BIR Ruling No. 458-13

December 2, 2013 BIR RULING NO. 458-13 RA No. 7279; BIR Ruling No. 109-13 Our Lady of Miraculous Medal Homeowners Association, Inc. Brgy. Macabog, Sorsogon City, Sorsogon Attention: Jesus Hubilla President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated July 25, 2013, endorsing the sale transaction between Milagros C. Flores, et al. and Our Lady of Miraculous Medal 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". HEDCAS Documents submitted disclosed that Milagros C. Flores, Emmanuel Flores, Leonardo Flores, Jr., Stellamar Flores, Teresita Flores-Velarde, Heidy B. Flores, Leonardo C. Flores III and Ma. Rosario Flores-Naranjo (hereinafter referred to as landowners) are the registered owners of a parcel of land, identified as Lot 1662-I, Psd-05-037641 covered by Transfer Certificate of Title (TCT) No. 083-2013000097 issued by the Registry of Deeds for Sorsogon, Sorsogon. The aforesaid property is situated at Brgy. Macabog, Sorsogon City with an area of Eighteen Thousand Three Hundred Thirty Eight square meters (18,338 sq.m.), more or less. Our Lady of Miraculous Medal Homeowners Association, Inc. (TIN 006-141-562-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On May 29, 2013, the parties executed a Deed of Absolute Sale whereby the landowners, thru their Attorney-in-Fact, Stellamar Flores, transferred and conveyed Seventeen Thousand Nine Hundred Ten square meters (17,910 sq.m.) portion of the subject property to Our Lady of Miraculous Medal Homeowners Association, Inc. at an agreed price of Five Million Three Hundred Seventy Three Thousand Pesos (P5,373,000.00). Pursuant to the certification dated May 31, 2013 issued by SHFC, Seventeen Thousand Nine Hundred Ten square meters (17,910 sq.m.) out of the total Eighteen Thousand Three Hundred Thirty Eight square meters (18,338 sq.m.) covered by TCT No. 083-2013000097 actually comprise a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Our Lady of Miraculous Medal 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, Our Lady of Miraculous Medal Homeowners Association, Inc. has completely submitted on September 20, 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; CITDES 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 Sections 20 and 32 of RA No. 7279, pertinent portions of which state that: "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 by the landowner to Our Lady of Miraculous Medal Homeowners Association, Inc. of Seventeen Thousand Nine Hundred Ten square meters (17,910 sq.m.) , portion of the properties covered by TCT No. 083-2013000097 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 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) cdll 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) 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 Our Lady of Miraculous Medal Homeowners Association, Inc. Brgy. Macabog, Sorsogon City, Sorsogon Blk. Lot Total Area Name of Beneficiary No. No. (sq.m.) 1 Jasareno, William D. 1 1 145.32 2 Jasareno, Arjay J. 1 2 142.47 3 Jasareno, Rowan D. 1 3 142.47 4 Jasareno, Ronel D. 1 4 142.47 5 Jasareno, Jose Jr. D. 1 5 142.47 6 Jasareno, Fred D. 1 6 142.47 7 Jasareno, Nilo D. 1 7 142.47 8 Sicad, Eduardo, Jr. J. 1 8 142.47 9 Jasareno, Nanette G. 1 9 85.48 10 Jasareno, Emmanuel D. 1 10 85.48 11 Jetajobe, Joel J. 1 11 113.98 12 Dellosa, Salvacion C. 1 12 113.98 13 Lanuza, Pablito S. 1 13 85.48 14 Datur, Danilo Sr. J. 1 14 85.48 15 Deniega, Rowell H. 1 15 85.48 16 Calayo, Maria Gracia D. 1 16 85.48 17 Deniega, Honorio J. 1 17 113.98 18 Nuez, Eugenio S. 1 18 113.98 19 Abejuro, Joseph II C. 1 19 142.47 20 Melendrez, Michelle R. 1 20 142.47 21 Jalmasco, Julieta F. 1 21 113.98 22 Jalmasco, Jenifer F. 1 22 113.98 23 Jetajobe, Adolfo Jr. J. 1 23 173.81 24 Cantela, Anelyn J. 1 24 85.48 25 Gonzales, Rexon J. 1 25 96.88 26 Deniega, Edgar J. 2 1 112.55 27 Deniega, Elma J. 2 2 116.83 28 Deniega, Mercy J. 2 3 118.25 29 Lacay, Anthony J. 2 4 118.25 30 Delima, Fedelino J. 2 5 142.47 31 Llobo, Jose D. 2 6 142.47 32 Escurido, Gemelita D. 2 7 113.98 33 Quiones, Maricel L. 2 8 113.98 34 Desacula, Emilio C. 2 9 113.98 35 Deniega, Jocelyn D. 2 10 113.98 36 Alebarbar, Marites DP. 2 11 85.48 37 Deniega, Wilfredo D. 2 12 85.48 38 Dela Paz, Rosw B. 2 13 142.47 39 Raymundo, Ruben A. 2 14 142.47 40 Jasareno, Renne D. 3 1 185.21 41 Labalan, Ranilo V. 3 2 142.47 42 Llamas, Flora J. 3 3 149.59 43 Brinola, Larry C. 3 4 98.30 44 Allego, Elizabeth G. 3 5 98.30 45 Allego, Gerwin G. 3 6 113.98 46 Deniega, Eduardo J. 4 1 85.48 47 Deniega, Jose Pepito J. 4 2 85.48 48 Jetajobe, Melvin C. 4 3 85.48 49 Jebulan, Wilfredo 4 4 85.48 50 Ramos, Jayson O. 4 5 85.48 51 Claveria, Alicia J. 4 6 85.48 52 Lacay, Albert J. 4 7 85.48 53 Lajada, Anjelo J. 4 8 85.48 54 Sicad, Emmalyn J. 4 9 115.40 55 Dungaran, Ronaldo L. 4 10 113.98 56 Lanuza, Arnel E. 5 1 113.98 57 Deniega, Christian H. 5 2 116.83 58 Dellosa, Nelia L. 5 3 85.48 59 Brinola, Leticia 5 4 85.48 60 Leoncito, Mylene R. 5 5 85.48 61 Deniega, Ryan H. 5 6 85.48 62 Dado-acon, Nemesio Jr. T. 5 7 85.48 63 Barrios, Alejandre Jr., A. 5 8 85.48 64 Asiatico, James DL. 5 9 111.13 65 Erepol, Christopher J. 5 10 116.83 66 Labayo, Jerome E. 6 1 111.13 67 Talagsad, Aimee D. 6 2 108.28 68 Ante, Armand Victor D. 6 3 113.98 69 Janaban, Susana A. 6 4 113.98 70 Dungaran, Eduardo L. 6 5 92.61 71 Garcia, Joseph D. 6 6 92.61 72 Lanuza, Rolando S. 6 7 96.88 73 Escurido, Lorena D. 6 8 96.88 74 Janapin, Roger Jr., H. 6 9 88.33 75 Discaya, Jose J. 6 10 108.28 76 Dungaran, Gina J. 7 1 128.22 77 Garcia, Josephine J. 7 2 123.95 78 Garcia, Ariel D. 7 3 113.98 79 Laguidao, Sammy T. 7 4 113.98 80 Garcia, Domingo D. 7 5 113.98 81 Janaban, Alvin J. 7 6 113.98 82 Guardian, Jose Rosendo D. 7 7 86.91 83 Hubilla, Roy M. 7 8 85.48 84 Dungaran, Marilyn D. 7 9 128.22 85 Garcia, Carlo J. 7 10 129.65 86 Dave, Hazel Joy R. 8 1 122.52 87 Delima, Salvacion C. 8 2 119.68 88 Paje, Francis J. 8 3 149.59 89 Gallofin, Leonisa C. 8 4 151.02 90 Laguidao, Gina L. 8 5 149.59 91 Oliver, Merlinda J. 8 6 151.02 92 Janaban, Thelma L. 8 7 148.17 93 Hubilla, Jesus D. 8 8 149.59 94 Caig, Jess Wilzon J. 9 1 112.55 95 Jetajobe, Imelda 9 2 108.29 96 Caig, Zenaida J. 9 3 142.47 97 Lacao, Efren J. 9 4 142.47 98 Jayona, Reynaldo D. 9 5 116.83 99 Bio, Marvin J. 9 6 116.83 100 Jetajobe, Amadeo J. 9 7 116.83 101 Doyog, Daniel S. 9 8 116.83 102 Carillo, Telesporo, Jr., A. 9 9 116.83 103 Jasareno, Roberto D. 9 10 116.83 104 Carillo, Telesporo, II L. 9 11 116.83 105 Barbin, Valerie V. 9 12 116.83 106 Salundaguit, Michael F. 9 13 116.83 107 Vargas, John Joseph C. 9 14 116.83 108 Calayo, Fernando D. 9 15 116.83 109 Jaramiel, Augusto L. 9 16 116.83 110 Jetajobe, Ariel B. 9 17 116.83 111 Jebulan, Richard D. 9 18 116.83 112 Garcia, Carlito J. 9 19 142.47 113 Aninipot, Gina J. 9 20 142.47 114 Marbella, Roger D. 10 1 113.98 115 Benemerito, Glenerico L. 10 2 113.98 116 Brinola, Victor C. 10 3 113.98 117 Discaya, Edelberto J. 10 4 113.98 118 Sarmiento, Ma. Bella D. 10 5 113.98 119 Doyog, Asuncion S. 10 6 113.98 120 Deniega, Vergelio D. 10 7 113.98 121 Balisbis, Gemma J. 10 8 113.98 122 Araojo, Leonila J. 10 9 113.98 123 Bio, Michael J. 10 10 113.98 124 Bio, Adelaida J. 10 11 113.98 125 Laguidao, Rodolfo Jr., S. 10 12 113.98 126 Dioneda, Ma. Edena B. 10 13 113.98 127 Ocampo, Clemente L. 10 14 133.92 128 Fulleros, Jan Mikhael G. 11 1 119.68 129 Fulleros, Ozan J. 11 2 142.47 130 Fulleros, Osee Lolito J. 11 3 142.47 131 Discaya, Maribel 11 4 145.32 132 Jetajobe, Elmer I. 11 5 145.32 133 Lacao, Ricky D. 11 6 145.32 134 Lacao, Dolores D. 11 7 109.70 135 Lacao, Roselyn D. 11 8 119.68 136 Lacao, Sonny D. 11 9 109.70 137 Asis, Regina L. 11 10 113.98 138 Jebulan, Manolo D. 11 11 113.98 139 Dioneda, Florenda D. 11 12 125.37 140 Jardin, Raul D. 11 13 125.37 141 Jetajobe, Allan B. 11 15 179.51 142 Grafil, Elisa P. 11 16 136.77 143 Ubales, Zea Cirhea A. 11 17 142.47 144 Garcia, Liza J. 11 18 142.47 145 Duran, Ma. Theresa 11 19 142.47 146 Duran, Ma. Nirvana 11 20 146.74 147 Jamisal, Jeshon D. 11 21 143.90 148 Jetajobe, Alberto J. 11 22 216.56 149 Orejo, Rosa J. 11 23 182.36 150 Garcia, Raul J. 11 24 158.14 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.