BIR Ruling [UN-118-95]

March 23, 1995 BIR RULING [UN-118-95] E. B. Villarosa & Partner Co., Ltd. 102 Juan Luna St., Davao City Attention: Engr . Eliezer B . Villarosa President/General Manager Gentlemen : This refers to your letter dated February 2, 1994 requesting for tax exemption on the sale of house and lot package under your socialized housing project registered with the Housing and Land Use Regulatory Board (HLURB) pursuant to R. A. NO. 7279, otherwise known as the Urban Development and Housing Act of 1992. aisadc Records disclosed that E. B. Villarosa & Partner Co., Ltd. is primarily engaged in the development of low-cost subdivision and construction of Socialized Housing Units for the benefit of qualified beneficiaries who are also SSS, GSIS and/or Pag-ibig members, pursuant to Republic Act No. 7279; that you are the owner/developer of Emenville Guerra Subdivision located at Ambago, Butuan City which is a duly registered socialized housing project under R. A. No. 7279, per certification issued by the Housing and Land Use Regulatory Board (HLURB); and that as owner-developer of the said project, your maximum selling price per house and lot do not exceed P150,000.00. 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: (1) Project-related income taxes; (2) Capital gains tax on raw lands used for the project; xxx xxx xxx E. B. Villarosa & Partner Co., Ltd. is exempt from the payment of capital gains tax on the conveyance of 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 said property is to be applied or is being applied to socialized housing project pursuant to R. A. No. 7279. Upon the sale of the socialized housing units (house and lot) or lots only, E. B. Villarosa & Partner Co., Ltd., as owner, shall be exempt from project-related income taxes, and creditable expanded withholding tax prescribed under Revenue Regulations No. 1-90 as amended by Revenue Regulations No. 12-94. It shall be understood that to be tax-exempt, the selling price per lot or house and lot shall not exceed P150,000.00, in accordance with Revenue Regulations No. 9-93 implementing R. A. No. 7279. Accordingly, since you are registered with and certified by the Housing and Land Use Regulatory Board (HLURB) as engaged in socialized housing project pursuant to Republic Act No. 7279, the sale of house and lot package at P150,000.00 or below is exempt from the expanded withholding tax pursuant to Revenue Regulations No. 12-94 amending Revenue Regulations No. 6-85. In this connection, any sale made by E. B. Villarosa & Partner Co., Ltd. to interested parties other than the principal target beneficiaries under Sections 3(t) and 16 of R. A. No. 7279, shall not be entitled to the foregoing tax exemption, should there be non-compliance with any of the since qua non terms and conditions as aforestated, for tax exemption purposes. It is, however, understood that the Certificate Authorizing Registration (CAR) shall only be issued after it is established upon proper verification by the Revenue District Officer (RDO) concerned that, considering the rules on valuation of real property, the actual selling price per sale transaction of the units in this case does not really exceed P150,000.00. However, it is observed that documentary stamp tax is not one of the taxes covered by the tax exemption clause in Sec. 20 of R. A. No. 7279. Such being the case, as Project developer/seller, E. B. Villarosa & Partner Co., Ltd. shall be liable to pay the documentary stamp tax on the document conveying the property imposed under Sec. 196 of the Tax Code as amended, based on the actual consideration paid to it. 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, and/or any of the requirements imposed in this letter are not complied with, then this ruling shall be considered null and void. (BIR Rulings No. 063-95 dated February 13, 1995) cdt Very truly yours, ALICIA P. CLEMENO Assistant Commissioner(Legal Service) By: ALICIA L. TOMACRUZ Head Rev. Executive Assistant (Legal Service)