BIR Ruling [DA-192-04]

April 6, 2004 BIR RULING [DA-192-04] Sec. 123 1977 Tax Code BLISS Project Mr. Edilberto D. Laccay Municipal Assessor Dupax del Sur, Nueva Viscaya S i r : This refers to your letter dated June 4, 2002 relative to the request of the Sangguniang Bayan of the Municipality of Dupax Del Sur, Nueva Vizcaya for exemption from payment of the donor's tax on the donation of its real property to the Ministry of Human Settlements to be used in the socialized housing project for the benefit of the indigent constituents of Barangay Mangayang, Dupax Del Sur, Nueva Vizcaya. It appears that the Municipal Government of Dupax Del Sur, Nueva Vizcaya was desirous to extend assistance through a housing project for the benefit of its underprivileged and homeless citizens, particularly those residing at Barangay Mangayan of said municipality; that to implement the said project, the Municipal Government collaborated with the then Ministry of Human Settlements (the Ministry for brevity); that as contained in the whereas clauses of the resolution promulgated by the Sangguniang Bayan of Dupax Del Sur on June 11, 1982, the Municipality of Dupax Del Sur was required by the Ministry to provide and donate the site for the BLISS 1 project; that as a procedure in the BLISS Program, the parcel of land wherein the BLISS project was to be established must be donated by the Municipality to the Ministry; that to comply with the said requirement the Municipality of Dupax Del Sur, Nueva Vizcaya on July 21, 1982 donated a parcel of land covered by Tax Declaration No. R-3291 containing an area of 55,824 square meters to the Ministry; that at present, the occupants-beneficiaries of the BLISS Project wanted that the titles of the individual lots be transferred to their respective names; and that the individual lots were paid by the respective occupants through the "lease-purchase agreement" designed by the Ministry to implement the BLISS Program. In reply, please be informed as follows: 1. Pursuant to paragraph 2 of Section 123 of the Tax Code of 1977, the law applicable at the time of the donation on July 21, 1982, gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government shall be exempt from the donor's tax. Accordingly, the donation made by the Municipality of Dupax Del Sur, Nueva Vizcaya of a parcel of land covered by Tax Declaration No. R-3291 containing an area of 55,824 square meters to the Ministry of Human Settlements, the government entity or agency then tasked to provide shelters and livelihoods to the less fortunate citizens of the country is exempt from the donor's tax. 2. The distribution or transfer of the individual lots to the respective names of the occupants-beneficiaries of the BLISS Project is exempt from income taxes. The government agency which will be tasked to implement the distribution of the individual lots shall not be subject to any tax, for the same only acted for and in the behalf of the defunct Ministry of Human Settlements, thus, will be performing a mandated governmental function of providing shelter to the underprivileged and homeless citizens. ( BIR Ruling No. DA-192-2003 dated June 19, 2003 ) Moreover, the transfer of the individual lots to the occupants-beneficiaries is merely a formality to finally effect transfer of titles of the real properties to them who actually bought the same. However, the deeds transferring the individual lots to the respective occupants are subject to the documentary stamp tax imposed on transfers or conveyances of realty. The rate and basis for the imposition of the documentary stamp tax depends on the date the transfer of the above individual lots were consummated. ECSaAc 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.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group Footnotes 1. Acronym for the "Bagong Lipunan Sites and Services," a program of the then Ministry of Human Settlements which is an integrated human settlements approach in delivering basic services and facilities for the development of new self-contained community, incorporating not only the housing component, but livelihood and ecosystem development as well.