BIR Ruling [DA-594-06]

October 6, 2006 BIR RULING [DA-594-06] 180, R.A. 9243; DA-060-2001 Ong, Ordoez and Associates 8/F 111 Paseo de Roxas Bldg. 111 Paseo de Roxas cor. Legaspi St. Legaspi Village, Makati City Attention: Mr. Ricardo G. Ong Gentlemen : This refers to your letter dated September 12, 2006 stating that Acerhomes Development Corporation (ADC) an entity engaged in socialized housing development has a project known as Eastwind Homes which cater to buyers who are mostly members of Pag-ibig. ADC is currently in the process of title transfer and is likewise executing a Real Estate Mortgage in favor of Pag-ibig. It is your position that since the socialized housing units of ADC 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 Eastwind Homes 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." Applying the foregoing provision, and inasmuch as the socialized housing units of ADC 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. SEIaHT 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 null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service