BIR Ruling No. 628-12

November 22, 2012 BIR RULING NO. 628-12 RA 7279; 208-12 La Consolacion Phase 2 Homeowners Association, Inc. Purok La Consolacion Ph 2, Brgy. Apopong General Santos City Attention: Mr. Marlone G. Baldugo President Gentlemen : This refers to your letter dated November 15, 2011 requesting on behalf of the landowner, Edmundo Tan Lim married to Sylvia Zablan Lim, for exemption from the payment of capital gains tax and other taxes in accordance with Republic Act (RA) No. 7279, otherwise known as "The Urban Development and Housing Act of 1992". HCISED It is represented that Edmundo Tan Lim with TIN 188-087-607 is the registered owner of a parcel of land covered by TCT No. T-121196 more particularly described as Lot 4 (LRC), Pcs-11711 issued by the Registry of Deeds for General Santos City situated in Barrio Makar, General Santos City, with an aggregate area of 60,000 square meters more or less; that on the other hand, La Consolacion Phase 2 Homeowners Association, Inc. is a non-stock, non-profit corporation duly registered with the Housing and Land Use Regulatory Board (HLURB) under Certificate of Registration No. 13622 bearing TIN 409-415-020-000; that on October 10, 2011, a Deed of Absolute Sale was executed by Edmundo Tan Lim in favour of the La Consolacion Phase 2 Homeowners Association, Inc. whereby the former transferred to the latter a portion of the above-mentioned property with an area of 27,405.85 square meters at an agreed price of P10,067,264.94; that pursuant to a certification issued by the Social Housing Finance Corporation (SHFC), 27,405.85 square meters of the subject property covered by TCT No. T-121196 is actually a CMP Project and shall be proportionately distributed to the association's qualified member-beneficiaries; and that the La Consolacion Phase 2 Homeowners Association, Inc. secured a housing loan under the Community Mortgage Program (CMP), a financing assistance program of the SHFC, a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). In reply thereto, 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: xxx xxx xxx (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: DTIcSH xxx xxx xxx (b) Properties sold under the CMP shall be exempted from the capital gains tax; and xxx xxx xxx" the landowner who sold his property for use in a socialized housing project is exempt from the payment of capital gains tax. Such being the case, the sale of the aforesaid property, with respect to the 27,405.85 square meters area for CMP, by the landowner, Edmundo Tan Lim, to La Consolacion Phase 2 Homeowners Association, Inc. 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 La Consolacion Phase 2 Homeowners Association, Inc. 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. (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 Section 20 of RA No. 7279. Accordingly, Edmundo Tan Lim is liable to pay the documentary stamp tax on the document conveying the aforesaid property 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. (ibid.) It is however, understood that this ruling is never intended and shall not be construed as giving authority to the covered Register of Deeds to effect the 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 Revenue Memorandum Order (RMO) No. 15-2003. (BIR Ruling No. 040-10 dated August 27, 2010) HSacEI 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 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 disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX A La Consolacion Ph 2 Homeowners Association, Inc. Purok Olaer, Brgy. Apopong, General Santos City Member-Beneficiaries 1 MALABARBAS JR. FLORENTINO 2 LALUNA LEMUEL 3 SUMILI MARVIN 4 BUCOL RECHEL 5 LUYAO SR. NELSON 6 CABALUNA MARY JANE 7 DEL SOCORRO ROWENA 8 LAMADA KAMAMA 9 CADIL ALMA 10 PESCADOR MELODY 11 PESCADOR ROY 12 ORTEGA DEOLIDA 13 PARALUMAN JONATHAN 14 GARCIANO BAIRAHANE 15 GARCIANO RAJAN 16 MIJAL CESAR 17 BANGLAY JHA 18 UY BARRY 19 UY SAMSODDIN 20 GORECHO ARLENE 21 CASTILLON ANTONIO 22 ALERTA DOMINGO 23 DICHOSA ALBERTO 24 PALMES JR. ELIAS 25 GRECIA RYAN 26 GRECIA LOUZHIR 27 MARAMBA JOY 28 MARAMBA ELE ROSE 29 SALADAS CHARLYN 30 SALADAS NENITA 31 SALADAS JEROME 32 REYES DEXTER 33 SUBAAN RONALD 34 RODA MARIGOLD 35 RODA LILYBETH 36 WONG JR. MANUEL 37 WONG EVELYN 38 SARAPUDDIN GERALDINE 39 ABO MOHALIDJOE 40 DELOS REYES MARY GRACE 41 ABAO NORA 42 ENRIQUEZ HONEY PEARL 43 LAVADIA MARIVIC 44 ENRIQUEZ KAREN 45 ENRIQUEZ JUBERT 46 PARILLA SOFRONIO 47 PARILLA REGIE 48 LANDERO ROAN 49 MONTE ALITA 50 TOROCIO NORMA 51 JALAGAT DANTE 52 CALIAO ENGELBERT 53 CALIAO JEROME 54 VILLALOBOS ROLLY 55 RODRIGUEZ CECILIA 56 CABUNILAS MAGDALENA 57 ALLERA JEAN 58 LIM ROMEO 59 LIM BENJAMIN 60 GO KRISTIAN LLOYD 61 LIM CHRISTIAN 62 REMUDARO JEFFREY 63 REMUDARO JOFFEL 64 AGARRADO CINDERILLA 65 ASTUDILLO JANMAR 66 ALVAREZ RICHARD 67 ALVAREZ HYRA MAE 68 ABO TAHIR 69 ABO MONER 70 GALVE LORENA 71 RAMOS PIERE 72 DEMOLAR JR. GONZALO 73 MAULANI EDISON 74 COLOBONG JEANE ROSE 75 DEMADARA SR. ALEXANDER 76 AMBIA MICHELLE 77 MAULANA PINKY 78 PESIDAS MIRALUNA 79 PESIDAS ROWEL 80 MATARLO RUTH 81 PORAL RUBY 82 CABAEZ YOLANDA 83 CABAEZ ILY SIMMON 84 BAGUIO ERLINDA 85 SATURINAS EXPEDITO 86 AGUCOY JAY-R 87 CONDES JR. BONIFACIO 88 CONDES AILEEN 89 CONDES JONA JOY 90 MANINGO ELVIRA 91 ANNIE NANCY 92 RAMOS MELADY 93 AMORA RONALD 94 AMORA MARNA 95 ALVAREZ ADORA 96 BACALSO LLORY 97 LAYUGUE LEAH 98 ARROYO ROGIE 99 MAGTANUM WILAMAE 100 NUFUAR GODOFREDO 101 BALDUGO MARLONE 102 ENRIJO ARNEL 103 DIMALEN ZULKIFE 104 DIMALEN DATU SAUDI 105 CESAR JR. CARMELITO 106 CABREJAS ROCHIE LOU 107 NUEZ NORBERTO 108 NUEZ JAIME 109 GOMEZ MARISTELA 110 ARTILLERO MARY JANE 111 MINANGA MOTIN 112 GALANG JR. BENEDICTO 113 MORIN LOVELYN 114 MORIN LIEZEL 115 BARICAUA LILIA 116 POLOT RICHIE 117 PIAMONTE JENIE ROSE 118 CANJA RICHARD 119 SAPAYANI ANTIK 120 UPAK BANZUNAID 121 PADAL RALPH 122 PADAL BERNARDITA 123 ALVAREZ JEFFREY 124 ALVAREZ DAN JASPER 125 AMOLAT VICTOR 126 LUYAO GERWIN 127 ALERTA JR. MANUEL 128 KAWIT MODIE 129 ALERTA TERESITA 130 CALIBO MANULO 131 MALANG MARIFA 132 SIMENE JUANITA 133 ARIZA ANGIE 134 SERONDA EFREN 135 SANTOS IAN FRANCIS SIDNEY 136 JALOVER EILLEEN 137 SILAGURA DAISY 138 SILAGURA LOVELLA 139 PALERACIO JOSE ANTONIO 140 MIGUEL MARILYN 141 DELES JOSELITO 142 ERRO NATHALIE 143 HUMANG-IT LILIBETH 144 EBRADO ANGELITO 145 GUMIMBA HARRIER OSE 146 OPEA SUSAN 147 GALANG STEVENSON 148 RAMA MELDA 149 MANALILI JINKY 150 MONCEDA HERACLEO 151 MAG-ASO JUAQUIN 152 BERNASOR JULIE 153 OSETA BERNARDITO 154 SORIANO YEHLEN 155 ABDUL BANDALA