BIR Ruling No. 426-15

December 17, 2015 BIR RULING NO. 426-15 Sec. 32, RA No. 7279; BIR Ruling No. 109-13 Sucat Dreamland Homeowners' Association, Inc. Sitio Pagkakaisa, Brgy. Sucat, Muntinlupa City Attention: Lolito V. Pantaleon President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of the Social Housing Finance Corporation (SHFC) dated February 16, 2015, endorsing the sale transaction between Aida Macaraig Posadas, Luis M. Posadas and Sucat Dreamland 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". HTcADC Documents submitted disclose that Aida Macaraig Posadas and Luis M. Posadas (hereinafter referred to as Landowners) are the registered owners of two (2) parcels of land covered by two (2) Transfer Certificates of Title (TCT): Landowner TCT No. Tax Declaration No. Area (sq. m.) Aida Macaraig Posadas and Luis M. 014-2014001943 F-008-10750 2,000.00 1 Posadas Aida Macaraig Posadas and Luis M. 014-2014001944 F-008-10749 15,128.00 2 Posadas total area 17,128.00 ========= both issued by the Registry of Deeds of Muntinlupa. The aforesaid properties are situated at Brgy. Sucat, Muntinlupa City. Sucat Dreamland Homeowners' Association, Inc. (TIN 248-284-275-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On February 2, 2015, the parties executed a Deed of Absolute Sale whereby the Landowners transferred and conveyed Six Thousand Six Hundred Seventy Two square meters (6,672 sq.m.) portion of the subject properties to Sucat Dreamland Homeowners' Association, Inc. at an agreed price of Eleven Million Six Hundred Seventy Six Thousand Pesos (P11,676,000.00). Pursuant to the certification issued by SHFC, 6,672 sq.m. out of 17,128 sq.m. covered by TCT Nos. 014-2014001943 and 014-2014001944 actually comprise a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 3 For this purpose, Sucat Dreamland 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 February 5, 2015. In support of its request, Sucat Dreamland Homeowners' Association, Inc. has completely submitted on September 11, 2015 the following documents: 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC that 6,672 sq.m. portion of the subject property qualifies and is actually a CMP project; 3) SHFC Letter-Guaranty No. 1008; 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 TCTs and Latest Tax Declarations 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; and 10) 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" aScITE the landowners who sold their properties 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 Aida Macaraig Posadas and Luis M. Posadas to Sucat Dreamland Homeowners' Association, Inc. of the 6,672 sq.m. portion out of 17,128 sq.m. covered by TCT Nos. 014-2014001943 and 014-2014001944 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. 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. 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 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. 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 Sec. 24 (D) (1) 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 Sucat Dreamland Homeowners' Association, Inc . Sitio Pagkakaisa, Brgy. Sucat, Muntinlupa City Name of Beneficiary Blk. No. Lot No. Total Area (sq.m.) 1 MAAT, Gerry C. 1 1 44.56 2 MAAT, Gerliza F. 1 2 44.56 3 BAYLON, Custodio F. 1 3 44.56 4 NEBRIA, Florante V. 1 4 44.56 5 ROS, Juvy V. 1 5 44.56 6 MENDOZA, Darwin V. 1 6 44.56 7 BASCO, Jessica C. 1 7 44.56 8 ALMASA, Fe E. 1 8 44.56 9 TOLENTINO, Corazon D. 1 9 44.56 10 CANLAS, Eden B. 1 10 44.56 11 SANDOVAL, Ma. Joana C. 1 11 44.56 12 COJAMCO, Josiella A. 1 12 44.56 13 JALA, Rosita P. 2 1 44.56 14 BOTIQUIN, Alwin B. 2 2 44.56 15 TRONCOSO, Herman D. 2 3 44.56 16 MAGBANUA, Patricia T. 2 4 44.56 17 ARROYO, Leonora O. 2 5 44.56 18 GARCIA, Jane D. 2 6 44.56 19 BARASONA, Jonjon S. 2 7 44.56 20 NABOR, Virgilio Jr. G. 2 8 44.56 21 GALANG, Restituto C. 2 9 44.56 22 FRANCISCO, Joselito G. 2 10 44.56 23 BARBOSA, Carina C. 2 11 44.56 24 SULAT, Nora D. 2 12 44.56 25 ESTORMINOS, Emy A. 2 13 44.56 26 AGUACITO, Arlyn E. 2 14 44.56 27 HILARIO, Haydee A. 2 15 44.56 28 GALANZA, Julie B. 2 16 44.56 29 BOLOS, Jolex B. 2 17 44.56 30 LALANGAN, Fernando E. 2 18 44.56 31 LALANGAN, Pedro Jr. E. 2 19 44.56 32 PESIGAN, Feneth B. 2 20 44.56 33 PESIGAN, Marissa Q. 2 21 44.56 34 JASMIN, Michael A. 2 22 44.56 35 PESIGAN, Philip B. 2 23 44.56 36 FABABAER, John S. 2 24 44.56 37 MACANDOG, Antonio J. 2 25 44.56 38 MACANDOG, Ruth M. 2 26 44.56 39 TORMIS, Melvin P. 2 27 44.56 40 MARTINEZ, Jimly O. 3 1 44.56 41 VELIGANIO, Dindo O. 3 2 44.56 42 MEJIA, Rosalina R. 3 3 44.56 43 RUAYA, Ronnie P. 3 4 44.56 44 ARAMAN, William A. 3 5 44.56 45 BANICO, Felicidad C. 3 6 44.56 46 CARATAO, Danilo B. 3 7 44.56 47 GOLDE, Loreto L. 3 8 44.56 48 BALODOYA, Julian B. 3 9 44.56 49 DIAMPOC, Dan B. 3 10 44.56 50 VILLARAN, Rosalina P. 3 11 44.56 51 CACHO, Tommy C. 3 12 44.56 52 REBITA, Jacinto P. 3 13 44.56 53 FERNANDEZ, Crisente D. 3 14 44.56 54 LATOSA, Cornelio C. II 3 15 44.56 55 LATOSA, Christopher C. 3 16 44.56 56 ANTONIO, Manuel I. 3 17 44.56 57 CACHO, Gerry C. 3 18 44.56 58 MORALDE, Elizabeth R. 3 19 44.56 59 GANDOL, Arsenia B. 3 20 44.56 60 BELEN, Ronaldo M. 3 21 44.56 61 BALANE, Avelardo R. 3 22 44.56 62 BALANE, Yolanda A. 3 23 44.56 63 BARIA, Noel B. 3 24 44.56 64 DASALLA, Helbert L. 3 25 44.56 65 SANDOVAL, Erlinda C. 3 26 44.56 66 BELEN, Arturo M. 3 27 44.56 67 PANCHO, Gina S. 3 28 44.56 68 GUANZON, Ilyn C. 3 29 44.56 69 NORTE, Rommel B. 3 30 44.56 70 OSIA, Val-Dominick N. 3 31 44.56 71 BAYAGA, Jaime G. 3 32 44.56 72 SIMO, Elvira P. 3 33 44.56 73 VALIENTE, Diana Mae C. 3 34 44.56 74 LEGURPA, Noel C. 3 35 44.56 75 MATABA, Eduardo P. 3 36 44.56 76 MATABA, Michelle N. 3 37 44.56 77 MATABA, Marlon Marvin F. 3 38 44.56 78 BAYADOG, Arsenio P. 3 39 44.56 79 MAGBANUA, Norberta T. 3 40 44.56 80 PANTALEON, Princess, P. 4 1 44.56 81 VENUS, Mary Jane B. 4 2 44.56 82 NUEZ, Nelson H. 4 3 44.56 83 MINERALES, Frandie F. 4 4 44.56 84 CABALLERO, Aida M. 4 5 44.56 85 BAGUNA, Rowena A. 4 6 44.56 86 ALEGADO, Wendel T. 4 7 44.56 87 BAGONA, Rita A. 4 8 44.56 88 BUENAVISTA, Edgar A. 4 9 44.56 89 VALIENTE, Danilo N. 4 10 44.56 90 PANTALEON, Lolito V. 4 11 44.56 91 MIANO, Fredmark S. 4 12 44.56 92 MACANDOG, Jay-ar T. 4 13 44.56 93 MILA, Mitz P. 4 14 44.56 94 ROMANA, Ruben Sr. N. 4 15 44.56 95 ROMANA, Jero L. 4 16 44.56 96 EMUSLAN, Renalyn C. 4 17 50.13 97 BARRIDA, Rosita G. 4 18 73.81 98 CONTAYOSO, Lorna B. 5 1 44.56 99 SEVILLA, Ma. Cristina M. 5 2 44.56 100 TAMBO-ON, Dely S. 5 3 44.56 101 CONTAYOSO, Lorene B. 5 4 44.56 102 DOMENS, Alexander E. 5 5 44.56 103 LLARENA, Mary Grace S. 5 6 44.56 104 BARUC, Jocelyn S. 5 7 44.56 105 MILLARES, Arnel P. 5 8 44.56 106 SOLANO, Gil O. 5 9 44.56 107 MACADAYA, Carmelita S. 5 10 44.56 108 CASINELLO, Teodoro L. 5 11 44.56 109 GANDOL, Alvin B. 5 12 44.56 110 TERUEL, Janesto B. 5 13 44.56 111 PANALIGAN, Evangeline DJ. 5 14 44.56 112 ALCANTARA, Laurea C. 5 15 44.56 113 PANTALEON, Jhenlet P. 5 16 37.60 114 SIBUNGA, Allan F. 5 17 44.56 115 ANGELES, Roxanne M. 5 18 29.24 116 MACANDOG, Agapito N. 6 1 44.56 117 MACANDOG, Michael T. 6 2 44.56 118 AGUILAR, Francisco Jr. P. 6 3 44.56 119 CORPORAL, Manilyn E. 6 4 44.56 120 ARAMAN, Marlon V. 6 5 44.56 121 ARAMAN, Arnulfo R. 6 6 44.56 122 LATOSA, Amalia A. 6 7 44.56 123 BASCO, Julie Ann C. 6 8 44.56 124 PANO, Adelfa B. 6 9 44.56 125 ASTORGA, Jose O. 6 10 44.56 126 ASTORGA, Braulio Jr. O. 6 11 44.56 127 LALANGAN, Dwine Angelo L. 6 12 44.56 128 SANDOVAL, Claudette B. 6 13 44.56 129 MENDOZA, Federico L. 6 14 55.70 130 SUASE, Eulita V. 6 15 44.56 131 BOLOS, Alex R. 6 16 44.56 132 BOLOS, Asterio Jr. R. 6 17 44.56 133 POLINAR, Godofredo Q. 6 18 44.56 134 REZABA, Lilibeth C. 6 19 44.56 135 MACANDOG, Elena O. 6 20 44.56 136 AGUACITO, Roderick E. 6 21 44.56 137 GACOSTA, Elizabeth G. 6 22 44.56 138 ASTORGA, Jay-ar R. 6 23 44.56 139 TORETA, Marline V. 6 24 44.56 140 BARIA, Joaquin Jr. B. 6 25 55.70 141 GARCIA, Teresita B. 6 26 48.74 142 SALVO, Fernan S. 6 27 44.56 143 CRUZ, Cherry Lyn S. 6 28 44.56 144 CRUZ, Jose Jr. B. 6 29 44.56 145 SANDOVAL, Genovevo G. 6 30 44.56 146 ARAMAN, Brando V. 6 31 44.56 147 GARCIA, Erlinda G. 6 32 44.56 148 GUTIERREZ, Rochelle R. 6 33 44.56 149 GUTIERREZ, Rommel R. 6 34 44.56 Footnotes 1. Aida Macaraig Posadas 1,333.33 sq.m. and Luis M. Posadas 666.67 sq.m. 2. Aida Macaraig Posadas 10,085.34 sq.m. and Luis M. Posadas 5,042.66 sq.m. 3. See Annex for the masterlist of qualified beneficiaries.