BIR Ruling No. 437-12

June 27, 2012 BIR RULING NO. 437-12 RA 7279; BIR Ruling No. 059-10 National Housing Authority Zamboanga Project Office 3rd Flr. Unit 5 Nationwide Appliance Center Bldg. Veterans Avenue, Zamboanga City Attention: Reynaldo H. Bolay-Og Team Head Gentlemen : This refers to your letter dated May 17, 2011 duly endorsed by Revenue Region No. 15- Zamboanga, relative to the request for exemption from the payment of capital gains tax and documentary stamp tax on the transfer of a property which is being acquired by the National Housing Authority for its socialized housing program known as Amor Con Amor Village Housing Project for the benefit of the 127 members of Amor Con Amor Homeowners Association, Inc. Documents submitted disclosed that Ma. Luisa Rosalinda P. de los Santos is the absolute registered owner of a parcel of land described as Lot 2212 of the cadastral survey of Zamboanga covered by TCT No. T-80,775 of the Register of Deeds for Zamboanga City located at Barangay Curuan, Zamboanga City, containing an area of fifteen thousand nine hundred sixty two square meters (15,962 sq. m.) more or less; that Executive Order No. 90 dated December 17, 1986 mandated the Vendee (National Housing Authority) as the sole housing production agency to meet the housing needs of the low and marginal income families in the urban areas; that NHA in coordination with the Representative of each congressional district, is implementing the Local Housing Program to cover implementation of socialized housing project in urban and urbanizable areas in all congressional district pursuant to HUDCC Resolution No. 001 Series of 2001 approving the adoption of the Implementing Rules and Regulations of Rule 8, (Local Housing Program) of Republic Act 7835 and NHA Board Resolution No. 4485 dated January 10, 2002. On March 25, 2011, a Memorandum of Agreement Amor Con Amor Village (Land Acquisition) was executed by National Housing Authority, the Office of the Second Congressional District, Zamboanga City, the City Government of Zamboanga and Ma. Luisa Rosalinda P. de los Santos (land owner). Under the MOA, NHA shall pay the Land Owner the amount of two million one hundred fifty four thousand eight hundred seventy pesos (P2,154,870.00) for the ninety percent (90%) of the purchase price. 1 The Office of the Second Congressional District, Zamboanga City shall allocate the amount of two million one hundred fifty four thousand eight hundred seventy pesos (P2,154,870.00) from the Local Housing Program (LHP). On May 4, 2011, a Deed of Absolute Sale and Conveyance was executed over the described property whereby the Land Owner and the NHA agree that the total purchase price is two million one hundred fifty four thousand eight hundred seventy pesos (P2,154,870.00). In reply, please be informed that pursuant to Sections 19 and 20 of R.A. No. 7279, pertinent portions of which read: "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 favour 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 the transfer certificates of title. "Sec. 20. Incentives for Private Sector Participating in Socialized Housing. To encourage greater 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: "(1) . . . "(2) Capital gains tax on raw lands used for the project; xxx xxx xxx" The conveyance to the NHA by the land owner of the above-mentioned parcel of land under the socialized housing program is exempt from the payment of capital gains tax and documentary stamp tax pursuant to Sections 19 and 20 of R.A. No. 7279. (BIR Ruling No. 059-10 dated September 15, 2010) Upon issuance of this letter of exemption, and upon registration of the documents of sale, lien on the Certificate of Title of the said parcel of land, which shall be issued in the name of the NHA, 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 R.A. No. 7279. This ruling is being issued on the basis of the foregoing 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. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue Footnotes 1. The beneficiaries have raised and paid to land owner the ten percent (10%) down payment amounting to two hundred thirty nine thousand four hundred thirty pesos (P239,430.00).