BIR Ruling No. 537-12

August 29, 2012 BIR RULING NO. 537-12 RA 7279; BIR Ruling No. 344-2011 San Sebastian Community Urban Land & Development Foundation, Inc. Purok Luhod-Luhod, Mandalagan Bacolod City Attention: Ms. Ma. Joy B. Jarabelo Housing Director Gentlemen : This refers to your letter dated April 6, 2011, requesting for capital gains tax exemption, on behalf of Happyville Homeowners Association, Inc. (HHAI) on its purchase of a parcel of land from the Philippine National Bank (PNB) pursuant to Republic Act No. 7279, otherwise known as the Urban Development and Housing Act of 1992. It appears that Philippine National Bank (TIN 000-188-209) is the registered owner of a lot covered by Transfer Certificate of Title (TCT) No. T-120663 of the Registry of Deeds for Bacolod City. The aforesaid property is situated at Brgy. Sum-ag, Bacolod City with an area of 6,388 sq.m. On the other hand, HHAI (TIN 005-916-873) is a legal association of underprivileged and homeless citizens registered with the Housing and Land Use Regulatory Board (HLURB), Region VI, Western Visayas under Certificate of Registration No. 00362 dated October 30, 2001. On November 22, 2010 the above-stated parties executed a Deed of Absolute Sale whereby the owner transfers and conveys to HHAI the subject property for and in consideration of the sum of P2,555,200.00 payable thru the loan proceeds of HHAI's approved Community Mortgage Program (CMP) per Letter Guaranty LOG No. 0480 under the CMP of the Social Housing Finance Corporation (SHFC), a Subsidiary of the National Home Mortgage Finance Corporation (NHMFC). (The Master List of Members-Beneficiaries, consisting of fifty-seven (57) qualified individuals are listed in Annex "A" hereof and shall form part of this Ruling) 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: xxx xxx xxx (d) Exemption from the payment of the following: (2) Capital gains tax on raw lands used for the project; aTCAcI 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 land owner is exempt from the payment of capital gains tax and expanded withholding tax on the conveyance of the property. 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 property, to the effect that the said property shall be used for socialized housing pursuant to RA No. 7279. However, it is observed that documentary stamp tax is not one of the taxes covered by the tax exemption clause in Secs. 20 and 32 of RA No. 7279. Such being the case, the document conveying the property to HHAI under the CMP shall be subject to documentary stamp tax imposed under Section 196 of Tax Code, as amended, based on the consideration contracted to be paid for such realty or on its fair market value determined in accordance with Section 6 (E) of the said Code, whichever is higher. Please take note 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 Homeowners Association 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) after the submission of the requirements provided under RMO 15-2003. EHSTDA 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 for capital gains tax or income tax imposed under the Tax Code of 1997. (BIR Ruling No. 344-2011 dated September 13, 2011) 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 MASTERLIST OF MEMBER-BENEFICIARIES OF HAPPYVILLE HOMEOWNERS ASSOCIATION, INC. No. Name Lot Allocation Block # Lot # Lot Area 1 Separo, Julieta G. 1 1 72 2 Nasis, Radito D. 1 2 116 3 Dela Torre, Rosalie S. 1 5 100 4 Juarez, Lorelyn P. 1 6 100 5 Juarez, Rita A. 1 7 141 6 Cordero, Analee J. 1 8 62 7 Cordero, Alejandro G. 1 9 57 8 Salaver, Lea J. 1 10 72 9 Mendoza, Dorotea R. 1 12 101 10 Tambasen, Janice F. 1 13 97 11 Delgado, Charmaine J. 1 14 92 12 Barcelona, Dem Ceasar R. 1 15 110 13 Barcelona, Ryan Ceasar R. 1 16 110 14 Bayot, Joyce N. 1 17 79 15 Tambasen, Jimmy Jr. F. 1 18 110 16 Gutang, Jazel M. 1 19 73 17 Tambasen, Fe V. 1 20 143 18 Mabalon, Harvey G. 1 21 72 19 Mabalon, Letecia G. 1 22 72 20 Barcelona, Ofelia M. 1 23 108 21 Nasis, Ronilo A. 2 1 73 22 Nasis, Lucilo D. 2 2 110 Sub-Total 2070 ===== No. Name Lot Allocation Block # Lot # Lot Area 23 Cordero, Lazaro C. 2 3 64 24 Sioco, Kenneth B. 2 4 60 25 Toriano, Jona F. 2 6 54 26 Pahilona, Francisco B. 2 7 54 27 Bendol, Erwin Jr. E. 2 8 120 28 Bendon, Erwin Sr. D. 2 9 120 29 Zapata, Hazel F. 3 1 54 30 Zapata, Iluminada F. 3 2 54 31 Dencio, Jenifer P. 3 3 72 32 Nasis, Anamy P. 3 4 72 33 Bula, Lucita N. 3 5 67 34 Yap, Wilma B. 3 6 72 35 Palma, Eduardo Q. 3 7 67 36 Salunatin, Precious Mae M. 3 8 67 37 Nasis, Josephine M. 3 9 100 38 Nasis, Giovannie Sr. C. 3 10 108 39 Berdigay, Caroline A. 3 11 90 40 Nasis, Maria Suzette D. 3 12 54 41 Leonoras, Nida Z. 3 13 78 42 Bearneza, Nenita B. 3 14 79 43 Nasis, Roderick G. 3 15 79 44 Gale, Ladislao Jr. D. 4 1 59 45 Yulo, Catherine Y. 4 3 105 46 Yaun, Christine C. 4 4 105 47 Yaun, Suzette O. 4 5 105 48 Yaun, Cris Paulo C. 4 6 105 Sub-Total 2064 ===== No. Name Lot Allocation Block # Lot # Lot Area 49 Yaun, Cheryll C. 4 7 80 50 Gan, Elena Q. 4 8 65 51 Gan, Carah Jamaica Sheena Q. 4 9 79 52 Quillain, Noel G. 4 10 56 53 Sabacan, Michelle Marie N. 4 11 169 54 Mayang, Delia G. 4 12 84 55 Nasis, Pedmer J. 4 13 209 56 Malaga, Esmeralda S. 4 14 60 57 Zamora, Julianita T. 4 15 60 Sub-Total 862 =====