National Housing Authority

January 6, 2009 BIR RULING [SH-(001) 001-09] S20-030-06 National Housing Authority Quezon Memorial Elliptical Road Diliman, Quezon City Attention: Ivanswenda V. Marquez Officer-in-Charge, CRIOD Gentlemen : This refers to your letter dated December 09, 2008 requesting on behalf of the landowners, GEN. RESTITUTO C. PADILLA & MRS. DOLORES FERRER PADILLA, for a ruling that the sale of their parcel of land to the National Housing Authority (NHA) for its socialized housing program for the benefit of the low-income and marginal income families in the urban areas, is exempt from the payment of capital gains tax and documentary stamp tax pursuant to Sections 19, 20 and 32 of Republic Act (R.A.) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". HSAcaE It appears that the landowners are the registered owners of two (2) parcels of land located at Cabanatuan City covered by TCT Nos. T-131790 and T-126096 issued by the Registry of Deeds for Cabanatuan City with an aggregate area of 30,815 square meters; that on August 21, 2008, a Memorandum Agreement was entered into by and among Spouses Restituto C. Padilla and Dolores Ferrer-Padilla, The Samahan ng Maralitang Tagalunsod Homeowners Association, Inc. (SMTHOAI) and the National Housing Authority (NHA) whereby NHA has committed to purchase the above said properties in favor of marginal income families; NHA as the sole housing production agency to meet the housing needs of the low and marginal income families in the urban areas, has developed an alternative mode of providing land tenure and access to illegal settlements, where organized communities of low income families are provided financial resources for the purpose of acquiring the land they occupy; and that per Board Resolution No. 4140 dated July 29, 1999, the NHA is authorized to negotiate, enter into a settlement agreement with and eventually pay just compensation to the landowners. In reply thereto, please be informed that pursuant to Sections 19, 20 and 32 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 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 the transfer certificates of title. (emphasis supplied) "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: TcAECH xxx xxx xxx (d) Exemption from the payment of the following: (1) Project-related income taxes; (2) Capital gains tax on raw land used for the project; xxx xxx xxx "Sec. 32. Incentives. To encourage its wider implementation, participants in the CMP shall be granted with the following privileges or incentives: xxx xxx xxx (b) Properties sold under the CMP shall be exempted from the capital gains tax; and xxx xxx xxx the conveyance to the NHA by the landowners of the above-mentioned parcels 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. Upon issuance of this letter of exemption, and upon registration of the documents of sale, a lien on the Certificates of Title of the said parcels 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. (BIR Ruling No. DA102-98 dated June 22, 1998) 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. HSIADc Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service