BIR Ruling No. 315-2016

REPUBLICOFTHE PHILIPPINES

DFPARIMENTOF FINANCE

BUREAUOFINTERNALREVENUE

Quezon City

RA 7279

BIR Ruling No.127-2015

#315-2016 6-28-2016

LAK-K BUILDERS CO. Units 606&609 Jocfer Bidg Commonwealth Avenue.Quezon City

Attention: MICHAEL ANGELO F.KALLOS Vice President/General Manager

Gentlemen:

This refers to the letter dated December 8.2015 of Felicisimo F. Lazarte,Jr.

Group Manager, Northern and Central Luzon Management Office of the National

Housing Authority (NHA),requesting on behalf of LAK-K BUILDERS CO.for tax

exemption on the latter's low-cost housing project. Pandi Residences 3 Resettlement Project located in Brgy.Mapulang Lupa. Pandi.Bulacan,pursuant to Republic Act RA) No.7279.otherwise known as the Urban Development and Housing Act of

1992

Documents submitted show that LAK-K BUILDERS CO. with Tax

the Securities and Exchange Commission (SEC with SEC Registration No. Identification Number is a General Partnership duly registered with

that it is a real property developer habitually engaged in the business of

developing and constructing housing subdivisions that LAK-K BUILDERS CO.is

the registered owner of the following lots, selected and identified by the various Local Government Units in Metro Manila and favorably endorsed by the Municipal

Government of Pandi as the permanent resettlement site of the additional 700 informal

settler families (ISFs under Batch 3 living in danger areas affected by calamities. clearing of waterways. esteros and infrastructure projects of the government within the

Metro Manila:

TCT No. Area (sq.m. 35,339

Total 113,130 26.873 26.823 24,095

Formerly.TCT No. Formerly.TCT No Formerly.TCT No Formerly.TCT No. 5 Formerly. TCT No. Formerly.TCT No (M M) 042405

#315-2016

Lak-k Builders Co/Pandi Residences 3 Resettlement Project Page2of6 6-28-2016

Approach Program CIAP) of the National Housing Authority (NHA)(TIN and completed housing unit per ramily. PR3HOAI a homeowner's organization registered with the Housing and Land Use BUILDERS CO.has agreed to sell to PR3HOAI's individual members the developed lots. including the completed housing units thereon under the Community Initiarive LAK-K BUILDERS CO.and Pandi Residences 3 Homeowner's Association,Inc. Regulatory Board (HLURB with Registration No. On October 10,2014.a Contract Agreementwas entered into by and between for for every developed lot wherebvLAK-K

settler families living in danger areas,affected by calamities and those affected by the clearing of waterways, esteros and infrastructure projects of the government in Metro the NHA, as the lead agency in the implementation of the National Resettlement ensure the timelypeaceful and orderly relocation and resettlement of the informal Programs of the government,executed four4)Memoranda of Agreement (MOAs) to Manila. landowner/developer/constructor.the members of PR3HOAI.as the beneficiaries,and On various dates LAK-K BUILDERS Co.. as the

the National Resettlement Program of the government in the amount not to exceed financing shall be provided by the NHA with a financial grant through the CIAP under Under the MOAs,members of the PR3HOAI who are qualified for NHA per housing unit, respectively. per lot per family and

following lots: Absolute Sale whereby the former transferred and conveyed to the latter portions of the On various dates.LAK-K BUILDERS CO.and the NHA executed Deeds of

Date of Deed of Absolute Sale June 15.2015 (DOAS) TCT No. Area SoldNumber of (sq. m.) 21,840 Residential Lots 51410 Batch No. 1-2014

December 1,2015 October 1, 2015 August 27,2015 14,836 14.281 15.544 376 34 3582 2 4 3

TOTAL 66,501 590

Four Memoranda of Agrcement(MOAswere exccuted on November 27,2014,March 2.2015 and i See attached AnnexB(Master List of Beneficiarics consisting of eight 8 pages containing Three See attached Annex DMaster List of Beneficiaries consisting of nine 9 pages containing Ihree Brgv.Mannlang Lupa, Pandi. Bulacan 1 Sc ttached AnnexA(Master List of Beneficiaries consisting of twelve2 pages containing Five Hundred Fourteen (514) beneficiaries) 1See attached Annex CMaster List of Beneficiaries consisting of cight8pages containing Threc Hundred Fifty Eight358beneficiaries Hundred Seventy Six (3 76) beneficiaries) Hundred Forty Two342beneficiaries September 14.2015. Financing the Acquisition of Developed Lots and Completed Housing Units in Pandi Residences 3 per developed lot and er completed housing unit.

042405

Lak-k Builders Co Pandi Residences 3 Resettlement Project Page 3 of 6 #315-2016 6-28-2016

RA No.7279.pertinent portions of which state that In replyplease be informed that pursuant to Sections 19 and 20 of Republic Act

the issuance of transfer certificates of title. Housing Authority shall also be exempt from the payment of documentary stamp tax and registration fees,including fees reguired for charge of providing housing for the underprivileged and homeless.shall be exempted from the payment of all fees and charges of any kind. documents or contracts executed by and in favor of the National National Housing Authority being the primary government agency in whether local or national, such as income and realty taxes. All "Sec. 19. Incentives for the National Housing Authority.-The

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

XX XX XXX

d Exemption from the payment of the following:

(3 2 Value-added tax for the project contractor concerned." Capital Gains Tax; Project-related income taxes;

income taxes. housing project is exempt from the payment of the capital gains tax and project-related the landowner/developer of properties who sells its properties for use in a socialized

of the following lots, to wit: Such being the case, the sale transactions by LAK-K BUILDERS CO.to NHA

3. 4. 376 developed lots under Batch 4 on the 15,544 sq.m. portion of lot covered by 358 developed lots under Batch 3 on the 14,836 sq.m. portion of lot covered by and 514 developed lots under Batch 1-2014 on the 21,840 sq.m. portion of lots TCT No. TCT No. per Deed of Absolute Sale dated June 15,2015 342 developed lots under Batch 2 on the 14,281 sq.m. portion of lot covered by TCT No. covered by'TCT Nos. per Deed of Absolute Sale dated December 1.2015 per Deed of Absolute Sale dated August 27,2015 per Deed of Absolute Sale dated October 1,2015 and

are exempt from capital gains tax, project-related income taxes and consequently from withholding tax.BIR Ruling No.127-2015 dated April 17,2015

42-01 dated October 5,200i,provideviz. Moreover,pertinent portions of Revenue Memorandum Circular (RMC No.No

XXX XX XXX

042405

Lak-k Builders CoPandi Residences 3 Reelement Project Page 4 of 6 325m036 6282016

payment of the following national internal revenue taxes: the primary government agency in charge of providing housing for the underprivileged and homeless citizens shall be exempted from the National Housing Authority (NHA-The NHA.being

Section 19 of RA.7279 exempts "all documents or contracts executed extends to the other party (either seller or buver) that is dealing or transacting with the NHA. favor of the NHA in connection with socialized housing projects. Since by and in favor of the NHA,"the exemption from documentary stamp tax (2 Documentary stamp tax on sales transactions executed by and in

XXX XXX XXX

any of its socialized housing projects,extends to the other party either seller or buyer) no documentary stamp tax shall be due on such sale,either on NHA or the party with that deals or transacts with the NHA. Consequently,since NHA is a party to the sale which NHA is transacting.Accordingly,the sale transactions by LAK-K BUILDERS CO.to NHA of the following lots,to wit The exemption from the documentary stamp tax of NHA, in connection with

2 514 developed lots under Batch 1-2014 on the 21.840 sq.m. portion of lots per Deed of Absolute Sale dated June 15,2015 342 developed lots under Batch 2 on the 14,281 sq.m. portion of lot covered by covered by TCT Nos. and

3. 358 developed lots under Batch 3 on the 14,836 sq.m. portion of lot covered by TCT No. per Deed of Absolute Sale dated August 27,2015

4. 376 developed lots under Batch 4 on the 15,544 sq.m. portion of lot covered by TCT No. and er Deed of Absolute Sale dated October 1,2015

TCT No. per Deed of Absolute Sale dated December 1.2015.

are exempt from the payment of documentary stamp tax under Section 196 of the Tax Code of 1997.as amended.BIR Ruling No.127-2015 dated April 17,2015

housing as defined therein shall also be exempt from the payment of value-added tax VAT.Relative thereto,Section 4.109-1B1p3of'RR No.16-2005 states that Moreover,pursuant to Section 20d3 of RA 7279,the sale of a socialized

general.-"VAT-exempt transactions"refer to the sale of goods or properties andlor services and the use or lease of properties that is not subject to VAT (output tax) and the seller is not allowed any tax credit of VAT (input tax) on purchases. "Section4.109-1.VAT-ExemptTransactions. E (A) In

XX XX X

Subsection (2) hereof, the following transactions shall be exempt from VAT (B Exempt transactions.-1) Subject to the provisions of

XXX XXX XXX

042405

Lak-k Builders Co./ Pandi Residences 3 Resettlement Project Page 5 of 6 333016 6-28-2016

p The following sales of real properties are exempt from VAT, namely.

XXX XXX XXX

(3) under RA No.7279.andother related laws,such as RA No.7835 P225.000.00 or as may from time to time be determined by the Sale of real properties utilized for socialized housing as defined and RA No. 8763, wherein the price ceiling per unii is HUDCCand the NEDA and other related laws....

Socialized housing.and as circularized by Revenue Memorandum Circular No.35 promulgated on October 16.2013 approving thc adjustment of price ceiling for 2014,pertinent portion of which reads: Furthermore pursuant to HUDCC Resolution No.1. Series of 2013

RESOLVED that the price ceiling for horizontal socialized housing be adjusted from P400,000.00to P450,000.00. "THEREFORE BE IT RESOLVED, AS ITIS HEREBY

for horizontal socialized housing shall apply to sale of real properties utilized for thus,beginning December 18.201314.the newly adjusted price ceiling of socialized housing, as defined under R.A.No. 7279 otherwise known as "Urban Development and Housing Actand other related laws such as R.A.No. 7835 otherwise known as the "Comprehensive and Integrated Shelter Financing Act of 1994,and R.A.No.8763,otherwise known as the Home Guaranty Act of 2000

Likewise,Section 2 of R.R.No.17-2001 provides

these Regulations, the following terms shall have the following meaning: "Section 2. XXX Definition of Terms.-As used in XXX XXX

exceed forty percent(40%)of the maximum limit prescribed for promulgated on October 16,2013for a house and lot package subject to periodic adjustment or increase as the Housing and Land Use Regulatory Board (HLURB may effect from time to time. In the case of sale of homelots only, the price shall not the house and lot package." (now P450.000.00 per HUDCC Resolution No.1.Series of 2013 "A socialized housing unit shall not exceed P150.000.00

Residences 5 Resettement Project locatea at Brgy.Mapulang Lupa. Pandi,Bulacan shall be exempt from VAT.However,its purchases of goods/articles shall be subject to Moreover.it shall be understood that LAK-K BUILDERS CO.must issue non-VAT VAT,even if the said purchases are to be used for the socialized housing project, sincc VAT is an indirect tax which can be passed on by the seller of the goods/services. valued at Thus, the sale bv I.AK-K RILDERS CO. toNHA of home lots valued a and belowand house and lot packages and below in Pandi

publication requirement as circularized by HUDCC Memorandum Circular No.01 Series of 2014 HUDCC Reolution No.Serie of 2013 took effct on December 18,2013 afr having satisfied the 042405

Page 6 of 5 Lak-k Builders Co/ Pandi Residences 3 Resentlement Project #315-2016 6-282016

official receipts on its gross receipts from the said socialized housing project. (BIR Ruling No. 351-12 dated May 21,2012)

effect that the same is to be applied or is being applied to a socialized housing project pursuant to RA 7279. shall be annotated by the Register of Deeds having jurisdiction over the property,to the Upon application for exemption,a lien on the title of the subject parcel of land

by this Bureau. In this regard, this ruling shall be presented to the Revenue District Registration (CAR after the submission of the requirement provided under RMO 15- Office (RDO concerned in order for the latter to issue the Certificate Authorizing 2003. giving authority to the concerned Register of Deeds to effect the transfer of the title in the name of the buyer without the necessary certificate of authority to register issued Please take note that this ruling is never intended and shall not be construed as

However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoing facts as represented.

Very truly yours,

Commissioner of Internal Revenue KIM S.JACINTO-HENARES

K-I-JHB 042405 JUN 27 2016