BIR Ruling No. 250-15

July 21, 2015 BIR RULING NO. 250-15 RA 7279; BIR Ruling No. 446-2012; BIR Ruling No. 304-2013 TQG Enterprises, Inc. 4700 Valenzuela St., Sta. Mesa, Manila Attention: Teresa R. Tuason President Gentlemen : This refers to the letter dated June 13, 2014 of Ma. Theresa L. Siat, District Manager, Pasig/Marikina/Manggahan, National Housing Authority (NHA), requesting issuance of Certificate of Tax Exemption for the Deed of Sale executed between TQG Enterprises, Inc. and NHA pursuant to Republic Act (R.A.) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". Documents submitted show that TQG Enterprises, Inc. (hereinafter referred to as Landowner) (TIN: 000-502-765-000) is the registered owner of a parcel of land, identified as Lot 66-A-1-A-2-A-1-B-10 of the subdivision plan, Psd-00-071716, being a portion of Lot 66-A-1-A-2-A-1-B, Psd-13-004334, LRC Record No. 7672 covered by Transfer Certificate of Title (TCT) No. 473624 issued by the Registry of Deeds for Marikina City. The aforestated lot is located at Brgy. Nangka, Marikina City containing an area of Seven Hundred Thirty One square meters (731 sq.m.) more or less. cSaATC On June 4, 2014, a Memorandum of Agreement (MOA) was executed by the NHA, the Office of the Second Congressional District of Marikina City, the landowner and the Crown Land Homeowners' Association, Inc. (Association). Under the MOA, the Second Congressional District of Marikina City agreed to the utilization of Two Million One Hundred Forty Nine Thousand One Hundred Thirty pesos (P2,149,130.00) 1 from the allocation of the Local Housing Program Fund under R.A. No. 7835 to finance the acquisition of the property occupied by Association. The project shall be known as the Crown Land Homeowners' Association, Inc. Housing Project intended to benefit Sixteen (16) 2 members of the Association. On June 6, 2014, a Deed of Absolute Sale was executed by and between the Landowner and the NHA, a government corporation created and existing by virtue of Presidential Decree No. 757, as amended, whereby the former transferred to the latter the subject realty in consideration for One Million Nine Hundred Thousand Six Hundred pesos (P1,900,600.00). 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: xxx xxx xxx 2) Capital gains tax on raw lands use 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. 2-98, as amended, on the conveyance of the parcel of land for use in the aforesaid socialized housing project. Such being the case, the sale by the Landowner of the subject property covered by TCT No. 473624 to NHA is exempt from the capital gains tax. (BIR Ruling No. 446-2012 dated July 10, 2012.) CHTAIc 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 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, either on NHA or the party with which NHA is transacting. Accordingly, the sale of the subject property covered by TCT No. 473624 to NHA is, likewise, exempt from the payment of documentary stamp tax under Section 196 of the Tax Code of 1997, as amended. 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 property covered by TCT No. 473624 by the landowner to NHA is exempt from the imposition of VAT. (BIR Ruling No. 304-2013 dated August 6, 2013) 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. cHDAIS 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 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. 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 ANNEX Crown Land Homeowners Association, Inc. Brgy. Nangka, Marikina City No. Name of Beneficiary 1 ROSEMARIE W. SAMANIEGO 2 MINDA B. ICASA 3 RANDY G. DE GUZMAN 4 PRIMO R. ROCHA 5 ROSITA C. CAASI 6 ADAM R. JUEGO 7 JULIUS WALTER DING A. LADJAHASAN 8 RODRIGO C. PECAYO 9 ROGELIO B. BANIGUED 10 PHILIP B. BANIGUED 11 CRISTY C. PECAYO 12 ROWENA B. LEDONA 13 RHISI T. GONZALES 14 CRESENCIO B. INOCENCIO 15 MA. MAGDALENA R. BALADING 16 AMELITA S. ABO Footnotes 1. P1,900,600.00 shall directly paid to the landowner, P135,500.00 shall be allotted for survey, P18,000.00 shall be allotted for titling and P95,030.00 shall be allotted for miscellaneous fees. 2. See Annex.