BIR Ruling No. 452-12

July 10, 2012 BIR RULING NO. 452-12 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10 Samahang Kabuhayan sa Mapulang Lupa Kabuhayan St.,Purok 4 Mapulang Lupa, Valenzuela City Attention: Gloria P. Madayag President Gentlemen : This refers to your letter dated November 24, 2011 requesting for a tax exemption on the sale of real property by George Tiu Ka Siong in favor of Samahang Kabuhayan sa Mapulang Lupa Homeowners Association, Inc. pursuant to Republic Act 7279 otherwise known as the "Urban Development and Housing Act of 1992". It appears that George Tiu Ka Siong married to Louie A. Tiu with Tax Identification Number 101-303-356-000 is the registered owner of a parcel of land, identified as Lot 1174-B-1-B of the subd. plan (LRC) Psd-228656, being a portion of Lot 1174-B-1 (LRC) Psd-71881, LRC Rec. No. 5941 covered by Transfer Certificate of Title (TCT) No. V-69076 issued by the Registry of Deeds for Valenzuela City. The aforesaid property is situated at Brgy. Mapulang Lupa, Valenzuela City with an area of nine thousand two hundred thirty six square meters (9,236 sq.m.),more or less. Samahang Kabuhayan sa Mapulang Lupa Homeowners Association, Inc. with Tax Identification Number 218-749-944-000, on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB).On November 16, 2011, the parties executed a Deed of Sale whereby the owner transfers and conveys eight thousand six hundred eighty square meters (8,680 sq.m.) of the subject property to Samahang Kabuhayan sa Mapulang Lupa Homeowners Association, Inc. at an agreed price of Nineteen Million Ninety Six Thousand Pesos (P19,096,000.00) at Two Thousand Two Hundred Pesos (P2,200.00) per sq.m. Pursuant to a certification issued by Social Housing Finance Corporation, eight thousand six hundred eighty square meters (8,680 sq.m.) of the property covered by TCT No. V-69076 is actually a CMP Project and shall be proportionately distributed to the association's two hundred forty three (243) qualified member-beneficiaries. 1 For this purpose, Samahang Kabuhayan sa Mapulang Lupa Homeowners Association, Inc. secured a housing loan under the Community Mortgage Program (CMP),a financing assistance program of the Social Housing Finance Corporation (SHFC) a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). In reply, please be informed that pursuant to Sections 20 and 32 of RA No. 7279, pertinent portions of which state that: TCDHaE "Sec. 20. Incentives for Private Sector Participating in Socialized Housing. To encourage greater private sector participation in socialized housing and further reduce the cost of housing units for the benefit of the underprivileged and homeless, the following incentives shall be extended to the private sector: (d) Exemption from the payment of the following: (2) Capital gains tax on raw lands used for the project; xxx xxx xxx 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 of the aforestated property by George Tiu Ka Siong to Samahang Kabuhayan sa Mapulang Lupa Homeowners Association, Inc., in so far as the eight thousand six hundred eighty square meters (8,680 sq.m.) portion thereof is concerned 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 R.A. No. 7279. (BIR Ruling No. 130-10 dated December 1, 2010) However, the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Secs. 20 and 32 of RA 7279. Accordingly, George Tiu Ka Siong is liable to pay the documentary stamp tax on the documents 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. 130-10 dated December 1, 2010) 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 RMO15-2003. (BIR Ruling No. 040-10 dated August 27, 2010) aDcTHE 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 ATTACHMENT SAMAHANG KABUHAYAN SA MAPULANG LUPA HOMEOWNERS ASSOCIATION, INC. Kabuhayan St.,Purok 4 Mapulang Lupa, Valenzuela City Name of Beneficiary Blk. Lot Total Area No. No. (sq.m.) 1 ALLAN S. BARRAMEDA 1 1 34.07 2 DIANNALOU A. MABINI 2 29.02 3 PRUDENCIO D. BENEDICTOS 3 32.81 4 MELDEN T. BENEDICTOS 4 25.24 5 DINDO T. MASONG 5 49.21 6 MARK RAY T. LEONARDO 6 29.02 7 HAROLD B. DIGNOS 7 29.02 8 DINO T. MASONG 8 39.12 9 ARNULITO T. TORRENUEVA 9 39.12 10 LUDINA T. DIGNOS 10 25.24 11 MA. VICTORIA M. LEONARDO 11 36.59 12 ALVIN M. LEONARDO 12 36.59 13 JOHN PHILIP P. LEONARDO 2 1 40.38 14 ANDRES JR. D. LEONARDO 2 40.38 15 JONATHAN B. MANLISIS 3 37.85 16 MA. THERESA B. MANLISIS 4 40.38 17 ROLANDO C. RANADA 5 31.55 18 HERMINIA T. ESTRELLA 6 41.64 19 BENJAMIN L. LEONARDO JR. 7 44.16 20 ROGELIO C. RODRIGUEZ 8 46.69 21 MARIO E. ONAYAN 3 1 37.85 22 DANILO M. OSBUAL 2 31.55 23 MELISSA O. GARRA 3 32.81 24 ENRIQUE JR. M. OSBUAL 4 31.55 25 MARFEDINO S. ONAYAN 5 35.33 26 REGALADO G. STA. MARIA 6 26.50 27 SHIRLEY B. PANTI 7 39.12 28 FLORA G. DANTES 8 26.50 29 LEILANY G. BUNTAG 9 26.50 30 SUSAN B. PANTI 10 40.38 31 MANUEL A. QUEQUE 11 35.33 32 REYZEL D. DEQUINA 12 20.19 33 JELITA T. BOROMEO 13 20.19 34 RENALD A. LAPUT 14 18.93 35 SUSANA R. APARECE 15 35.33 36 CARIDAD B. RAMIREZ 16 25.24 37 LEOPOLDO B. BLANCO 17 53.00 38 JULIANA C. NEGRITO 18 25.24 39 LEONILO E. TESIORNA 19 45.43 40 FRANCISCO L. GALINDO SR. 4 1 60.57 41 CERILO I. DANONG 2 26.50 42 JERRY T. ALBANEZ 3 27.76 43 JULIUS CEZAR H. PEDRAJAS 4 36.59 44 LUDOVICO A. SABADLAB 5 25.24 45 ALEJANDRO P. ALDANA 6 29.02 46 MERCYDITA C. CLORES 7 36.59 47 CHANITO A. SABADLAB 8 29.02 48 DENNIS P. CLORES 9 39.12 49 GARRY B. MASONG 10 44.16 50 EDILBERT P. CLORES 11 40.38 51 LARRY B. MASONG 12 42.90 52 JOVENCIO A. DIMAKILING 13 37.85 53 HERNANI S. CAPILLO 14 37.85 54 CRISPINA L. FRANCISCO 15 42.90 55 ARIEL L. FRANCISCO 16 42.90 56 MARILOU M. GIGANTE 5 1 58.04 57 NESTOR T. OMILIO 2 56.78 58 MARK ARTHUR V. MELGAREJO 3 35.33 59 JASMIN P. SAMONTE 4 53.00 60 ARTURO B. MELGAREJO 5 35.33 61 REYNALDO B. SAMONTE 6 53.00 62 ROWENA M. GONZALES 7 35.33 63 ROGER B. SAMONTE 8 54.26 64 RONAN M. GONZALES 9 35.33 65 SHELA O. GINEZ 10 41.64 66 ZAIDA R. OBEA 11 37.85 67 BENJAMIN M. YAKIT, SR. 12 36.59 68 LORENZO M. YAKIT 13 35.33 69 CORNELIO D. MANALANG 6 1 75.71 70 ALEXANDER I. QUIMOY 2 84.54 71 DANILO A. DIMAKILING 3 61.83 72 OFELIA S. CUNTAPAY 4 49.21 73 EDNA D. CERVEZA 5 30.28 74 VIRGINIA T. ORATE 6 31.55 75 JOEL Q. ATOR 7 18.93 76 JOSEPHINE V. PAULINO 8 53.00 77 GREGORIO C. ADRALES, JR. 9 25.24 78 PABLO P. BACUS 10 32.81 79 JULIO L. CUNTAPAY, JR. 11 34.07 80 MARK C. BAUI 7 1 37.85 81 RENATO D. BAUTISTA, JR. 2 29.02 82 PRINCESS D. BAUTISTA 3 23.97 83 JIMMY C. DORAN 4 27.76 84 REY C. BAUI 5 30.28 85 ROSEMARIE R. BENLOT 6 37.85 86 JOB P. DE TOMAS 7 32.81 87 ARCIE B. LOPEZ 8 26.50 88 FORTUNATO V. BENLOT, JR. 9 39.12 89 ARWIN B. LOPEZ 10 23.97 90 DANIEL D. DE LEON 11 35.33 91 NIDA S. MEDENILLA 12 50.47 92 RICHARD O. CALLO 13 36.59 93 ANALYN M. PORLAS 14 25.24 94 GRETA C. RUIZ 15 46.69 95 JESSIE O. SADIRI 16 29.02 96 LORE N. NEROZA 8 1 20.19 97 ANNALIZA B. MONEZ 2 42.90 98 ARMANDO E. SANTOS 3 53.00 99 MA. MARGIE C. TUGAY 4 25.24 100 JOEL D. FELICIANO 5 25.24 101 LAZARO S. MELENCION 6 32.81 102 MARIBETH D. ENQUIG 7 49.21 103 CRISANTO B. FELICIANO 8 26.50 104 JASMIN M. ESTUARIA 9 27.76 105 EDWIN C. ESTUARIA 10 26.50 106 JIMMY M. ESTUARIA 11 27.76 107 AMADO E. SANTOS 12 26.50 108 ARNOLD M. ESTUARIA 13 27.76 109 JIMMY T. MASONG 14 26.50 110 MARVIN V. ALVAREZ 15 37.85 111 RAMIL C. SANTURAL 16 34.07 112 GILBERT I. QUIMOY 17 34.07 113 VILMA V. ALVAREZ 18 39.12 114 ASTERIO V. BARRAMEDA 9 1 50.47 115 CHARLA M. BACTOL 2 50.47 116 MICHAEL GEORGE M. BACTOL 3 23.97 117 CARLOS L. ROJA SR. 4 36.59 118 ARNOLFO B. ROJA 5 36.59 119 ALEXANDER E. FLORES 6 36.59 120 RAQUEL D. BAUTISTA 7 36.59 121 HERMOGENES B. VILLANUEVA 10 1 29.02 122 WILLIAM C. CUENCO, JR. 2 30.28 123 DANILO B. ESTACIO 3 39.12 124 PABLIO R. RANA, JR. 4 39.12 125 MARIVIC C. ORTIZ 5 29.02 126 BERNITA M. SALVADOR 6 37.85 127 FRANCISCO P. PIA 7 36.59 128 MA. FE T. TUASTUMBAN 8 34.07 129 LETICIA M. DORAN 9 37.85 130 EDUARDO S. DU 10 37.85 131 JOHN PAUL L. BATOL 11 30.28 132 FRANCIA C. LIBOON 12 34.07 133 JESUS L. BATOL, JR. 13 30.28 134 MARIE FE B. ABARRATIGUE 14 44.16 135 VALENTINA C. JIMENO 15 18.93 136 DAVE T. RAMOS 16 27.76 137 ERNESTO M. MIRANDA 11 1 39.12 138 APOLONIO A. MICULOB, JR. 2 29.02 139 ROMEO F. EVASCO 3 45.43 140 OMAR C. EVASCO 4 45.43 141 MARYJOY M. SERAMI 5 45.43 142 ANTONIO C. GUERRERO, SR. 6 27.76 143 BERNARDO M. LACHARON, SR. 7 23.97 144 EXCLUDED 145 RONALD L. MIJARES 9 21.45 146 ANNALIZA M. PALOGUER 10 45.43 147 ARCHEY M. BASALLOTE 11 25.24 148 NELLY D. LABITAG 12 21.45 149 JENALYN B. CABILLO 13 21.45 150 JOANNA S. TAKASAWA 14 36.59 151 RONNIE M. QUINTO 15 61.83 152 RENATO C. LOYOLA 16 35.33 153 ALIPIO A. EMPERIO 17 32.81 154 LARRY A. ALMONINIA 18 32.81 155 JULIE D. JUARE 19 34.07 156 MA. FRENNIE D. DESTURA 20 35.33 157 CATHERINE L. BATOL 21 18.93 158 EVELYN S. BALMORES 12 1 29.02 159 SILVESTRE A. MICULOB 2 21.45 160 MARVIN F. CASTRO 3 34.07 161 CHARLIE H. GIMAO 4 32.81 162 MARIO S. DELGADO, JR. 5 25.24 163 JOEL S. DELGADO 6 25.24 164 JAY S. DELGADO 7 25.24 165 MYRNA D. DUYAG 8 29.02 166 ARNOLD G. VILLAGRACIA 9 30.28 167 LEONORA V. FLORES 10 31.55 168 MA. TERESA G. VILLAGRACIA 11 31.55 169 JOSEPHINE G. CALUBAYAN 12 59.31 170 ROSABELLA V. NAKATA 13 1 47.95 171 MODESTO O. GARCIA 2 50.47 172 LEOFELITO R. GRAFANE 3 36.59 173 ARLYN B. ROJA 4 37.85 174 JOCELYN G. MARAVILLA 5 46.69 175 DJOANA O. GARCIA 6 46.69 176 DANTE O. GARCIA JR. 7 46.69 177 JULITO C. MABULAY 8 31.55 178 RENANTE V. BENLOT 9 53.00 179 RODOLFO V. LEONES 10 53.00 180 ALVIN A. BENCION 11 32.81 181 NANCY P. RAMOS 12 25.24 182 EDITHA P. RAMOS 13 63.09 183 MARIVIC F. FORLAJE 14 59.31 184 MARCIAL G. GONZALES 15 58.04 185 JULITO M. BAID 14 1 34.07 186 SENICIO J. BENCION 2 34.07 187 MARY JANE B. ABULON 3 36.59 188 REBECCA M. AVELINO 4 35.33 189 ALEXIS V. BASA 5 30.28 190 HEIDE V. REGASPI 6 29.02 191 MOISES B. PANTALITA 15 1 29.02 192 RITA C. UY 2 25.24 193 JUVY T. BENCION 3 22.71 194 MARVIN M. CAJARA 4 21.45 195 LIMWHILL M. APIT 16 1 34.07 196 ABIGAEL M. BELASIO 2 20.19 197 AVELINO R. MARTIN 3 49.21 198 LAZARO M. MADAYAG 4 30.28 199 MA. INEZ N. GAYORGOR 5 25.24 200 RODRIGO L. MARANA 6 30.28 201 HERMAN L. MARANA 7 30.28 202 DANILO H. HABAB 8 37.85 203 DANICA H. LACDAN 9 34.07 204 IRISH IVY M. MELGAREJO 10 32.81 205 LOUILA V. ALIGATO 11 26.50 206 NORA T. TEJOL 12 25.24 207 AMELITA B. AMOROSO 13 20.19 208 ERLINDA O. CLAVITE 17 1 40.38 209 RENANDE D. DULLIN 2 25.24 210 GINA G. BONA 3 51.73 211 LEAH G. DELA CRUZ 4 59.31 212 ERNEL B. MAOZA 5 32.81 213 MERDONIO V. ROSAL JR. 6 34.07 214 JERRY S. BAYARONG 7 21.45 215 RICHIE B. GAYORGOR 18 1 34.07 216 PABLO D. BUNDA JR. 2 37.85 217 TUEBE P. MONTANA 3 32.81 218 VICTOR C. CALICDAN 4 26.50 219 EUGENIANO D. DURMIENDO 5 42.90 220 ROSE P. CABRESA 6 25.24 221 MARYJANE S. MORALES 7 31.55 222 MERLINDA D. PANGAN 19 1 56.78 223 JENNIE TESS P. MADAYAG 2 32.81 224 GLORIA P. MADAYAG 3 25.24 225 RUEL L. BARONA 4 29.02 226 RENE B. INAHID 5 30.28 227 RONALDO D. ABORQUE 6 26.50 228 NOEL M. SIERVO 7 26.50 229 GERWIN D. BAYARONG 8 26.50 230 RHODORA D. ABORQUE 9 26.50 231 ROLLIE E. GONZALES 10 22.71 232 GEMINI B. GUMAWANG 11 22.71 233 FELIX Z. ESCULTOR 12 25.24 234 CINDERELLA F. ZAPANTA 13 65.61 235 ARACELI D. VALIENTE 14 30.28 236 PEDRO D. VALIENTE, JR. 15 29.02 237 VIRGINIA C. VILLAMOR 16 42.90 238 CARMIEE C. ESTANO 17 27.76 239 SALVADOR E. FLORES 18 20.19 240 JUDY L. BADIDLES 19 70.66 241 LOVELLA S. CANO 20 37.85 242 RONEL G. LLONOSO 21 71.92 243 ROBERT D. SANTIAGO 22 37.85 244 EUFEMIO D. RUIZ 23 40.38 Footnotes 1. See Annex for the masterlists of qualified beneficiaries.