BIR Ruling No. 383-14

October 8, 2014 BIR RULING NO. 383-14 RA No. 7279; BIR Ruling No. 109-13 Blessed Ville Homeowners Association, Inc. Lomboy, Barangay Indahag, Cagayan de Oro City Attention: Victor L. Rapirap Sr. President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated February 27, 2014, endorsing the sale transaction between Antonio M. Navale married to Narcisa B. Navale and Blessed 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 Antonio M. Navale (TIN 139-925-425-000) (hereinafter referred to as Landowner) is the registered owner of a parcel of land, identified as Lot 2728-L, Bsd-10-001248 (OLT) being a portion of Lot 2728, CAD-237, Cagayan Cadastre covered by Transfer Certificate of Title (TCT) No. T-28 issued by the Registry of Deeds for Cagayan de Oro City. The aforesaid property is situated at Lomboy, Barangay Indahag, Cagayan de Oro City with an area of Sixteen Thousand Seven Hundred Six square meters (16,706 sq.m.), more or less. Blessed Ville Homeowners Association, Inc. (TIN 429-162-437-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On October 31, 2013, the parties executed a Deed of Absolute Sale whereby the Landowner transferred and conveyed the subject property to Blessed Ville Homeowners Association, Inc. at an agreed price of Eight Million Three Hundred Fifty Three Thousand Pesos (P8,353,000.00). Pursuant to the certification issued by SHFC, the property covered by TCT No. T-28 is actually a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Blessed 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 November 28, 2013. CcADHI In support of its request, Blessed 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 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; 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; 10) Certified True Copy of Affidavit of Identity executed by the Seller; and 11) 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" STCDaI 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 Blessed Ville Homeowners Association, Inc. of the property covered by TCT No. T-28 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) 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. IESDCH Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner Bureau of Internal Revenue ANNEX Blessed Ville Homeowners Association, Inc. Lomboy, Barangay Indahag, Cagayan de Oro City Name of Beneficiary Blk. No. Lot No. Total Area (Sq.M.) 1 Alvarez, Yolanda T. 1 1 132.83 2 Alvarez, Gerwin T. 1 2 141.68 3 Mendoza, Nelson V. 1 3 141.68 4 Alvaro, Donata B. 1 4 141.68 5 Alvaro, Mary Beth B. 1 5 141.68 6 Gamayon, William T. 1 6 141.68 7 Rapirap, Victor L. 1 7 141.68 8 Rapirap, Victor Bryan L. 1 8 138.14 9 Macion, Jovelyn L. 2 1 123.97 10 Ocenar, Ian Raymond N. 2 2 123.97 11 Macion, Berlyn May L. 2 3 123.97 12 Abecia, Jeanelyn E. 2 4 123.97 13 Resano, Maria Lynette E. 2 5 123.97 14 Loreto, Ryan G. 2 6 123.97 15 Namit, Arch Noah P. 2 7 123.97 16 Besagas, Gonzaga D. 2 8 123.97 17 Nanong, Manette M. 2 9 123.97 18 Nanong, Martine M. 2 10 123.97 19 Adelion, Christine N. 3 1 123.97 20 Maderal, Sharon N. 3 2 123.97 21 Antecristo, Jerson B. 3 3 123.97 22 Souribio, Julie D. 3 4 123.97 23 Parreno, Charol B. 3 5 123.97 24 Bagay, Moran A. 3 6 123.97 25 Tantong, Carolyn S. 3 7 123.97 26 Asok, Julia R. 3 8 123.97 27 Remerata, Ponciano Lore B. 3 9 123.97 28 Balabag, Analyn A. 3 10 123.97 29 Mutia, Amelia M. 5 1 123.97 30 Bongabong, Romeo S. 5 2 127.51 31 Baigan, Archer C. 5 3 123.97 32 Labitad, Christopher N. 5 4 173.56 33 Labitad, Gladiolus N. 5 5 178.87 34 Labitad, Lea Ricca G. 5 6 166.48 35 Rameri, Reynante L. 5 7 171.79 36 Unda, Yasmin C. 5 8 161.16 37 Awiten, Emma Flor N. 5 9 164.70 38 Borres, Jerome N. 5 10 154.08 39 Cartagena, Ramsis C. 5 11 155.85 40 Osio, Verlito M. 5 12 148.77 41 Armero, Sarah D. 5 13 146.99 42 Rafal, Kristine Marie C. 5 14 141.68 43 Dombase, Jeonie D. 5 15 139.91 44 Ampo, Adna L. 5 16 136.37 45 Mabaylan, Michael G. 5 17 131.06 46 Gomez, Marites N. 5 18 131.06 47 Mabaylan, Felix, Jr. G. 5 19 129.28 48 Geromo, Roel P. 6 1 125.74 49 Lamsen, Marilou D. 6 2 127.51 50 Geromo, Roger P. 6 3 123.97 51 Catulong, Joan B. 6 4 123.97 52 Amplayo, Mi Amor M. 6 5 123.97 53 Felicidario, Jonamie J. 6 6 123.97 54 Panes, Dexter B. 6 7 123.97 55 Calipayan, Roy Jin T. 6 8 123.97 56 Yosores, Allan N. 6 9 123.97 57 Calipayan, Alberto R. 6 10 123.97 58 Jamero, Ruth R. 6 11 123.97 59 Sumalinog, Russel A. 6 12 123.97 60 Bautista, Princess Mae M. 6 13 123.97 61 Baculio, Vivien P. 6 14 123.97 62 Dela Pena, Nicolas B. 6 15 123.97 63 Quinto, Elena D. 6 16 123.97 64 Veloso, Emeliano A. 6 17 127.51 65 Castuera, Maricel A. 6 18 131.06 66 Alvarez, Roel Z. 7 1 148.77 67 Escatron, Mylene (new) U. 7 2 123.97 68 Gallamaso, Marivic A. 7 3 123.97 69 Gallenero, Mary Grace (new) N. 7 4 123.97 70 Collado, Ruthchel C. 7 5 123.97 71 Sabuero, Ade M. 7 6 123.97 72 Rosal, Christian Q. 7 7 123.97 73 Rosal, Emma Q. 7 8 123.97 74 Ranises, Victor V. 7 9 123.97 75 Daigdigan, Freddie P. 7 10 123.97 76 Medija, Rico, Sr. T. 7 11 123.97 77 Makinano, Jessan S. 7 12 123.97 78 Aguilar, Estrella C. 7 13 123.97 79 Aguilar, Cherie Ann C. 7 14 123.97 80 Ranile, Francisco Vito S. 7 15 123.97 81 Vergara, Rommel O. 7 16 123.97 82 Casinillo, Cherlyn R. 7 17 123.97 83 Sagrado, Kevin G. 7 18 123.97 84 Sagrado, Keach G. 7 19 123.97 85 Bajas, Grenlee A. 7 20 123.97 86 Fuentes, Jesselle Mae P. 7 21 123.97 87 Montera, Merlie T. 7 22 146.99 88 Estandarte, Aileen Q. 7 23 146.99 89 Prado, Herlen E. 7 24 146.99 90 Nacario, Julieta M. 8 1 177.10 91 Balongcas, Glory M. 8 2 123.97 92 Balongcas, Riel B. 8 3 123.97 93 Balongcas, Hazel B. 8 4 148.77 94 Jamisola, Ruth Shiela J. 8 5 123.97 95 Carangcarang, Rosalia J. 8 6 123.97 96 Zacal, Nuraisa P. 8 7 123.97 97 Rodriguez, Francis L. 8 8 123.97 98 Roxas, George I. 8 9 123.97 99 Raro, Marilou D. 8 10 123.97 100 Rayla, Ylaiza A. 8 11 123.97 101 Hojas, Vincent C. 8 12 123.97 102 Gonzales, Gladys G. 8 13 123.97 103 Gonzales, Niedes G. 8 14 123.97 104 Talisayan, Jesus Arthur U. 8 15 123.97 105 Baquiro, Edgar E. 8 16 123.97 106 Tagapulot, Romel B. 8 17 123.97 107 Melancolico, Marina S. 8 18 123.97 108 Melancolico, Romar S. 8 19 123.97 109 Baybay, Joseph C. 8 20 123.97 110 Sumaoy, Xelmarc Czerney Dey B. 8 21 123.97 111 Bugnot, Keen Remle Y. 9 1 148.77 112 Bugnot, Zita Y. 9 2 150.54 113 Dofiles, Josephine S. 9 3 141.68 114 Alvarez, Joanna D. 9 4 141.68 115 Enerio, John Stephen D. 9 5 141.68 116 Guevarra, Cheryl A. 9 6 141.68 117 Enerio, Jane Star D. 9 7 141.68 118 Dofiles, Gary S. 9 8 141.68 119 Felias, Melinda J. 9 9 150.54 120 Bucol, Christopher M. 9 10 150.54 121 Prado, Rhon E. 10 1 141.68 122 Montera, Kenth Star S. 10 2 141.68 123 Steiner, Maribeth G. 10 3 141.68 124 Sumalpong, Lovella G. 10 4 141.68 125 Estandarte, Janeth C. 10 5 141.68 126 Bongcawil, Rene V. 10 6 141.68 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.