C. 7 16 74.78 131 Cosico, Emeterio Jr. A. 7 17 94.23 132 Vibal, Sherlie P. 7 18 103.20 133 Hernandez, Dionito G. 8 1 85.25 134 Galicia, Jose Jr. L. 8 2 101.71 135 Digol, Lilian L. 8 3 74.78 136 Galicia, Jerome G. 8 4 74.78 137 Niebres, Victor B. 8 5 74.78 138 Nuque, Evangeline A. 8 6 74.78 139 Abo, Enrico R. 8 7 74.78 140 Mercado, Arian 8 8 74.78 141 Opio, Avelino I. 8 9 74.78 142 Gonzales, Emelia N. 8 10 74.78 143 Marasigan, Norberto M. 8 11 74.78 144 Mendoza, Jennifer B. 8 12 74.78 145 Villapando, Calixto M. Jr. 8 13 74.78 146 Dialino, Marvin A. 8 14 74.78 147 Siguenza, Joy B. 8 15 74.78 148 Escondo, Christopher B. 8 16 74.78 149 Gelizon, Jennifer D. 8 17 74.78 150 Herrera, Corazon A. 8 18 74.78 151 Tumbaga, Rowena E. 8 19 97.22 152 Zoleta, Belinda L. 13 1 80.77 153 Lagrosas, Joann Z. 13 2 74.78 154 Perlas, Herminia A. 13 3 74.78 155 Grefal, Teresa P. 13 4 85.25 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.