BIR Ruling No. 429-15

December 17, 2015 BIR RULING NO. 429-15 Sec. 32, RA No. 7279; BIR Ruling No. 109-13 Millenium Homeowners' Association, Inc. Sitio Pagkakaisa, Brgy. Sucat, Muntinlupa City Attention : Crisanta V. Eval President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of the Social Housing Finance Corporation (SHFC) dated February 24, 2015, endorsing the sale transaction between Aida Macaraig Posadas, Luis M. Posadas and Millenium 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 a parcel of land, identified as Lot 3-C-2-C of the subdivision plan Psd-13-008036, being a portion of Lot 3-C-2, Psd-13-005108, L.R.C. Record No. 10766 covered by Transfer Certificate of Title (TCT) No. 014-2014001944 issued by the Registry of Deeds for the City of Muntinlupa. The aforesaid property is situated at Brgy. Sucat, Muntinlupa City with an area of Fifteen Thousand One Hundred Twenty Eight square meters (15,128 sq.m. 1 ), more or less. Millenium Homeowners' Association, Inc. (TIN 248-282-821-000), 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 Four Thousand Two Hundred Ninety Two square meters (4,292 sq.m.) portion of the subject property to Millenium Homeowners' Association, Inc. at an agreed price of Seven Million Five Hundred Eleven Thousand Pesos (P7,511,000.00). Pursuant to the certification issued by SHFC, 4,292 sq.m. out of 15,128 sq.m. covered by TCT No. 014-2014001944 actually comprise a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 2 For this purpose, Millenium 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, Millenium 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 4,292 sq.m. portion of the subject property qualifies and is actually a CMP project; 3) SHFC Letter-Guaranty No. 0400; 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; 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" 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 Millenium Homeowners' Association, Inc. of the 4,292 sq.m. portion out of 15,128 sq.m. covered by TCT No. 014-2014001944 is exempt from the capital gains tax. aScITE 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) of 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 Millenium Homeowners' Association, Inc . Sitio Pagkakaisa, Brgy. Sucat, Muntinlupa City Name of Beneficiary Blk. No. Lot No. Total Area (sq.m.) 1 ABALOS, Samuel B. 1 1 50.22 2 LOGATOC, Rio V. 2 50.22 3 VELASQUEZ, Julie G. 3 50.22 4 MAGPANTAY, Mario V. 4 50.22 5 LOBRICO, Vivian C. 5 50.22 6 MAGUDDAYAO, Yolanda B. 6 50.22 7 LONDRES, Jocelyn V. 7 50.22 8 DULVA, Serra A. 8 50.22 9 BERMUNDO, Geoffrey G. 9 50.22 10 BELDAN, Teoderick S. 10 50.22 11 DEUZ, Elizabeth R. 11 50.22 12 DEUZ, Jenevibe R. 12 50.22 13 SALDIBAR, Gina T. 13 50.22 14 ALBURO, Rosalyn A. 14 47.08 15 CALUGAS, Raquel V. 15 50.22 16 DEUZ, Jenelyn R. 16 50.22 17 DOMASIG, Domingo Jr. A. 17 50.22 18 LOGATOC, Mark Edin V. 18 50.22 19 FAUSTINO, Editha L. 1 19 50.22 20 PUNZALAN, Gleceria J. 20 50.22 21 FLORES, Sebeniano G. 21 75.33 22 MISTICA, Apollo P. 22 50.22 23 REBUGHIO, Rafael M. 23 47.08 24 EVAL, Garry V. 24 50.22 25 EGWAY, Edwin A. 25 50.22 26 ODON, Gil A. Jr. 26 50.22 27 MONTILLA, Teodula C. 27 50.22 28 SEBELINA, Robert E. 2 1 50.22 29 BALANI, Joveth M. 2 50.22 30 RAON, Jolly P. 3 50.22 31 BALANI, Richard M. 4 50.22 32 AVILA, Jesus G. 5 50.22 33 MIRANDILLA, Cristina B. 6 50.22 34 AVILA, Jaime M. 7 50.22 35 MADIS, Gina S. 8 50.22 36 CAMANAY, Marites L. 9 50.22 37 PEREZ, Jaime S. 2 10 50.22 38 AQUINO, Ma. Gina B. 11 50.22 39 PISON, Amelita P. 12 50.22 40 ORIOKE, Armando A. 13 50.22 41 BALINGIT, Carlito D. 14 50.22 42 LOBRICO, Jeorge C. 15 50.22 43 LABRADOR, Frelyn L. 16 50.22 44 CORPUZ, Maria Luiza G. 17 50.22 45 TOLENTINO, Jennifer D. 18 50.22 46 MAPILOT, Isabelo R. 19 50.22 47 SUSON, Jocelyn R. 20 50.22 48 DEUZ, Jennifer R. 21 50.22 49 LLARENA, Jay-ar P. 22 50.22 50 CHIONG, Conrado C. 23 50.22 51 TIQUEL, Renante D. 24 50.22 52 CLAMOR, Jeremias A. 25 50.22 53 CAPOQUIAN, Federico B. 26 50.22 54 NOYNAY, Flora R. 2 27 50.22 55 AGUIRAN, Allen P. 28 50.22 56 APAYOR, Babelyn H. 29 50.22 57 EVAL, Crisanta V. 30 50.22 58 VILLEGAS, Eduardo B. 31 50.22 59 TANILON, Ezra T. 32 59.63 60 ENCISO, Elmerto O. 3 1 50.22 61 BACOG, Ronilio A. 2 50.22 62 GLORIA, Juan B. 3 50.22 63 HERNANDEZ, Myrna M. 4 50.22 64 HERNANDEZ, Ramil M. 5 50.22 65 CABAN, Neil S. 6 50.22 66 MARAMAG, Manuel P. 7 50.22 67 PEREZ, Glecerio A. 8 50.22 68 CORLA, Jesserie L. 9 50.22 69 CAPOY, Mark L. 10 50.22 70 CAPOY, David L. 11 50.22 71 NATAD, Leonedes T. 12 50.22 72 BARRERA, Kenneth C. 3 13 50.22 73 BARRA, Cipriano N. 14 50.22 74 CINES, Edgar L. 15 50.22 75 IMPAS, Marilou B. 16 50.22 76 CERBO, Janet L. 17 50.22 77 GALOS, Eusebio L. 18 50.22 78 HERMANO, Jaylyn C. 19 58.06 79 HERMANO, Donna C. 20 50.22 80 GERSTOSANI, Chona H. 21 48.65 81 CHIONG, Darnin C. 22 53.36 82 BARRA, Ericson B. 23 50.22 83 NEYPES, Marites N. 24 50.22 84 ALMIROL, Lotes Key A. 25 42.37 85 CHIONG, Fernando C. 26 43.94 Footnotes 1. Aida Macaraig Posadas 10,085.34 sq.m. and Luis M. Posadas 5,042.66 sq.m. 2. See Annex for the masterlist of qualified beneficiaries.