Tax Consequence of Sale by the Government thru HIGC of Property for Socialized Housing

June 16, 1999 BIR RULING NO. 077-99 R.A. 7279 RR2-98-000-00-77-99 Bellestar B Homeowners Association, Inc. cor. San Simon and Sto. Domingo Streets Barangay Holy Spirit, Quezon City Attention: Ms . Araceli F . Selosa President Gentlemen : This refers to your letter dated November 7, 1998 requesting for a ruling on the tax consequence of the direct sale by the government through the Home Insurance and Guaranty Corporation (HIGC) of its property intended for socialized housing in favor of Mr. Tito C. Tanqui-on, married to Elizabeth N. Tanqui-on and Ms. Consuelo B. Esparrago, bonafide members of the Bellestar B Homeowners Association, Inc., who are less privileged and homeless citizens, pursuant to Section 32(b) of R.A. 7279, otherwise known as the Urban Development and Housing Act of 1992. dctai It appears that the government is the owner of the parcels of land intended for its socialized housing undertaking known as the National Government Center Housing Project (NGCHP); that Bellestar B Homeowners Association, Inc., a community association registered with the HIGC, is an awardee of the project under the People's Housing Alternative for Social Empowerment Land Acquisition and Development Program (PHASE-LADP), which award is administered by the HIGC; and that Deeds of Absolute Sale were executed by the HIGC for that parcels of land of the project covered TCT Nos. N-170009 and N-170017 of the Registry of Deeds for Quezon City in favor of Mr. Tito C. Tanqui-on, married to Elizabeth N. Tanqui-on and Ms. Consuelo B. Esparrago, bonafide members of the Bellestar B Homeowners Association, Inc.. In reply, please be informed that pursuant to the pertinent provision of Section 32, paragraph (b) of R.A. No. 7279, which reads: "SEC. 32. Incentives . To encourage its wider implementation, participants in the CMP shall be granted with the following privileges or incentives: "xxx xxx xxx "(b) Property sold under the CMP shall be exempted from the capital gains tax; and "xxx xxx xxx "(d) Exemption from the payment of the following: "(1) Project-related income taxes; "(2) Capital gains tax on raw lands used for the project; "(3) Value-added tax for the project contractor concerned;" xxx xxx xxx HIGC as trustee for the National Government Center Housing Project is exempt from the payment of capital gains tax on the sale of the aforementioned properties in favor of Mr. Tito C. Tanqui-on, married to Elizabeth N. Tanqui-on and Ms. Consuelo B. Esparrago, and to the creditable withholding tax imposed under Revenue Regulations No. 2-98. LexLib However, it is observed that the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Section 20 of R.A. No. 7279. Such being the case, HIGC shall be liable to pay the documentary stamp tax on the documents conveying the aforementioned properties imposed under Section 196 of the Tax Code of 1997, based on the actual consideration thereof. 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.) BEETHOVEN L. RUALO Commissioner of Internal Revenue