BIR Ruling [UN-013-95]

January 5, 1995 BIR RULING [UN-013-95] Mr. Tomas R. Pastor 103 10th Street, New Manila Quezon City S i r : This refers to your letter dated December 26, 1994 requesting for a ruling that the sale of your property in favor of the Public Estates Authority, a government corporation, to be used as additional resettlement/relocation area for squatters from the Financial Center Area, Roxas Boulevard, Manila, making available to them decent housing at affordable cost, is exempt from the payment of capital gains tax pursuant to Section 20 of R.A. 7279, otherwise known as the Urban Development and Housing Act of 1992. Records disclosed that a property (raw land) situated in Paliparan, Dasmarias, Cavite with an aggregate area of 17,064 square meters, covered by Transfer Certificate of Title No. T-463055, issued by the Registry of Deeds for the Province of Cavite is the subject of the Deed of Absolute Sale between the owners, Mr. Tomas R. Pastor married to Remedios Salas, and the Public Estates Authority, represented by its General Manager, Mr. Amado S. Lagdameo, Jr., dated August 19, 1994; that the said property is intended as additional resettlement-relocation area for squatters in the Financial Center Area, Roxas Boulevard, Manila per certification of the Public Estates Authority, and as embodied in its Resolution No. 1153, series of 1994, being one of the government agencies involved in the squatters resettlement/relocation programs. In reply please be informed that pursuant to Section 20 of R.A. No. 7279, pertinent portion of which reads: cdtech "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: (1) Project-related income taxes; (2) Capital gains tax on raw lands used for the project; xxx xxx xxx" the conveyance of the aforesaid property covered by Transfer Certificate of Title No. T-463055 in the name of Mr. Tomas R. Pastor married to Remedios Salas, in favor of the Public Estates Authority is exempt from the payment of capital gains tax. Upon issuance of this letter of exemption, and upon registration of the document of sale, a lien on the Certificate of Title of the land to be issued in the name of the corporation shall be caused to be annotated by the Register of Deeds having jurisdiction over the property, to the effect that the said property shall be used as resettlement/relocation area for squatters pursuant to R.A. 7279. (BIR Ruling No. 374-92, dated December 28, 1992) However, it is observed that Documentary Stamp Tax is not one of the taxes covered by the tax exemption provisions in Sec. 20 of R.A. 7279. Such being the case, the landowners are liable to pay the documentary stamp tax on the document conveying the property to the Public Estates Authority imposed under Section 196 of the Tax Code, as amended, based on the actual consideration paid by the government to the landowners. cdtech Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)