BIR Ruling No. 609-12

November 5, 2012 BIR RULING NO. 609-12 RA No. 7279; BIR Ruling No. 130-10; BIR Ruling No. 040-10 Kimara Homeowners Association, Inc. Purok Mahimulanton, Brgy. Banago Bacolod City Attention: Lemuel Yanson President Gentlemen : This refers to your letter dated March 21, 2011 requesting for a tax exemption on the sale of real properties by the Maria Clara Development and Holding Corporation in favor of Kimara Homeowners Association, Inc. pursuant to Republic Act 7279 otherwise known as the "Urban Development and Housing Act of 1992". SAcCIH It appears that Maria Clara Development and Holding Corporation (MCDHC) with Tax Identification Number 000-923-253, Mariano G. Yogore (TIN 266-471-741-000), Mario G. Yogore (TIN 266-472-164-000), Segundo G. Yogore (TIN 266-472-002-000) and Lourdes Concha Cruz (TIN 162-937-486), are the registered owners of parcels of land covered by five (5) Transfer Certificates of Title, to wit: Owner TCT No. Area (sq. m.) Property Index No. MCDHC T-121095 2,674 143-00-044-04-012 Mariano G. Yogore T-57222 2,674 143-00-044-04-007 Mario G. Yogore T-57223 2,674 143-00-044-04-006 Segundo G. Yogore T-57225 2,674 143-00-044-04-009 Lourdes Concha Cruz T-288405 2,674 143-00-044-04-010 issued by the Registry of Deeds for Bacolod City with aggregate area of thirteen thousand three hundred seventy square meters (13,370 sq.m.). The aforesaid properties are situated at Brgy. Banago, Bacolod City. Kimara 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. 006-266-411-000. On October 11, 2010, the parties executed a Deed of Absolute Sale whereby the owners thru their Attorney-in-Fact, Marianela Y. Acua, transfer and convey portion of the subject properties or twelve thousand one hundred eleven square meters (12,111 sq.m.) to Kimara Homeowners Association, Inc. at an agreed price of Four Million Eight Hundred Forty Four Thousand Four Hundred Pesos (P4,844,400.00). Pursuant to a certification issued by Social Housing Finance Corporation, the properties covered by TCTs No/s. T-121095, T-57222, T-57223, T-57225 and T-288405 1 are actually a CMP Project and shall be proportionately distributed to the association's one hundred forty (140) qualified member-beneficiaries. 2 For this purpose, Kimara 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" cHITCS 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, Marianela Y. Acua to Kimara Homeowners Association, Inc., in so far as the twelve thousand one hundred eleven square meters (12,111 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 Certificates of Titles of the lands 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 Secs. 20 and 32 of RA 7279. Accordingly, the owners thru their Attorney-in-Fact, Marianela Y. Acua are 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. HcACST Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ATTACHMENT Kimara Homeowners Association, Inc. Purok Mahimulanton, Brgy. Banago Bacolod City Name of Beneficiary Blk. No. Lot No. Total Area (sq.m.) 1 Gumban, Sonia S. 1 1 91.70 2 Banaban, Julie J. 1 2 41.57 3 Abalos, Ma. Liza J. 1 3 55.02 4 Demadara, Milagros M. 1 4 39.13 5 Dequilla, Deanna V. 1 5 73.36 6 Sanchez, Nelyn S. 2 1 70.92 7 Gumban, Rosevilla R. 2 2 139.39 8 Mario, Rosma S. 2 3 88.04 9 Robles, Rodrigo R. 2 4 67.25 10 Jarina, Gloria P. 2 5 34.24 11 Makilan, Amelita B. 2 6 91.70 12 Sasi, Rodora V. 3 1 100.26 13 Andrade, Eva S. 3 2 141.84 14 Gumban, Helen D. 3 3 177.29 15 Gumban, Jesus D. 3 4 100.26 16 Aliermo, Jonil R. 4 1 221.31 17 Mirasol, Josefina T. 4 2 30.57 18 Braza, Louvern S. 4 3 138.17 19 Aplasca, Wilma 4 4 86.81 20 Banaban, Melchor A. 4 5 83.14 21 Pelle, Lenie M. 4 6 112.49 22 Alegre, Emelyn M. 4 7 179.74 23 Marco, Rhea S. 4 8 163.84 24 Marco, Ma. Regina S. 5 1 88.04 25 Marco, Julius S. 5 2 72.14 26 Basa, Julita E. 5 3 150.39 27 Clavel, Apolonia G. 5 4 327.69 28 Acebedo, Jocelyn C. 5 5 162.62 29 Melgar, Eleah E. 5 6 149.17 30 Paguntalan, Jaycel E. 5 7 179.74 31 Indico, Ruel A. 5 8 157.73 32 Descutido, Edebeb A. 5 9 86.81 33 Londres, Felizardo B. 5 10 85.59 34 Nombre, Alvin O. 5 11 84.37 35 Batayola, Bregida C. 5 12 100.26 36 Dadivas, Harris Kim V. 5 13 133.28 37 Caspe, Ma. May L. 6 2 61.14 38 Dadivas, Ruby 6 3 62.36 39 Diamante, Carmelita F. 6 4 61.14 40 Pegares, Irene L. 6 5 61.14 41 Pabon, Adonis B. 6 6 61.14 42 Luna, Juanita D. 6 7 61.14 43 Miranda, Wilfredo G. 6 8 70.92 44 Marapo, Nenita L. 6 9 72.14 45 Garcia, Jessie Jesus A. 6 10 146.73 46 Barbas, Ronilo B. 6 11 58.69 47 Paguntalan, Pablito J. 6 12 58.69 48 Barbas, Renee B. 7 1 56.24 49 Behogan, Diesilyn S. 7 2 47.69 50 Guevarra, Maya P. 7 3 41.57 51 Caldino, Dante R. 7 4 53.80 52 Mondejar, Rufino D., Jr. 7 5 81.92 53 Occillo, Renato P. 7 6 42.80 54 Coberos, Markvon 7 7 26.90 55 Tumacay, Cristina L. 8 1 36.68 56 Torre, Alexander T. de la 8 2 29.35 57 Villadolid, Elizabeth M. 8 3 35.46 58 Blaza, Violy M. 8 4 33.01 59 Anito, Jerry D. 8 5 37.90 60 Ombing, Anna Lou G. 8 6 29.35 61 Sayam, Anastacia V. 8 7 36.68 62 Pangue, Roxanne P. 8 8 36.68 63 Trespeces, Julie A. 8 9 89.26 64 Bigcas, Liezel 8 10 47.69 65 Bedonia, Imelda O. 8 11 85.59 66 Bedonia, Jessry O. 8 12 36.68 67 Natan, Edwin B. 8 13 44.02 68 Padasas, Romulo B. 8 14 106.38 69 Lagonero, Joji A. 9 1 47.69 70 Consolacion, Carlos B. 9 2 129.61 71 Consolation, Maximo B. 9 3 61.14 72 Francisco, Medina C. 9 4 110.04 73 Calamba, Thesa D. 9 5 46.46 74 Anito, Georgie D. 9 6 55.02 75 Sarabia, Willy A., Jr. 9 7 161.40 76 Arances, Gerundo C., Jr. 10 1 30.57 77 Alob, Arnel M. 10 2 30.57 78 Salvan, Nixon A. 10 3 30.57 79 Salvan, Newton A. 10 4 30.57 80 Rebada, Reynaldo B. 10 5 30.57 81 Jimenez, Marlon T. 10 6 30.57 82 Santillan, Jocelyn P. 10 7 30.57 83 Aque, Albert J. 10 8 30.57 84 Cruz, Jemie B. 10 9 30.57 85 Jomoles, Ronald T. 10 10 30.57 86 Gravador, Evelyn A. 10 11 30.57 87 Rebada, Roan B. 10 12 30.57 88 Pagsugiron, Petronilo C. 11 1 135.72 89 Modillas, Elsa R. 11 2 124.72 90 Benares, Jona P. 11 3 110.04 91 Sarraga, Nimfa O. 11 4 91.70 92 Diamante, Jonel B. 11 5 103.93 93 Baylon, Gaudencio T., Jr. 11 6 91.70 94 Diamante, Romerian B. 11 7 88.04 95 Bernasol, Jasmine L. 11 8 91.70 96 Leduna, Liza V. 11 9 73.36 97 Leduna, Mary Kris L. 11 10 91.70 98 Doval, Ard Karem S. 11 11 110.04 99 Lim, Sheillyn Grace G. 11 12 166.29 100 Modillas, Raymund V. 11 13 97.82 101 Yanson, Reli Boy S. 11 14 58.69 102 Cervantes, Edwin V. 12 1 74.59 103 Cervantes, Rafael Y., Jr. 12 2 80.70 104 Samos, Ramonito F. 12 3 83.14 105 Samos, Aljie F. 12 4 96.59 106 Leopardas, Editha P. 13 1 83.14 107 Guillen, Johnny C. 13 2 44.02 108 Lumontad, Emilio S. 13 3 39.13 109 Nombre, Jonathan A. 14 1 152.84 110 Bantaran, Ana Mae V. 14 2 102.71 111 Yanson, Paulina L. 14 3 117.38 112 Yanson, Ivy Grace A. 15 1 188.30 113 Yanson, Dax A. 15 2 196.86 114 Yanson, Lemuel R. 15 3 244.54 115 Manlupig, Mae Claire Y. 15 4 284.89 116 Kepa, Rommel Y. 15 5 72.14 117 Kepa, Reynold Y. 15 6 178.52 118 Kepa, Ronald Y. 15 7 58.69 119 Indoma, Maxilyn V. 15 8 83.14 120 Vingco, Mauricio N., Jr. 15 9 81.92 121 Aguirre, Rodjun S. 15 10 51.35 122 Castillo, Luzavilla A. 15 11 94.15 123 Dullesco, Josephine L. 15 12 83.14 124 Samos, Archie R. 15 13 119.83 125 Aguirre, Jessica R. 15 14 70.92 126 Rivera, Rizal Z. 15 15 69.69 127 Consolacion, Jomary L. 15 16 72.14 128 Relos, Vangie A. 15 17 61.14 129 Solitario, Reynan T. 15 18 114.94 130 Banaban, Celinda D. 15 19 73.36 131 Andrade, Virgenia S. 15 20 52.58 132 Ciocon, Luis P. 15 21 42.80 133 Sarol, Cristy D. 15 22 40.35 134 Magbanua, Nelly C. 15 23 81.92 135 de la Cruz, Corazon M. 15 24 57.47 136 Olivo, Barbara C. 15 25 80.70 137 Locay-locay, Susimo V. 15 26 35.46 138 Indoma, Jacqueline V. 15 27 62.36 139 Orpano, Elpa D. 15 28 89.26 140 Rebada, Joel P. 16 1 163.84 Footnotes 1. Per Deed of Absolute Sale, 236 sq.m. for legal easement, 551 sq.m. "excluded portion" and 472 sq.m. (eroded portion) are excluded from the sale and in the CMP area. 2. See Annex for the masterlist of qualified beneficiaries.