BIR Ruling No. 113-12

February 22, 2012 BIR RULING NO. 113-12 RA 7279; BIR Ruling No. 059-10 National Housing Authority Julia Pacana St. Cagayan de Oro City Attention: Judy A. Fernandez OIC-Regional Manager Gentlemen : This refers to your letter dated June 14, 2011 duly endorsed by Revenue Region No. 16-Cagayan de Oro City, relative to the request for exemption from the payment of capital gains tax and documentary stamp tax on the transfer of a property which is being acquired by the National Housing Authority for its socialized housing program known as NHA-Belican Ville Housing Project. Documents submitted disclosed that Eulalia T. Belican is the absolute registered owner of a parcel of land identified as Lot 4, of the subdivision plan (LRC) Psd-259284, being a portion of land described on Plan of H-210828 covered by Transfer Certificate of Title (TCT) No. T-23260 issued by the Registry of Deeds for the Province of Bukidnon, containing an area of forty thousand eight hundred thirty four square meters (40,834 sq.m.) more or less; that Executive Order No. 90 dated December 17, 1986 mandated the Vendee (National Housing Authority) as the sole housing production agency to meet the housing needs of the low and marginal income families in the urban areas; that NHA in coordination with the Representative of each congressional district, is implementing the Local Housing Program to cover implementation of socialized housing project in urban and urbanizable areas in all congressional district pursuant to HUDCC Resolution No. 001 Series of 2001 approving the adoption of the Implementing Rules and Regulations of Rule 8, (Local Housing Program) of Republic Act 7835 and NHA Board Resolution No. 4485 dated January 10, 2002. EHaCID On March 22, 2011, a Memorandum of Agreement was executed by National Housing Authority, the Office of the Second Congressional District, Bukidnon and Eulalia T. Belican (landowner). Under the MOA, the Office of the Second Congressional District, Bukidnon shall allocate the amount of three million two hundred sixty six thousand seven hundred twenty pesos (P3,266,720.00) under the Local Housing Program (LHP) for the acquisition of the property owned by the landowner. On May 20, 2011, a Deed of Absolute Sale was executed over the described property whereby the landowner and the NHA agreed that the total purchase price is three million two hundred sixty six thousand seven hundred twenty pesos (P3,266,720.00). In reply, please be informed that pursuant to Sections 19 and 20 of R.A. No. 7279, pertinent portions of which read: "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 favour 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 the transfer certificates of title. "Sec. 20. Incentives for Private Sector Participating in Socialized Housing. To encourage greater participation in socialized housing, and further reduced the cost of housing units for the benefit of the underprivileged and homeless, the following incentives shall be extended to the private sector: THaAEC "xxx xxx xxx "(d) Exemption from the payment of the following: "(1) . . . "(2) Capital gains tax on raw lands used for the project; xxx xxx xxx" The conveyance to the NHA by the landowner of the above-mentioned parcel of land under the socialized housing program is exempt from the payment of capital gains tax and documentary stamp tax pursuant to Sections 19 and 20 of R.A. No. 7279. (BIR Ruling No. 059-10 dated September 15, 2010) Upon issuance of this letter of exemption, and upon registration of the documents of sale, a lien on the Certificate of Title of the said parcel of land, which shall be issued in the name of the NHA, shall be caused to be annotated by the Register of Deeds having jurisdiction over the properties to the effect that the said properties shall be used for socialized housing pursuant to R.A. No. 7279. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered as null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue