BIR Ruling No. 121-11

April 12, 2011 BIR RULING NO. 121-11 R.A. 7279; BIR Ruling No. DA-184-99 National Housing Authority Quezon Memorial Elliptical Road Diliman, Quezon City Attention: Arch. Ma. Teresa P. Oblipias Sector Manager Gentlemen : This refers to your letter dated December 15, 2010 requesting on behalf of the landowner, Ms. Luningning V. Santos, for a ruling that the sale of her parcel of land to the National Housing Authority (NHA) for its socialized housing program known as Dagat-Dagatan Development Project to be used as a resettlement site for the overspill marginal income families affected by the Tondo Foreshore Development Project and other government projects in Metro Manila, is exempt from the payment of capital gains tax and documentary stamp tax pursuant to Sections 19 and 20 of R.A. No. 7279, otherwise known as the "Urban Development and Housing Act of 1992." It appears that the landowner, Ms. Luningning V. Santos is the absolute and registered owner of a parcel of land located at Caloocan City, covered by Transfer Certificate of Title No. C-370344 issued by the Registry of Deeds for Caloocan City with a total area of five hundred (500) square meters, more or less; that on December 14, 2010, Ms. Luningning V. Santos and NHA, through its General Manager, Atty. Chito M. Cruz, entered into a contract of sale whereby the former sold the above-described land to the latter for its aforementioned socialized housing project. In reply, please be informed that under Sections 19 and 20 of R.A. No. 7279, it is provided, to wit: "SECTION 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 the transfer certificates of title. (emphasis supplied) "SECTION 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: cHDAIS "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; "xxx xxx xxx Thus, the conveyance to the NHA by the landowner, Ms. Luningning V. Santos 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. 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 property to the effect that the said property shall be used for socialized housing pursuant to R.A. No. 7279. (BIR Ruling No. DA-184-99 dated March 25, 1999) 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