Mr. Rufino Tiu

December 17, 2009 BIR RULING [SH-(135) 797-09] R.A. 7279 Mr. Rufino Tiu c/o Mr. Ricarido Delfin A. King Luisa Estate Park Subdivision Banilad, Cebu City Sir : This refers to your letter dated November 25, 2009, indorsed to this Office by BIR Revenue Region No. 13 Cebu City, requesting for tax exemption on the sale of your real property in favor of New Bajanlai Homeowners Association, Inc. ("New Bajanlai" or "Association" for brevity). Per verification by BIR Revenue District Office No. 81, New Bajanlai with office and business address at Back Japer, Sto. Nio, Quiot, Cebu City is a non-stock-non-profit association with Taxpayer Identification No. 285-604-865. It is duly registered with the Securities and Exchange Commission (SEC) and the Housing and Land Use Regulatory Board (HLURB). It has secured a housing loan under the Community Mortgage Program (CMP), a financing assistance program of the Social Housing Finance Corporation (SHFC) and subsidiary of the National Home Mortgage Finance Corporation (NHMFC), for the acquisition of a real property situated in San Gerardo Homes Subdivision, Barrio Punta Princesa, Cebu City, Cebu covered by Transfer Certificate of Title (TCT) No. T-133922 with an area of 7,596 sq. m. that its qualified member-beneficiaries occupy. On November 20, 2009, a Deed of Absolute Sale for the subject real property was executed by Ricarido Delfin A. King, on your behalf, in favor of New Bajanlai as represented by its President, Conrado Conde in the amount of PhP9,000,000.00. In reply, please be informed that pursuant to Section 32 of R.A. No. 7279, pertinent portion of which reads: "Section 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 exempt from the capital gains tax; and xxx xxx xxx" the landowner who sells its/his property to the Association pursuant to the CMP is exempt from the payment of capital gains tax and from the expanded withholding tax under Revenue Regulations No. 1-90, as amended by Revenue Regulations No. 12-94. TAaCED In view of the foregoing, your sale of the above-described property in favor of New Bajanlai is exempt from 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 the 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 R.A. No. 7279. However, it is observed that documentary stamp tax is not one of the taxes covered by the tax exemption clause under Sections 20 and 32 of R.A. No. 7279. Such being the case, the landowner is liable to pay the documentary stamp tax on the document conveying the property to the Association under the CMP as imposed under Section 196 of the Tax Code, as amended, based on the actual consideration paid by the Association to the landowner. (BIR Ruling No. 291-94 Dated December 12, 1994) 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