KPS Foundation, Inc.

October 26, 2009 BIR RULING [SH-(102) 673-09] 24 (D) (1); 196; DA-065-2004 KPS Foundation, Inc. Purok Magsaysay, Barangay Labangal Gen. Santos City Attention: Mr. Rodrigo M. Olarte, Sr. President/CEO Gentlemen : This refers to your letter dated July 14, 2009 relative to your request for exemption from the payment of taxes pursuant to the provisions of Republic Act No. 7279. It is represented that this pertains to the property at Barangay Calumpang acquired in 2005 as relocation site by the members of Mendoza Alliance Village Homeowners Association, Inc. (MAVHOAI) duly registered with the Housing and Land Regulatory Board per Reg. 00809 dated March 2, 2005; that it was subdivided among themselves and named the project Mendoza Alliance Village; that this project was jointly undertaken and facilitated by the KPS Foundation as originator; that the project provided land tenure security to more or less 144 families through a collective community acquisition called Community Mortgage Program (CMP) initiatives; that the transfer of ownership from the landowner to community association is now being processed by the said association as facilitated by KPS Foundation, Inc.; and that it submitted the following documents in support of its request for exemption: 1. SHFC Certification; 2. HLURB Certificate of Registration of the Mendoza Alliance Village Homeowners Assn., Inc.; 3. SEC Registration of KPS Foundation, Inc. aITECD 4. Photocopy of the Transfer Certificate of Title; 5. Tax Declaration; 6. Subdivision Plan; and 7. Special Power of Violeta D. Mendoza. In reply, please be informed that pursuant to Section 32 of Republic Act (RA) No. 7279, pertinent portions of which read: "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 owners of the raw lands are exempt from the payment of capital gains tax on the conveyance of the property, corresponding to the portion thereof that will be used in the aforestated socialized housing project. Upon application for exemption, a lien on the titles of the lands shall be annotated by the Register of Deeds having jurisdiction over the properties, to the effect that the same are being applied to socialized housing project pursuant to RA No. 7270. However, it is observed that documentary stamp tax is not one of taxes covered by the tax exemption clause in Section 20 of RA No. 7279. Such being the case, the project developer/sellers shall be liable to pay the documentary stamp tax on the documents conveying the properties imposed under Section 196 of the Tax Code of 1997, based on the consideration contracted to be paid for such realties or on their fair market value determined in accordance with Section 6 (E) of the said Code, whichever is higher. Moreover, the notarial acknowledgement to said deed of conveyance is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. 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, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service