BIR Ruling No. 392-12

June 11, 2012 BIR RULING NO. 392-12 R.A. 7279; BIR Ruling 30-2012 Negros Urban Rural Housing, Inc. Room 1 BSP Building, cor. Rosario-Araneta Sts. Bacolod City Attention: Steve Christian A. Pacheco Corporate Secretary This refers to your letter dated March 2, 2012 requesting certificate of exemption from capital gains tax on the sale of a parcel of land executed by Teresita Vda. De Jesena in favor of the Central Cabug Homeowners' Association, Inc . pursuant to Republic Act (RA) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". It is shown that Teresita Vda. De Jesena ("De Jesena") is the registered owner of a parcel of land covered by Transfer Certificate of Title (TCT) No. T-305911, issued by the Registry of Deeds for the City of Davao, with an area of Fifty Thousand (50,000) sq. m. located at Brgy. Cabug, Bacolod City, Negros Occidental, more particularly described as follows: "A parcel of land (Lot 2-A of the subd. Plan (LRA) Psd-290830 approved as a non-subd. Project, being a portion of Lot 2, (LRC) Pcs-19218; LRC Cad. Rec. No. 55),situated in the District of Cabug, City of Bacolod, Island of Negros. Containing an area of Fifty Thousand (50,000) square meters, more or less." On the other hand, Central Cabug Homeowners' Association, Inc .(the " Association "),is a legal association of underprivileged and homeless citizens registered on February 17, 2006 with the Housing and Land Use Regulatory Board (HLURB). On November 3, 2011, De Jesena ,through her Attorney-in-Fact, Norah L. Javellana, executed a Deed of Absolute Sale in favor of the Association by which De Jesena conveyed to the Association a portion of the above-described parcel of land in an area measuring Thirty Two Thousand Five Hundred Ninety Six (32,596) sq. m. at an agreed price of Eight Million One Hundred Forty Nine Thousand Pesos (PhP8,149,000.00).The Association had 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),for the purchase of the aforesaid 32,596 sq. m. of land, and said purchase was certified by Ma. Ana R. Oliveros, President of SHFC, as a CMP Project which shall be proportionately distributed to the Association's one hundred ninety-nine (199) qualified members listed hereunder: CTacSE No. Name of Members Block No. Lot No. Area 1 Fernandez, Junjely Salanap 1 1 129 2 Peraren, Angel Jr. 1 2 142 3 Pintucan, Christopher 1 3 138 4 Dichoso, Romeo 1 4 135 5 Claridad, Rollan 1 5 140 6 Monotilla, Reynaldo 1 6 144 7 Pion, Arnel 1 7 149 8 Tinga, Lucia 1 8 167 9 Estander, Danilo 1 9 155 10 Iwarata, Antonietto Sr. 1 10 143 11 Iwarata, Rachel 1 11 166 12 Guilaran, Violeta 1 12 157 13 Acabal, Alvin 1 13 170 14 Canillo, Ricky 1 14 69 15 Obiena, Victor 1 15 58 16 Canillo, Emma 1 16 50 17 Pinion, Delmar 1 18 167 18 Cuenca, Yvette 1 19 176 19 Tolosa, Elmore 1 20 173 20 Canto, Daisy 1 21 199 21 Morden, Lory 2 1 112 22 Palmes, Rolyn 2 2 193 23 Toravilla, Jovelyn 2 3 153 24 Toravilla, Paterno III 2 4 122 25 Casquero, Owynn 2 5 150 26 Casquero, Faith Joy 2 6 174 27 Gayatao, Sheene 2 7 130 28 Divinigracia, Maria 2 8 133 29 Ewarata, Elsa 2 9 191 30 Iwarata, Eliseo 2 10 182 31 Hechanova, Ma. Corazon 2 11 338 32 Sevilla, Rosalie 2 12 246 33 Asuncion, Clint 2 13 167 34 De la Torre, Raffy 2 14 172 35 Estander, David 2 15 147 36 Ababao, Emerita 2 16 167 37 Baldonebro, Edwin 2 17 172 38 Baldominos, Alfredo 2 18 154 39 Espaola, Joey 2 19 168 40 Sevilla, Evan 2 20 156 41 Esclabanan, Noe 2 21 167 42 Ferrer, Ernie John 2 22 158 43 Espaola, Janet 2 23 165 44 Ilon, Rodenia 2 24 158 45 Jereza, Ernesto 2 25 156 46 De Asis, Alvin 2 26 161 47 Berja, Analee 2 27 165 48 Toledo, Herminio 2 28 159 49 Estrologo, Edmund 2 29 161 50 Relota, Remedios 2 30 165 51 Petalla, Roland 2 31 159 52 Esparas, Zenaida 2 32 167 53 Malunes, Rowena 2 33 158 54 Canto, Romulo Jr. 2 34 171 55 Esparas, Primrose 2 35 158 56 Relota, Milagros 2 36 167 57 Tolosa, Katherine 2 37 157 58 Maravilla, Ma. Fe 3 1 171 59 Ouillo, Enginita 3 2 133 60 Fuentespina, Generoso 3 3 144 61 Relota, Celso 3 4 175 62 Empedrad, Angelo 3 5 160 63 Flores, Wilfredo 3 6 143 64 Magalona, Teodora 3 7 358 65 Sabordo, Ma. Fe 3 8 252 66 Ababao, Sariann 3 9 172 67 Estor, Alma 3 10 173 68 Arjona, Perla 3 11 195 69 Pabalate, Leah R. 3 12 147 70 Sardia, Edwin 3 13 173 71 Angtiampo, Rosalina 3 14 153 72 Cuenca, Jay-r 3 15 165 73 Plaza, Sonita 3 16 165 74 Ilon, Nenit 3 17 155 75 Flores, Arturo 3 18 167 76 Minasalvas, Sofia 3 19 164 77 Segovia, Cristina 3 20 150 78 Flores, Richard 3 21 167 79 Asuncion, Maera 3 22 161 80 Ilon, Analou 3 23 159 81 Borja, Rosalie 3 24 175 82 Ababao, Fernando 4 1 181 83 Ababao, Carlito 4 2 116 84 Divinagracia, Alita 4 3 133 85 Buyco, Luzviminda 4 4 118 86 Espinosa, Jocelyn 4 5 176 87 Solivio, Ernie 4 6 200 88 Endonila, Hezel 4 7 173 89 Arjona, Perpetuo 4 8 116 90 Ababao, Rhea 4 9 235 91 Ilon, Rosanna 4 10 146 92 Flores, Ramilo 4 11 171 93 Barayoga, Jonas 4 12 168 94 Barayoga, Antonio 4 13 186 95 Flores, Perpetua 4 14 177 96 Buyco, Alberto 4 15 194 97 Gumban, Mary Mae 5 1 63 98 Villiotica, Rosemarie 5 2 66 99 Severino, Rommel 5 3 74 100 Gaureno, Mary Cris 5 4 169 101 Petalla, Rame 5 5 163 102 Magalona, Julieta 6 1 190 103 Malayang, Juan Zonuel 6 2 242 104 Relota, Agustin 6 3 133 105 Garrucho, Edna 6 4 166 106 Gaureno, Daisy Rose 6 5 133 107 Fuentes, Joycelyn 6 6 149 108 Barayoga, Hernani 6 7 135 109 Lacson, Eva 6 8 316 110 Toledo, Concepcion 6 9 143 111 Lacson, Francis Adrian 6 10 145 112 Robles, Lowela 6 11 137 113 Silonga, Jose Julius 6 13 141 114 Corteza, Karen Joy 6 14 156 115 Makilan, Ismael 6 16 156 116 Makilan, Raul 6 18 159 117 Otic, Delia 6 19 137 118 Guimbal, Dona Lee 6 20 151 119 Berina, Herlaine 6 21 166 120 Columbres, Federico 6 22 165 121 Bontalidad, Oliver 8 1 175 122 Joaquin Posadas 8 2 165 123 Guanzon, Eden 8 3 170 124 Bautista, Helen 8 4 150 125 Diotay, Nepthalie 8 5 179 126 Ruiz, Richard 8 6 160 127 Malayang, Merlyn 8 7 167 128 Ruiz, Angeli 8 8 148 129 Azarcon, Adolfo Jr. 8 9 249 130 Doloiras, Maria A. 8 10 31 131 Aliwate, Leda 8 11 185 132 Ortiaga, Editha 8 12 173 133 Bautista, Jachin 9 1 191 134 Alit, Susan 9 2 192 135 Allic, Jose Rizal 9 3 213 136 Lumanog, Anthony 9 5 206 137 Asuncion, Joselito 9 6 211 138 Garilles, Helena 9 7 214 139 Belleza, Gil Jr. 9 8 216 140 Guillen, Jerry 9 9 214 141 Banguanga, Arkie 9 11 276 142 Jalandoni, Rechelle 9 12 131 143 Lizades, Virginia 10 1 165 144 Empedrad, Heide 10 2 173 145 Tornea, Hernanie 10 3 164 146 Cruz, Leah T. 10 4 146 147 Beltran, Rodrigo 10 5 156 148 Teodosio, Jesus Rex 10 6 160 149 Pomada, Maritess 10 7 312 150 Expectacion, Jane 10 8 157 151 Expectacion, Josefino 10 9 154 152 Zamora, Eufracil 10 10 159 153 Casinas, Marilyn 10 11 148 154 Sabandal, Ryan 10 12 156 155 Ambrona, Liza 10 13 158 156 Malayang, John 10 14 149 157 De Paula, Meli Joan 10 15 140 158 Jarme, Cristina 10 16 32 159 Llanes, Francisco Jr. 10 17 277 160 De Paula, Francis 10 18 150 161 Aguilar, Emily 10 19 202 162 Asuncion, Marcelino Jr. 11 1 141 163 Banguanga, Jerry 11 2 146 164 Toledo, Paul Ian 11 3 85 165 Zamora, Virginita 11 4 153 166 Solis, Merely 11 5 62 167 Sorongon, Mary Jane 11 7 161 168 De los Reyes, Domingo 11 8 156 169 Borneso, Joel 11 9 148 170 Ebido, Jesus 11 10 162 171 Aliwate, Geryl 11 11 152 172 Borneso, Clarita 11 12 164 173 Magallanes, Herman Jr. 11 13 170 174 Medalla, Ma. Fe 11 14 83 175 Jarme, Nathaniel 11 15 169 176 Corteza, Analie 11 16 239 177 Abalajon, Edmundo 11 17 149 178 Gicana, Felisa 11 18 174 179 Jagocoy, Joery 11 19 165 180 Dueas, Constantino 11 20 146 181 Petalla, Mamerta 11 21 257 182 Montao, Rosemarie 11 22 151 183 Sangasa, Sandie 12 1 127 184 Empedrad, Ma. Luz 12 2 72 185 Magalona, Norberto 12 4 184 186 Bibliotica, Dennis 12 5 183 187 Bimbao, Ma. Liza 12 6 179 188 Guanzon, Joery 12 7 183 189 Tugade, Haizel 12 8 183 190 Magallanes, Christopher 12 9 183 191 Villagante, Grace 12 10 156 192 Gicana, Renato Jr. 12 11 209 193 Abalajon, Efren 12 12 183 194 Malunes, Bibsy 12 13 88 195 Dueas, Crisanta 12 14 94 196 Banuyao, Paterna 12 15 197 197 Gubac, Flora 12 16 180 198 Bebing, Teresa 12 17 208 199 Jarme, Mary Joy 12 18 207 In reply thereto, 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: xxx xxx xxx. (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" TEHIaD xxx xxx xxx 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 subject property executed by De Jesena in favor of the Association is exempt from the capital gains tax. It is to be made clear however, that the exemption covers only the actual area covered by the CMP Project which is the 32,596 sq. m.,as per attached Certification of the President of the SHFC, and not the entire 50,000 sq. m. of the subject property. (BIR Ruling No. 30-2012 dated January 16, 2012) Furthermore, the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Sec. 20 of RA 7279. Accordingly, De Jesena is liable to pay the documentary stamp tax on the documents conveying the property pursuant to 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. 30-2012 dated January 16, 2012) Finally, 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 beneficiary association of the socialized housing program 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 RA No. 7279. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue