BIR Ruling No. 371-12

May 31, 2012 BIR RULING NO. 371-12 R.A. 7279; BIR Ruling No. 066-2011 City Planning and Development Office 10th Flr. New City Hall Building Elliptical Road, Diliman Quezon City Attention: Tomasito L. Cruz City Planning and Development Officer Gentlemen : This refers to your letter dated December 05, 2011 requesting on behalf of the City Government of Quezon City, for a ruling that the sale of a parcel of land owned by the Spouses Gaudencio and Magnolia Antonino ("Spouses Antonino"), to the City Government for the latter's socialized housing program is exempt from the payment of capital gains tax pursuant to Sections 19 and 20 of R.A. No. 7279, otherwise known as the "Urban Development and Housing Act of 1992." Documents submitted show that Spouses Antonino are the absolute and registered owners of a parcel of land located in Brgy. Payatas, Quezon City, covered by Transfer Certificate of Title (TCT) No. RT-55167 (35493) issued by the Registry of Deeds for Quezon City with a total area of sixteen thousand eight hundred fifteen (16,815) square meters, more or less; and that on September 26, 2011, a Deed of Absolute Sale was executed between the City Government of Quezon City, represented by its City Mayor, Herbert Bautista, and the heirs of the Spouses Antonino, represented by Mr. Gaudencio Antonino Jr.,covering the sale of the above-described land which shall be used by the City Government for its socialized housing project. In reply, please be informed that under Section 20 of R.A. No. 7279, it is provided, to wit: "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: cTCaEA "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 Based on the above-quoted provision, the conveyance of the parcel of land executed by the landowners in favor of the City Government of Quezon City for the latter's socialized housing program is exempt from the payment of capital gains tax. (BIR Ruling No. 066-2011 dated March 9, 2011) 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 City Government of Quezon City, 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. 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) 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, including proof of payment of documentary stamp tax. (BIR Ruling No. 066-2011 dated March 9, 2011) It must be emphasized, however, that this ruling shall not preclude the BIR from conducting further investigation as to the appropriate estate tax liability of the estate of the late Magnolia Antonino. 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. SCHcaT Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue