BIR Ruling No. 462-13

December 6, 2013 BIR RULING NO. 462-13 RA No. 7279; BIR Ruling No. 109-13 Bagong Pag-Asa Homeowners Association, Inc. Ph IV Hangar, Mabuhay, General Santos City Attention: Antonio Sargado President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated October 1, 2013, endorsing the sale transaction between Federico Limjuco, et al. and Bagong Pag-asa Homeowners Association, Inc. Ph IV 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". TECIHD Documents submitted disclose that Federico Limjuco (TIN 931-751-504-000) married to Beverly Alunan, Anita F. Catotal (TIN 102-665-906-000), Jeffrey F. Catotal (TIN 123-944-425) married to Margarita Paz Catotal and Nenita Catotal-Delos Santos (TIN 179-381-392-000) married to Nilo De Los Santos (hereinafter referred to as Landowners) are the registered owners of a parcel of land, identified as Lot-802-D of the Subdivision Plan Psd-12-059365 being portion of Lot-802, Pls-209-D-11 covered by Transfer Certificate of Title (TCT) No. 147-2012001797 issued by the Registry of Deeds for General Santos City. The aforesaid property is situated at Brgy. Mabuhay, General Santos City with an area of Twenty Five Thousand square meters (25,000 sq.m.), more or less. Bagong Pag-asa Homeowners Association, Inc. Ph IV (TIN 296-679-918-000), on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB). On August 2, 2013, the parties executed a Deed of Absolute Sale whereby the Landowners, thru their Attorney-in-Fact, Anita F. Catotal, transferred and conveyed Sixteen Thousand Five Hundred Forty Seven and 16/100 square meters (16,547.16 sq.m.) of the subject property to Bagong Pag-asa Homeowners Association, Inc. Ph IV at an agreed price of Eight Million Eight Hundred Thirty Six Thousand One Hundred Eighty Four and 61/100 Pesos (P8,836,184.61). Pursuant to the certification issued by SHFC, Sixteen Thousand Five Hundred Forty Seven and 16/100 square meters (16,547.16 sq.m.) out of Twenty Five Thousand square meters (25,000 sq.m.) covered by TCT No. 147-2012001797 actually comprise a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Bagong Pag-asa Homeowners Association, Inc. Ph IV 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, Bagong Pag-asa Homeowners Association, Inc. Ph IV has completely submitted on October 29, 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; ITSCED 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 landowners to Bagong Pag-asa Homeowners Association, Inc. Ph IV of Sixteen Thousand Five Hundred Forty Seven and 16/100 square meters (16,547.16 sq.m.) portion of the property covered by TCT No. 147-2012001797 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 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 landowners are 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. 109-13 dated March 21, 2013) EcHTCD 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 Bagong Pag-Asa Homeowners Association, Inc. Ph IV Hangar, Mabuhay, General Santos City Blk. No. Lot Total Area Name of Beneficiary No. (sq.m.) 1 Sumanting, Ruben A. 1 5 168.32 2 Cagongon, Alejandro Jr. A. 1 7 168.32 3 Magaso, Armando C. 1 8 168.32 4 Alonzo, Richard C. 1 9 168.32 5 Villamil, Proceso II J. 1 10 168.32 6 Malino, Reymund N. 1 11 168.32 7 Hepi, Marieta G. 2 1 201.98 8 Mendoza, Leo D. 2 2 168.32 9 Cuna, Henry S. 2 3 168.32 10 Alvarez, Rosemarie A. 2 4 168.32 11 Bayron, Arlene A. 2 5 168.32 12 Barro, Mabeth M. 2 6 168.32 13 Besinga, Julie Anne L. 2 7 168.32 14 Gulada, Arlene S. 2 8 168.32 15 Cloma, Liza E. 2 9 168.32 16 Romares, Alain C. 2 11 168.32 17 Sargado, Antonio F. 2 12 168.32 18 Martinez, Herman II L. 2 13 168.32 19 Aceberos, Reynaldo A. 2 14 168.32 20 Arevalo, Rey C. 2 15 201.98 21 Belgira, R-Nel R. 5 1 175.05 22 Ruto, Emily F. 5 2 175.05 23 Belgira, Marnelee R. 5 3 168.32 24 Cantomayor, Marwin C. 5 4 168.32 25 Ancheta, Erlie E. 5 5 168.32 26 Ancheta, Ely E. 5 6 168.32 27 Obenza, Arielito A. 5 7 168.32 28 Agustin, Carlo G. 5 9 168.32 29 Bongay, Marieta P. 5 10 168.32 30 Pontejo, Larry C. 5 15 175.05 31 Nabor, Freddie Jr. T. 5 16 178.42 32 Poloy, Epefania C. 5 17 175.05 33 Tangayan, Edilberto Jr. T. 6 1 175.05 34 Romero, Nita B. 6 2 175.05 35 Torcino, Grace M. 6 3 168.32 36 Dalanon, Roger D. 6 4 168.32 37 Lapiz, Rolando A. 6 5 168.32 38 Nabua, Jose P. 6 6 168.32 39 Tupas, Cernan G. 6 7 168.32 40 Pascua, Renato D. 6 8 168.32 41 De Juan, Jonalie T. 6 9 168.32 42 Cataylo, Arlyn R. 6 11 168.32 43 Rodis, Arnold L. 6 12 168.32 44 Dela Cruz, Mary Joy E. 6 13 168.32 45 Fetros, Braziel C. 6 14 168.32 46 Tomenio, Jocelyn E. 6 15 175.05 47 Sales, Ellen Jay B. 6 16 178.42 48 Sales, Rom Kenneth B. 6 17 175.05 49 Castro, Nikki Joy V. 7 1 185.15 50 Erojo, Joena P. 7 2 183.46 51 Barber, Margarita D. 7 3 168.32 52 Erojo, Minda P. 7 4 168.32 53 Alvior, Maria Socoro G. 8 1 257.52 54 Fuentes, Vergilio Jr. F. 9 5 168.32 55 Samaniego, Richard T. 9 6 168.32 56 Figuracion, Arnold I. 9 7 180.10 57 Gesulga, Cheryl P. 9 8 180.10 58 Famatiga, Sherwin S. 10 1 175.05 59 Espino, Job D. 10 2 175.05 60 Lacdo-O, Rona B. 10 4 168.32 61 Ampoon, Josephine D. 10 5 168.32 62 Cabanog, Francisca M. 10 6 168.32 63 Mier, Arnold G. 10 7 168.32 64 Villanueva, Gretchen M. 10 8 168.32 65 Damaso, Berma O. 10 9 168.32 66 Naya, Bethwell M. 10 10 168.32 67 Balleras, Fe E. 10 11 168.32 68 Docusin, Renato F. 10 12 168.32 69 Corporal, Margareth L. 10 13 168.32 70 Alabe, Meriam C. 11 1 175.05 71 Jabillo, Jernilu R. 11 2 175.05 72 Lumasag, Jeyson M. 11 3 168.32 73 Salvador, Mishelle L. 11 4 168.32 74 Patropez, Elizabeth V. 11 5 168.32 75 Dolutan, Maria B. 11 6 168.32 76 Jaya, Christopher S. 11 10 168.32 77 Rival, Eric C. 11 11 168.32 78 Hanopol, Joemar V. 11 12 168.32 79 Jandumon, Arlene A. 11 13 168.32 80 De Asis, Geraldine P. 11 15 175.05 81 Mancera, Miguel L. 11 16 178.42 82 Pudadera, Noel A. 11 17 175.05 83 Muico, Junard Jay N. 12 1 195.25 84 Perez, Richel May M. 12 2 168.32 85 Revuelta, Angel Jr. S. 12 3 168.32 86 Abregana, Riza J. 12 4 168.32 87 Joloro, Berlicita A. 12 5 168.32 88 Joloro, Randy C. 12 6 168.32 89 Joloro, Ricky C. 12 7 168.32 90 Fortin, Arnel A. 12 8 168.32 91 Amarille, Jovy M. 12 10 168.32 92 Estrella, Romy C. 12 11 168.32 93 Muico, Nora N. 12 12 168.32 94 Muico, Cherry Lyn N. 12 13 168.32 95 Mier, Romy G. 12 14 168.32 96 Hao, Jonathan S. 12 15 193.56 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.