Apostolic Vicariate of Calapan

July 22, 2009 BIR RULING [SH-(060) 450-09] RA 7279; DA-032-01 Apostolic Vicariate of Calapan Bishop's Residence, Salong Calapan City, Oriental Mindoro Attention: Bishop Warlito I. Cajandig, DD. Apostolic Vicar Gentlemen : This refers to your letter dated June 15, 2009 requesting, in effect, exemption from the payment of capital gains and documentary stamp taxes on the transfer of the individual titles of the lots to the beneficiaries of the relocation sites provided for by the Vicar Apostolic of Calapan City, Oriental Mindoro, pursuant to Republic Act (RA) No. 7279. Documents submitted show that the Vicar Apostolic of Calapan, Oriental Mindoro under its present Local Ordinary, Bishop Warlito I. Cajandig, DD.,has put up since 1994 relocation sites in and around the City of Calapan for the victims of natural calamities, the homeless, and the underprivileged; that there are at present six (6) relocation sites which have been purchased by the Vicariate; that the Sangguniang Panlungsod of Calapan City in its Resolution No. 283 dated September 6, 2006 identified the relocation sites as follows: 1) St. Joseph Relocation Site in Bayanan II with an area of 2.8468 hectares; 2) St. Francis Relocation Site in Barangay Guinobatan with an area of more or less 5.0 hectares; 3) St. Isidro Relocation Site in Barangay Canubing II with an area of more or less 1.5 hectares; 4) St. Rafael Relocation Site in Barangay San Rafael with an area of more or less 4.0 hectares; 5) St. Benedict Relocation Site in Barangay Panchoca with an area of more or less 1.4165 hectares; and 6) St. Anthony Relocation Site in Barangay San Antonio with an area of more or less 1.0413 hectares; that on the same resolution, the Sangguniang Panlungsod approved the said relocation project; and that the informal settlers who are the beneficiaries of the above relocation sites have a total of 661 families. caSDCA In reply, please be informed that pertinent portion of Section 20 of RA No. 7279, provides: "Sec. 20. Incentives for the 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) Project-related income taxes; (2) Capital gains tax on raw lands used for the project; (3) Value-added tax for the project contractor concerned; xxx xxx xxx (5) Donor's tax for lands certified by the local government unit to have been donated for socialized housing purposes." Thus, if the distribution or transfer of the titles of the lots of the relocation sites to the respective names of the occupants-beneficiaries thereof, is for a consideration, the same is exempt from income taxes. Accordingly, said transfer is neither subject to the capital gains tax imposed under Section 27 (D) (5) of the Tax Code of 1997, as amended, nor to the creditable withholding tax imposed under Revenue Regulations (RR) No. 2-98, as amended. On the other hand, if the said transfer or distribution of titles is without any monetary consideration, thereby considered as a donation by the Vicariate of Calapan to the individual beneficiaries of the lots for socialized housing purposes, the said transfer or distribution of titles is exempt from the payment of donor's tax in accordance with Section 20 (d) (5) of RA No. 7279. Moreover, under Section 196 of the Tax Code of 1997, as amended, the deeds or documents subject to the documentary stamp tax imposed therein are those where the realty sold shall be granted, assigned, transferred or otherwise conveyed to a purchaser or purchasers or to any other person or persons designated by such purchaser or purchasers. Thus, if the transfer or distribution of titles of the lots of the relocation sites to the respective occupants-beneficiaries is for a consideration, the said transfer or distribution therefore is subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended. (BIR Ruling No. DA-192-04 dated April 6, 2004) However, if the above transfer or distribution is made without any monetary consideration, it shall not be subject to the documentary stamp tax considering that no consideration is involved in said transaction upon which the tax imposed could be based. However, the notarial acknowledgment to the individual deed of conveyance is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997, as amended. (BIR Ruling No. DA-032-01 dated March 12, 2001 citing BIR Ruling No. 398-93 dated October 11, 1993) SDEHCc 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service