BIR Ruling No. 351-15

October 8, 2015 BIR RULING NO. 351-15 RA 7279; BIR Ruling No. 360-2013 Office of the Mayor Municipality of Estancia, Iloilo National Highway cor. V. Cudilla, Sr. Ave. Estancia, Iloilo Attention: Rene S. Cordero Municipal Mayor Gentlemen : This refers to your letter dated September 19, 2014, duly indorsed to this office by the National Anti-Poverty Commission (NAPC), requesting exemption from the capital gains tax (CGT) on the sale of two (2) parcels of land executed by Spouses Warlito B. Baido and Madeline S. Baido ("Sps. Baido") in favor of the Municipality of Estancia, Iloilo, which shall be utilized as Post-Yolanda Fisherfolk Settlement site. Documents submitted show that Sps. Baido are the absolute owners of two (2) parcels of land located at Estancia, Iloilo, covered by Original Certificate of Title (OCT) Nos. F-44370 (with an area of 1,461 sq. m.) and F-25566 (with an area of 21,185 sq. m.) of the Registry of Deeds for Iloilo City. On August 12, 2014, Sps. Baido executed a Deed of Absolute Sale over the said parcels of land in favor of the Municipality of Estancia for the amount of P1,811,680.00 which shall be utilized by the latter as Post-Yolanda Fisherfolk Settlement site. Based on the Certification dated August 26, 2014 issued by the National Housing Authority Iloilo Project Office, the socialized housing project, Estancia People's Ville Subdivision Project, that will be built on the aforesaid parcels of land is under the NHA's Typhoon Yolanda Permanent Housing Program. In reply, please be informed that pursuant to Section 20 of 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: 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 the CGT or the withholding tax under Revenue Regulations No. 2-98, as amended, on the conveyance of a parcel of land which shall be utilized for a socialized housing project. Such being the case, the sale of the two (2) parcels of land covered by Original Certificate of Title (OCT) Nos. F-44370 (with an area of 1,461 sq. m.) and F-25566 (with an area of 21,185 sq. m.) of the Registry of Deeds for Iloilo City, which shall be utilized as Post-Yolanda Fisherfolk Settlement site, is exempt from the CGT. (BIR Ruling No. 360-2013 dated September 30, 2013) However, the sale is subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended, based on the actual consideration contracted to be paid for such realties. Upon application for exemption, a lien on the titles of the land shall be annotated by the Register of Deeds having jurisdiction over the properties, to the effect that the same are to be applied or are being applied to a 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 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 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