Circularizing the MOA between the NHMFC and the BIR

October 8, 2001 REVENUE MEMORANDUM CIRCULAR NO. 43-01 SUBJECT : Circularizing the Memorandum of Agreement between the National Home Mortgage Finance Corporation and the Bureau of Internal revenue Streamlining the Procedures and Requirements for the Implementation of the Tax Incentives Granted to Legally Organized Associations Under the Community Mortgage Program Pursuant to Republic Act No. 7279 TO : All Internal Revenue Officers and Others Concerned For the information and guidance of the taxpaying public and all internal revenue officers and others concerned, the Memorandum of Agreement that was executed between the National Home Mortgage Finance Corporation (NHMFC) and the Bureau of Internal Revenue (BIR) on October 5, 2001, providing for the streamlining of the procedures and requirements for availing the tax incentives granted to the underprivileged and the homeless under the Community Mortgage Program (CMP), pursuant to Republic Act No. 7279, otherwise known as the " Urban Development and Housing Act of 1992," is hereby circularized as follows: "MEMORANDUM OF AGREEMENT KNOW ALL MEN BY THESE PRESENTS: This Agreement made and entered into by and between: NATIONAL HOME MORTGAGE FINANCE CORPORATION, a government-owned corporation with office address at Filomena Building III, 104 Amorsolo Street, Legaspi Village, Makati City, Metro Manila, represented herein by its President, ANGELICO T. SALUD, hereinafter referred to as "NHMFC"; - and - BUREAU OF INTERNAL REVENUE, a government agency with office address at Agham Road, Diliman, Quezon City, Metro Manila, represented herein by its Commissioner, RENE G. BAEZ, hereinafter referred to as "BIR"; WITNESSETH That: WHEREAS, Republic Act No. 7279, otherwise known as the "Urban Development andHousingAct of 1992" provides for a Community Mortgage Program (CMP) where legally organized associations of underprivileged and homeless citizens are enabled to purchase and develop a tract of land under the concept of community ownership; WHEREAS, one of the incentives granted under Section 34 of the said Act pertains to the exemption from the payment of capital gains tax of the properties sold under the CMP; WHEREAS, it is the primary objective of the NHMFC, with the leadership of the Housing and Urban Development Coordinating Council (HUDCC), to assist residents of blighted or depressed areas to own the lots they occupy, or where they choose to relocate and to eventually improve their neighborhood and homes to the extent of their affordability; WHEREAS, the BIR is mandated by law to assess and collect all national internal revenue taxes, fees, and charges; and to enforce all forfeitures, penalties, and fines connected therewith, including the examination of records, documents and of taxpayer in order that the correct amount of tax may be collected, if warranted; WHEREAS, under Revenue Regulations No. 9-93, as amended by Revenue Regulations No. 11-97, and in relation to Revenue Memorandum Circular No. 3-2001, the Regional Directors of the various regions of the BIR are authorized to issue rulings on the capital gains tax exemption of CMP projects, subject to the submission of certain documents by the taxpayer-applicant and the conduct of an ocular inspection; WHEREAS, the parties recognize the need, and are committed to streamline the existing procedures and requirements in order that the above-stated incentive could be best implemented and realized, without impairing, however, the need to properly monitor the activities related to such CMP projects; NOW, THEREFORE, for and in consideration of the foregoing premises and the terms and conditions hereinafter set forth, the parties hereby agree as follows: 1. The Housing and Urban Development Coordinating Council (HUDCC) and the National Home Mortgage Finance Corporation (NHMFC). The HUDCC is the policy-making agency of the government for the housing sector and exercises supervisory authority over the NHMFC. The NHMFC shall execute a certification, signed by the President of the NHMFC that the subject property qualifies and is actually a CMP Project. Such certification, copy of which is attached as Annex "A", shall be an NHMFC accountable form. On or before the fifth (5th) day of the month immediately following the end of each calendar month, a summary report of all certifications made shall be submitted by the NHMFC to the BIR Deputy Commissioner for Operations. 2. The Bureau of Internal Revenue The BIR undertakes to process applications for exemption from the payment of capital gains tax, including the creditable withholding tax, if any, on the sale of real property under the Community Mortgage Program (CMP) on the basis of the certification issued by the NHMFC, and other documents necessary for the preparation of the corresponding Certificate Authorizing Registration and Tax Clearance (CAR/TCL), including proof of payment of the corresponding documentary stamp tax imposed under section 196 of the Tax Code of 1997, based on whichever is higher between the consideration contracted to be paid for such real property or the fair market value that shall be determined by comparing the zonal value and the Local Government Assessor's fair market value. However, when one of the contracting parties is the government, the documentary stamp tax shall be based on the actual consideration paid for the real property. The BIR undertakes to process, approve and issue the necessary CAR/TCL within five (5) days from the date of compliance with all the above-stated requirements. This Agreement shall take effect immediately upon signing by the parties. IN WITNESS WHEREOF, the parties herein, through their duly authorized representatives, have caused this agreement to be signed this 5th day of October 2001, at Malacaang Palace, City of Manila. BUREAU OF INTERNAL REVENUE NATIONAL MORTGAGE FINANCE CORPORATION By: By: (Original Signed) (Original Signed) RENE G. BAEZ ANGELICO T. SALUD Commissioner President Signed in the Presence of: DEPARTMENT OF FINANCE HOUSING AND URBAN DEVELOPMENT COORDINATING COUNCIL By: By: (Original Signed) (Original Signed) JOSE ISIDRO N. CAMACHO MICHAEL T. DEFENSOR Secretary Chairman ANNEX A SN_____________ CERTIFICATION KNOW ALL MEN BY THESE PRESENTS: This is to certify that ________________________, with address at _________________, is a legal association of underprivileged and homeless citizens organizes on ________________ as evidenced by its duly submitted authenticated Articles of Incorporation. Pursuant to Section 36 of Republic Act No. 7279, otherwise known as the "Urban and Development Housing Act of 1992", (name of association) is securing a housing loan under the Community Mortgage Program (CMP), a financing assistance program of the National Home Mortgage Finance Corporation (NHMFC), for the acquisition of the lots that its qualified member-beneficiaries occupy. This certifies further that the property/ies described under Transfer Certificate(s) of Title No. _____________, and more particularly described as follows: ( technical description of the property/ies ) is/are actually a CMP Project and shall be proportionately distributed to the association' s qualified member beneficiaries who are identified in the list that is made an integral part hereof. This certifies finally that the purchase of the above-described property by the (name of association) is a bona fide transaction, and qualifies for the capital gains tax exemption incentive provided in Section 32(b) of R.A. 7279. The necessary documents are enclosed herewith and made an integral part of this certification. Done this _________ day of ____________, 2001. _________________________ ANGELICO T. SALUD President, NHMFC encl: Certified Duplicate Original of the Deed of Sale to the Community Association Certified True Copy of the Articles of Incorporation of the Community Association and Masterlist of Qualified Beneficiaries; Certified True Copy of the TCT/OCT and Latest Tax Declaration of the Property/ies sold under CMP; Certified True Copy of the Location Plan of the Property/ies Sold to the Community Association." All internal revenue officers and others concerned are requested to give this Circular as wide a publicity as possible. (SGD.) RENE G. BAEZ Commissioner of Internal Revenue