BIR Ruling No. 482-12

July 30, 2012 BIR RULING NO. 482-12 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10 Villa Maxima Homeowners Association, Inc. Bislig City, Surigao del Sur Attention: Anatolio M. Becira CA President Gentlemen : This refers to your letter dated May 10, 2011, endorsed by BIR Revenue Region No. 17-Butuan City, requesting tax exemption from the payment of Capital Gains Tax and other taxes in accordance with Republic Act No. 7279, otherwise known as the Urban Development and Housing Act of 1992. It appears that Rodulfo C. Montero married to Dolores Chua and Rosina C. Montero are the registered owners of parcels of land covered by two (2) Transfer Certificates of Title, to wit: TCT No. Area (sq. m.) Tax Declaration No. T-4817 7,611 06-01-0001-00873 T-4818 8,204 06-01-0001-00860 issued by the Registry of Deeds for the Province of Surigao del Sur. The aforesaid properties are situated at Poblacion, Bislig City with a total area of fifteen thousand eight hundred fifteen (15,815) sq.m. Villa Maxima Homeowners Association, Inc., on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB) with Tax Identification No. 006-056-728-000. On April 15, 2011, the parties executed a Deed of Absolute Sale whereby the owners thru their Attorney-in-Fact, Simon C. Montero, transfer and convey six thousand four hundred forty two and 32/100 square meters (6,442.32 sq.m.) out of seven thousand six hundred eleven square meters (7,611 sq.m.) covered by TCT No. T-4817 and eight thousand two hundred four square meters (8,204 sq.m.) covered by TCT No. T-4818 of the subject property to Villa Maxima Homeowners Association, Inc. at an agreed price of Six Million Five Hundred Ninety Thousand Eight Hundred Forty Four Pesos (P6,590,844.00). 1 Pursuant to a certification issued by Social Housing Finance Corporation, six thousand four hundred forty two and 32/100 square meters (6,442.32 sq.m.) out of seven thousand six hundred eleven square meter (7,611 sq.m.) covered by TCT No. T-4871 and eight thousand two hundred four square meters (8,204 sq.m.) covered by TCT No. T-4818 are actually a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 2 For this purpose, Villa Maxima 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: "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; TIAEac 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 properties by the owners thru their Attorney-in-Fact, Simon C. Montero to Villa Maxima Homeowners Association, Inc., in so far as the six thousand four hundred forty two and 32/100 square meters (6,442.32 sq.m.) out of seven thousand six hundred eleven square meter (7,611 sq.m.) covered by TCT No. T-4817 and eight thousand two hundred four square meters (8,204 sq.m.) covered by TCT No. T-4818 are 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 Certificates 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 properties, to the effect that the said properties 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 Sec. 20 of RA 7279. Accordingly, the owners thru their Attorney-in-Fact, Simon C. Montero is liable to pay the documentary stamp tax on the document 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 their 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 titles 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 properties transferred under the CMP are qualified beneficiaries and therefore, the sellers are 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 Villa Maxima Homeowners Association, Inc., Guava Junction, Bislig City Name of Beneficiary Blk. No. Lot No. Total Area (sq.m.) 1 Salimbangon, Blaze Y. 1 1 76.361 2 Yu, Jed Aries A. 1 2 76.361 3 Yu, Jerome A. 1 3 76.361 4 Yu, Stevens A. 1 4 76.361 5 Capadosa, Runhel C. 1 5 77.858 6 Lumbab, Ruel S. 1 6 77.858 7 Cebe, Welbert V. 1 7 77.858 8 Balogal, Revelyn C. 1 8 77.858 9 Barangot, Joemer E. 1 9 98.82 10 Coquilla, Ronnie O. 1 10 98.82 11 Alas-as, Elizabeth G. 1 11 100.32 12 Alvarez, Noel P. 1 12 97.323 13 Edradan, Delmer G. 1 13 98.82 14 Edradan, Diosdado B. 1 14 98.82 15 Ranque, Jovencio S. 2 1 79.355 16 Ranque, Rio S. 2 2 79.355 17 Zabala, Concordio U. Jr. 2 3 79.355 18 Zabala, Joy U. 2 4 79.355 19 Domiquel, Marilyn V. 2 5 79.355 20 Ibabao, Nicomedis V. 2 6 88.339 21 Junio, Liberato B. 2 7 88.339 22 Dimafelis, Ritchel B. 2 8 86.842 23 Dimafelis, Naomi B. 2 9 82.35 24 Figura, Frenlyn C. 2 10 86.842 25 Figura, Efren S. 2 11 88.339 26 Jugadora, Edilberto N. 2 12 92.831 27 Largado, Rey-Ann C. 2 13 115.29 28 Largado, Anecita C. 2 14 106.31 29 Dimafelis, Richard B. 2 15 106.31 30 Curro, Lea J. 2 16 106.31 31 Zabala, Julieta U. 2 17 106.31 32 Zabala, Rogelio U. 2 18 106.31 33 Zabala, Virgenia U. 2 19 106.31 34 Ranque, Cris S. 2 20 101.81 35 Dejarlo, Vivencio L. 3 3 74.864 36 Rodas, Nelda M. 3 4 74.864 37 Decenilla, Marcelo C. Jr. 3 5 74.864 38 Melloza, Ronald C. 3 6 74.864 39 Maquiling, Mayflor T. 3 7 74.864 40 Salibay, Adrian C. 3 8 74.864 41 Arendaying, Guillian O. 3 9 74.864 42 Sampinit, Rhonie D. 3 10 74.864 43 Buniel Ramil A. 3 11 74.864 44 Domiquel, Dick B. 3 12 74.864 45 Buniel, Reynaldo A. 3 13 74.864 46 Buniel, Dante A. 3 14 74.864 47 Serato, Rowena C. 3 15 86.842 48 Suroy-Suroy, Elizabeth C. 3 16 76.361 49 Catian, Jupiter A. 3 17 89.836 50 Catian, Mary Ann A. 3 18 76.361 51 Catian, Clark A. 3 19 89.836 52 Catian, Henry U. 3 20 76.361 53 Maquiling, Cecille P. 3 21 76.361 54 Feliscuzo, Meily B. 3 22 82.35 55 Bun-an, Merlita Y. 3 23 76.361 56 Montes, Marlon M. 3 24 82.35 57 Maquiling, Domingo T. 3 25 76.361 58 Delos Santos, Erlinda C. 3 26 80.853 59 Bulig del, Bertelyn D. 3 27 77.858 60 Bulig del, Allen D. 3 28 74.864 61 Plasquita, Eddie D. 3 29 74.864 62 Delos Santos, Filbert P. 3 30 74.864 63 Delos Santos, Lito P. 3 31 74.864 64 Villaceran, Charmay M. 3 32 74.864 65 Castillo, Juluis A. 3 33 74.864 66 Villaceran, Flordeles M. 3 34 74.864 67 Castillo, Christian Charles U. 3 35 74.864 68 Canda, Jessie P. 3 36 74.864 69 Andipa, Gil M. 3 37 74.864 70 Paguis, Edna J. 3 39 74.864 71 Maturan, Manuel M. 3 40 74.864 72 Jabagat, Alvin P. 3 41 74.864 73 Montes, Michael H. 3 42 74.864 74 Montes, Dominador H. 3 43 74.864 75 Maturan, Reynaldo H. 3 44 74.864 76 Alinabon, Pilar P. 3 45 74.864 77 Dua, Marieta B. 3 46 77.858 78 Dua Joemar B. 3 47 74.864 79 Maquiling, Jagger P. 3 48 74.864 80 Doliguez, Elibertdel E. 3 49 97.323 81 Doliguez, Ervin E. 3 50 95.825 82 Chua, John L. 3 51 74.864 83 Salimbangon, Jon Shepherd Y. 3 52 76.361 84 Salimbangon, Lovely Y. 3 53 76.361 85 Salimbangon, Monica Y. 3 54 74.864 86 Doliguez, Edel Webb E. 4 1 100.32 87 Doliguez, Sharon O. 4 2 86.842 88 Decap, Dennis A. 4 3 79.355 89 Antonio, Arlon Ree C. 4 4 79.355 90 Capangpangan, Jonathan T. 4 5 79.355 91 Antonio, Arnel Joy C. 4 6 79.355 92 Venzon, Nelfa V. 4 7 79.355 93 Antonio, Armie Shaila C. 4 8 79.355 94 Venzon, Eulogio V. 4 9 79.355 95 Antonio, Archie Ryan C. 4 10 79.355 96 Gabatan, Rey M. 4 11 79.355 97 Capadosa, Reil C. 4 12 79.355 98 Bargaso, Jonie S. 4 13 73.366 99 Bargaso, Rosalie S. 4 14 77.858 100 Polia, Clarissa J. 5 1 68.875 101 Becira, Edna M. 5 2 74.864 102 Becira, Laudemer M. 5 3 74.864 103 Becira, Anatalio M. 5 4 85.345 104 Bajao, Remelito G. 5 5 83.847 105 Dalgo, Irene A. 5 6 74.864 106 Asis, Marissa C. 5 7 74.864 107 Balane, Alito B. 6 1 83.847 108 Pambuena, Mary Lota L. 6 2 89.836 109 Gallardo, Salvacion G. 6 3 89.836 110 Gunos, Genevieve F. 6 4 89.836 111 Fajardo, Alexander L. 6 5 89.836 112 Fajardo, Nelda G. 6 6 89.836 113 Ohao, Jose A. 6 8 89.836 114 Igong Igong, Joel G. 6 9 89.836 115 Budionganon, Emme D. 6 10 83.847 116 Burlat, Tycheco 6 11 77.858 117 Canonigo, Jimmy C. 6 12 98.82 118 Caete, Edna R. 6 13 98.82 119 Benguillo, Jerlito C. 6 14 98.82 120 Nerveza, Lorenzo M. 6 15 98.82 121 Nerveza, Eduardo M. 6 16 98.82 122 Ilagan, Jickel P. 6 17 98.82 123 Arcular, Arlito B. 6 18 104.81 124 Lapatha, Romeo T. Jr. 6 19 92.831 125 Condes, Reynante T. 7 1 104.81 126 Conquilla, Alma V. 7 2 104.81 127 Conquilla, Conrado N. Jr. 7 3 104.81 128 Gargar, Lydia E. 7 4 104.81 129 Gargar, Jesie Lloyd E. 7 5 104.81 130 Quibol, Melecio L. 7 6 104.81 131 Enad, Marivic E. 7 7 104.81 132 Villamater, Ernan E. 7 9 92.831 133 Pingkian, Levi B. 7 10 98.82 134 Ratilla, Cleto A. 7 11 98.82 135 Lico, Mildred P. 7 12 98.82 136 Perral, Ephraim R. 7 13 98.82 137 Bibat, Wilfredo A. 7 14 98.82 138 Aldave, Maribeth B. 7 15 98.82 139 Bohol, Flora A. 8 1 104.81 140 Peramide, Sheila S. 8 2 104.81 141 Peramide, Eric S. 8 3 104.81 142 Salvador, Dolores S. 8 4 104.81 143 Pancho, Efren M. 8 5 104.81 144 Decap, Ana Leah A. 8 6 104.81 145 Reyes, Harry S. 8 7 104.81 146 Flores, Willie L. 8 8 104.81 147 Coquila, Felix N. Sr. 8 9 104.81 148 Coquilla, Alfredo O. Jr. 8 10 104.81 149 Coquilla, Benecio L. Jr. 8 11 106.31 150 Sibay, Rizalino F. 8 12 106.31 151 Piandong, Janice D. 8 13 124.27 152 Piandong, Jose Giovani D. 8 14 124.27 153 Ohao, Pedro A. 9 1 86.842 154 Kirong, Charlie A. 9 2 86.842 155 Guiwan, Mary Jane 9 3 86.842 156 Kirong, Richard A. 9 4 86.842 157 Flores, Helen L. 9 5 86.842 158 Ayob, Leonida C. 9 6 86.842 159 Nulia, Victor C. 9 7 86.842 160 Canonoy, Jeffrey A. 9 8 86.842 161 Emnace, Rosita P. 9 9 88.339 162 Canonoy, Norman A. 9 10 103.31 163 Balili, Daylinda E. 10 1 91.334 164 Gallardo, Noel N. 10 2 92.831 165 Bustamante, Rosario C. 10 3 94.328 166 Gomez, Rosalie S. 10 4 95.825 167 Gomez, Romy S. 10 5 104.81 Footnotes 1. P6,495,682.50 was paid by SHFC and P95,161.50, in form of equity, had been paid by Villa Maxima Homeowners Association, Inc. 2. see Annex for the masterlist of qualified beneficiaries.