Moonlight Homes Homeowners' Association, Inc.

December 7, 2009 BIR RULING [SH-(124) 752-09] 24 (D) (1); 196; DA-065-2004 Moonlight Homes Homeowners' Association, Inc. Lot 2, Block 23 Golden Acres II Talon IV Las Pias City Attention: Mr. Charlie B. Alzaga President Gentlemen : This refers to your undated letter relative to your request for exemption from the payment of taxes pursuant to the provisions of Republic Act No. 7279. It is represented that Moonlight Homes Homeowners' Association, Inc. is registered with the Housing and Land Use Board with Registration Certificate No. 13843 for the following purposes, viz. : 1. To construct, manage, maintain, and operate adequate facilities and services for its members; 2. To initiate and organize socio-cultural projects and activities to awaken community consciousness and belonging; 3. To promote, enhance, and foster the development and improvement of the quality of life of the members through livelihood projects and other economic activities; 4. To acquire, accept donations, purchase, own, hold, develop, lease, mortgage, pledge, exchange, sell, transfer or otherwise invest, deal in or trade, in any manner permitted by law and the rules and regulations of government regulatory or licensing agencies, real and personal property of every kind and description, or any interest therein, as may be necessary for the accomplishment of the purposes of the association; DcAaSI 5. To borrow and otherwise contract indebtedness and issue notes, bonds and other evidence of indebtedness and to secure payment therefor by mortgage, pledge or deed of trust, or through encumbrances on any and all of its then-owned or after-acquired real or personal properties and assets as may be permitted by law; 6. To enter into, make, perform and carry out, or cancel and rescind contracts of every kind and for any lawful purpose with any person, firm, association, corporation syndicate, domestic or foreign, or others; 7. To do and perform any other acts and things, and to have and exercise any other powers, which may be necessary, convenient and appropriate to accomplish the purpose for which the association is organized. and that it submitted the following documents in support of its request for exemption: 1. HLURB Certificate of Registration 2. Articles of Incorporation 3. Project Development Plan In reply, please be informed that pursuant to Section 32 of Republic Act (RA) No. 7279, pertinent portions of which read: "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 owners of the raw lands are exempt from the payment of capital gains tax on the conveyance of the property, corresponding to the portion thereof that will be used in the aforestated socialized housing project. Upon application for exemption, a lien on the titles of the lands shall be annotated by the Register of Deeds having jurisdiction over the properties, to the effect that the same are being applied to socialized housing project pursuant to RA No. 7270. However, the sale is subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997, based on the consideration or the fair market value, whichever is higher. cHCIEA However, it is observed that documentary stamp tax is not one of taxes covered by the tax exemption clause is Section 20 of RA No. 7279. Such being the case, the project developer/sellers shall be liable to pay the documentary stamp tax on the documents conveying the properties imposed under Section 196 of the Tax Code of 1997, based on the consideration contracted to be paid for such realties or on their fair market value determined in accordance with Section 6 (E) of the said Code, whichever is higher. Moreover, the notarial acknowledgement to said deed of conveyance is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of 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, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service