BIR Ruling No. 416-14

October 23, 2014 BIR RULING NO. 416-14 RA No. 7279; BIR Ruling No. 109-13 Bagong Sitio Homeowners' Association, Inc. Purok II, Brgy. Caingin, Sta. Rosa, Laguna Attention: Joselito Hernandez President Gentlemen : This refers to the letter of Leomar A. Palorma, Senior Community development Officer of Planning Programs and Assistance to the Development of Community, Inc. dated July 31, 2014, endorsing the sale transaction between Uliran T. Joaquin, et al., and Bagong Sitio 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 Uliran T. Joaquin, Ma. Pilar J. Alvarez married to Allan Alvarez, Ma. Feliza J. Legaspi married to Ronald Legaspi and Nereo T. Joaquin, Jr. (hereinafter referred to as Landowners) are the registered owners of a parcel of land, identified as Lot __ as shown on plan Pcn-04-00315 being a portion of the consolidation of lots 1 to 25, Blk. 1; 1 to 11, Blk. 2; 1-25, Blk. 3; 1 to 34, Blk. 4, and the road lots 1 to 3, all of Psd-04-094176 covered by Transfer Certificate of Title (TCT) No. 060-2010002063 issued by the Registry of Deeds for Province of Laguna, Calamba Branch. The aforesaid property is situated at Brgy. Caingin, Santa Rosa, Laguna with an area of Eight Thousand One Hundred Sixty Two square meters (8,162 sq.m.), more or less. Bagong Sitio Homeowners' Association, Inc. (TIN 278-297-491-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On July 24, 2014, the parties executed a Deed of Absolute Sale whereby the Landowners transferred and conveyed the subject property to Bagong Sitio Homeowners' Association, Inc. at an agreed price of Eleven Million Four Hundred Twenty Six Thousand Eight Hundred Pesos (P11,426,800.00). Pursuant to the certification issued by SHFC, the property covered by TCT No. 060-2010002063 actually comprises a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Bagong Sitio 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 July 24, 2014. aTEScI In support of its request, Bagong Sitio Homeowners' Association, Inc. has completely submitted on August 8, 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's 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 landowners to Bagong Sitio Homeowners' Association, Inc. of the subject property covered by TCT No. 060-2010002063 is exempt from the capital gains tax. TCaSAH 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 Homeowner's 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 document 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 sellers are 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 ANNEX Bagong Sitio Homeowners' Association, Inc. Purok II, Brgy. Caingin, Sta. Rosa, Laguna Name of Beneficiary Blk. Lot. Total Area No. No. (Sq.M.) 1 Cendaa, Mythaddy C. 1 1 43.07 2 Cendaa, Myrose C. 1 2 41.69 3 Santos, Edna T. 1 3 41.69 4 Santos, Noel T. 1 4 41.69 5 Santos, Wilma T. 1 5 41.69 6 Sanchez, Sanchez S. 1 6 41.69 7 Acosta, Bernardita A. 1 7 41.69 8 Cariaga, Abegail M. 1 8 41.69 9 Acosta, Harold A. 1 9 41.69 10 Abelardo, Julius Joseph A. 1 10 41.69 11 Jumaquio, Kathlene Kate A. 1 11 41.69 12 Esporna, Ruel Q. 1 12 41.69 13 Perwelo, Jovita A. 1 13 41.69 14 Esporna Jr., Marcelo Q. 1 14 41.69 15 Carpio, Ma. Ligaya D. 1 15 41.69 16 Bulda, Feliza T. 1 16 41.69 17 Bajador Jr., Armando B. 1 17 41.69 18 Agquis, Gaspar A. 1 18 41.69 19 Fabia, Flordelisa 1 19 41.69 20 Villar Jr., Jesus C. 1 20 41.69 21 Dimaculangan, Eduardo A. 1 21 41.69 22 Dimaculangan, Karen L. 1 22 41.69 23 Adato, Elmer B. 1 23 41.69 24 Ubales, Roberto E. 1 24 41.69 25 Castro, Veronica M. 1 25 41.69 26 Sequia, Allan Francis C. 1 26 41.69 27 Castro, Roel M. 1 27 41.69 28 Rosales, Leah S. 1 28 41.69 29 Mesina, Wilma S. 1 29 41.69 30 Ibaez, Ryan M. 1 30 41.69 31 Suyo, Alexander S. 1 31 41.69 32 Suyo, Roel S. 1 32 41.69 33 Hipolito, Michelle Mae M. 1 33 41.69 34 Yldeso, Paulino L. 1 34 41.69 35 Yldeso, Tereso L. 1 35 41.69 36 Delmo, Quennie Y. 1 36 41.69 37 Gallardo, Erwin Q. 1 37 41.69 38 Pascual, Joan I. 1 38 41.69 39 Pascual, Peejay I. 1 39 41.69 40 Dupagan, Lea E. 1 40 41.69 41 Dupagan, Melvin E. 1 41 41.69 42 Vergara, Ligaya Delos Reyes 1 42 41.69 43 Vergara, Ronela E. 1 43 59.75 44 Esperanza Jr., Rodolfo P. 1 44 66.70 45 Noriel, Hazel B. 1 45 41.69 46 Sanchez, Jane U. 1 46 41.69 47 Sanchez, Don Ryan U. 1 47 41.69 48 Santos, Aprilyn T. 1 48 41.69 49 Escosura, Evangeline N. 1 49 41.69 50 Aquino, Fritzie A. 1 50 41.69 51 Asuncion, Geric D. 1 51 41.69 52 Cabaltera, Leopoldo E. 1 52 41.69 53 Demiao, Marygrace C. 1 53 41.69 54 Talavera, Carlos P. 1 54 41.69 55 Cajes, Erma M. 1 55 41.69 56 Vicedo, Arlene O. 1 56 41.69 57 Habal, Marlon G. 1 57 41.69 58 Pentojo, Jenny M. 1 58 41.69 59 Villapando, Grace P. 1 59 41.69 60 Adato, William D. 1 60 41.69 61 Palulay, Joseph B. 1 61 41.69 62 Digal, Levie L. 1 62 41.69 63 Endozo, Edison D. 1 63 41.69 64 Dimaculangan, Khatreen L. 1 64 41.69 65 Obregon, Razene Y. 1 65 41.69 66 Esperida, Joseph F. 1 66 41.69 67 Conejos, Jelly A. 1 67 41.69 68 Bardientes, Wilma O. 1 68 41.69 69 Mago, Ronaldo B. 1 69 41.69 70 Barrientes, Aida E. 1 70 41.69 71 Dioquino, Amelia B. 1 71 41.69 72 Pili, Rayan D. 1 72 41.69 73 Lampitoc, Garyvic 1 73 41.69 74 Lampitoc, Eric M. 1 74 41.69 75 Villacera, Ricky T. 1 75 41.69 76 Lopez, Jennette N. 1 76 41.69 77 Vicedo Jr., Servando O. 1 77 41.69 78 Rentutar, Marilou B. 1 78 41.69 79 Narvaez, Joseph E. 1 79 41.69 80 Yldeso, Rene N. 1 80 41.69 81 Aguinillo, Jocelyn T. 1 81 41.69 82 Tolentino, Janessa C. 1 82 41.69 83 Reyes, Mary Ann R. 1 83 41.69 84 Reyes, Reynaldo A. 1 84 41.69 85 Florano, Erwin T. 1 85 41.69 86 Florano, Donna Rose T. 1 86 50.02 87 Vista, Lord Christian B. 2 1 43.07 88 Capuso, Michelle V. 2 2 41.69 89 Bustalino, Elmer 2 3 41.69 90 Abad, Marilyn G. 2 4 41.69 91 Escosura, Morena G. 2 5 41.69 92 Gambala Jr., Rodolfo E. 2 6 41.69 93 Escosura, Jimmy M. 2 7 41.69 94 Camat, Manny E. 2 8 41.69 95 Sardeniola, Zenaida S. 2 9 41.69 96 Saliente, Reynaldo P. 2 10 41.69 97 Camat, Marlon E. 2 11 41.69 98 Camat, Mylene E. 2 12 41.69 99 Barrera, Dennis C. 2 13 41.69 100 Melendrez, Crisanto D. 2 14 41.69 101 Taruc, Maria Cristina D. 2 15 41.69 102 Lacsamana, Winnierose N. 2 16 41.69 103 Talibsao, Bernardo A. 2 17 41.69 104 Talibsao, Gener A. 2 18 41.69 105 Latorza, Myra Jane L. 2 19 41.69 106 Latorza, Conchita L. 2 20 41.69 107 Aseoche Jr., Ernesto F. 2 21 41.69 108 Bague, Josie A. 2 22 41.69 109 Dela Cruz, Resureccion S. 2 23 41.69 110 Regenio, Rosemarie S. 2 24 41.69 111 Carandang, Marvin F. 2 25 41.69 112 Dela Pea, Jimmy S. 2 26 41.69 113 Esperida, Arnel F. 2 27 41.69 114 Obregon, Ivan Y. 2 28 41.69 115 Obregon, Elmerto R. 2 29 41.69 116 Abuda, Ma. Ramonita 2 30 41.69 117 Casano, Josie L. 2 31 41.69 118 Noe Sr., Neo S. 2 32 41.69 119 Edeza, Nestor M. 2 33 41.69 120 Villar, Jojit C. 2 34 41.69 121 Remoquillo, Lorna A. 2 35 41.69 122 Alcoran, Cathlene A. 2 36 41.69 123 Alcoran, Don Dion A. 2 37 41.69 124 Calculba, Annalyn B. 2 38 41.69 125 Basco, Medilyn O. 2 39 41.69 126 Barroso, Eliza B. 2 40 41.69 127 Salud, Ernani V. 2 41 41.69 128 Amarante, Noel P. 2 42 41.69 129 Pinoy, Marky L. 2 43 44.46 130 Miranda, Mylene T. 2 44 41.69 131 Turla, Marygrace P. 2 45 41.69 132 Vista, Josefina B. 2 46 41.69 133 Vista, Jowelyn Wells B. 2 47 41.69 134 Tangco, Linda DC. 2 48 41.69 135 Tangco, Lenie S. 2 49 41.69 136 Villar, Rosalyn G. 2 50 41.69 137 Villar, Rosana G. 2 51 41.69 138 Villar, Rino G. 2 52 41.69 139 Camangon, Florinda G. 2 53 41.69 140 Camangon, Jocelyn C. 2 54 41.69 141 Fernandez, Maribeth T. 2 55 41.69 142 Fernandez, Rommel E. 2 56 41.69 143 Atun, Frederic N. 2 57 41.69 144 Labro, Herman M. 2 58 41.69 145 Verdejo, Maribel M. 2 59 41.69 146 Aldana, Marites G. 2 60 41.69 147 Velasquez, Louie C. 2 61 41.69 148 Velasquez, Leodel C. 2 62 41.69 149 Velasquez, Lea C. 2 63 41.69 150 Velasquez, Debby C. 2 64 41.69 151 Villar, Rosalinda B. 2 65 41.69 152 Discaya, Jerlie V. 2 66 41.69 153 Hernandez, Joselito R. 2 67 41.69 154 Villanueva, Elena M. 2 68 41.69 155 Borbe, Rechard R. 2 69 41.69 156 Alicbusan, Enrique B. 2 70 41.69 157 Alicbusan, Eduardo B. 2 71 41.69 158 Tejones, Renz P. 2 72 41.69 159 Tejones, Rowenio G. 2 73 41.69 160 Ieva, Welhilmina B. 2 74 41.69 161 Capispisan, Raul 2 75 41.69 162 Capispisan, Gemma R. 2 76 41.69 163 Capispisan, Dave 2 77 41.69 164 Escosura, Joseph N. 2 78 41.69 165 Alvarez, Leticia I. 2 79 41.69 166 De Gamo, Daniel T. 2 80 41.69 167 Sumait, Francis A. 2 81 41.69 168 Tejones, Lina P. 2 82 41.69 169 De Leon, Linet T. 2 83 41.69 170 Tejones, Jarom P. 2 84 41.69 171 Sumait, Jorge A. 2 85 41.69 172 Junio, Eduardo S. 2 86 45.85 173 Junio, Roberto S. 2 87 41.69 174 Bukid, Michael A. 3 2 41.69 175 Gondraneos, Leonides A. 3 3 41.69 176 Magana, Narda V. 3 4 41.69 177 Magana, Lucila B. 3 5 41.69 178 Hernandez, Ma. Jonielyn M. 3 6 41.69 179 Hernandez, Julius Cezar M. 3 7 43.07 180 Papag, Ana Camille C. 3 8 44.46 181 Papag, Robina C. 3 9 44.46 182 Materiano, Edna S. 3 10 44.46 183 Diaz, Dennis D. 3 11 45.85 184 Escosura, Ronaldo D. 4 1 43.07 185 Escosura, Isagani T. 4 2 41.69 186 Escosura, Irene A. 4 3 40.30 187 Almarinez, Luningning F. 4 4 41.69 188 Aliparo, Rufina E. 4 5 41.69 189 Escosura, Raymond Derick A. 4 6 41.69 190 Ortega, Nena M. 4 7 41.69 191 Constantino, Roy A. 4 8 41.69 192 Roylo, Maryjoy C. 4 9 41.69 193 Camota, Edil C. 4 10 41.69 194 Tibay, Marian S. 4 11 41.69 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.