BIR Ruling No. 358-2022

REPUBLIC OF THE PHILIPPINES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE

Republic Act (RA) No. 7279) CTE No. NSH-623-2020: as amended by RA No. 10884 BIR Ruling No. 426-20123 BIR Ruling No. 011-2018; N9H- 3.5 8 - 2 0 2 2 AUG_0 4.2022

Diliman, Quezon City NATIONAL HOUSING AUTHORITY Quezon Memorial Elliptical Road

Attention: Mr. Luis S. Bacamante Regional Manager NCR-South Sector

Gentlemen:

exemption from tax 'relative to the Titling Works project:of the NHA, pursuant to Republic Act transfer of ownership of certain parcels of Iand from the Republic of the Philippines (ROP) / Manila International Airport Authority (MIAA) to the National Housing Authority (NHA), and (RA) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992." This refers.to your request for exemption from any taxes that may be incurred on the

Background:

by PP No. 391 dated May 28, 2003, certain parcels of land situated in Parafiaque City and Pasay City, titled in the name of the ROP under the administration of MIAA, have been proclaimed and declared the same open for disposition to actual occupants by the NHA, to wit: Pursuant to Presidential Proclamation (PP) No. 144 dated January 18, 2002, as amended

Transfer Certificate of Title (TCT) No/s. Lot No/s. (sq. m.) Area Sitio Puyat Compound. Bo. Pilipino Puto!, Paraaque City Sitio Maligaya, Parafiaque City Parafaque City Parafaque City Sitio Sta. Rita, Maricaban 3, Sitio San Juan. Pasay City Pasay City Location

the notarization of the said Deeds, the NHA, through public bidding, hired various Contractors were ail acknowledged by NHA on June 29, 201 8 and by, MIAA on July 31, 2018. Foilowing for Titling Works herein described, as follows: through the execution of three (3) Deeds of Conditional Assignment of Real Property, which residents, MIAA has agreed to convey the said parcels of land under the said PP to the NHA To facilitate the disposition of the subject proclaimed area to bonafide and qualified

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Contractor/s Scope of Works : TCT No/s. Lot No/s. Location

C.G. Garcia Realty and Development Land Surveying BAC Surveying Dimaculangan and Titling Corporation Services Services Segregation Survey. Individual Titling Individual Titling Titling Works and Individual Survey and Works Works Maricaban 3, Pasay Bo. Pilipino Putol, Sitio Maligaya. Parafiaque City Paranaque City Paranaque City Sitio San Juan, Parafaque City Sitio Sta. Rita, Compound, Pasay City Sitio Puyat City

to value-added tax (VAT) pursuant to Section 109 (1)(P) of the National Internal Revenue of Real Property executed by and between the MIAA and the NHA over the above-described Code (Tax Code) of 1997, as amended. documentary stamp tax pursuant to Sections 19'and 20 of RA No. 7279, as amended by RA No. 10884 (Balanced Housing Development Program Amendments) dated July 17, 2016 and parcels of land are not subject to income tax/capital gains tax/expanded withholding tax, and In reply, please be informed that the afore-mentioned Deeds of Conditional Assignment

of legal basis. Section 20 of RA No. 7279, as amended, states that: mentioned Contractors on the conduct of Titling Works, the same cannot be granted for lack However, with regard to the'exemption of taxes that may be incurred by the above-

homeless, the following incentives shall be extended to the private sector: further reduce the cost of housing units for the benefit of the underprivileged and "Sec. 20. Incentives for the Private Sector Participating in Socialized Housing. - To encourage greater private sector participation in socialized housing and

XXX Xx X (d) Exemption from the payment of the following:

(1) Project-related income taxes;

XXX YX XXX (3) Value-added tax for the project contractor concerned;

(Emphasis and underscoring supplied) xXX XXX XXX

housing" as follows: In relation thereto, Section 3(r) of RA No. 7279, as amended, defines "socialized

"Sec. 3. Definition of Terms. --For purposes of this Act:

XXX xXX Xx (r) _"Socialized housing" refers to housing programs and projects covering include sites and services "development, long-term financing, liberalized private sector for the :underprivileged and homeless citizens which shall houses and lots or homelots only undertaken by the Government or the

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terms on interest payments, and such other benefits in accordance with the provisions of this Act; " (Emphasis and underscoring ours)

In this case, the above-mentioned Contractors. have been engaged by the NHA to undertake the individual titling of the above-describediparcels of land. It must be noted that a purely Iand titling works do not fall within' the definition of a "socialized housing" under Section 3 (r) of RA No. 7279, as amended. It is apparent that the tax incentive provision granting exemption from project related income taxes is limited to project contractors on their construction and development of houses and lots. or homelots only, with a view to reduce the cost of housing units for the benefit of.the underprivileged and homeless. Thus, the service fees to be paid by the NHA to the aforesaid Contractors shall-be subject to. income tax and consequently, to withholding tax.

VAT at the rate of five.percent (5%) of the gross payment thereof, pursuant to Section 114 (C) exemption from VAT for the project contractor concerned, was already repealed by Section 86 (tt) and (uu) of RA No. 10963: Hence, the service"fees to be paid by the NHA to the said Contractors shall be subiect to VATiand the NHA: before making payment on account of the services to performed by the Contractors conicerned. shall deduct and withhold a creditable of the Tax Code of 1997, as amended. Moreover,:Section 20 (d) (3) of RA:No. 7279, as amended by RA No. 10884, on

taxpayer to establish his.right toexemption beyond reasonable doubt2. In the case of Mactan Cebu International Airport Authority v. Marcos 3 construed against the taxpayer. Exemptions are never presumed and the burden is upon the It should be remembered that laws and statutes granting tax exemptions are strictly 3 the Supreme Court held:

juris: against the taxpayer and liberally in favor of the taxing authority. A claim. of exemption from tax payments .must be mistaken.. Elsewise , stated, taxation is the rule, exemption government and liberally in favor of the taxpayer. But since taxes nation, the law.frowns against exemptions from taxation and statutes. granting the exemptionis: are thus construed strictissimi clearly shown and based on language in the law too plain to be therefrom is the exception." are what we pay for civilized society,.or are the lifeblood of the "Accordingly, tax statutes must be construed strictly against the : Please be guided accordingly.

Very truly yours.

Mh T

K- Commissioner of Internal Revenue LILIACATRIS GUILLERMO 000277

2 Dimaampao, Japar B., Tax Principles and:Remedies, Second Edition (2005). 3 G.R. No. 120082, 11 September i996, 261 SCRA 667. : BIR Ruling Nos. 011-2018 dated January 10, 2018 and 426-2012 dated Juine 25, 2012. **

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