BIR Ruling No. 479-12

July 30, 2012 BIR RULING NO. 479-12 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10; Cong. Romeo G. Guanzon Homeowners Association, Inc. Purok Guanzon, Brgy. Mansilingan, Bacolod City Attention: Ronilo N. Robles President Gentlemen : This refers to the letters of Makawili Jay C Foundation, Inc. dated March 27, 2012 and April 16, 2012, received by this Office on the same dates requesting exemption from the payment of Capital Gains Tax and other taxes in accordance with the Republic Act No. 7279, otherwise known as the Urban Development and Housing Act of 1992. It appears that R.G.G. FARMS CORPORATION with Tax Identification Number 000-726-684-000 is the registered owner of a parcel of land, identified as Lot 6, Pcs-06005115, being a cons-subd of Lot 1625-E-2-J-2-C-2-A, Lot 1625-E-2-J-2-C-2-B, Lot 1625-E-2-J-2-C-2-C, Lot 1625-E-2-J-2-C-2-D, all of Psd-06-054544, Lot 1625-E-2-J-2-C-1 and Lot 1625-E-2-J-2-C-3, all of Psd-06-058661 covered by Transfer Certificate of Title (TCT) No. T-329183 issued by the Registry of Deeds for the Bacolod City. The aforesaid property is situated at Brgy. Mansilingan, Bacolod City with an area of twenty thousand square meters (20,000 sq.m.), more or less. Cong. Romeo G. Guanzon Homeowners Association, Inc. with Tax Identification Number 403-037-329-000, on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB). On January 2, 2012, the parties executed a Deed of Sale whereby the owner transfers and conveys nineteen thousand five hundred fourteen and 06/100 square meters (19,514.06 sq.m.) of the subject property to Cong. Romeo G. Guanzon Homeowners Association, Inc. at an agreed price of Twelve Million Six Hundred Eighty Four Thousand One Hundred Thirty Nine Pesos (P12,684,139.00). Pursuant to a certification issued by Social Housing Finance Corporation, nineteen thousand five hundred fourteen and 06/100 square meters (19,514.06 sq.m.) of the property covered by TCT No. T-329183 is actually a CMP Project and shall be proportionately distributed to the association's one hundred sixty one (161) qualified member-beneficiaries. 1 For this purpose, Cong. Romeo G. Guanzon 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). cTDIaC 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 of the aforestated property by the owner to Cong. Romeo G. Guanzon Homeowners Association, Inc., in so far as the nineteen thousand five hundred fourteen and 06/100 square meters (19,514.06 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) SCIAaT However, the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Sec. 20 of RA 7279. Accordingly, R.G.G. FARMS CORPORATION 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. 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 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. 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 CONG. ROMEO G. GUANZON HOMEOWNERS ASSOCIATION, INC. Purok Guanzon, Brgy. Mansilingan, Bacolod City Name of Beneficiary Blk. No. Lot No. Total Area (sq.m.) 1 Faculdita, Marife Familara 1 1 120.42 2 Malayang, Gilfred Carmona 1 2 120.42 3 Sase, Bebelyn Raboy 1 3 120.42 4 Napao, Anabelle Lee Vidaja 1 4 120.42 5 Usi, Mary Grace Barraca 1 5 120.42 6 Relos, Lily Gaspar 1 6 120.42 7 Malacad, William Villarga 1 7 120.42 8 Nadate, Rosalia Servando 1 8 120.42 9 Bacayo, Maila Servando 1 9 120.42 10 Infante, Donnabel Felizario 1 10 120.42 11 Almodiel, Jose Mansanares 1 11 120.42 12 Panido, Arnil Sr. Agramon 1 12 120.42 13 Pada, Elsa De Las Marias 1 13 120.42 14 Pabiania, Ilyn Trespeces 1 14 120.42 15 Almodiel, Sulpicio Mansanares 1 15 120.42 16 Panido, Ailyn V. 1 16 120.42 17 Benitez, Flor Cadungon 1 17 120.42 18 Tizon, Christine Legaspina 1 18 120.42 19 Pequiz, Joemel Gomez 1 19 120.42 20 Buenafe, Joemarie Britan 1 20 120.42 21 Gordon, Marilyn Lagarto 1 21 120.42 22 Garcia, Ivy Franco 1 22 120.42 23 Franco, Eduardo Torres 1 23 120.42 24 Inocencio, Felix Guinsatao 1 24 120.42 25 Decendario, Elmer Nierves 1 25 120.42 26 Nierves, Inocencio Nostrado 1 26 120.42 27 Malinao, Melquiades 1 27 120.42 28 Alipato, Rosefel Ardon 2 1 120.42 29 Agudelo, Delia Dojino 2 2 120.42 30 Quinto, Rosalie Cabahug 2 3 120.42 31 Agudelo, Ruth Dojino 2 4 120.42 32 Apostol, Nemuel Cabahug 2 5 120.42 33 Delotina, Jessica Flores 2 6 120.42 34 Verdad, Marlon Marcasote 2 7 120.42 35 Espinosa, Mario Ababa 2 8 120.42 36 De la Rama, Jude Belgera 2 9 120.42 37 Dealagdon, Jelyn Eusebio 2 10 120.42 38 Recodo, Ruby Ordaniel 2 11 120.42 39 Flores, Vicente Recodo 2 12 121.84 40 Rosalita, Viernie Buncal 3 1 120.42 41 Dado, Moises Denaque 3 2 120.42 42 Rosalita, Juvy Buncal 3 3 120.42 43 Dado, Christine Denaque 3 4 120.42 44 Porenas, Cheryl Abuhat 3 5 120.42 45 Mo-ong, Bernie Castillo 3 6 120.42 46 Abuhat, Ariel Dequillo 3 7 120.42 47 Vinco, Eileen Aguilar 3 8 120.42 48 Forrosuelo, Rogelio Rodriguez 3 9 120.42 49 Duaban, Jane Forrosuelo 3 10 120.42 50 Kho, Joecel San Martin 3 11 120.42 51 Kho, Erwin Depamaylo 3 12 120.42 52 Tubongbanua, Ruel Hernaez 4 1 120.42 53 Real, Fernandito Jalwin 4 2 120.42 54 Tadia, Raymund Rubaton 4 3 120.42 55 Banate, Edwin Dela Pea 4 4 120.42 56 Tadia, Jake Rubaton 4 5 120.42 57 Tadia, Ester Rubaton 4 6 120.42 58 Bandojo, Ma. Ida Gordon 4 7 120.42 59 Tanaman, Reynelda Maderazo 4 8 120.42 60 Flores, Imelda Carbon 4 9 120.42 61 Maderazo, Renecio Jr. Catalua 4 10 120.42 62 Alvarado, Melani Nesol 4 11 120.42 63 Bonda, Joy Pulmones 4 12 120.42 64 Cordero, Edgar Tuazon 5 1 120.42 65 Morales, Rowena Solinap 5 2 120.42 66 Sasil, Sarah Jane Lozada 5 3 120.42 67 Peralta, Silna Mae Mendieta 5 4 120.42 68 Estacion, Wynn Joy Olarte 5 6 120.42 69 Togono, Maximo Cargason 5 7 120.42 70 Bugna, Johnalyn Pahilanga 5 8 120.42 71 Catanyag, Aileen Ariquin 5 9 120.42 72 Servando, Edwin Lanaza 6 1 120.42 73 Agravante, Romualdo Lacaras 6 2 120.42 74 Rivera, Jocelyn Aguilar 6 3 120.42 75 Agravante, Cheryl Lacaras 6 4 120.42 76 Camandag, Joniel Palma 6 5 120.42 77 Inodeo, Charito Custudio 6 6 120.42 78 Canete, Butch De la Pena 6 7 120.42 79 Bantad, Elisa Perez 6 8 120.42 80 Gabayeron, Ares Banot 6 9 120.42 81 Rama, Janette Floreno 6 10 120.42 82 Torres, Mercedita Aragon 6 11 120.42 83 Estiamba, Ma. Delia Devaras 6 12 120.42 84 Gabales, Marvin Pongyan 7 1 120.42 85 Tizon, Ma. Rosa Turtola 7 2 120.42 86 Pagunsan, Rey Pido 7 3 120.42 87 Loro, Analyn Sadiasa 7 4 120.42 88 Jardinico, Catherine Ramos 7 5 120.42 89 Panido, Amy Calopez 7 6 120.42 90 Donasco, Ruperto Espanola 7 7 120.42 91 Llema, Angelie Loro 7 8 120.42 92 Suansing, Dona P. 7 9 120.42 93 Loro, Argie Sadiasa 7 10 120.42 94 Alvarino, Mary Ann Britania 7 11 120.42 95 Robles, Remon Bantad 7 12 120.42 96 Cadungon, Fe Painag 8 1 120.42 97 Go, Johnny Liaga 8 2 120.42 98 Caro, Nie Anne Marfil 8 3 120.42 99 Aboyo, Eduardo Bala-an 8 4 120.42 100 Las, Ma. Teresita Jimenea 8 5 120.42 101 Quioyo, Kristine Marcelo 8 6 120.42 102 Locsin, Raymund Noble 8 7 120.42 103 Marcelo, Janice Punsalan 8 8 120.42 104 Locsin, Rio Noble 8 9 120.42 105 De la Cruz, Ronald Gayte 8 10 120.42 106 Locsin, Helen Grace Noble 8 11 120.42 107 Marcelo, Rosemay Espaola 8 12 120.42 108 De la Cruz, Evangeline Campos 9 1 120.42 109 Justo, Hanz Pabalan 9 2 120.42 110 Batayola, Ronilo Britania 9 3 120.42 111 Tusalem, Jenilyn Encarnacion 9 4 120.42 112 Uba, Lucia Benigay 9 5 120.42 113 Domingo, Antoniette Avellano 9 6 120.42 114 De la Cruz, Reymond Gayte 9 7 120.42 115 Domingo, Nida Calma 9 8 120.42 116 Biona, Edmund Robles 9 9 120.42 117 Caalim, Aileen Caneo 9 10 120.42 118 Belbar, Corazon Parpa 9 11 120.42 119 Camayudo, Reynaldo Flores 9 12 120.42 120 Inocencio, Roy Guinsatao 10 1 120.42 121 Cristobal, Marlo Villareal 10 2 120.42 122 Serona, Rochelle Salem 10 3 120.42 123 Baldonado, Juliet Pamplona 10 4 120.42 124 Famindalan, Agnes Coscolluela 10 5 120.42 125 Salazar, Michelle Baldonado 10 6 120.42 126 Rosas, Katherine Joy Coscolluela 10 7 120.42 127 Besenia, Warren San Miguel 10 8 120.42 128 Romero, Jonathan Osorio 10 9 120.42 129 Buyco, Smilyn Besenia 10 10 120.42 130 Besenia, Pedro San Miguel 10 11 120.42 131 Villacampa, Rowena Besenia 10 12 120.42 132 Dealagdon, Janice Eusebio 11 1 124.67 133 Mollenido, Jackelyn Eusebio 11 2 120.42 134 Tabuada, Macy Ann Mahinay 11 3 120.42 135 Mijares, Kim Jurilla 11 4 120.42 136 Buenaflor, Cheryl Chavez 11 5 120.42 137 Samos, Archie Romo 11 6 120.42 138 Lampinez, Arlene Parcon 11 7 120.42 139 Escopin, Roli Genova 11 8 120.42 140 Tugaff, Victor Marcial 11 9 120.42 141 Gimarangan, Harvey 11 10 120.42 142 Mijares, Michelle Namora 11 11 120.42 143 Estiamba, Anecito Devaras 11 12 150.17 144 Corrales, Ma. Cecilia Palomero 11 14 120.42 145 Priolo, Nelson Valdez 11 15 120.42 146 Lim, Jeanilyn Palapas 11 16 120.42 147 Bivoso, Nelly Mones 11 17 189.84 148 Lim, Ma. Luisa Marquez 11 20 141.67 149 Ronilo, Robles Nessia 11 21 120.42 150 Pregil, Arlene Lachica 11 22 120.42 151 Panes, Melchor Ponce 11 23 120.42 152 Jamili, Marietta Espinosa 11 24 120.42 153 Capitle, Ma. Theresa 11 25 120.42 154 Villa, Gina Delos Santos 11 26 120.42 155 Licera, Rosene Oro 11 27 120.42 156 Otero, Juna Bascon 11 28 120.42 157 Oro, Ehron Quizan 11 29 120.42 158 Ortoo, Lyndon Mirasol 11 30 120.42 159 Jumayao, Jenny Rose Escamos 11 31 120.42 160 Lorezo, Eduardo Elloran 11 32 120.42 161 Oro, Adriano Calmarin 11 33 120.42 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.