BIR Ruling No. 502-11

December 15, 2011 BIR RULING NO. 502-11 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10; BIR Ruling No. SH-(110) 710-09; BIR Ruling No. DA-567-98; Villa Ilagan Homeowners Association, Inc. Brgy. Muzon, City of San Jose Del Monte, Bulacan Attention: Lanie D. Oralie CA President Gentlemen : This refers to your letter dated July 1, 2011, requesting for a tax exemption on the sale of real property by Atty. Ruben M. Ilagan in favor of Villa Ilagan Homeowners Association, Inc. pursuant to Republic Act 7279 otherwise known as the "Urban Development and Housing Act of 1992". It appears that Atty. Ruben M. Ilagan with Tax Identification Number 188-508-730-000, is the registered owner of a parcel of land, identified as Lot No. 4-C-2 of the subdivision plan Psd-031420-060757 being a portion of lot 4-c, Psd-03-039171 L.R.C. Record No. covered by Transfer Certificate of Title (TCT) No. T-188941 (M) issued by the Registry of Deeds for the Meycauayan Branch. The aforesaid property is situated at Brgy. Muzon Sitio Panaklayan, San Jose Del Monte Bulacan with an area of ten thousand square meters (10,000 sq.m.), more or less. Villa Ilagan Homeowners Association, Inc. with Tax Identification Number 253-221-345-000, on the other hand, is a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB). On June 6, 2011, the parties executed a Deed of Sale whereby the owner transfers and conveys nine thousand one hundred seventy one square meters (9,171 sq.m.) of the subject property to Villa Ilagan Homeowners Association, Inc. at an agreed price of Eight Million Two Hundred Fifty Three Thousand Nine Hundred Pesos (P8,253,900.00) at Nine Hundred Pesos (P900.00) per sq.m. Pursuant to a certification issued by Social Housing Finance Corporation, nine thousand one hundred seventy one square meters (9,171 sq.m.) of the property covered by TCT No. T-188941 (M) is actually a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, Villa Ilagan 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; 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 Atty. Ruben M. Ilagan to Villa Ilagan Homeowners Association, Inc., in so far as the nine thousand one hundred seventy one square meters (9,171 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 documents 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 properties, 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 Sec. 20 of RA 7279. Accordingly, Atty. Ruben M. Ilagan 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. DA-567-98 dated December 18, 1998; BIR Ruling No. SH-(110) 710-09 dated November 13, 2009) It is, however, understood that this ruling is never intended and shall not be construed as giving authority to the concerned Register of Deed 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 Ilagan Homeowners Association, Inc. Brgy. Muzon San Jose Del Monte Bulacan Name of Beneficiary Blk. No. Lot No. Total Area (sq.m.) 1. NERIE D. DAUB 1 1 47.43 2. VIRGELIO C. PORTOLASO, Sr. 1 2 45.99 3. RAFAEL R. PORTOLASO 1 3 45.99 4. LUISITO R. PORTOLASO 1 4 45.99 5. ERWIN S. LACHICA 1 5 45.99 6. JENNELYN A. CAMPOS 1 6 45.99 7. MARY ANN R. LACABA 1 7 45.99 8. RICARDO G. LACABA 1 8 45.99 9. CHERILYN L. HERMOSO 1 9 45.99 10. CONRADO REVILLIS 1 10 45.99 11. MARITES E. BANTILO 1 11 45.99 12. AGNER T. LOVINO 1 12 45.99 13. JINALYN L. CASTRO 1 13 45.99 14. ROLAND M. CASTRO 1 14 45.99 15. RICARDO L. DELOS REYES 1 15 45.99 16. EDMOND P. LIM 1 16 45.99 17. ALFREDO C. ADORIAS 1 17 45.99 18. AILEEN A. NAPOLES 1 18 45.99 19. NENITA R. ARDINA 1 19 45.99 20. JONATHAN Y. SADJE 1 20 45.99 21. NORLINDA P. NERZA 1 21 45.99 22. MARGARITA S. TAGARINO 1 22 45.99 23. GLORIA C. TAGARINO 1 23 47.43 24. ARISTEO C. TAGARINO 1 24 48.87 25. KELLY GEORGE C. TAGARINO 1 25 45.99 26. NOEMI M. GARCIA 1 26 45.99 27. LORILIE M. GARCIA 1 27 45.99 28. LALAINE M. GARCIA 1 28 45.99 29. LONY BOY M. DOLORES 1 29 44.55 30. MARIEL S. ULBATA 2 1 44.55 31. WARLITO S. TUGNAO 2 2 44.55 32. JOSE BENIGNO C. VALIENTE 2 3 45.99 33. CHARIS MIBELYN C. VALIENTE 2 4 45.99 34. CARLITO N. AZUCENA, Jr. 2 5 45.99 35. MARY GRACE C. SOL 2 6 45.99 36. ORLY D. ORALE 2 7 45.99 37. VERGEL A. GEORLIN 2 8 45.99 38. MARY CHING G. FERNANDEZ 2 9 48.87 39. GILDA A. GEORLIN 2 10 47.43 40. HERMINIO L. MANGASER 2 11 45.99 41. JANINE L. APILADO 2 12 45.99 42. JENNELYN L. MALING 2 13 45.99 43. EFREN S. BERANIO 2 14 45.99 44. LEONOR T. MEJOS 2 15 45.99 45. RICHARD A. SIMAN 2 16 45.99 46. MARK JUN A. MATAY-ON 2 17 44.55 47. MARK NEIL A. MATAY-ON 2 18 44.55 48. RICKLYN E. SARMIENTO 3 1 44.55 49. MARY GRACE E. SARMIENTO 3 2 45.99 50. ELMA B. EBSERNAS 3 3 45.99 51. BIBIANA O. BIGWAS 3 4 45.99 52. LUCIA S. ESCAMILLA 3 5 48.87 53. MARICEL P. OLIS 3 6 47.43 54. MONICA A. LAUDEN 3 7 45.99 55. MELQUIADES E. CALVO 3 8 45.99 56. JENNIFER G. RANIGO 3 9 45.99 57. MARITES L. ESTRADA 3 10 44.55 58. REYNALDO S. EBRON 3 11 44.55 59. NERCITA B. LIBUNAO 4 1 51.74 60. DANILO A. BERZA 4 2 50.30 61. JENA L. DICTA 4 3 48.87 62. JEAN MARIE C. VILLEGAS 4 4 50.30 63. MAGDALENA D. RAMOS 5 1 45.99 64. ERWIN Z. PACINIO 5 2 45.99 65. SEAN Q. REGATCHO 5 3 45.99 66. IRNAN A. CAMACHO 5 4 45.99 67. LORNA A. SARMIENTO 5 5 45.99 68. LOUIE A. SARMIENTO 5 6 45.99 69. REY D. CASTILLO 5 7 45.99 70. IRENE S. CARIGMA 5 8 45.99 71. MELANIE P. LIGUTAN 5 9 45.99 72. GENARO E. DAMOLE 5 10 44.55 73. ROSANA ALMA L. RETAMAL 5 11 44.55 74. EDWIN L. MONTECILLO 5 12 45.99 75. REX L. MONTECILLO 5 13 45.99 76. RAYMARK O. BASOL 5 14 45.99 77. MARLON O. BASOL 5 15 45.99 78. RANDY A. PELIPEL 5 16 45.99 79. SHIRLEEN D. TACAYON 5 17 45.99 80. MARIVIC S. FLORIANO 5 18 45.99 81. JESUS L. DELOS REYES 5 19 45.99 82. MARLON E. BARCELONA 5 20 45.99 83. ARTURO FRANCISCO 5 21 45.99 84. JESUS B. MEJOS 5 22 44.55 85. HELEN M. MACALISANG 6 1 51.74 86. AVEY B. BERDAJE 6 2 45.99 87. DANILO F. OBEDENCIO 6 3 45.99 88. VICTOR M. HUCAY 6 4 45.99 89. ANALIZA R. PALENCIA 6 5 45.99 90. LARIZA K. ARROYO 6 6 45.99 91. ROSARIO O. BASOL 6 7 45.99 92. ROLAND G. FUENTES 6 8 45.99 93. ONOFRE A. PELIPEL 6 9 50.30 94. ROSALINDA C. SANTOS 6 10 50.30 95. JOSEPH C. SANTOS 6 11 50.30 96. RENE G. GARMAY 6 12 47.43 97. JONATHAN C. GARMAY 6 13 45.99 98. MARISA G. GEPILANO 6 14 45.99 99. LUCIO G. GARMAY 6 15 45.99 100. LUCRESIA C. MAGON 6 16 45.99 101. FELIPA R. CIMINE 6 17 45.99 102. MARIA CHRISTINA C. SALONGCONG 6 18 45.99 103. EDGAR D. TALISIC 6 19 45.99 104. REYNALDO G. ALCARTADO 6 20 45.99 105. MARIO G. GEGALAO 6 21 45.99 106. ANTHONY S. SALVACION 6 22 45.99 107. LANIE D. ORALE 6 23 47.43 108. PAMELA G. TAYSON 7 1 53.18 109. PRAISEL B. TAYSON 7 2 45.99 110. JAKE CRIS B. ARANCO 7 3 45.99 111. ALEJANDRO T. CALONG 7 4 45.99 112. GILBERT C. EBARE 7 5 45.99 113. MARY ANN G. GARNACE 7 6 45.99 114. ARMY G. GERANDOY 7 7 45.99 115. TITO D. FERRER 7 8 45.99 116. ALAN S. CORDOVA 7 9 45.99 117. MARIO S. CORDOVA 7 10 45.99 118. RITA I. LACHICA 7 11 50.30 119. LOLITA A. ORIASEL 7 12 54.83 120. BASILIO G. CORDOVA 7 13 50.30 121. ALVIN O. MENDOZA 7 14 45.99 122. VIOLETA O. MENDOZA 7 15 45.99 123. JURIX E. ELARDO 7 16 45.99 124. RICHARD E. GAPASANGRA 7 17 45.99 125. CYRUS C. GAYAS 7 18 45.99 126. SAMMY N. CASIPLE 7 19 45.99 127. MICHELLE C. OCTAVIO 7 20 45.99 128. VIRGIE M. CORDOVA 7 21 45.99 129. ALBERT L. SELORIO 7 22 45.99 130. ALICIA C. ROQUE 7 23 43.12 131. MARLENE M. OYALES 8 1 53.18 132. GILBERT L. LOTO 8 2 45.99 133. ELMER B. ZALUN 8 3 45.99 134. EDELYN C. TESADO 8 4 45.99 135. LUZVIMINDA FULE 8 5 45.99 136. JENELYN C. CALZADO 8 6 45.99 137. MANUEL A. ABELA, Jr. 8 7 45.99 138. MARLON P. SILVA 8 8 45.99 139. ALEXANDER V. MAISA 8 9 45.99 140. EDUARDO U. FLORA, Jr. 8 10 45.99 141. EDUARDO R. FLORA Sr. 8 11 48.87 142. ROSALINDA E. PONCE 8 12 51.74 143. JEREMIAS L. ABENILA 8 13 51.74 144. MARK AGUSTIN P. GAMALI 8 14 45.99 145. JEFFREY R. GUTIERREZ 8 15 45.99 146. GILBERT O. GARGAR 8 16 45.99 147. JOBEN C. CALZADO 8 17 45.99 148. JOYLET C. CALZADO 8 18 45.99 149. WILFREDO O. OCTAVIO 8 19 45.99 150. MACKY V. AQUINO 8 20 45.99 151. GANI A. KUNTINGAN 8 21 45.99 152. AURELIO M. TINOMA 8 22 45.99 153. JOSEPH L. DE BORJA 8 23 43.12 154. GEORGE R. VILLEGAS 9 1 53.18 155. MELANIE D. DELA CRUZ 9 2 45.99 156. MARAH D. DELA CRUZ 9 3 45.99 157. DOMINGO M. DELA CRUZ, Jr. 9 4 45.99 158. PETERSON TORRES 9 5 45.99 159. JOSE A. PANTANO 9 6 45.99 160. ALEJANDRO B. MANIBOG 9 7 44.55 161. LEO B. MOLINA 9 8 43.12 162. BERMER P. DIVA 9 9 43.12 163. JANET D. TALISIC 9 10 44.55 164. EDWARD B. COBEY 9 11 44.55 165. CRISTAR D. BUAN 9 12 45.99 166. CECILE C. RIVA 9 13 45.99 167. ROGELIO B. SALVADOR 9 14 45.99 168. MARK ROGER C. SALVADOR 9 15 45.99 169. LESLIE A. BACAYON 9 16 45.99 170. GIL D. SILAO 9 17 43.12 171. ALFREDO C. CABUANG 10 1 48.87 172. PACENCIA C. CAIDOY 10 2 45.99 173. JOSEPH RUBEN 10 3 45.99 174. MARICEL E. CAIDOY 10 4 45.99 175. RENATO P. PARDIAS 10 5 45.99 176. CORNELIO L. DALIDA 10 6 50.30 177. ROBELLA S. MANIRE 10 7 48.87 178. ELEODORA M. CORTES 10 8 48.87 179. CHRISTOPHER G. RAPAL 10 9 48.87 180. ANTONIO R. GUTIERREZ 10 10 48.87 181. ALAN E. TANIEZA 10 11 48.87 182. CRIS JORIX M. FRAGATA 10 12 48.87 183. ROLYN L. CAMPOS 10 13 48.87 184. MANILYN A. ESPINOLA 10 14 45.99 185. VERGENIO L. CAMPOS 10 15 45.99 186. JANE A. PANDAY 10 16 45.99 187. JOSEPHINE A. VILLAMERO 10 17 45.99 188. LUCEL F. AGUHOB 10 18 44.55 189. JUDEWEL P. JULAO 11 1 45.99 190. ROLLIE E. TALLER 11 2 47.43 191. JEREMIAS P. LACANO 11 3 47.43 192. RONALD R. DELA CRUZ 11 4 45.99 193. ROLAN R. DELA CRUZ 11 5 47.43 194. ANTONIO DL. BORJA, Jr. 11 6 45.99 195. ABRAHAM F. MAGLASANG 11 7 51.74 196. JOSEPH F. MAGLASANG 11 8 47.43 197. BEVERLY C. TIONGSON 11 9 47.43 Footnotes 1. See Annex for the masterlist of qualified beneficiaries.