BIR Ruling No. 431-13

November 14, 2013 BIR RULING NO. 431-13 RA No. 7279; BIR Ruling No. 109-13 Dulong Bayan Homeowners' Association, Inc. Brgy. Bambang, Taguig City Attention: Jannette U. Urbano President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated May 17, 2013, endorsing the sale transaction between BDO Unibank, Inc. (formerly Equitable Savings Bank) and Dulong Bayan 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". CAaSHI Documents submitted disclosed that BDO Unibank, Inc. (formerly Equitable Savings Bank) (TIN: 000-708-174-000) is the registered owner of a parcel of land, identified as Lot 1 of the subd. plan Psd-00-082955, being a portion of plan PSD-248543 covered by Transfer Certificate of Title (TCT) No. 164-2013000207 issued by the Registry of Deeds for Taguig City. The aforesaid property is situated at Brgy. Bambang, Taguig City with an area of Six Thousand Nine Hundred Eighty square meters (6,980 sq.m.),more or less. Dulong Bayan Homeowners' Association, Inc. (TIN: 247-379-771-000),on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB).On March 7, 2013, the parties executed a Deed of Absolute Sale whereby the owner transferred and conveyed the subject property to Dulong Bayan Homeowners' Association, Inc. at an agreed price of Ten Million Four Hundred Seventy Thousand Pesos (P10,470,000.00).Pursuant to the certification dated May 23, 2013 issued by SHFC, the property covered by TCT No. 164-2013000207 is actually a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Dulong Bayan 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). In support of its request, Dulong Bayan Homeowners' Association, Inc. has completely submitted on May 28, 2013 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 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 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 SCaDAE 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 Dulong Bayan Homeowners' Association, Inc. of the property covered by TCT 164-2013000207 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 caused to 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 landowner is 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) Moreover, under Section 109 (1) (P) of the Tax Code, as amended by RA 9337, the sale of real properties utilized for low-cost and socialized housing as defined by RA No. 7279 shall be exempt from VAT, thus, the sale of the aforestated property by BDO Unibank, Inc. to Dulong Bayan Homeowners' Association, Inc. is exempt from the imposition of VAT. EcDSHT Notwithstanding the foregoing, the Bureau of Internal Revenue shall conduct verification and post-audit that the actual occupants of the properties 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 Dulong Bayan Homeowners' Association, Inc. Brgy. Bambang, Taguig City Name of Beneficiary Blk. No. Lot Total Area No. (sq.m.) 1 Redentor, Afable S. 1 1 42.01 2 Largo, Felylibeth B. 1 2 31.87 3 Omambac, Julian Jr. R. 1 3 31.87 4 Fabillar, Ma. Vilma P. 1 4 31.87 5 Udtohan, Luis F. 1 5 31.87 6 Montino, Gina L. 1 6 31.87 7 Montino, Randy L. 1 7 31.87 8 Nipa, Nelia A. 1 8 31.87 9 Fajardo, Enone M. 1 9 31.87 10 Arezalita, Lilian B. 1 10 42.01 11 Albay, Loreto D. 2 1 31.87 12 Cayamay, Zosimo, Jr. A. 2 2 43.46 13 Navarrete, Perla B. 2 3 43.46 14 Panesales, Rosalina F. 2 4 43.46 15 Tolibas, Castor Jr. C. 2 5 43.46 16 Nasis, Rowena R. 2 6 43.46 17 Priete, Edgar C. 2 7 43.46 18 Sumugat, Rene L. 2 8 43.46 19 Rentoria, Robert L. 2 9 43.46 20 Borlaza, Juna V. 2 10 43.46 21 Dela Cruz, Ramona L. 2 11 43.46 22 Llames, Lorenzo M. 2 12 43.46 23 Vergara, Ariston D. 2 13 43.46 24 Plan, Mark Joseph S. 2 14 43.46 25 Lelis, Jesse R. 2 15 43.46 26 Hallare, Richel B. 2 16 43.46 27 Serdan, Bernabe M. 2 17 43.46 28 Gujelde, Noel B. 2 18 43.46 29 Cauilan, Myra C. 2 19 43.46 30 Dolendres, Roland C. 2 20 43.46 31 Lampa, Ederlina B. 2 21 43.46 32 Guillar, Noel N. 2 22 55.05 33 Teves, Jeffrey A 3 1 46.36 34 Cabe, Manuel B. 3 2 44.91 35 Cabe, Celso B. 3 3 44.91 36 Villegas, Arlene B. 3 4 43.46 37 Gianag, Freddie L. 3 5 43.46 38 Tolilic, Edwin F. 3 6 43.46 39 Niebres, Ma. Esabel N. 3 7 43.46 40 Andrade, Eleonor Ruby R. 3 8 43.46 41 Cabas, Runiel Z. 3 9 43.46 42 Agcaoili, Alan S. 3 10 43.46 43 Palaming, Percival S. 3 11 43.46 44 Agcaoili, Vivencio, Jr. M. 3 12 43.46 45 Dugang, Chona C. 3 13 43.46 46 Carillo, Jume G. 3 14 43.46 47 Pababero, Maricris R. 3 15 43.46 48 Urbano, Jannette U. 3 16 43.46 49 Porras, Reynaldo E. 3 17 43.46 50 Odejerte, Ma. Reda F. 3 18 43.46 51 Borlaza, Beniffel A. 3 19 43.46 52 Ycoy, Genalyn B. 3 20 53.60 53 Ikan, Saturnina F. 3 21 50.71 54 Llames, Hazel L. 3 22 50.71 55 Labustro, Elma P. 4 1 47.81 57 * Dacumos, Marcelino L. 4 3 43.46 58 Mabalatan, Prescilla D. 4 4 43.46 59 Ballados, Wilma G. 4 5 43.46 60 Pamada, Renato Jr. B. 4 6 43.46 61 Daaca, Daniel C. 4 7 43.46 62 Yango, Edgardo R. 4 8 43.46 63 Centeno, Jaylord G. 4 9 43.46 64 Daan, Ma. Teresa M. 4 10 43.46 65 Muoz, Edna D. 4 11 43.46 66 Relucio, Teresita T. 4 12 43.46 67 Balber, Diosdado C. 4 13 43.46 68 Gadingan, Marivic J. 4 14 43.46 69 Baldomero, Roberto T. 4 15 43.46 70 Arador, Adora M. 4 16 43.46 71 Relatorres, Jose V. 4 17 43.46 72 Aguilar, Randy D. 4 18 43.46 73 Lambrento, Ma. Arizan M. 4 19 43.46 74 Bolisig, Alejandre A. 4 20 44.91 75 Glorioso, Lornel C. 5 1 46.36 76 Flores, Marco D. 5 2 44.91 77 Tinambacan, George P. 5 3 44.91 78 Yangson, Rolando B. 5 4 43.46 79 Ballados, Anjo Welter G. 5 5 43.46 80 Guarino, Nenita M. 5 6 43.46 81 Testigo, Josie B. 5 7 43.46 82 Guarino, Pio M. 5 8 43.46 83 Faeldonia, Edgar P. 5 9 43.46 84 Callueng, Ronel L. 5 10 43.46 85 Labustro, Charles P. 5 11 43.46 86 Ordonio, Lini L. 5 12 43.46 87 Lignes, Ramil L. 5 13 43.46 88 Sandoval, Grace D. 5 14 43.46 89 Neri, Castro H. 5 15 43.46 90 Clavesillas, Renato L. 5 16 43.46 91 Novero, Flordeliza S. 5 17 43.46 92 Tadique, Ligaya D. 5 18 43.46 93 Largo, Andrea L. 5 19 43.46 94 Pinero, Angelito B. 5 20 43.46 95 Villacin, Arnel B. 5 21 43.46 96 Basillote, Reynaldo B. 5 22 46.36 97 Paller, Robert R. 5 23 46.36 98 Cardiente, Eddie R. 5 24 46.36 99 Dano, Dario J. 6 1 44.91 100 Narag, Sofia G. 6 2 27.53 101 Supat, Carlota C. 6 3 43.46 102 Zabalo, Mary Ann V. 6 4 43.46 103 Saren, Robert P. 6 5 43.46 104 Datoon, Lorenzita N. 6 6 43.46 105 Briagas, Merle N. 6 7 43.46 106 Villanueva, Ruben M. 6 8 43.46 107 Espinosa, Ivy S. 6 9 43.46 108 Dela Cruz, Chris Aljen D. 6 10 43.46 109 Ramos, William M. 6 11 43.46 110 Rupio, Joan L. 6 12 43.46 111 Delos Santos, Lorena S. 6 13 43.46 112 Espena, Jomar S. 6 14 43.46 113 Naputo, Matias D. 6 15 43.46 114 Cabanlit, Lucia B. 6 16 43.46 115 Sario, Reynaldo P. 6 17 43.46 116 Alcain, Roselyn B. 6 18 43.46 117 Torres, Manuel Jr. M. 6 19 43.46 118 Berdin, Ely B. 6 20 43.46 119 Lindo, Ruel T. 6 21 43.46 120 Sarono, Pedro V. 6 22 43.46 121 Sison, Zaldy P. 6 23 43.46 122 De Leon, Erlinda J. 6 24 43.46 123 De Leon, Severino M. 6 25 46.36 124 Nacion, Gina M. 7 1 43.46 125 Bonita, Jacqueline P. 7 2 43.46 126 Llaguno, Sara Jean L. 7 3 43.46 127 Bicada, Leonino P. 7 4 43.46 128 Tabalan, Floserpida C. 7 5 43.46 129 Borais, Ulysis B. 7 6 43.46 130 Briagas, Mercedes M. 7 7 43.46 131 Unaid, Abdulgafor Jr. D. 7 8 43.46 132 Caiga, Jose A. 7 9 43.46 133 Tagle, Sisenando M. 7 10 43.46 134 Villacacan, Arden Jay M. 7 11 43.46 135 Oandasan, Jonathan S. 7 12 43.46 136 Sinamay, Julie B. 7 13 43.46 137 Atienza, Maricel S. 7 14 43.46 138 Rama, Antonieta V. 7 15 43.46 139 Lacson, Helen F. 7 16 43.46 140 Valmoria, Joselito G. 7 17 43.46 141 Faeldonia, Nilda C. 7 18 43.46 142 Daaca, Mary Jane C. 7 19 43.46 143 Bueno, Imelda M. 7 20 43.46 144 Maceda, Mark Joseph C. 7 21 43.46 145 Aliban, Rolando L. 7 22 43.46 146 Pedregosa, John B. 7 23 43.46 147 Breboneria, Bryan P. 7 24 55.05 148 Galleto, Edmundiego M. 7 25 49.26 149 Pabunan, Allan C. 8 1 53.60 150 Bolima, Leny N. 8 2 43.46 151 Somosot, Ferdinand R. 8 3 43.46 152 Prajinog, Richard M. 8 4 43.46 153 Alfaro, Marlon M. 8 5 43.46 154 Cabas, Elvis S. 8 6 43.46 155 Bulanadi, Erwin O. 8 7 43.46 156 Fenid, Ma. Annabelle B. 8 8 43.46 157 Faeldonea, Lanie S. 8 9 43.46 158 Avergonzado, Ailyn G. 8 10 43.46 159 Arania, Arwel I. 8 11 43.46 160 Pelarion, Ian Yholie A. 8 12 43.46 161 Cano, Jewilyn F. 8 13 43.46 162 Amalia, Fely T. 8 14 55.05 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.