BIR Ruling No. 086-15

April 8, 2015 BIR RULING NO. 086-15 RA 7279; BIR Ruling No. 446-2012 Housing & Land Management Division Office of the City Mayor City of Zamboanga Attention: Rodrigo S. Pagotaisidro Housing & Homesite Regulation Officer V Gentlemen : This refers to your letter dated November 27, 2013, requesting tax exemption on the sale transaction between Catalina B. Lavia, et al. and the National Housing Authority (NHA) from the payment of Capital Gains Tax and other taxes in accordance with the Republic Act No. 7279, otherwise known as the Urban Development and Housing Act of 1992. Documents submitted show that Catalina B. Lavia, Jose B. Bernal, Jr., George B. Bernal and Ignacio B. Bernal (hereinafter referred to as Landowners) are the registered owners of a parcel of land, identified as Lot No. 71 of the Cadastral Plan of the West Extension covered by Transfer Certificate of Title (TCT) No. 129-2012002762 issued by the Registry of Deeds for Zamboanga City. The aforestated lot is located at Maasin, Zamboanga City containing an area of Forty Three Thousand Four Hundred Ninety Two square meters (43,492 sq.m.) more or less. On June 10, 2013, a Deed of Absolute Sale was executed by and between the Landowners and the NHA, a government corporation created and existing by virtue of Presidential Decree No. 757, as amended, whereby the former transferred to the latter the Forty Two Thousand Twenty Eight square meters (42,028 sq.m.) portion of the subject realty in consideration for Twelve Million Six Hundred Eight Thousand Four Hundred pesos (P12,608,400.00). On June 10, 2013 and May 26, 2013, a Memorandum of Agreement, Bernal Ecology Village Homeowners Association, Inc. Housing Project (Land Acquisition) was executed by the NHA, the Office of the First Congressional District of Zamboanga City, the City Government of Zamboanga, the landowners and Bernal Ecology Village Homeowners Association, Inc. Under the MOA, 64.26% of the total purchase price to be shouldered by the Bernal Ecology Village Homeowners Association, Inc. in the amount of P8,102,400.00 and 35.74% by the Local Housing Fund of the First Congressional District of Zamboanga City held in trust by the NHA amounting to (4,506,000.00). The project shall be known as the Bernal Ecology Village Homeowners Association, Inc. Housing Project and shall generate ninety eight (98) Residential Lots with an average lot size of 245.48 sq.m. and the targeted beneficiaries 1 are landless and low-income families identified as local and national government employees who are seeking permanent settlement. 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: xxx xxx xxx (d) Exemption from the payment of the following : xxx xxx xxx 2) Capital gains tax on raw lands use for the project ; xxx xxx xxx" the owner of the raw land is exempt from the payment of capital gains tax or the withholding tax under Revenue Regulations No. 2-98, as amended, on the conveyance of the parcel of land for use in the aforesaid socialized housing project. Such being the case, the sale by the Landowners of the Forty Two thousand Twenty Eight square meters (42,028 sq.m.) portion of the subject property to NHA is exempt from the capital gains tax. (BIR Ruling No. 446-2012 dated July 10, 2012) 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. 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 sale of the Forty Two Thousand Twenty Eight square meters (42,028 sq.m.) portion of the subject property to NHA is, likewise, exempt from the payment of documentary stamp tax under Section 196 of the Tax Code of 1997, as amended. 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 requirement provided under RMO 15-2003. 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 ANNEX No. Name of Beneficiary Address 1 Abdula, Jaran Danih San Roque, Zamboanga City 2 Alias-Mai, Lelang Ismael Sta. Barbara, Zamboanga City 3 Almario-Ferrer, Pilar Ledesma Maasin, Zamboanga City 4 Amplayo, Henry Malobago Upper Calarian, Zamboanga City. 5 Anilao-Francisco, Mantes Francisco Sta. Maria, Zamboanga City 6 Apolinario-Olmedo, Lucia Deniega Maasin, Zamboanga City 7 Ararao-De Asis, Priscilla Gaid San Jose, Zamboanga City 8 Ararao, Karen De Asis San Jose, Zamboanga City 9 Avenido-Gonzales Annie Francisco Upper Calarian, Zamboanga City 10 Bagadi, Ahadi Piandao Upper Calarian, Zamboanga City 11 Baares-Ong, Pacita Faustino Lunzuran, Zamboanga City 12 Baricua, Rosie Claire Ong San Roque, Zamboanga City 13 Barrio, Dulce Joy Villanueva Upper Calarian, Zamboanga City 14 Bernal, George Bernardo Canelar, Zamboanga City 15 Bernal, Gienet Santiago Canelar, Zamboanga City 16 Bernal, Hazel Joy Santiago Canelar, Zamboanga City 17 Bernal, Ignacio Bernardo Canelar, Zamboanga City 18 Bernal, John Paul Santiago Canelar, Zamboanga City 19 Bernal, Jose, Jr. Bernardo Sta. Maria, Zamboanga City 20 Bernal, Katherine Santiago Canelar, Zamboanga City 21 Bernal, Leah Santiago Canelar, Zamboanga City 22 Bernal-Camins, Rosario Saavedra Sta. Maria, Zamboanga City 23 Bernal-Santiago, Janet Jimenez Canelar, Zamboanga City 24 Bernardo, Misael Suarez Maasin, Zamboanga City 25 Braanola, Irish Mayor Tetuan, Zamboanga City 26 Caldoza-Ramos, Sanderlie Roluna Talon-Talon, Zamboanga City 27 Camacho, Elegio Arce San Roque, Zamboanga City 28 Candido, Baltazar Alquizar Talon-Talon, Zamboanga City 29 Cantina, Deomides Sumicad Sinunuc, Zamboanga City 30 Capillo, Celso Flores Upper Calarian, Zamboanga City 31 Casero, Ilyn Ortega Upper Calarian, Zamboanga City 32 Casias-Paragas, Marison Ruste Maasin, Zamboanga City 33 Castante-Laspias, Cleofe Acop Southcom, Zamboanga City 34 Castro, Cathy Angeles Talon-Talon, Zamboanga City 35 Cruz, Raul Palisoc Upper Calarian, Zamboanga City 36 Dantes-Lavia, Chris Elna Bernal Putik, Zamboanga City 37 De Leon, Paul Stephen Angeles Talon-Talon, Zamboanga City 38 Delatado, Paulo Jerome Rafaela Divisoria, Zamboanga City 39 Dequia, Ronnie, Jr. Mallorca Upper Calarian, Zamboanga City 40 Destora, Nestor Paderna Upper Calarian, Zamboanga City 41 Duriman-Lotilla, Mary Jane Bitchayda Pasonanca, Zamboanga City 42 Elias, Rukaida Ulanghutan Talon-Talon, Zamboanga City 43 Espinol-Lim, Mildred Ylanan Maasin, Zamboanga City 44 Fernando, Rachel Aldemita Baliwasan, Zamboanga City 45 Flores-Macansantos, Mary Ann Lunzuran, Zamboanga City Francisco 46 Galdo-Barton, Raquel Rosaline Southcom, Zamboanga City Dagaraga 47 Gontias, Ronniel Anthony Robles Canelar, Zamboanga City 48 Gurrea, Elmer Ramos Guiwan, Zamboanga City 49 Hajal, Anwar Abduljamil San Roque, Zamboanga City 50 Hamoy, Florante Bicoy Canelar Moret, Zamboanga City 51 Handang-Tano, Aimee Gerosaga Ayala, Zamboanga City 52 Hassan, Evalyn Gonzales San Jose, Zamboanga City 53 Ilaji-Guzman, Ruby Surpi Baliwasan Grande, Zamboanga City 54 Irong-Lim, Jasmina Tolero Maasin, Zamboanga City 55 Item, Romualda Gulang San Jose Gusu, Zamboanga City 56 Jaji, Nader Yusop Gov. Camins, Zamboanga City 57 Jawali, Sahari Jakati Purok 7A, Recodo, Zamboanga City 58 Jawali-Usman, Nihma Jalani Sinunuc, Zamboanga City 59 Jocutan, George Tangkapah Baliwasan, Zamboanga City 60 Jocutan, Mharwin Tangkapah Tetuan, Zamboanga City 61 Lagmay, Leopoldo, Sr. Mauricio Upper Calarian, Zamboanga City 62 Lakibul, Hassan Adam Suterville, Zamboanga City 63 Lakibul-Tangkapa, Samira Hawari Sto. Nio, Zamboanga City 64 Langgal, Hadjiri Jamili Baliwasan, Zamboanga City 65 Langgal, Muin Jamili Baliwasan, Zamboanga City 66 Lavia-Bernal Catalina Bernardo Putik, Zamboanga City 67 Magno, Russel Chavez Baliwasan Tabuk, Zamboanga City 68 Makiling-Sangcopan, Diana Hailil Baliwasan, Zamboanga City 69 Masillam, Abdulnasser Gampal Baliwasan, Zamboanga City 70 Mercado, Gerlie Rubio San Jose, Zamboanga City 71 Mohammad, Rasid Bernardo Talon-Talon, Zamboanga City 72 Mohammad, Sufian Bernardo Upper Calarian, Zamboanga City 73 Mulong-Muin, Editha Balla Campo Islam, Zamboanga City 74 Olasiman, Nio Tumulak Pasonanca, Zamboanga City 75 Padillon, Freddie Velasco Ayala, Zamboanga City 76 Pagkaliwangan, Arnel Hernandez Upper Calarian, Zamboanga City 77 Pagotaisidro, Junnie Rebollos Talon-Talon, Zamboanga City 78 Pagotaisidro, Rodrigo Saavedra Canelar Moret, Zamboanga City 79 Payao, Rasad Abdulhaman San Roque, Zamboanga City 80 Quisel-Genturalez, Cielita Albolario Maasin, Zamboanga City 81 Ramos, Rogelio Roa Talon-Talon, Zamboanga City 82 Resoor-Comaling, Milagros But-ay Gov. Alvarez, Zamboanga City 83 Rubia, Fabian Trono Baliwasan, Zamboanga City 84 Sahibaddin, Albasher Alih Sta. Catalina, Zamboanga City 85 Sakili, Bani Hashim Baliwasan Grande, Zamboanga City 86 Salabao, Nonito Alabata Upper Calarian, Zamboanga City 87 Sawadi, Darwin Alih Sto. Nio, Zamboanga City 88 Seolos, Rosendo Delos Santos Southcom, Zamboanga City 89 Sojor-Manangan, Rizalinda Molina Pasonanca, Zamboanga City 90 Solamo-Calisanga, Arlene Calumpong Southcom, Zamboanga City 91 Tampioc, Sofronio Cafino Sta. Barbara, Zamboanga City 92 Timbang-Alcala, Carlisel Calminero Upper Calarian, Zamboanga City 93 Tuquib, Juan Ozo Tumaga, Zamboanga City 94 Usman, Tahari Said Lustre, Sta. Barbara, Zamboanga City 95 Velasquez, Junessa Barco Guiwan, Zamboanga City 96 Villa, Rodrigo, Jr. Jalani Sta. Catalina, Zamboanga City 97 Villanueva-Molanida, Susan Saida Las Southcom, Zamboanga City Pias 98 Wenceslao, Noel Gregorio Divisoria, Zamboanga City Footnotes 1. See Annex