BIR Ruling No. 155-13

April 29, 2013 BIR RULING NO. 155-13 RA 7279; BIR Ruling No. 066-2011 Office of the Secretary to the Mayor 3rd Floor, Main Bldg., Quezon City Hall Elliptical Road, Quezon City Attention: Mr. Tadeo M. Palma Secretary to the Mayor Gentlemen : This refers to your letter dated November 27, 2012 requesting for a ruling that the transfer by Sps. Mariano Tiong and Nancy G.L. Tiong of their property to the Quezon City Government intended for the latter's socialized housing program is exempted from payment of capital gains tax. Documents submitted show that Mariano Tiong, married to Nancy G.L. Tiong is the registered owner of a parcel of land covered by Transfer Certificate of Title (TCT) No. RT-61967 (112582) and described as Lot No. 644-A-7-D of the subdivision plan (LRC) Psd-32238 with an area of 9,200 sq.m. issued by the Registry of Deeds for Quezon City. The City Government of Quezon, on the other hand, is a public entity created and existing under the laws of the Philippines and in line with its thrust of providing decent housing program for its constituents through socialized housing projects has embarked on a development known as Bistek Ville IV located in Barangay Culiat, Quezon City and as such decided to acquire the above-mentioned property by way of Ordinance No. SP-1370 S-2004 dated January 20, 2004, authorizing the City Mayor to expropriate the above-mentioned lot for the eventual sale to qualified and bona fide tenants/occupants therein thru the Community Mortgage Program. In a Certificate of Finality of Decision of the expropriation proceedings dated July 5, 2012, the Clerk of Court of RTC Branch 91 of Quezon City, National Capital Judicial Region has certified that the City Government of Quezon is ordered to take possession of the aforestated lot upon deposit in Court the amount of P11,040,000.00 and after deposit thereof the Register of Deeds of Quezon City is ordered to cancel TCT No. RT-61967 (112582) and a new TCT be issued in the name of the Quezon City Government. ACTESI In reply, please be informed that pursuant to Sections 20 and 32 of Republic Act (RA) No. 7279, pertinent portions of which state that: "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: (d) Exemption from the payment of the following: (2) Capital gains tax on raw lands used for the project; xxx xxx xxx." the owner of the raw land is exempt from the payment of capital gains tax or the withholding tax under Revenue Regulations No. 12-98, as amended, on the conveyance of the land which will be actually used for socialized housing project by the Quezon City Government pursuant to Ordinance No. SP-1370 S-2004. Upon application for exemption, a lien on the title of the land shall be annotated by the Register of Deeds having jurisdiction over the property, to the effect that the same is to be applied or is being applied to socialized housing project pursuant to RA 7279. However, the sale is subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997 based on the actual consideration of the property transferred, considering that one of the contracting parties is the Government. (BIR Ruling No. 066-2011 dated March 9, 2011) It is to be noted 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 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 requirement provided under RMO 15-2003, including proof of payment of documentary stamp tax. This ruling is being issued on the basis of the forgoing 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. SEHTIc Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue