BIR Ruling No. 640-12

December 4, 2012 BIR RULING NO. 640-12 RA 7279; 208-12 La Consolacion Ph 1 Homeowners Association, Inc. Purok La Consolacion Ph 1, Brgy. Apopong General Santos City Attention: Mr. Fidel M. Parreo President Gentlemen : This refers to your letters dated March 21, 2012 and July 18, 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". IaHSCc 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 1 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. 13609 bearing TIN 408-230-569-000; that on May 6, 2011, a Deed of Absolute Sale was executed by Edmundo Tan Lim in favour of the La Consolacion Phase 1 Homeowners Association, Inc. whereby the former transferred to the latter a portion of the above-mentioned property with an area of 24,459.02 square meters at an agreed price of P8,838,023.86; that pursuant to a certification issued by the Social Housing Finance Corporation (SHFC),24,459.02 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 1 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: TCADEc (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: 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 24,459.02 square meters area for CMP, by the landowner, Edmundo Tan Lim, to La Consolacion Phase 1 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 1 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. ) DAEcIS 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) 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 1 HOMEOWNERS ASSOCIATION, INC. Purok Olaer, Brgy. Apopong, General Santos City 1 AGUSTIN DANTE 2 AHIT RHANDY 3 ALEJANDRO ARLENE 4 ALVARADO JIZREEL 5 ALVARADO MARIBETH 6 AMOGUIS MICHAEL JOHN 7 ANGANA RICKY 8 AO ROSELYN 9 APORADOR MARIVIC 10 ARANETA MARIA CONCEPCION 11 ARGOTE NORMITA 12 ASOMBRADO LIZA 13 ATAYDE PHILIP 14 BABA ALBERTO 15 BARBELINO GREG 16 BAYKING LILIA 17 BAYLON MARIA ARCELIE 18 BEJAR ROLANDO 19 BERINDES PURESA 20 BERWAGA MARIO 21 BETER JR. VICENTE 22 BONIFACIO ANITA 23 BOSTON ROMULO 24 BUHAIN MARISSA 25 CABABAT CAMILO 26 CABATIAN SAMSON 27 CABREJAS RONILEE 28 CALMA DODO 29 CALOPEZ PACITA 30 CAMINADE ROGELIO 31 CANOMON JR. JOSE 32 CARIO JADE 33 CARIO XERXES 34 CASTOR RODEL 35 CASTRO TARCELA 36 CATAPANG III FELICIANO 37 CATIG JOSELITO 38 COMPIO RODRIGO 39 DAHAN PETER 40 DAMULO NELSON 41 DARAS MARILOU 42 DAUB SAMSON 43 DELA TORRE REY 44 DILAG ELENA 45 DIMAISIP RODILYN 46 DOMINGO EVELYN 47 ENANORIA ELVIRA 48 ESTORES ROSALIE 49 ESTORES ROLLY 50 ESTORES FELISA 51 ESTORES ROSA 52 EVANGELISTA JR. JOSE 53 EWICAN ALFREDO 54 FELIAS REMY 55 FRANCISCO SYLVIA 56 GALEOS MARGARITA 57 GALOS RENAIDA 58 GENELO ROGELIO 59 GERMEN MARLON 60 GERMIN MARVIN 61 GETUYA MARJORIE 62 GONO GALACIO 63 GONZALES GENALYN 64 GRECIA RENERIO 65 GRECIA MELCHOR 66 GUIBON IBRAHIM 67 GUINOO RHODORA 68 GUNIDA OLIVIE 69 HILAJOS ABNER 70 HIMARANGAN JR. VALERIANO 71 INARSOLIN RONA 72 JAGUTIN RHODORA 73 JASTILLANA RAMONITO 74 JEMINEZ LOLITO JOSE 75 JOLASCO JOHNNY 76 JURILLA JOCELYN 77 LABUCA MARIVIC 78 LALANTACON ROMELYN 79 LARA RUBIE 80 LEITCH JOAN 81 LIMPIADO GREGORIO 82 LLOREN DIOSY FE 83 LUNTAYAO LADISTA 84 MAHINAY RUBEN 85 MAMILLA MERCEDITA 86 MANGANOHOY RODEL 87 MANTUA RICHARD JAY 88 MANTUA CLAIRE BENNETH 89 MANTUA NONITO 90 MARAJAY ISMAEL 91 MARINAY LUCY 92 MARINTES VERGEL 93 MENDOZA JUANITO 94 MENDOZA FRANCIS LAARNE 95 MEPARANDUM EDWARD 96 MERCADO ALMA 97 MERCADO DON CRISTIAN 98 MICARTE AIDA 99 MONTEZA RONALD 100 MONTEZA SUSAN 101 MONTEZA GEORGE 102 MOSNE SHIELA MAE 103 MOSNE JR. FABIAN 104 NERI MARY GRACE 105 OCMAR CYNTHIA 106 OCMAR JR. PABLO 107 ORAPA ARNULFO 108 ORPIANO JOHN MARK 109 ORTEGA ALFREDO 110 ORTEGA SR. ROBERT 111 PACIFICO JR. CRISANTO 112 PAGAL MILAGROSA 113 PAMAYLOON RHENA 114 PANCHO CERILO 115 PARREO FIDEL 116 PAUSAL LEONILA 117 PENDON EDGAR 118 PENDON LOWIELYN 119 PLONIA DOMINADOR 120 QUADALQUIVER FELOMINA 121 QUANO DOMINGO 122 ROQUILLOS LUCIA 123 ROVERO NOEL 124 SABASAJE FARAH 125 SAIKOL DATUMALAO 126 SASIS EMELITA 127 SASIS MA. GLORIA 128 SEBIGAN HERLEY 129 SEBUNGA ERLA 130 SIBUNGA VIVIAN 131 SOLATORIO BALTAZAR 132 SUBA-AN MARTIN 133 SUBA-AN MARIA NORA 134 SUBITO BEVERLY 135 SYDIONGCO PRIMO 136 TABANAO MILA 137 TABLIZO SALVACION 138 TATEL REY 139 TEMBLOR JERRY 140 TEMPLAOD JOCELYN 141 TILLO RUDY 142 TINGAL JIMMY 143 TORIBIO ARIEL 144 TORRES ELIZABETH 145 UGSANG SHIELA 146 UNOS HASER 147 UNOS ABDUL 148 VARGAS LYNE 149 VERGARA MILAGROS 150 VILLA LYNIE JEAN