Mr. Ricardo G. Ong

February 28, 2007 BIR RULING [DA-126-07] 180, R.A. 9243 DA-060-2001 Mr. Ricardo G. Ong 8/F 111 Paseo de Roxas Bldg. 111 Paseo de Roxas cor. Legaspi St. Legaspi Village, Makati City S i r : This refers to your letter dated February 20, 2007 stating that Extraordinary Development Corporation (EDC) is an entity engaged in socialized housing development. It has projects which cater to buyers who are mostly members of Pag-ibig. EDC is currently in the process of title transfer and is likewise executing a Real Estate Mortgage in favor of Pag-ibig. The following is the list of projects of EDC: Project Name No. of Units Total Selling Price Golden City Dasmarias 1 P 149,500 Mabuhay Homes Binangonan 122 27,169,191 Golden City Dasmarias IV 1 240,937 Mabuhay Homes-2000 Dasma V 62 14,526,344 Mabuhay Homes 2000 Dasma VI 6 1,312,418 Mabuhay City Dasmarias 353 74,268,479 Mabuhay Homes 2000 Dasma V-Extension 208 48,399,439 Mabuhay City Dasma Ph 2 Extension 383 89,243,146 Mabuhay Homes Binangonan Ph 1B 165 34,397,443 Extension Mabuhay City Cabuyao Ph 1B 298 61,900,144 Mabuhay City Cabuyao Ph 2 445 97,850,179 Mabuhay City Cabuyao Ph 4 LS 1 237,136 City Cabuyao Ph 3 CS 54 12,760,960 Mabuhay City Cabuyao Ph 5 475 107,657,123 Mabuhay City Cabuyao Ph 6 978 223,530,588 Mabuhay City Value Homes 165 37,390,100 Mabuhay City Cabuyao Ph 2 Extension 61 14,751,300 Mabuhay City Cabuyao Ph 1EA 159 37,225,000 Total 3,937 P883,009,427 ===== =========== It is your position that since the socialized housing units of EDC bought by its buyers thru Pag-ibig financing are below P250,000.00 per unit, you now would like to request for a ruling on the exemption from the payment of documentary stamp tax on the Promissory Note with Loan and Mortgage Agreement between the buyers of the aforementioned projects and Pag-ibig. In reply, please be informed that Section 9 (d) of Republic Act (RA) No. 9243 (An Act Rationalizing the Provisions on the Documentary Stamp Tax of the National Internal Revenue Code of 1997, as amended, and for other purposes), provides that: "Sec. 199. Documents and Papers Not Subject to Stamp Tax. The provisions of Section 173 to the contrary notwithstanding, the following instruments, documents and papers shall be exempt from the documentary stamp tax: xxx xxx xxx (d) Loan agreements or promissory notes, the aggregate of which does not exceed Two hundred fifty thousand pesos (P250,000), or any such amount as may be determined by the Secretary of Finance, executed by an individual for his purchase on installment for his personal use or that of his family and not for business or resale, barter or hire of a house, lot, motor vehicle, appliance or furniture: Provided, however, That the amount to be set by the Secretary of Finance shall be in accordance with a relevant price index but not to exceed ten percent (10%) of the current amount and shall remain in force at least three (3) years." cDICaS Applying the foregoing provision, and inasmuch as the socialized housing units of EDC bought by its buyers through Pag-ibig financing are below P250,000.00 per unit, this Office hereby opines that the aforesaid transaction is not subject to documentary stamp tax under Section 180 of the 1997 Tax Code, as amended. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service