National Housing Authority

November 16, 2009 BIR RULING [SH-(112) 716-09] RA No. 7279; BIR Ruling No. DA-132-06 National Housing Authority Quezon Memorial Elliptical Road Diliman, Quezon City 1100 Attention: Ms. Ma. Rosario L. Villanueva Officer-in-Charge Estate Management Department Gentlemen : This refers to your letter dated October 5, 2009 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 documentary stamp taxes. Documents show that the NHA has awarded, in favor of Virginia G. Sarmiento, Teresita G. Jarquio, Renato M. Guerrero, Rigoberto M. Guerrero, Siegfrido M. Guerrero, and Rhodora G. Goldsmith, a parcel of land under its housing project known as Tunasan Estate covered by Transfer Certificate of Title. No. 0-845 situated in Lot 11, Block 35, Psd NR-224, Tunasan Estate, San Pedro, Laguna, containing an area of 484 square meters. 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." DCIAST 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. 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: (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 property in favor of Virginia G. Sarmiento, Teresita G. Jarquio, Renato M. Guerrero, Rigoberto M. Guerrero, Siegfrido M. Guerrero, and Rhodora G. Goldsmith is exempt from the payment of documentary stamp tax under Section 196 of the Tax Code of 1997, as amended. acCETD 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 documentary stamp tax on the transfer of the subject realty by NHA to Virginia G. Sarmiento, Teresita G. Jarquio, Renato M. Guerrero, Rigoberto M. Guerrero, Siegfrido M. Guerrero, and Rhodora G. Goldsmith. 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