BIR Ruling No. 018-11

January 21, 2011 BIR RULING NO. 018-11 Sec. 196 of NIRC, RR 11-97;E.O. 70 as amended by E.O. 465; R.A. 7279; RMC 42-01; BIR Ruling No. DA-132-06; BIR Ruling No. SH-(111) 715-09 National Housing Authority Quezon Memorial Elliptical Road, Diliman, Quezon City 1100 Attention: Dalisay N. Lizardo District Manager NCR, South Sector II Gentlemen : This refers to your letter dated 24 August 2010 requesting for the exemption from payment of documentary stamp tax on the issuance of Transfer Certificate of Title (TCT) in the name of the National Housing Authority (NHA) as conveyed by the Bases Conversion and Development Authority (BCDA) pursuant to Executive Order (EO) No. 465 amending EO 70. Documents submitted disclosed that EO 465, enacted in 2005, amended EO 70 entitled "Declaring Portions of the Property of the Bases Conversion and Development Authority Located in Fort Bonifacio and its Environs as Socialized Housing Sites and Providing for the Disposition thereof to Qualified Occupants and Beneficiaries"; that under Section 1 of EO 70, Lupang Katuparan, Philippine Centennial Village and a portion of BHIT Zone Property, all located in Fort Bonifacio, and its environs were declared as socialized housing sites and provided for the disposition to qualified occupants and beneficiaries under the provisions of Republic Act No. 7279; that BCDA, with TIN: 002-219-694-000, is the absolute and registered owner of Lupang Katuparan consisting of Forty-Eight Hectares (48.00 has.) in Fort Bonifacio by virtue of RA 7227 or the Bases Conversion Act; that under EO 465, ownership, administration and control over Lupang Katuparan shall be transferred to the NHA (TIN: 000-916-384-000); that EO 465 amended EO 70 to cover only Four Hundred Fifty-Two Thousand Nine Hundred Seventeen Square Meters (452,917 sq.m.) of Lupang Katuparan (Lots 2 and 3 of Pcs-00-072-93); that since Lots 2 and 3 were already subdivided and approximately One Hundred Twenty-One Thousand Seventy Square Meters (121,070 sq.m.) have been disposed/awarded to BCDA socialized housing beneficiaries; that in compliance thereto, the BCDA and NHA executed a Deed of Turnover of Lupang Katuparan to the latter agency on 20 November 2006 covering the following parcels of land located in Taguig City with the following TCTs: ICTHDE TCT No. Lot ID Area (in sq.m.) 34464 Lot 2-A, Psd-00-051794 64,348 39862 Lot 2-D-1, Psd-00-056213 30,852 39863 Lot 2-D-2, Psd-00-056213 3,969 39864 Lot 2-D-3, Psd-00-056213 2,720 39865 Lot 2-D-4, Psd-00-056213 25,897 39866 Lot 2-D-5, Psd-00-056213 11,063 39867 Lot 2-D-6, Psd-00-056213 173,087 40093 Lot 3-B-1, Psd-00-056212 2,116 40094 Lot 3-B-2, Psd-00-056212 480 40095 Lot 3-B-3, Psd-00-056212 431 40096 Lot 3-B-4, Psd-00-056212 38,567 Total 353,530 ======== and that R.A. 7279 provides for exemption from documentary stamp tax on sales transactions executed, by and in favor of the NHA in connection with socialized housing project. In reply, please be informed that in R.A. 7279, otherwise known as the "Urban Development and Housing Act", the State declares as its policy to undertake, in cooperation with the private sector, a comprehensive and continuing urban development and housing program. To be able to accomplish the aforementioned policy, the NHA has been granted such incentives which are specifically provided for in Section 19, Article V thereof, portion of which reads as follows: Section 19 of R.A. 7279 provides that: "Section 19. Incentives for the National Housing Authority. The National Housing Authority, being the primary government agency in charge of providing housing for the underprivileged and homeless, shall be exempted from the payment of all fees and charges of any kind, whether local or national, such as income and real taxes. All documents or contracts executed by and in favor of the National Housing Authority shall also be exempt from the payment of documentary stamp tax and registration fees, including fees required for the issuance of transfer certificates of titles. " (Emphasis supplied) cIDHSC Revenue Memorandum Circular (RMC) No. 42-01 dated October 5, 2001 circularizing the tax incentives of sellers of real properties in existing areas for priority development (APDs) sites, and in other areas that may be identified by the local government units as suitable for socialized housing projects under R.A. No. 7279 provides: "II. Tax Incentives of Sellers of Subject Real Properties under Secs. 19 and 20 of Article V, Sec. 25 of Article VI and Sec. 32 of Article VIII of R. A. No. 727 9. A. National Housing Authority (NHA) The NHA, being the primary government agency in charge of providing housing for the underprivileged and homeless citizens shall be exempted from the payment of the following national internal revenue taxes: (1) . . . (2) Documentary stamp tax on sales transactions executed by and in favor of the NHA in connection with socialized housing projects. Since Section 19 of R. A. 727 9 exempts "all documents or contracts executed by and in favor of the NHA," the exemption from documentary stamp tax extends to the other party (either seller or buyer) that is dealing or transacting with the NHA. " (Emphasis supplied) Based on the foregoing, this Office is the opinion that since Section 19 of R.A. 7279 clearly provides that all documents or contracts executed by and in favor of the NHA shall be exempt from the payment of documentary stamp tax, hence, the Deed of Turn-Over transferring the subject lots of Lupang Katuparan from BCDA to NHA pursuant to EO 465, is exempt from documentary stamp tax (DST) imposed under Section 196 of the Tax Code of 1997, as amended. (BIR Ruling No. SH-(111) 715-09 dated November 16, 2009) The exemption from DST on the Deed of Turn-over extends to NHA's contracting party BCDA. (BIR Ruling No. DA-132-06 dated March 17, 2006) 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, and/or any of the requirements set forth in this letter are not complied with, then this ruling shall be considered null and void. SaETCI Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue