BIR Ruling [UN-236-95]

June 27, 1995 BIR RULING [UN-236-95] Freedom To Build, Inc. Social Communication Center Building R. Magsaysay at Santol Sta. Mesa, Manila Attention: Mr . William J . Reyes Executive Director Gentlemen : This refers to your request for a ruling that the sale by Ms. Rufina Gloria Dawisan of her property in favor of the Freedom to Build, Inc., a non-stock, non-profit charitable and religious corporation, to be used for socialized housing project, making available decent housing units at affordable cost to the underprivileged and homeless citizens, is exempt from the payment of capital gains tax pursuant to Section 20 of R.A. 7279, which was approved on March 24, 1992 and published in the March 28, 1992 issue of the Philippine Times Journal and Malaya, newspapers of general circulation. cdll Records disclosed that a property (raw land) situated in a Barrio Caretas, San Jose del Monte, Bulacan with an aggregate area of Thirty Five Thousand Seven Hundred Ninety (35,790) square meters, covered by Transfer Certificate of Title No. T-178405 (M) issued by the Registry of Deeds for the Province of Bulacan is the subject of a Deed of Absolute Sale between the owner, Ms. Rufina Gloria Dawisan, and the Freedom to Build, Inc. represented by its Executive Director, Mr. William J. Reyes, dated June 20, 1994; that the said property is intended for socialized housing project of the Government for the benefit of the underprivileged and homeless citizens as embodied in the Agreement entered into by and between the owner of the raw land and the Freedom to Build, Inc. 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" the conveyance of the aforesaid property covered by Transfer Certificate of Title No. T-178405 (M) in the name of Ms. Rufina Gloria Dawisan, in favor of the Freedom to Build, Inc. 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 a socialized housing project in accordance with the Socialized housing development plan, duly approved by the Housing and Land Use Regulatory Board/Local Government Unit concerned. (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 landowner is liable to pay the documentary stamp tax on the document conveying the property to the Freedom to Build, Inc. imposed under Section 196 of the Tax Code, as amended, based on the actual consideration paid by the government to the landowner. This ruling is issued on the basis of the foregoing representations. However, if upon investigation it will be disclosed that the facts are different and/or if one of the requirements imposed in this letter is not complied with, then this ruling shall be declared as null and void. cd Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)