BIR Ruling No. 430-15

December 17, 2015 BIR RULING NO. 430-15 RA No. 7279; BIR Ruling No. 053-15 Recomville I Homeowners Association, Inc. Phase 2-A Recomville I, Brgy. 170, Deparo, Caloocan City Attention: Azucena Alcanzado President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated October 27, 2014, endorsing the sale transaction between Inter-Urban Developers, Inc. and Recomville I Homeowners Association, Inc. Phase 2-A 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". cSEDTC Documents submitted disclose that Inter-Urban Developers, Inc. (TIN 000-914-278-000) (hereinafter referred to as Landowner) is the registered owner of three (3) parcels of land covered by three (3) Transfer Certificates of Title (TCT), to wit: TCT No. Lot No. Tax Declaration No. Area (sq.m.) C-23061 809-New B-1 24-170-00266-R 5,001 T-87876 638 24-170-00265-R 15,386 T-87877 639 24-170-00058-R 8,973 total area 29,360 ======= all issued by the Registry of Deeds for the Metro Manila District III. The aforesaid properties are situated at Barrio Road, Brgy. 170, Caloocan City. Recomville I Homeowners Association, Inc. Phase 2-A (TIN: 246-872-555-000), on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB). On June 27, 2014, the parties executed a Deed of Absolute Sale whereby the Landowner transferred and conveyed Four Thousand Six Hundred Forty Five square meters (4,645 sq.m.) portion of the subject properties to Recomville I Homeowners Association, Inc. Phase 2-A 1 at an agreed price of Eight Million Five Hundred Ninety Three Thousand Two Hundred Fifty Pesos (P8,593,250.00) under Community Mortgage Program (CMP) of the SHFC. Pursuant to the certification issued by SHFC, 4,645 sq.m. out of 29,360 sq.m. covered by TCT Nos. C-23061, T-87876 and T-87877 actually comprise a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 2 For this purpose, Recomville I Homeowners Association, Inc. Phase 2-A 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. In support of its request, Recomville I Homeowners Association, Inc. Phase 2-A has completely submitted on August 7, 2015 the following documents: 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC that the subject properties actually comprise a CMP project; 3) Certified true copy of the Letter-Guaranty; 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 Properties 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 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 Recomville I Homeowners Association, Inc. Phase 2-A of the 4,645 sq.m. portion out of 29,360 sq.m. covered by TCT Nos. C-23061, T-87876 and T-87877 is exempt from the capital gains tax. SDAaTC Upon issuance of this letter of exemption, and upon registration of the document of sale, a lien on the Certificates 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 properties, to the effect that the said properties shall be used for socialized housing pursuant to RA No. 7279. (BIR Ruling No. 053-15 dated February 27, 2015) 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 landowner is liable to pay the documentary stamp tax on the documents conveying the afore-stated properties 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. 053-15 dated February 27, 2015) 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 4,645 sq.m. portion out of 29,360 sq.m. covered by TCT Nos. C-23061, T-87876 and T-87877 by the landowner to Recomville I Homeowners Association, Inc. Phase 2-A is exempt from the imposition of VAT. (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 RMO 15-2003. (BIR Ruling No. 053-15 dated February 27, 2015) 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 seller is 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 Recomville I Homeowners Association, Inc. Phase 2-A Recomville I, Brgy. 170, Deparo, Caloocan City Name of Beneficiary Blk. No. Lot No. Total Area (sq.m.) 1 Caluya, Arthur D. 14 26 46.42 2 Olvinar, Sarah C. 14 30 46.42 3 Balela, Joel P. 14 31 46.42 4 Damian, Rodolfo Jr. M. 14 32 46.42 5 Reloj, Marilyn R. 14 33 46.42 6 Marabut, Generosa A. 14 34 46.42 7 Mabansag, Clodualdo M. 14 35 46.42 8 Paclibar, Raymond A. 14 36 46.42 9 Begante, Atanacio M. 14 38 46.42 10 Macali, Francia A. 14 39 45.10 11 Aristotle, Flor A. 14 40 46.42 12 Alcanzado, Conchita O. 14 41 46.42 13 Robles, Renato D. 14 42 46.42 14 Felipe, Benjamin S. 14 43 46.42 15 Roda, Feliza T. 14 44 46.42 16 Sarmiento, Nerva R. 14 45 46.42 17 Delacruz, Analiza L. 14 46 46.42 18 Garduque, Ma. Victoria G. 14 47 46.42 19 Secopito, Ma. Nelsa V. 14 48 46.42 20 Castanas, Jonathan C. 14 49 46.42 21 Taracina, Ronnie C. 14 50 46.42 22 Patalan, Rhonel B. 14 51 46.42 23 Alfante, Anchona C. 14 52 46.42 24 Refuerzo, Robert T. 25 1 46.42 25 Ueno, Nenita R. 25 2 45.10 26 Poncio, Iluminada R. 25 4 46.42 27 Pineda, Magdalena P. 25 5 46.42 28 Verbo, Gehrald B. 25 6 46.42 29 Angeles, Avelina C. 25 7 46.42 30 Verbo, Gene B. 25 8 46.42 31 Salvador, Gina D. 25 9 46.42 32 Rayanon, Jonathan T. 25 10 46.42 33 Mabelin, Rolando T. 25 11 53.06 34 Gonzales, Maribel G. 25 12 53.06 35 Rayanon, Michael T. 25 13 51.73 36 Rosales, Alma B. 26 1 46.42 37 Esmeralda, Bonifacio I. 26 2 45.10 38 Jove, Rolita B. 26 3 46.42 39 Yongson, Arnold C. 26 4 46.42 40 Jove, Geraldo A. 26 5 46.42 41 Abarquez, Clarita C. 26 6 46.42 42 Alibuyog, Gloria E. 26 7 46.42 43 De Guzman, Aleli D. 26 8 46.42 44 Ytang, Nones U. 26 9 46.42 45 De Guzman, Alex D. 26 10 46.42 46 Ursal, Nestor L. 26 11 46.42 47 Panes, Leo V. 26 12 46.42 48 Poderanan, Mary Jane J. 26 13 42.44 49 Martin, Edgar F. 29 1 46.42 50 Flores, Lean Antonette D. 29 2 45.10 51 Bautista, Felicisimo D. 29 3 46.42 52 Diaz, Chuckie Alexander U. 29 4 46.42 53 Librea, Emilita M. 29 5 46.42 54 Conversion, Vilma C. 29 6 46.42 55 Marcos, Rebecca R. 29 7 46.42 56 Ablaza, Ma. Luisa O. 29 8 46.42 57 Torres, Nieva S. 29 9 46.42 58 Ablaza, Marielle O. 29 10 46.42 59 Nacional, Bella M. 29 11 53.06 60 Damian, Gladys Ann M. 29 12 58.36 61 Vitug, John D. 30 1 46.42 62 Alcanzado, Evangelyn V. 30 2 45.10 63 Sudila, Ma. Charo C. 30 3 46.42 64 Yao, Regina V. 30 4 46.42 65 Paragas, Joel F. 30 5 46.42 66 Abellera, Jessica M. 30 6 46.42 67 Castillo, Apolinario C. 30 7 46.42 68 Maligsay, Susan A. 30 8 46.42 69 Jardillo, Mario M. 30 9 46.42 70 Pareja, Fegelyn G. 30 10 46.42 71 Cubon, Amelia P. 30 11 42.44 72 Ganitano, Gloria A. 30 12 46.42 73 Pesigan, Mary Joy C. 33 1 46.42 74 Casiple, Yolanda S. 33 2 45.10 75 Dalton, Jacquelyn C. 33 3 46.42 76 Giron, Eden C. 33 4 46.42 77 Jarito, Jerlyn C. 33 5 46.42 78 Supremo, Shiela Ann P. 33 6 46.42 79 Hernandez, Lerida G. 33 7 46.42 80 Tangal, Teodita B. 33 8 46.42 81 Torcelino, Lirio H. 33 9 46.42 82 Hobilla, Sheryll P. 33 10 41.12 83 Paragas, Jocelyn F. 33 11 39.79 84 Rosales, Nicomedes Rodel C. 34 1 46.42 85 Rebuliana, Radwel V. 34 2 45.10 86 Lambino, Rhodora B. 34 4 46.42 87 Bernaditt, Kenny A. 34 5 46.42 88 Miquibas, Michael L. 34 6 46.42 89 Bernaditt, Jennalyn A. 34 7 49.08 90 Alcanzado, Azucena O. 34 8 49.08 91 Perez, Ma. Theresa S. 37 1 53.06 92 Mancenido, Sheryll M. 37 2 46.42 93 Tulabing, Cheryl R. 37 5 45.10 94 Lauro, Lucy M. 37 6 46.42 95 Sumido, Salvio S. 37 7 46.42 96 Dantes, Juanito D. 37 8 45.10 97 Patalan, Adonis B. 37 9 35.81 98 Escultura, Cesar B. 40 1 45.10 99 Landeza, Vivian D. 40 2 45.10 100 Mesa, Romeo D. 40 5 45.10 Footnotes 1. Certified by HLURB that Recomville I Homeowners Association, Inc. Phase 2-A was formerly Recomville I Homeowners Association, Inc. Phase 2. 2. See Annex for the masterlist of qualified beneficiaries.