BIR Ruling No. 152-10

December 21, 2010 BIR RULING NO. 152-10 RA 7279; BIR Ruling No. 071-98; BIR Ruling No. DA-130-05; BIR Ruling No. [SH-(006) 076-09]; BIR Ruling No. [SH-(111) 715-09]; BIR Ruling No. [SH-(041)-317-09] Rowena V. Balisnomo 41-C Leon SA. Aureus St. Corner Magsaysay Avenue Naga City Gentlemen : This refers to your letter dated August 10, 2010 requesting for an exemption from payment of capital gains tax and documentary stamp tax on the sale of lots by the National Housing Authority (NHA) in favor of individual project beneficiaries pursuant to Republic Act 7279 otherwise known as the "Urban Development and Housing Act of 1992". DEHcTI Documents submitted disclosed that the NHA, with Taxpayer Identification No. 000-916-384-000 is the registered owner of the parcels of land located at Concepcion Grande, Naga City covered by Transfer Certificate of Title (TCT) Nos. 14094; 14040 and 14286; that the lots under the aforementioned TCTs were sold by NHA to the following individuals: 1. Rowena R. Campillos TIN-124-382-267 2. David Casper Nathan A. Sergio TIN-124-381-137 3. Rowena V. Balisnomo TIN-164-321-201 In support to your request, you have completely submitted on August 25, 2010 the following documents: 1) Written Application for Exemption filed with the Law Division 2) Copies of the Transfer Certificates of Title (TCT) and Tax Declarations of the properties 3) Copies of the Deeds of Sale 4) TIN of Buyers and Seller In reply, please be informed that Section 19 of Republic Act (RA) No. 7279, otherwise known as the Urban Development and Housing Act of 1992 provides as follows: "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." Under the foregoing provisions, NHA enjoys exemption from all forms of taxation. Thus, at the time of the sale of the above-stated property, NHA was not liable to pay any kind of taxes, fees and charges. Section 19 of RA 7279, gives incentives to the NHA, as the entity tasked by the National Government to carry out the purposes of RA 7279, in the form of exemptions from the payment of all national taxes, such as income tax and the corresponding creditable withholding tax or the capital gains tax, including exemptions from documentary stamp taxes upon documents or contracts executed by and in favor of the NHA. (BIR Ruling No. 071-98 dated May 25, 1998 and BIR Ruling No. [SH-(006) 076-09] dated February 6, 2009) . caIACE Pertinent portions of RMC No. 42-01 dated October 5, 2001, provide, viz. : "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: xxx xxx xxx (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. 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, the transfer by NHA of its real property in favor of Rowena R. Campillos, David Casper Nathan A. Sergio and Rowena V. Balisnomo is exempt from the payment of documentary stamp tax under Section 196 of the Tax Code of 1997, as amended. (BIR Ruling No. DA-130-05 dated April 6, 2005) However, 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 titles 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) without the payment of the documentary stamp tax on the transfer of the subject realty by NHA to Rowena R. Campillos, David Casper Nathan A. Sergio and Rowena V. Balisnomo. (BIR Ruling No. [SH-(111)715-09] dated November 16, 2009) IcHAaS The Certificate Authorizing Registration (CAR) shall only be issued after the submission of the requirements provided under RMO 15-2003 and after it is established upon proper verification by the Revenue District Officer (RDO) concerned that, considering the rules on valuation of real property, the actual selling price per sale transaction of the lots in this case does not exceed P400,000.00 for each qualified beneficiary. (BIR Ruling No. [SH-(041)-317-09] dated May 15, 2009) Moreover, upon issuance of this letter of exemption, and upon registration of the document of sale, a lien on the Certificates or Title of the land to be issued in the name of Rowena R. Campillos, David Casper Nathan A. Sergio and Rowena V. Balisnomo 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 RA 7279. (BIR Ruling No. DA-130-05 dated April 6, 2005) 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