BIR Ruling [UN-240-94]

August 15, 1994 BIR RULING [UN-240-94] Casa Regalia, Inc. Doa Generosa Building EDSA Extension, Pasay City Attention: Ms . Rosario H . Javier General Manager Gentlemen : This refers to your letter dated January 8, 1994 requesting for a ruling that the sale of your properties located at Bo. Salawag, Dasmarias, Cavite, called the San Marino City which includes the areas of San Marino West Phases 1, 2 and 3, and San Marino East to be used as a socialized housing project, is exempt from the payment of income taxes on all income derived from the sale pursuant to Section 20 of R. A. 7279, otherwise known as the Urban Development and Housing Act of 1992. Records disclosed that Casa Regalia, Inc. was formed for the main purpose of catering to the underprivileged and homeless citizens in the urban and in resettlement areas by making available to them decent housing at a very affordable package price of P150,000.00. Investigation conducted by Revenue District No. 54 in Trece Martirez City disclosed that you have substantially complied with the requirements of the law; that the would-be occupants of the land are qualified beneficiaries, underprivileged and homeless citizens; that you were certified by the Municipal Engineer of Dasmarias, Cavite, as engaged in developing socialized housing projects in the City of San Marino situated at Bo. Salawag, Dasmarias, Cavite; and that you on July 02, 1993, you were issued a License to Sell No. 93-07-754 by the Housing and Land Use Regulatory Board for the sale of salable lots/units/lots with units in San Marino West at a minimum selling price of P150,000.00 per house and lot. 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; xxx xxx xxx" the conveyance of Casa Regalia's socialized housing units to qualified beneficiaries at the maximum cost of P150,000.00 per lot, or house and lot, is exempt from the payment of project-related income taxes. However, it is observed the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Sec. 20 of R. A. 7279. Such being the case, as Project-developer/seller, Casa Regalia 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. In this connection, any sale made by Casa Regalia, Inc. to interested parties other than the principal target beneficiaries under Section 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 sine qua non terms and conditions as aforestated, for tax exemption purposes. 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 Ruling No. 393-93 dated October 1, 1993) cdtech Very truly yours, ALICIA P. CLEMENO Acting Assistant Commissioner Legal Service