BIR Ruling No. 474-14

November 24, 2014 BIR RULING NO. 474-14 RA 7279; BIR Ruling No. 036-2014 National Housing Authority Quezon Memorial Elliptical Road Diliman, Quezon City Attention: Atty. Chito M. Cruz General Manager Gentlemen : This refers to your letter dated September 30, 2014 requesting issuance of certificate of exemption from payment of capital gains tax and documentary stamp tax on the sale of a land with an area of 388,306 square meters portion of the area covered by Transfer Certificate of Title (TCT) No. 129-2014002773. Documents submitted show that HGL Development Corporation (TIN: 000-610-779-000) (hereinafter referred to as Landowner) is the registered owner of a parcel of land without improvement, identified as Beginning at a point marked "1" of Lot 1, on the plan Psu-125349, being S.71 Deg. 03'E., 1502.07 m. from Mon. 203, Zamboanga Townsite, City of Zamboanga covered by TCT No. 129-2014002773 issued by the Registry of Deeds for Zamboanga City. The aforesaid property is situated at Brgy. Kasanyangan, Zamboanga City with an area of Three Hundred Eighty Eight Thousand Three Hundred Six square meters (388,306 sq.m.), more or less. The National Housing Authority (NHA) (TIN: 000-916-384-012), on the other hand, is a government corporation organized and existing by virtue of Presidential Decree No. 757, as amended. On September 17, 2014, the landowner and the NHA executed a Deed of Absolute Sale and Conveyance whereby the former transferred and conveyed the aforementioned property to latter at an agreed price of One Hundred Thirty Five Million Nine Hundred Seven Thousand One Hundred Pesos (P135,907,100.00). The above described property shall be used as a resettlement site for the affected fire victims of the September 2013 Zamboanga Armed Conflict. 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: HACaSc xxx xxx xxx "(d) Exemption from the payment of the following: (1) (2) Capital Gains Tax;" xxx xxx xxx The landowner who sells his property for use in a socialized housing project is exempt from the payment of the capital gains tax. Such being the case, the sale by HGL Development Corporation to NHA of the subject property covered by TCT No. 129-2014002773 is exempt from capital gains tax. (BIR Ruling No. 036-2014 dated January 29, 2014) 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. cEAaIS 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 HGL Development Corporation. Accordingly, the sale of the subject property covered by TCT No. 129-2014002773 is likewise exempt from documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended. (BIR Ruling No. 036-2014 dated January 29, 2014) 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. 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 requirements 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 Bureau of Internal Revenue