BIR Ruling No. 418-15

December 17, 2015 BIR RULING NO. 418-15 RA No. 7279; BIR Ruling No. 053-15 Dominador Asis Homeowners Association, Inc. M. Delos Reyes St. Gen. T. De Leon, Valenzuela City Attention: Charity B. Isaac President Gentlemen : This refers to the letter of Zenaida A. Mendoza, Chairman of the Board/President of A-5 Farms Corporation dated June 6, 2015, requesting exemption from the payment of Capital Gains Tax and other taxes the sale transaction between A-5 Farms Corporation and Dominador Asis Homeowners Association, Inc. in accordance with the Republic Act (RA) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". Documents submitted disclose that A-5 Farms Corporation (hereinafter referred to as Landowner) is the registered owner of a parcel of land, identified as Lot 7 of the subd. plan (LRC) Psd-209760, being a portion of LRC Pcs-555, LRC Rec. No. 5941 covered by Transfer Certificate of Title (TCT) No. B-7365 issued by the Registry of Deeds for the Metro Manila, District III. The aforesaid property is situated at Brgy. General T. De Leon, Valenzuela City with an area of Twelve Thousand Three Hundred Sixty Two square meters (12,362 sq.m.), more or less. Dominador Asis Homeowners Association, Inc. (TIN 253-291-068-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On May 28, 2015, the parties executed a Deed of Absolute Sale whereby the Landowner transferred and conveyed the subject property to Dominador Asis Homeowners Association, Inc. at an agreed price of Twenty Seven Million One Hundred Ninety Six Thousand Four Hundred Pesos (P27,196,400.00). Pursuant to the certification issued by Social Housing Finance Corporation (SHFC), the subject property covered by TCT No. B-7365 actually comprise a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Dominador Asis 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). CAacTH In support of its request, Dominador Asis Homeowners Association, Inc. has completely submitted on September 1, 2015 the following documents: 1) 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 TCTs and Latest Tax Declarations 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 landowner who sold its property under CMP 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 Dominador Asis Homeowners Association, Inc. of the subject property covered by TCT No. B-7365 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. 053-15 dated February 27, 2015) IAETDc However, the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Sec. 32 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 realties or their fair market values determined in accordance with Section 6 (E) of the said Code, whichever is higher. (BIR Ruling No. 053-15 dated February 27, 2015) 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 titles 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 RMO15-2003. (BIR Ruling No. 053-15 dated February 27, 2015) CTIEac Moreover, under Section 109 (1) (P) of the Tax Code of 1997, as amended by R.A. 9337, the sale of real properties utilized for low-cost and socialized housing as defined by R.A. No. 7279 shall be exempt from value-added tax (VAT), thus, the sale of the subject property covered by TCT No. B-7365 by the landowner to Dominador Asis Homeowners Association, Inc. is exempt from the imposition of VAT. (BIR Ruling No. 304-2013 dated August 6, 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 Sec. 27 (D) (5) the Tax Code of 1997, as amended. 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 Dominador Asis Homeowners Association, Inc. M. Delos Reyes St. Gen. T. De Leon, Valenzuela City Name of Beneficiary Blk. Lot Total Area No. No. (sq.m.) 1 Pumar, Lyn Gebilaguin 1 1 21 2 Calingacion, Roy Enclonar 1 2 33 3 Bobis, Doris Delemos 1 3 33 4 Amoncio, Ellen Aquino 1 4 33 5 Torrilla, Sonia Sia 1 5 33 6 Rico, Evangeline Ros 1 6 33 7 Francisco, Mary Joy Aquino 1 7 33 8 Aragon, Alma Pohanes 1 8 33 9 Pohanes, Elise Anne Nitafan 1 9 33 10 Nitafan, Mark Abbe Del Rio 1 10 33 11 Padernal, Edelwina Gumban 1 11 33 12 Salonga, Ruby Ellaine Dela Cruz 1 12 33 13 Salonga, Melinda Lopez 1 13 33 14 Faura, Emma Timbal 1 14 32 15 Bercasio, Luzviminda Lagata 1 15 32 16 Lagata, Lilibeth Anicete 1 16 32 17 Pohanes, Ma. Florelyn Belarma 1 17 33 18 Pohanes, Ma. Floramae Belarma 1 18 33 19 Guo, Wilson Santiago 1 19 34 20 Bartolome, Vilma Valdez 1 20 34 21 Iglesias, Ida Conde 1 21 48 22 Ramos, Emil Velasco 2 1 32 23 Pantoja, Amelita Cordova 2 2 32 24 Pumar, Arnulfo Eval 2 3 30 25 Duldulao, Nora Rosario 2 4 30 26 Larang, Marty Nacion 2 5 30 27 Pumar, John Dominic Gebilaguin 2 6 30 28 Galeon, Francisca Manoop 2 7 30 29 Andales, Elizabeth Salude 2 8 30 30 Salcedo, Jr., Segundo Espiritu 2 9 30 31 Relucio, Robert Ng 2 10 30 32 Fabro, Willie Cabalo 2 11 30 33 Antipolo, Bernito Minescula 2 12 30 34 Clauna, Mark Kenneth Bernardino 2 13 30 35 Caubalejo, Joey Jurilla 2 14 30 36 Belarma, Jesus Habagat 2 15 30 37 Oclarit, Jordan Anahao 2 16 30 38 Romano, Jayvie Asuzada 2 17 30 39 Cartago, Marven Lagumbay 2 18 30 40 Esmael, Joseph Amacio 2 19 30 41 Vendiola, Felix Baguio 2 20 30 42 Adriatico, Maritess Amar 2 21 30 43 Adriatico, Gilbert Olarte 2 22 30 44 Isaac, Julius Ceasar Barcelon 2 23 30 45 Espiritu, Sonny De Guzman 2 24 30 46 Isaac, Charity Barcelon 2 25 30 47 Operio, Angelica Tataro 2 26 30 48 Baldemor, Charisse Ann Isaac 2 27 30 49 Angana, Pio De Joya 2 28 30 50 Porferio, Jr., Federico Buntag 2 29 30 51 Caete, Jane Losauro 2 30 30 52 Bongon, Ferdinand Libunao 2 31 44 53 Tumbaga, Rodolfo Labrador 2 32 44 54 Santural, Jonepit Docil 3 1 36 55 De Guzman, Mildred Malicse 3 2 33 56 Amper, Darwin Labrador 3 3 35 57 Garete, Noemi Berces 3 4 30 58 Almonte, Cesar Cariso 3 5 31 59 Mana, Jr., Rogelio Gadin 3 6 30 60 Armilla, Jr., Renato Rafael 3 7 30 61 Abalicio, Estela Gagula 3 8 30 62 Tapiz, Ricky Vergara 3 9 30 63 Manga, Aidin Bantog 3 10 30 64 Lucas, Ramonito Alvarez 3 11 30 65 Padayhag, Salome Sanchez 3 12 30 66 Padayhag, Ernando Bagyon 3 13 30 67 Magalona, Mercy Cape 3 14 30 68 Caringal, Roderick Arida 3 15 30 69 Cabangunay, Galicano Gabijan 3 16 30 70 Bobis, Adriano Belgar 3 17 30 71 Ton-Ogan, Marilou Gelardino 3 18 31 72 Boncales, Catherine Matalang 3 19 30 73 Guevarra, Neneth Jagonase 3 20 30 74 Muyong, Analyn Morano 3 21 30 75 Guevarra, Noemi Jagonase 3 22 29 76 Pagunsan, Celeste Obligacion 3 23 30 77 Sido, Melvin Abrasaldo 3 24 31 78 Millares, Randy Ganan 3 25 30 79 Gados, Clarence Respeto 3 26 31 80 Dela Luna, Susana Tayco 3 27 30 81 Angara, Loralee Bernardino 3 28 30 82 Bangayan, Divina Cuntapay 3 29 30 83 Angara, Wendell Bernardino 3 30 30 84 Hernandez, Lee Pesidas 3 31 30 85 Comendador, Reynaldo Delantar 3 32 30 86 Alcanzo, Rudy Delos Santos 3 33 30 87 Pagela, Irma Paz 3 34 30 88 Samaco, Cifriano Alvarez 3 35 30 89 Morales, Helen Estoy 3 36 30 90 Pardillo, Randy Pat 3 37 30 91 Sumoba, Rodito Ancuna 3 38 29 92 Sumoba, Arnel Ancuna 3 39 29 93 Cano, Maria Sarmiento 4 1 18 94 De Guzman, Rey Asuncion 4 2 27 95 Candelada, Robinson Ibardaloza 4 3 27 96 Basilio, Paulyn Rosel 4 4 28 97 Candelada, Nancy Trinidad 4 5 25 98 Cuambot, Eduardo Soletatio 4 6 25 99 Pasamanero, Anrady Alamer 4 7 26 100 Balbarino, Alvin Dumpa 4 8 26 101 Tempongko, Val Rumohr 4 9 26 102 Pohanes, Leonita Balbarino 4 10 26 103 Padayhag, Teoro Regalado 4 11 24 104 Ballera, Arnold Belleza 4 12 25 105 Palma, Jonard Ong 4 13 26 106 Andales, Jaypee Salode 4 14 27 107 Castillo, Michael Dela Cruz 4 15 25 108 Padernal, Analiza Gumban 4 16 26 109 Salinas, Ranie Cacho 4 17 25 110 Ferrolino, Francisco Mayonado 4 18 26 111 Pertimos, Mac John Aguilar 4 19 25 112 Delos Angeles, Ranilo Escao 4 20 26 113 Meniano, Cristy Alaba 4 21 25 114 Cruz, Teodora Radam 4 22 26 115 Belarma, Venida Aranas 4 23 25 116 Narag, Gemma Francisco 4 24 26 117 Abala, Aldrin Jobel Belarma 4 25 26 118 Lopez, Lourdes Josue 4 26 26 119 Bilarma, Marilou Jabagat 4 27 25 120 Lopez, Annalou Josue 4 28 26 121 Salgado, Jeney Cagungon 4 29 24 122 Taller, Rosenda Asumbrado 4 30 24 123 Belarma, Jonas Aranas 4 31 26 124 Belarma, Jaycob Aranas 4 32 26 125 Rebosura, Ronald Espaol 4 33 23 126 Magallon, Alberto Abanil 4 34 31 127 Padernal, Angie Gumban 5 1 21 128 Lacaba, Jessie Orlanda 5 2 28 129 Ramos, Jerry Atacador 5 3 26 130 Padernal, Therese Shiela Gumban 5 4 24 131 Canja, Erwin Omagap 5 5 29 132 Sacueza, Randy Timbang 5 6 25 133 Gutierrez, Robert Benedicto 5 7 29 134 Montano, Dominador Santillan 5 8 25 135 Dela Cruz, Eugene Magno 5 9 25 136 Losauro, Rema Nacion 5 10 25 137 Cataquiz, Helen Magno 5 11 22 138 Mendoza, Kathlyn Simbajun 5 12 25 139 Fenellere, Jay Ampoan 5 13 19 140 Alvarez, Ernesto Abuel 5 14 25 141 Galibo, Renato Tan 5 15 25 142 Colopano, Jocelyn Monterey 5 16 32 143 Altizo, Erwin Jabagaton 6 1 24 144 Tan, Ronnie Cajuban 6 2 24 145 Bangayan, Maria Flordeliza Suba 6 3 24 146 Pontuya, Jose Atuli 6 4 25 147 Tecson, Kimilyn Reynante 6 5 23 148 Bodoso, Jr., Freddie Romero 6 6 26 149 Cavite, Jay-R Orillo 6 7 23 150 Botea, Teresita Adayon 6 8 25 151 Molijon, Junnel Tadifa 6 9 24 152 Manzanares, Jerry Ampoan 6 10 25 153 Peoso, Geralyn Joaquin 6 11 22 154 Calubag, Mary Anne Dasal 6 12 20 155 Nantes, Analyn Dante 7 1 26 156 Dere, Edwin Sulapas 7 2 25 157 Gabuya, Rolando Cabangunay 7 3 25 158 Mardicer, Bobby Cobrador 7 4 23 159 Alonzo, Danilo Naquilan 7 5 27 160 Calpito, Rico Bunag 7 6 24 161 Layug, Milagros Nadera 7 7 26 162 Delig, Exequil Perez 7 8 24 163 Layug, Arnel Nadera 7 9 26 164 Paho, Jerica Buado 7 10 24 165 Sabilla, Ruel Salceda 7 11 34 166 Barros, Reggie Rojas 7 12 23 167 Galoy, Cristina Acutayan 8 1 25 168 Olicia, Maria Cristina Dela Pea 8 2 22 169 Dante, Jose Rojas 8 3 25 170 Guardiana, Julio Canillo 8 4 25 171 Carinan, Arnel Casitas 8 5 25 172 Pelimiano, Lilibeth Mones 8 6 25 173 Pontillo, Anecito Corvera 8 7 25 174 Bernal, Edgar Tariman 8 8 25 175 Buday, Roy Dele 8 9 26 176 Lingahan, Marilyn Bocatcat 8 10 25 177 Odeamar, Rodelinda Barra 8 11 25 178 Distor, Apocalipsis Paulino 8 12 30 179 Collanto, Luzviminda Lasaca 8 13 28 180 Libatog, Rodrigo Carungay 9 1 25 181 Gripo, Paul Gungob 9 2 29 182 Padilla, Maria Jeane Salude 9 3 24 183 Ampoan, Susan Escarda 9 4 30 184 Clauna, Jeremias Guillermo 9 5 24 185 Iray, Reynaldo Abayon 9 6 33 186 Rebosura, Darwen Aselo 10 1 28 187 Ojales, Rolando Fadrigo 10 2 26 188 Ojales, Richard Fadrigo 10 3 26 189 Morante, Josephine Ojales 10 4 26 190 Cai, Jenalyn Dacuycuy 10 5 22 191 Faropaldin, Julie Suetado 10 6 25 192 Paez, Anthony Perocello 10 7 26 193 Pelio, Romualdo Pastoril 10 8 31 194 Pujanis, Joecel Cervantes 10 9 31 195 Carillo, Nora Francisco 10 10 29 196 Rogero, Gabriel Jason Brin 10 11 26 197 Pregoner, Jr., David Impas 10 12 25 198 Alinsub, Ariel Misoles 10 13 23 199 Gragasin, Carlos De Gula 10 14 24 200 Gragasin, Charlie De Gula 10 15 29 201 Gragasin, Christy De Gula 10 16 38 202 Mediario, Alexander Alvarez 10 17 23 203 San Diego, Jennifer De Gula 10 18 25 204 Relucio, Elaine Lim 10 19 25 205 De Gula, Juanito Santos 10 20 25 206 Aragon, Glenda Cabanez 10 21 25 207 Pillo, Maria Lema Laada 10 22 24 208 Dole, Vengie Alamida 10 23 27 209 Panes, Regie Lagumbayan 10 24 24 210 Gragasin, Paulo Agbulos 10 25 25 211 Gragasin, Marco Agbulos 10 26 25 212 Niala, Marcela Macabenta 10 27 25 213 Guntias, Richard Pesidas 10 28 25 214 Amante, Rolando Baduyin 10 29 24 215 Borja, Carmelita Bangayan 10 30 21 216 Alcanzo, Jr., Benjamin Delos Santos 10 31 25 217 Sayco, Merlyn Caliso 11 1 24 218 Padilla, Nancy Saludo 11 2 24 219 Baldonado, Randy Reyes 11 3 25 220 Lopez, Rolando Abubo 11 4 25 221 Gatus, Gerald Andaniel 11 5 25 222 Namoco, Antonio Dela Cruz 11 6 25 223 Arellano, Herminio Escapen 11 7 25 224 Cabangunay, Jr., Romeo Ebin 11 8 25 225 Valerio, Lilia Damasco 11 9 25 226 Cabangunay, Leo Ebin 11 10 25 227 Amandog, Jr., Paterno Quibol 11 11 25 228 Lapiz, Susan Anino 11 12 25 229 Oflas, Apolinario Montao 11 13 25 230 Asuncion, Bonifacio Salviejo 11 14 25 231 Sanlitan, Jeffrie Brin 11 15 25 232 Costan, Ernesto Jabagatan 11 16 25 233 Adanza, Victor Luis Mahusay 11 17 25 234 Baes, Fernando Nicor 11 18 25 235 Ampoan, Dina Grace Taborno 11 19 25 236 Romero, Jonathan Gados 11 20 27 237 Nicolas, Edwin, Jr. Romero 12 1 29 238 Alas-As, Roberto Hano 12 2 29 239 Romero, Edralyn Caldoza 12 3 25 240 Labolabo, Charlie Velasco 12 4 25 241 Boces, Judith Piabol 12 5 25 242 Sayson, Julius Artieda 12 6 25 243 Alcantara, Janet Guadilla 12 7 25 244 Sayson, Debbie Jane Artieda 12 8 25 245 Calaor, Elena Calcaben 12 9 26 246 Narciso, Juvy Mendoza 12 10 27 247 Loterte, Dennis Granado 13 1 26 248 Paho, Jean Flores 13 2 26 249 Agustin, Rolando Miclat 13 3 25 250 Felisilda, Rhandy Caezares 13 4 25 251 Romano, Jeaner Paulo Azusada 13 5 25 252 Bulanadi, Mario Sumalinog 13 6 25 253 Romano, Jimcel Azusada 13 7 25 254 Lazarito, Dimy Labus 13 8 25 255 Salvador, Marialyn Acosta 13 9 27 256 De Guzman, Benito Asuncion 13 10 26 257 Nicolas, Fernando, Sr. Marcaida 14 1 32 258 Bonacua, Jennifer Bulanadi 14 2 31 259 Fabro, Emiko Aquino 14 3 32 260 Etucas, Eduardo Salota 14 4 25 261 Delos Santos, Joel Eugenio 14 5 25 262 Rivera, Janet Pineda 14 6 25 263 Navarrete, Jr., Rosendo Dancel 14 7 25 264 Pineda, Ricky Bulanadi 14 8 26 265 Mollanida, Jr., Charlo Azarcon 14 9 27 266 Bulanadi, Romano Erico Sunga 15 1 24 267 Bulanadi, Maricar Sunga 15 2 25 268 Boncales, Rona Bulanadi 15 3 24 269 Salgado, Felita Alvez 16 1 25 270 Alvez, Cristino Catarinin 16 2 25 271 Salaum, Perlita Bernales 16 3 25 272 Manga, Rowee Bantog 16 4 25 273 Manilhig, Leilanie Cajote 16 5 25 274 Jamero, Fe Ochavez 16 6 25 275 Ranan, Leticia Miguela 16 7 25 276 Ramos, Maria Cleofe Impon 16 8 25 277 Aromin, Jr., Arnel Nacion 16 9 25 278 Ramos, Albert Impon 16 10 25 279 Enoy, Victor Comar 16 11 25 280 Hamor, Reynaldo Gimena 16 12 25 281 Sumoba, Almar Jed Taganahan 16 13 25 282 Susada, Alma Pujanis 16 14 25 283 Bautista, Freddie Abling 16 15 25 284 Buelo, Cristita Canaria 16 16 25 285 Salonga, Ryann Christopher Dela Cruz 16 17 25 286 De Josep, Winniefredo Masagnay 16 18 25 287 Cos, Reynante Bayog 16 19 25 288 Turtona, Maria Diossa Agravante 16 20 25 289 Estas, Rosalina Orpaner 16 21 25 290 Bansag, Jimmy Pando 16 22 25 291 Sagang, Jr., Emeterio Lucrenio 16 23 25 292 Gibaga, Alex Gliponeo 16 24 25 293 Albiso, Neil Millares 16 25 25 294 Gibaga, Angelica Joyce Catahay 16 26 25 295 Tamayo, Geronicio Gutanculan 16 27 25 296 Tubal, Junry Soliva 16 28 25 297 Titular, Marycris Cerezo 16 29 25 298 Sumampong, Geralin Tubal 16 30 25 299 Bautista, Eric Gallego 16 31 25 300 Bautista, Maida Gallego 16 32 25 Footnotes 1. see Annex for the masterlist of qualified beneficiaries.