BIR Ruling No. 435-13

November 14, 2013 BIR RULING NO. 435-13 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10 La Paz Homeowners Association, Inc. Zone 1, La Paz, Zamboanga City Attention: Joselito S. Bernardo President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated May 20, 2013, endorsing the sale transaction between Estrella S. Bernardo-Gagnier and La Paz 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". aEHTSc Documents submitted disclose that Estrella S. Bernardo (TIN 925-130-126-000) (hereinafter referred to as landowner) is the registered owner of two (2) parcels of land covered by two (2) Transfer Certificates of Title, to wit: TCT No. Area (sq.m.) Tax Declaration No. T-88,353 19,582 1101009100216 T-104,323 11,267 1101009100005 30,849 ====== issued by the Registry of Deeds for the Zamboanga City. The aforesaid properties are situated at La Paz, Zamboanga City. La Paz Homeowners Association, Inc. (TIN 006-285-270-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On December 10, 2010, the parties executed a Deed of Absolute Sale whereby the landowner transferred and conveyed Twenty Nine Thousand Seven Hundred Four square meters (29,704 sq.m.) portion of the subject properties to La Paz Homeowners Association, Inc. at an agreed price of Fourteen Million Eight Hundred Fifty Two Pesos (P14,852,000.00). * Pursuant to the certification dated December 10, 2012 issued by SHFC, Twenty Nine Thousand Seven Hundred Four square meters (29,704 sq.m.) out of the total Thirty Thousand Eight Hundred Forty Nine square meters (30,849 sq.m.) covered by TCT Nos. T-88,353 and T-104,323 actually comprises a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, La Paz 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, La Paz 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; DAcSIC 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 landowners to La Paz Homeowners Association, Inc. of Twenty Nine Thousand Seven Hundred Four square meters (29,704 sq.m.) portion of the property covered by TCT Nos. T-88,353 and T-104,323 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 properties 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 owners are 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 realties 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. 040-10 dated August 27, 2010) 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. TEAICc 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 La Paz Homeowners Association, Inc. Zone 1, La Paz, Zamboanga City Blk. Lot Total Area Name of Beneficiary No. No. (sq.m.) 1 Beltran, Nanet 1 1-A 136.24 2 Beebe, Mary Grace 1 1-B 155.49 3 Tubat, Macrino 1 1-C 155.49 4 Cambonga, Josefina 1 1-D 155.49 5 Cebritas, Fely 1 2-A 155.49 6 Solis, Elizabeth 1 2-B 155.49 7 Solis, Enrique 1 3-A 155.49 8 Solis, Joel 1 3-B 156.97 9 Matia-ong, Ronneth 1 4 142.16 10 Matia-ong, Sarah Jean 1 5 142.16 11 Madiales, Rizalde 1 6 142.16 12 Madiales, Dechele 1 7 142.16 13 Agta, Annie Jayleen B. 1 8 142.16 14 Beebe, Anthony 1 9 142.16 15 Saycon, Jester 1 10 142.16 16 Decierdo, Mary Jane 1 11 171.78 17 San Juan, Evangeline 1 12 148.08 18 Hipolito, Lea Mae 1 13 148.08 19 Bernardo, Florina 1 14 148.08 20 Aviola, Antonio 1 15 148.08 21 Rebarbas, Gina 1 16 148.08 22 Ituralde, Teresita 1 17 148.08 23 Caare, Joel 1 18 148.08 24 Diquito, Mariano 1 19 148.08 25 Dilao, Renee Rose 1 20 148.08 26 Elnas, Myrna 1 21 148.08 27 Francisco, Jerwin 1 22 148.08 28 Barredo, Luzminda 1 23 148.08 29 Matchon, Josephine 1 24 148.08 30 Maghanoy, Marcelina 1 25 148.08 31 Gahinanan, Felomina 1 26 148.08 32 Ducay, Greg 1 27 148.08 33 Panglilingan, Jessen 1 28 148.08 34 Bautista, Salvacion 1 29 148.08 35 Flores, Freddie 1 30 148.08 36 Gregorio, Ma. Christina 1 31 148.08 37 Abarro, Hector 1 32 148.08 38 Abarro, Hannie 1 33 148.08 39 Zamora, Ronilo 1 34 148.08 40 Juaton, Renato 1 35 137.72 41 Juaton, Cristine Joy 1 36 136.24 42 Catubig, Fernando 1 37 171.78 43 Bonsilao, Wennie 1 38 148.08 44 Delima, Charlene 1 39 148.08 45 Guirit, Juliet 1 40 148.08 46 Badayos, Marissa 1 41 148.08 47 Baral, Lendrix 1 42 148.08 48 Salaritan, Indgris 1 43 148.08 49 Mangodlay, Roselyn 1 44 148.08 50 Angkibo, Virginia 1 45 148.08 51 Alba, Flordeliz 1 46 148.08 52 Betongga, Melva 1 47 148.08 53 Ramirez, Emily 1 48 148.08 54 Tuanda, Anabel 1 49 148.08 55 Hernando, Rhoda 1 50 149.56 56 Lilio, Edson 2 1-A 131.79 57 Lintag, Ma. Lorna 2 1-B 148.08 58 Sulong, Cris Mark 2 1-C 148.08 59 Lilio, Edvie Jay 2 1-E 148.08 60 Manipol, Henry 2 1-F 148.08 61 Loba, Cherill 2 2-A 148.08 62 Loba, Alberto 2 2-B 148.08 63 Loba, Winston 2 2-C 148.08 64 Pabilona, Arlan 2 3 148.08 65 Agabon, Lolita 2 4 148.08 66 Tagal, Stephen 2 5 148.08 67 Tagal, Marlon 2 6 148.08 68 Sapalida, Ailene 2 7 148.08 69 Embudo, Luz 2 8 182.14 70 Viray, Randy 2 9 148.08 71 Taping, Dendo 2 10 148.08 72 Taping, Juvy 2 11 148.08 73 Francisco, Darcy Roy 2 12 148.08 74 Francisco, Vicmar 2 13 148.08 75 Martinez, Nimfa 2 14 148.08 76 Pabilona, Loida 2 15 148.08 77 Caedo, Reynaldo 2 16 148.08 78 Francisco, Angelo 2 17 148.08 79 Aloquin, Lowela 2 18 148.08 80 Navidad, Welfredo 2 19 148.08 81 Villanueva, Rey 2 20 148.08 82 Dangate, Emmanuel 2 21 148.08 83 Baustista, Reynaldo 2 22 148.08 84 Felix, Jr., Rodolfo 2 23 148.08 85 Francisco, Albert 2 24 148.08 86 Francisco, Analie 2 25 148.08 87 Clario, Nelson 2 26 148.08 88 Delima, Gerly 2 27 148.08 89 Paculanang, Joy May 2 28 148.08 90 Alivio, Ronilo 2 29 148.08 91 Osal, Cristina 2 30 148.08 92 Cambalon, Joseph 2 31 148.08 93 Momper, Chona 2 32 148.08 94 Dela Cerna, Jonedel 2 33 148.08 95 Medellin, Angelique 2 34 148.08 96 Medellin, Oliver 2 35 148.08 97 Rizardo, Joan 2 36 148.08 98 Ambat, Noel 2 37 148.08 99 Calderon, Elizabeth 2 38 148.08 100 Villa, Eufracio 2 39 137.72 101 Bernardo, Joselito 3 1 146.60 102 Marabas, Eliza 3 2 149.56 103 Bernardo, Elmer 3 3 148.08 104 Marabas, Yolanda 3 4 148.08 105 Delator, Ruel 3 5 148.08 106 Pimentel, Danilo 3 6 148.08 107 Francisco, Arlyn 3 7 148.08 108 Pimentel, Evelyn 3 8 148.08 109 Deyro, Elinor 3 9 148.08 110 Caubat, Reynante 3 10 148.08 111 Quililan, Pedro 3 11 148.08 112 Abella, Jose 3 12 148.08 113 Lacabe, Allan 3 13 148.08 114 Toledo, Dolores 3 14 148.08 115 Sumogue, Esther Chistine 3 15 148.08 116 Delos Santos, Maricris 3 16 148.08 117 Tanji, Kristine 3 17 148.08 118 Flores, Merissa 3 18 148.08 119 Pimentel, Rogelio 3 19 148.08 120 Mariano, Melinda 3 20 148.08 121 Rafols, Carlos David 3 21 148.08 122 Eslao, Sr., Reynald 3 22 148.08 123 Siva, Agnes 3 23 148.08 124 Flores III, Luis 3 24 148.08 125 Siva, Joel 3 25 148.08 126 Flores, Florante 3 26 148.08 127 Ignacio, Rodel 3 27 148.08 128 Narico, Jr., Vito 3 28 148.08 129 Calderon, Elenita 3 29 149.56 130 Galon, Alma 3 30 148.08 131 Garcia, Jane Wayne 3 31 148.08 132 Lacsina, Roche 3 32 148.08 133 Lacsina, Orlando 3 33 148.08 134 Flores, Danny 3 34 148.08 135 Flores, Joseph 3 35 148.08 136 Jeremias, Babor 3 36 148.08 137 Flores, Remon 3 37 148.08 138 Babor, Aufran Jim 3 38 148.08 139 Ramirez, Zofilkar 3 39 148.08 140 Palmero, Ronilda 3 40 148.08 141 Ramirez, Nasser 3 41 148.08 142 Mosqueda, Merlinda 3 42 148.08 143 Mosqueda, Merychelle 3 43 148.08 144 Belonio, Michelle 3 44 148.08 145 Benori, Joel 3 45 148.08 146 Paculanang, Rudith 3 46 148.08 147 Benori, Junel 3 47 148.08 148 Boliver, Roselyn 3 48 148.08 149 Siva, Jeneffer 3 49 148.08 150 Del Rosario, Ana Marie 3 50 148.08 151 Ragay, Ma. Joana Marie 3 51 148.08 152 Mosqueda, Myrna 3 52 162.89 153 Enoy, Arlene 3 53 148.08 154 Abrenica, Neil 3 54 148.08 155 Sanchez, Zaila Gail 3 55 148.08 156 Belmonte, Russel Joy 3 56 148.08 157 Sanchez, Zehcnas 3 57 162.89 158 Castro, Emmadel 4 1 148.08 159 Quintanilla, Lorraine 4 2 148.08 160 Bucoy, Joey 4 3 148.08 161 Quintanilla, Dexter 4 4 148.08 162 Bucoy, Ana Marie 4 5 148.08 163 Falcasantos, Edna 4 6 148.08 164 Ricardo, Fredelyn 4 7 148.08 165 Visperas, Rolynit 4 8 148.08 166 Godinez, Narcisa 4 9 148.08 167 Ocariza, Andrew 4 10 148.08 168 Camporedondo, Melona 4 11 148.08 169 Castro, Carmelita 4 12 148.08 170 Tabat, Elvira 4 13 148.08 171 Castro, Geoffrey 4 14 148.08 172 Tomboc, Rodrigo 4 15 148.08 173 Chavez, Enriqueta 4 16 148.08 174 Tomboc, Daniel 4 17 148.08 175 Cansing, Marina 4 18 148.08 176 Caubat, Ronilo 4 19 148.08 177 Dayapdapan, Lorena 4 20 148.08 178 Usin, Ester 4 21 148.08 179 Villa, Froilan 4 22 148.08 180 Estrellas, Aimee 4 23 148.08 181 Padojinog, Ma. Rosario 4 24 148.08 182 Lizondra, Arlene 4 25 148.08 183 Acierto, Margie 4 26 148.08 184 Dabon, Alvin 4 27 148.08 185 Delos Reyes, Rhealiza 4 28 148.08 186 Tantiado, Rolando 4 29 148.08 187 Delos Reyes, Danilo 4 30 148.08 188 Panglilingan, Esmeraldo 4 31 148.08 189 Delos Reyes, Marichu 4 32 148.08 190 Sinahon, Alfredo 4 33 148.08 191 Rivera, Riza 4 34 148.08 192 Ramillano, Joel 4 35 148.08 193 Rivera, Ruth May 4 36 148.08 194 Juaton, Luvisminda 4 37 148.08 195 Mejidana, Judith 4 38 148.08 196 Tomboc, Ma. Florivel 4 39 148.08 197 Mosqueda, Jeany 4 40 148.08 198 Teedo, Nicofran 4 41 155.49 199 Dicdican, Lolita 4 42 155.49 200 Ducay, Dick G. 4 43 155.49 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.