National Housing Authority

March 22, 2010 BIR RULING [SH-(003) 010-10] RA 7279; BIR Ruling Nos. 272-93, 367-93, 064-96 & 071-98 & DA-132-06 National Housing Authority Region IX Zamboanga Project Office 3/F Nationwide Appliance Building Veterans Avenue Zamboanga City Attention: Ms. Doris A. Siao Officer-in-Charge Gentlemen : This refers to your letter dated April 1, 2008 requesting for a ruling that the transfer of real property by the National Housing Authority (NHA) in favor of individual project beneficiaries is exempt from capital gains and documentary stamp taxes. Documents show that the NHA, with Taxpayer Identification No. 916-384-00, has acquired parcels of land for the member-beneficiaries of Waray Matulungin Homeowners Association, Inc. under its socialized housing program known as Magbalikatan Para sa Maunlad na Pabahay (MMP) Program, technically described as follows: Name TIN Block Lot No. Area TCT No. No. (sq.m.) Jimmy V. Baunillo 949-567-316 1 3 200 T-165,022 Victor P. Escabarte 155-911-661 1 4 200 T-165,023 Florentino D. Dueas 949-563-187 1 5 150 T-165,024 Norberto C. Sanico, Jr. 949-025-822 1 6 150 T-165,025 Geodario A. Sapalleda 147-083-620 1 9 150 T-165,028 Arman V. Laranjo 925-159-531 2 2 100 T-165,030 Alvin S. Silagan 183-828-840 2 3 150 T-165,031 Petronilo D. Barbon 116-633-276 2 4 150 T-165,032 Alfredo M. Sarte 164-845-174 2 9 100 T-165,037 Benjamin A. Dellona 950-025-039 2 11 100 T-165,039 Ma. Everlilie B. Sojor 945-255-985 2 15 100 T-165,043 Joel Y. Jasmin 949-576-264 2 17 100 T-165,045 Emerenciano D. Silagan 183-828-862 2 23 150 T-165,051 Norwina H. Alap-ap 949-563-179 2 25 99 T-165,053 Genaro A. Dellona 949-581-727 3 2 200 T-165,055 Rosemarie S. Alaban 143-329-876 3 3 200 T-165,056 Noriel C. Sanico 949-549-698 4 1 100 T-165,060 Saturnina C. Sanico 949-549-655 4 2 200 T-165,061 Rosita T. Lorenzo 175-907-200 4 4 200 T-165,063 Analita F. Retuya 2357-0266 4 5 200 T-165,064 Danilo U. Zaragosa, Jr. 921-169-212 4 7 200 T-165,066 Jocelyn I. Liang 203-106-743 4 8 200 T-165,067 Antonio B. Bolencis 116-659-726 4 9 200 T-165,068 Mercedes A. Bais 949-576-256 4 10 100 T-165,069 Vergie N. Tuazon 949-554-687 4 13 100 T-165,072 The NHA executed several Deeds of Sale in favor of the abovementioned member-beneficiaries. DEHaAS In reply, please be informed that Section 19 of Republic Act (RA) No. 7279, otherwise known as the Urban Development and Housing Act of 1992 provides as follows: "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." Under the foregoing provisions, NHA enjoys exemption from the payment of all forms of taxation such as income, creditable withholding or capital gains taxes, including exemptions from documentary stamp taxes upon documents or contracts executed by and in favor of the NHA (cited in BIR Ruling No. 071-98 dated May 25, 1998). This is because the NHA, as the entity tapped by the National Government to carry out the purposes of RA 7279, is mandated to provide socialized housing for the underprivileged and which continuing mandate is imbued with public interest. In view of the foregoing, NHA is exempt from the payment of income tax and consequently, the creditable withholding tax imposed under Section 57 (B) of the Tax Code of 1997, as amended, and as implemented by Section 2.57.2 (J) of Revenue Regulations No. 2-98, as amended or capital gains tax under Section 27 (b) (5) of the Tax Code of 1997, as amended, whichever is applicable on the transfer of its real properties, sold under its socialized housing program, to member-beneficiaries. On the other hand, 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: ATHCDa (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. Provided, however, that in the case of foreclosure sale of real property mortgaged to NHA by qualified beneficiaries of socialized housing, NHA, as statutory seller, shall be liable to the payment of capital gains tax and documentary stamp tax otherwise due from the mortgagor-debtor. Provided further, that if the latter redeems the property within the one-year redemption period, the amount of tax paid by NHA may be collected from the mortgagor-debtor." (Emphasis supplied) 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 the party with which NHA is transacting. Accordingly, the transfer by NHA of its real properties in favor of member-beneficiaries is, likewise, exempt from the payment of documentary stamp tax under Section 196 of the Tax Code of 1997, as amended. However, 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 titles 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) without the payment of the capital gains and documentary stamp taxes on the transfer of the subject realties by NHA to member-beneficiaries. 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. HaIESC Very truly yours, (SGD.) MARISSA O. CABREROS OIC-Assistant Commissioner Legal Service