BIR Ruling [DA-318-98]

1998 BIR RULING [DA-318-98] Naraval Alegarbes & Fajardo Law Offices Room 204 Caritas Building Claro M. Recto St., Davao City Attention: Atty . Carmelo F . Naraval Gentlemen : This refers to our ruling referenced S-20/32-98-98 dated June 19, 1998, following your request for opinion that the sale of a parcel of land by Ms. Vicenta Flandez-Castanos, et. al. to the National Housing Authority (NHA) for its socialized housing program under the Community Based Housing Program (CBHP) known as Magbalikatan Para sa Maunlad na Pabahay for the benefit of the homeless and underprivileged residents of Davao City is exempt from the payment of capital gains tax land documentary stamp tax pursuant to Sections 19, 20 and 32 of R.A. No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". casia We have confirmed therein that the conveyance by the landowners of the stated parcels of land under the socialized housing program of the NHA is exempt from the payment of capital gains tax and documentary stamp tax pursuant to Sections 19 and 20 of R.A. No. 7279. However, Section 173 of the Tax Code of 1997, provides that . . ., whenever one party to the taxable document enjoys exemption from the tax herein imposed, the other party thereto who is not exempt shall be the one directly liable for the tax . Such being the case, the landowners involved in the subject transaction are liable to pay the documentary stamp tax on the documents conveying their parcels of land to the NHA under its socialized housing program imposed under Section 196 of the Tax Code of 1997, based on the actual consideration paid by the NHA. (BIR Ruling Nos. (64-96 dated June 7, 1996; S-32-056-98 dated April 17, 1998; S-32-057-98 dated April 17, 1998; S-20/32-102-98 dated June 22, 1998). In view hereof, the ruling issued in your behalf (BIR Ruling S-20/32-98-98 dated June 19, 1998) is hereby modified to the extent discussed above. LLcd Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal & Enforcement Group