BIR Ruling No. 066-15

March 16, 2015 BIR RULING NO. 066-15 RA 7279; BIR Ruling No. 500-2014 Goldenville Realty and Development Corporation 3368 Harvard Street, Pinagkaisahan Makati City Attention: Ida Abendano-Guintu President and General Manager Gentlemen : This refers to your letter dated September 2, 2014, requesting for the issuance of Certificate of Tax Exemption for the Southville 2 Phase 5 Resettlement Housing Project in Brgy. Aguado and Cabuco, Trece Martires, Cavite known as Golden Horizon Subdivision pursuant to Republic Act (R.A.) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". Documents submitted show that the Goldenville Realty and Development Corporation with Tax Identification Number 002-562-057-000, is the absolute and registered owner of parcels of land located at Brgy. Aguado and Cabuco, Trece Martires, Cavite, covered by Transfer Certificates of Title (TCT), to wit: TCT Lot No. Area (sq.m.) T-37108 3330 29,513 T-37109 3332 30,075 077-2013003072 3479-C 17,444 Total Area 77,032 ====== both issued by the Registry of Deeds for the City of Trece Martires. On February 5, 2014, a Contract Agreement 1 was executed by and between Goldenville Realty and Development Corporation and Golden Horizon Homeowners Association, Inc., a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB) with Registration No. 17798, whereby Goldenville Realty and Development Corporation offered its services to the families who are members of Golden Horizon Homeowners Association, Inc. by delivering developed homelots and completed housing units under the Community Association Initiative Approach Program (CAIAP) of the National Housing Authority (NHA) for Two Hundred Forty Thousand Pesos (P240,000.00) for every developed lot and completed housing unit per family. IcCEDA Moreover, on February 19, 2014, a Memorandum of Agreement 2 (MOA) was executed by and among Goldenville Realty and Development Corporation as the landowner/developer/constructor, Golden Horizon Homeowners Association, Inc., as the beneficiary, and the NHA, as the lead government agency in the implementation of National Resettlement and Relocation Programs of the government and to ensure the timely, peaceful and orderly relocation and resettlement of the families affected by calamities and those living in danger areas from various areas within Metro Manila. Under the MOA, members 3 of Golden Horizon Homeowners Association, Inc. shall be provided by the NHA with a financial grant for the acquisition of One Thousand (1,000) developed lots and financing of the acquisition of completed housing units through the CAIAP under the National Resettlement Program of the government in the amount not to exceed One Hundred Fifteen Thousand Pesos (P115,000.00) per lot and One Hundred Twenty Five Thousand Pesos (P125,000.00) per housing unit. On June 4, 2014, Goldenville Realty and Development Corporation and the NHA executed a Deed of Absolute Sale whereby the owner transferred and conveyed One Thousand (1,000) developed lots or parcels of land with an aggregate area of Forty Thousand Nine Hundred Twenty Three square meters (40,923 sq.m.) portion of the subject properties to NHA at an agreed price of One Hundred Fifteen Million Pesos (P115,000,000.00). In reply, please be informed that pursuant to Sections 19 and 20 of Republic Act (RA) No. 7279, pertinent portions of which state that: "Sec. 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 realty 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 title. "Sec. 20. Incentives for Private Sector Participating in Socialized Housing . To encourage greater private sector participation in socialized housing and further reduce the cost of housing units for the benefit of the underprivileged and homeless, the following incentives shall be extended to the private sector: ACIDSc xxx xxx xxx "(d) Exemption from the payment of the following: (1) Project-related income taxes; (2) Capital Gains Tax; (3) Value-added tax for the project contractor concerned;" the landowner/developer of properties who sells its properties for use in a socialized housing project is exempt from the payment of the capital gains tax and project-related income taxes. Such being the case, the sale of 1,000 developed lots or parcels of land on the Forty Thousand Nine Hundred Twenty Three square meters (40,923 sq.m.) portion of the subject properties by Goldenville Realty and Development Corporation to NHA is exempt from capital gains tax, project-related income taxes and consequently from withholding tax. (BIR Ruling No. 500-2014 dated December 29, 2014) Moreover, pertinent portions of RMC No. 42-01 dated October 5, 2001, provide, viz. : xxx xxx xxx 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. 7279 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. cdll xxx xxx xxx The exemption from documentary stamp tax of NHA in connection with any of its socialized housing project extends to the other party (either seller or buyer) that deals or transacts with the NHA. Consequently, since NHA is a party to the sale, no documentary stamp tax shall be due on such sale, either on NHA or the party with which NHA is transacting. Accordingly, the transfer Goldenville Realty and Development Corporation to NHA of the 1,000 developed lots or parcels of land on the Forty Thousand Nine Hundred Twenty Three square meters (40,923 sq.m.) portion of the subject properties is concerned, are likewise exempt from documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended. (BIR Ruling No. 500-2014 dated December 29, 2014) Upon application for exemption, a lien on the title of the land shall be annotated by the Register of Deeds having jurisdiction over the property, to the effect that the same is to be applied or is being applied to socialized housing project pursuant to RA 7279. Please take note that this ruling is never intended and shall not be construed as giving authority to the concerned Register of Deeds to effect transfer of the land in the name of the buyer without the necessary certificate of authority to register issued by this Bureau. In this regard, this ruling shall be presented to the Revenue District Office (RDO) concerned in order for the latter to issue the Certificate Authorizing Registration (CAR) after the submission of the requirements provided under RMO 15-2003. Moreover, Goldenville Realty and Development Corporation is likewise exempt from the payment of VAT on its gross receipts from the said project, involving the sale of the sale of 1,000 developed lots or parcels of land on the Forty Thousand Nine Hundred Twenty Three square meters (40,923 sq.m.) portion of the subject properties. However, its purchases of goods/articles shall be subject to VAT, even if the said purchases are to be used for the socialized housing project, since VAT is an indirect tax which can be passed on by the seller of the goods/services. It shall be understood that Goldenville Realty and Development Corporation must issue non-VAT official receipts on its gross receipts from the said socialized housing project. DAaHET 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, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue Footnotes 1. Financing the Acquisition of Developed Lots and Completed Housing Units. 2. For Financing the Acquisition of Developed Lots and Financing the Acquisition of Completed Housing Units (Southville 2 Phase 5 Resettlement Project, Brgy. Aguado and Cabuco, Trece Martires City, Province of Cavite. 3. Composed of members/families affected by the calamities and those living in danger areas from various areas within Metro Manila.