BIR Ruling [UN-218-A-94]

July 20, 1994 BIR RULING [UN-218-A-94] Mr. Renato R. Ignacio 103 10th Street, New Manila Quezon City S i r : This refers to your letter dated June 14, 1994 requesting for a ruling that the sale of your properties in favor of the Public Estates Authority, a government corporation, to be used as a 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. cdtech Records disclosed that properties (raw lands) situated in Paliparan, Dasmarias, Cavite with an aggregate area of 60,411 square meters, covered by Transfer Certificates of Title Nos. T-436607 and T-436608 issued by the Registry of Deeds for the Province of Cavite are the subject of the Deed of Absolute Sale between the owners, Renato P. Ignacio married to Epifania Crisologo, and the Public Estates Authority, represented by its General Manager, Amado S. Lagdameo, dated June, 1994; that the said properties are intended as additional resettlement/relocation area for squatters in the Financial Center Area, Roxas Boulevard, Manila per certification of the Public Estates Authority dated July 14, 1994, and as embodied in its Resolution No. 1139, 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: "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 projects; xxx xxx xxx the conveyance of the aforesaid properties covered by Transfer Certificates of Title Nos. T-436607 and T-436608 in the name of Mr. Renato R. Ignacio married to Epifania Crisologo, 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 Certificates of Title of the lands to be issued in the name of the corporation shall be caused to be annotated by the Register of Deeds having jurisdiction over the properties, to the effect that the said properties 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 shall be liable to pay the documentary stamp tax on the document conveying the property to the Public Estates Authority imposed under Sec. 196 of the Tax Code, as amended, based on the actual consideration paid by the government to the landowners. aisadc Very truly yours, ALICIA P. CLEMENO Acting Assistant Commissioner (Legal Service)