Whether the Incentives Accorded to Developers Undertaking Socialized Housing Projects under RA 7279 be Extended Likewise to Socialized Housing Projects under other Laws such as BP 220 and that a Certificate from HLURB and CREBA that the Project is for Social Housing shall Suffice as Basis for BIR to Grant Exemption

June 15, 1995 BIR RULING NO. 091-95 R.A. 7279 000-00 091-95 Chamber of Real Estate & Builders Associations, Inc. 3/F CREBA Center Don Alejandro Roces Ave. Cor. South "A" Street Quezon City Attention: Mr . Charlie V . Gorayeb Chairman of the Board and President Gentlemen : This refers to your letter dated September 20, 1994 requesting for a ruling that the incentives especially tax exemption accorded to developers undertaking socialized housing projects under RA 7279 be extended likewise to socialized housing projects under other laws such as BP 220 and that a certificate from HLURB and CREBA that the project is for social housing shall suffice as basis for BIR to grant exemption. It is represented that BP 220 which took effect in 1982 authorized the then Ministry of Human Settlements to establish and promulgate different levels of standards and technical requirements for economic and socialized housing projects in urban and rural areas in order to make available adequate economic and social housing units for average and low-income earners; that comprised under the law are the different housing packages ranging from P150,000.00 to P500,000.00; that these packages were included in the exemption from the coverage of the creditable withholding tax under RR 1-90; that in view of the proposed amendment of RR 1-90 by RR 6-94, you reiterated your position that social housing packages include the various levels from P150,000.00 to P500,000.00 as recognized under BP 220 and RR 1-90; that 'RR 12-94 which superseded RR 6-94 and amended RR 1-90 pegged the definition of social housing to packages at P150,000.00 and restricted the exemption from the CWT only to social housing projects undertaken under RA 7279; and that considering the spirit and intent of both BP 220 and RA 7279 which seek to provide socialized housing to the low-income sector at packages within their affordability levels, CREBA reiterates that all social housing projects of packages not to exceed P500,000.00 regardless of the law under which it is registered and undertaken be exempted from the coverage of the creditable withholding tax or RR 12-94. In reply, please be informed that your request to include low cost housing projects undertaken pursuant to BP 220 within the coverage of the Expanded Creditable Withholding Tax System has been properly considered taking into account the parallel objective of BP 220 with that of RA 7279 which is to make available adequate economic and social housing for the average and low-income earners at packages within their affordability levels, and the purpose of exempting socialized housing projects undertaken pursuant to RA 7279 from the coverage of the ECWT or RR 12-94 which is to encourage greater participation by private developers in social housing. However, tax exemption laws are strictly construed. One claiming the benefit thereof must bring himself substantially within the terms of the statute or justify his claim by the clearest grant of the organic or state law (House vs. Posadas, 51 Phil. 338; Asiatic Petroleum Co. vs. Llanes, 49 Phil. 466). Accordingly, in the absence of a clear grant of tax exemption, we regret to deny your request for lack of legal basis. aisadc Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue