Goldenville Realty and Development Corporation

April 5, 2016 BIR RULING NO. 109-16 RA 7279; BIR Ruling No. 003-16 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 January 15, 2016, requesting issuance of Certificate of Tax Exemption for socialized housing project, the "Fully Developed & Completed Housing Units" under NHA's Yolanda Permanent Housing Program located at Brgy. Viscaya, Pres. Roxas, Capiz pursuant to Republic Act (R.A.) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". Documents submitted show that Arnel A. Martinez, (married to Alona De Asis), Florido D. Bangud, (married to Melinde Valois), Gilbert A. Manilay, Albert Z. Dangcalan, (married to Margie Villanueva), Danilo G. Bisan, (married to Nane Saris) and Roberto D. Candelario, (married to Jocelyn Palacios) (hereinafter referred to as Landowners) are the registered owners of parcels of land covered by seven (7) Transfer Certificates of Title (TCT) located Brgy. Viscaya, Pres. Roxas, Capiz, to wit: Landowners TCT Area (sq.m.) Arnel A. Martinez CLOA-13236 10,002 Florido D. Bangud CLOA-13041 9,999 Gilbert A. Manilay CLOA-13043 10,000 Albert Z. Dangcalan CLOA-13044 9,999 Albert Z. Dangcalan CLOA-13045 10,000 Gilbert A. Manilay and Arnel A. Martinez CLOA-13048 10,000 Danilo G. Bisan and Roberto D. Candelario CLOA-13049 10,000 Total Area 70,000 ====== all issued by the Registry of Deeds for Province of Capiz. The following Deeds of Absolute of Sale conveying the abovementioned properties were executed by the landowners to the National Housing Authority (NHA) (TIN: 000-916-384-012), is a government corporation organized and existing by virtue of Presidential Decree No. 757, as amended: Date of Deed of Consideration Area (sq.m.) Landowners Absolute Sale TCT (PhP) Arnel A. Martinez December 8, 2015 CLOA-13236 500,100.00 10,002 Florida D. Bangud December 8, 2015 CLOA-13041 499,950.00 9,999 Gilbert A. Manilay December 8, 2015 CLOA-13043 500,000.00 10,000 Albert Z. Dangcalan December 8, 2015 CLOA-13044 999,950.00 19,999 and 13045 Gilbert A. Manilay and December 8, 2015 CLOA-13048 500,000.00 10,000 Arnel A. Martinez Danilo G. Bisan and December 8, 2015 CLOA-13049 500,000.00 10,000 Roberto D. Candelario Total 3,500,000.00 70,000.00 ========== ======== The above described properties have been identified and certified for development into a residential project under the Yolanda Permanent Housing Program intended for the families affected by Typhoon Yolanda and qualified for housing assistance under R.A. No. 7279. The NHA has issued Notice of Award dated October 16, 2015 to Goldenville Realty and Development Corporation (TIN: 002-562-057-000) for the "Procurement of Fully Developed Lots and Completed Housing Units under the NHA's Yolanda Housing Program located at Brgy. Viscaya, Pres. Roxas, Capiz-866 Housing Units" with a contract price of Two Hundred Fifty Million Forty Thousand Pesos (P250,040,000.00). AcICHD To give effect to the Notice of Award, Contract for the Procurement of Fully Developed Lots and Completed Housing Units (866 Units) at Viscaya Ville Housing Project, Brgy. Viscaya, Pres. Roxas, Capiz was executed on December 10, 2015 between NHA and Goldenville Realty and Development Corporation, whereby the latter is committed to deliver Eight Hundred Sixty Six (866) units (House and Lot Package) for a price of P250,040,000.00; and that according to the contract, the scope of work under this project are "land development to include boundary and subdivision survey, roadworks, drainage works, water supply works, power supply works, housing construction and miscellaneous requirements necessary for the completion of the project". 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: (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 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 Sale by the Landowner to NHA The landowner who sells her property for use in a socialized housing project is exempt from the payment of the capital gains tax. Such being the case, the sale by the landowners to NHA of the subject properties covered by TCT Nos. CLOA-13236, CLOA-13041, CLOA-13043, CLOA-13044, CLOA-13045, CLOA-13048 and CLOA-13049 are exempt from capital gains tax. (BIR Ruling No. 003-2016 dated January 6, 2016) 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. Accordingly, the transfer by the landowners to NHA of the subject properties covered by TCT Nos. CLOA-13236, CLOA-13041, CLOA-13043, CLOA-13044, CLOA-13045, CLOA-13048 and CLOA-13049 are likewise exempt from documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended. (BIR Ruling No. 003-2016 dated January 6, 2016) Moreover, under Section 109 (1) (P) of the Tax Code of 1997, as amended by R.A. 9337, the sale of real properties utilized for low-cost and socialized housing as defined by R.A. No. 7279 shall be exempt from value-added tax (VAT), thus, the sale of the subject properties covered by TCT Nos. CLOA-13236, CLOA-13041, CLOA-13043, CLOA-13044, CLOA-13045, CLOA-13048 and CLOA-13049 by the landowners to NHA for purposes of the Yolanda Permanent Housing Program is exempt from the imposition of VAT. (BIR Ruling No. 003-2016 dated January 6, 2016) TAIaHE Upon application for exemption, a lien on the titles of the lands shall be annotated by the Register of Deeds having jurisdiction over the properties, 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 lands 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 Revenue Memorandum Order (RMO) No. 15-2003. Transaction between Goldenville Realty and Development Corporation and NHA Considering that Goldenville Realty and Development Corporation is a project contractor whose services are engaged by NHA to undertake construction of 866 Housing Units with its necessary construction components in Viscaya Ville Housing Project, Brgy. Viscaya, Pres. Roxas, Capiz and which was certified by the NHA as a socialized housing project as resettlement site pursuant to R.A. 7279, the income directly realized by Goldenville Realty and Development Corporation from the land development and housing construction with its necessary construction components for 866 Housing Units in Viscaya Ville Housing Project, Brgy. Viscaya, Pres. Roxas, Capiz shall be exempt from project-related income taxes. (BIR Ruling No. 003-2016 dated January 6, 2016) Moreover, pursuant to Section 20 (d) (3) of R.A. No. 7279, the housing construction with its necessary construction components for 866 Housing Units in Viscaya Ville Housing Project, Brgy. Viscaya, Pres. Roxas, Capiz by Goldenville Realty and Development Corporation shall be exempt from VAT. However, the purchases of goods/articles by Goldenville Realty and Development Corporation 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. 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