Office of the City Mayor

June 22, 2010 BIR RULING [SH-(012) 052-10] RA 7279; BIR Ruling No. 374-92; BIR Ruling No. [SH-(005)071-09] Office of the City Mayor City Urban Development & Housing Office City of Puerto Princesa Attention: Mr. Javier P. Quindoza Officer in Charge Gentlemen : This refers to your letter dated May 7, 2010 requesting for exemption from the payment of capital gains tax on the sale of parcels of land pursuant to Republic Act (R.A.) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". Documents submitted disclosed that the subject property with Original Certificate of Title No. 6597 with a total area of 24,241 square meters, more or less, located at Sicsican, Puerto Princesa City registered under the name of Vicente D. Gerochi IV ("Owner") with TIN 165-739-043 was sold to the City Government of Puerto Princesa, represented by its City Mayor Edward S. Hagedorn; that the subject property shall be developed into relocation site of the residents of Barangay Mabuhay, Puerto Princesa City per Resolution No. 724-2010 dated February 1, 2010; and that a Deed of Absolute Sale was executed dated May 12, 2010. In reply, please be informed that pursuant to Section 20 of R.A. No. 7279, pertinent portion of which reads: "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: xxx xxx xxx (d) Exemption from the payment of the following: CcTIAH xxx xxx xxx (1) Capital gains tax on raw lands used for the project; xxx xxx xxx the owners of the raw land are exempt from the payment of capital gains tax or the withholding tax under Revenue Regulation No. 2-98 on the conveyance of the parcel of land for use in the aforesaid socialized housing project. 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 are to be applied or are being applied to socialized housing project 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 consideration considering that one of the contracting parties is the Government. (BIR Ruling No. 374-92 dated December 28, 1992 and BIR Ruling No. [SH-(005)-071-09] dated February 4, 2009). 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. 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 null and void. ITcCSA Very truly yours, Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS OIC-Assistant Commissioner Legal Service