BIR Ruling No. 473-2017

REPUBLICOFTHE PHILIPPINES

DEPARTMENT OF FINANCE

W BUREAU OF INTERNAL REVENUE Quezon City

RA7279 BIR Ruling No. 036-16

473-2017 10-4-2017

331 Gil Puyat Ave., Makati City TRANSUNION CORPORATION

Attention: JOCELYN B.CRUZ President

Gentlemen:

Finance Corporation SHFC dated November 18. 2014endorsing the sale Housing Act of 1992 transaction between Transunion Corporation and SHFC for exemption from the payment of Capital Gains Tax and other taxes in accordance with Section 32b of the Republic Act (RA No. 7279,otherwise known as the Urban Development and This refers to the letter of Ma. Ana R. Oliveros. President of Social Housing

Transfer Certificates of Title (TCT located at Sauyo, San Bartolome,Quezon City.to wit: is the registered owner of the following parcels of land covered by two2 Documents submitted show that Transunion Corporation (TIN

TCT Tax Declaration Area(sq.m.

2.730

356 Total Area 3,086

SHFC (TIN , on the other hand, is a government-owned and controlled corporation created under Executive Order EO No.272 Series of 2004 an agreed price of Nos. 8974 and 7279 for the housing project of Pascualer Ville ISF Homeowners On November 19.2014 the parties executed a Deed of Absolute Sale whereby Transunion Corporation transferred and conveyed the subject properties to SHFC at Association, Inc., a homeowner's organization duly registered with the Housing and SHFC is buying the property pursuant to the provisionsofRA Pesos

77-8017 Pascualer Ville ISF Homeowners' Association. Ine Page 2 of 4 I tmX17

Iand Usc Regulatory Board (HI.URB) under Registration No. Pursuant to the Certification issued by SHFC. the subject propertics were acquired hy SHFC for Pascualer Ville ISF Homeowners' Association, Inc. covered by TCT Nos. and under an allocated funding for the ISF Housing Progran. where the SHFC is tasked to implemcnt this through its High Density Housing (HDH) Program. The purpose of the program is to relocate ISFs who are living along waterways and

(HDH) Program. a modified Community Mortgage Program (CMP) where community loans are given for land acquisition as well as site developnent and danger zones in Metro Manila and provide them with in-city or near-city relocation. The acquisition by SHFC of said property shall be under its High Density Housing

housing construction for the Nine Hundred Ninety Four (994) Informal Settler Families (ISF). For this purpose. Pascualer Ville ISF Homeowners' Association. Inc. secured a housing loan under the Informal Settler Families (ISF) Housing Program from ShFC.

In repiy- please be informed that Section 32 of RA No. 7279 provides:

Sec. 32. Incentives. --- To encourage its wider implementation

or incentives: purticipants in the CMP shall be granted with the following privileges

(a) Government-ov'ned or government units. may dispose of their idle lands suitable for -controlled corporations and local

prices based on acquisition cost plus financial carrying costs: socialized housing under the (MP through negotiuhle sale at

(h) Property sold under the (MP shall he exempted .from the cupital

gains tax; and

(c) Beneficiuries under the ('MP shall not be evicted nor dispossessed

of their lands or improvements unless they huve incurred arrangements in payments of amortizutions for three (3) months.

of the ISF Housing Fund to be released by the Departmcnt of Budget and SHFC buys the land identified for socialized housing with a funding to be drawn out Management'. The ISF's member beneficiary/relocatee then enters into a Usufruct In this particular HDH scheme which SHFC described as modified CMP.

Agreement (with option to buy) on the land with SHFC and from whom he may take out a community loan for Iand acquisition. site devclopment and building construction?.

Transunion Corporation is not under CMP. hence, it is not qualified for exemption Considering that the acquisition of the parcels of land by SHFC from

from capital gains tax under Section 32 of RA 7279.

Note that the CMP is a mortgage financing program of the National Home Mortgage Finance Corporation which assists legally organized associations ot underprivileged and homcless citizens to purchase and develop a tract of land under

2 Usufruct Agreement dated January 23. 2015 ' SHFC Secretary's Certificate dated August I, 2014

Pascualer Vifle ISF Homeowners' Association. inc Page 3 of 4 #473-2017 10-4-20 17

residents of blighted or depressed areas to own the lots they occupy, or where they choosc to relocate to. and cventually improve their neighborhood and homes to the extent of their affordability. (Sec. 3!. RA 7279) the concept of community ownership. The primary object of the program is to assist

Moreover. Section 15 of the same RA provides that:

hereof. shall be the primary strategy in providing shelter for the leasehold or usufruct._. the same shall be transitory and the Program within a given period of time, to he deternined hy the implementing ugency concerned. (emphasis supplied) underprivileged and homeless. However, if the tenuriul urrangement in a_particular socialized housing program is in _the nature of beneficiaries must be encouraged to become independent from the Sec. 15. Policy. -- Socialized housing, as defined in Section 3

Usufruct Agreement with option to buy was executed by SHFC and the Pascualer Association. Inc. but for the purchase by SHFC of the propcrty of Transunion are only given an option to buy the units that will be allotted to them. otherwise. they Ville ISF Homeowners' Association, Inc. It is likewise noted that the Letters of Corporation. I'he members of the Pascualer Ville ISF Homeowners' Association. Inc must surrender the same at the end of 50-year usufruct period, Section 32 of RA No 7279 therefore does not apply in this case. The concept and primary objective of the Guaranty were granted not in favor of the Pascualer Ville ISF Homeowners' CMP are absent in the transaction. In the case of Pascualer Ville ISF Homeowners' Association, Inc.. a 50-year

the housing unit is considered temporary and the beneficiary should be encouraged to own the housing unit within a given period of time. Moreover, as a socialized housing strategy under usufruct, the possession of

usufruct period. The usufruct agreement also states that the same shall be executed for projects where ISFs cannot afford to buy the land, as determined by the owner. or do not opt to buy the land. the agreement only presents the relocatee/beneficiary an option to buy the housing unit within the usufruct period or eise he must surrender the same at the cnd of the In this case, although the HDH program provides for a time-barred usufruct.

transactions that are entitied to the tax incentives under CMP of Article VIII of RA No. 7279. Consequently, the sale by Transunion Corporation of the subject properties covered by TCT Nos. real property that is subject to applicable revenue taxes i.e. CWT/ VAT/ DST. (BIR Ruling No. 036-16 dated January i2, 2016) Therefore. the HDH Scheme, as herein presented, is not among those ad shall be treated as ordinary sale of

burden is upon the taxpayer to establish his right to exemption beyond reasonable strictly construed against the taxpayer. Exemptions are never presumed and the It should be remembered that iaws and statutes granting tax exemptions are

Pascualer Ville iSF Homeowners' Association. Inc. Page 4 of 4 47-X17 10 2017

doubt3. In the case of Mactan Cebu International Airport Authority v. Marcost . the Supreme Court held:

what we pay for civilized society, or are the lifeblood of the nation. the Inv frowns ugainst exemptions from taxation and statutes granting the exemptions are thus construed strictissimi juris against the tuxpaver from tax payments must be clearly show'n and based on language in the Iaw too plain to be mistaken. Elsewise stated, taxation is the rule. exemption therefrom is the exception. ' government and liberally in favor of the taxpayer. But since tuxes are and liberally in favor of the taxing authority. A claim of exemption "Accordingly. tax statutes must he construed strictly against the

32(b) of RA No. 7279 for lack of legal basis. exemption from the payment of Capital Gains Tax and other taxes of the sale transaction between Transunion Corporation and SHFC in accordance with Section In view of the foregoing. this Office regrets to deny your request for

Very truly yours, A

K-1-JRC Commissioner of Intcrnal Revenue CAESAR R. DULAY W 009659

Dimaampao. Japar B., Tax Principles and Remedies. Second Edition (2005) +G.R. No. 120082, 1} September 1996. 261 SCRA 667