BIR Ruling No. 004-2017

REPUBLIG OY THF PHILIPPINES

DEPARIMENT OP FInAnCF BUREAU OF INTERNAL REVFNUE

Quezon City

RA7279 BIR Ruling No. 500-2014

C4-C17

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PACIFIC CONCRETE PRODUCTS, INC 15 West Avenue, Quezon City

Attention: PHILIP MARTINT. LOPEZ Vice President Gentlemen:

This refers to your letter dated July 12. 2016 requesting issuance of Certificate of Tax Exemption for the Monkayo Housing Project 3A located at Brgy. Poblacion. known as the "Urban Development and Housing Act of 1992". Monkayo. Compostela Valley pursuant to Republic Act (R.A.) No. 7279. otherwise

Documents submitted show that Pacific Concrete Products Inc. (TIN

Land Subdivision covered by Transfer Certificate of Title (T(T) No. Subdivision Plan Psd-11-029431. being a portion of Lot 4120. Pls-3. Monkayo Pubtic ), is the registered owner of a parcel of (and. identified as I.ot 4120-A of the issued by the Registry of Deeds for Province of Davao Del Norte. The aforesaid property is situated at Brgy. Poblacion. Monkayo. Compostela Valley with an arca of Forty Six Thousand Seven Hundred Sixty One square meters (46.761 sq.m.). more or less.

On Dcccmber 29. 2014, a Memorandum of Agrecmen't (MOA) was executed by and among Pacific Concrete Products, Inc.. as the tandowner/developer. Union Homeowners' Association. Inc., a homeowner's organization registered with the Housing and Land Use Regulatory Board (HLURB). as the beneficiary?. and the National Housing Authority (NHA). as sole national government agency engaged in direct housing production mandated to meet the housing needs of the low and marginal incomc familics and to focus its efforts towards the housing needs of the lowest 30% of the urban population

1 For Development of the Monkayo Housing Project 3. Brgy. Union. Monkayo. Conipostela Valley 2 See Annex list of beneficiaries consisting of thirteen (13) pages

C2O : -12-2017 Pacific Concrete Products. Inc. Monkayo Housing Project 3A Page 2 of 4

Under the MOA, members of Union Homeowners' Association. Inc. shall be

provided by the NHA with a financial grant for the acquisition of 312 developed lots

and financing of the acquisition of completed housing units under the TS Pablo

Rehabilitation Plan (TSPRP) through the Community Initiative Approach Program

(CIAP) of the government in the amount ot I'wo Hundred Twenty Thousand Pesos

(P220.000.00) per house and lot package of 60.00 square meter lot area and a house

floor area of 22.00 square meter Duplex-type model.

On June 22, 2015 and June 26. 2015. Amendment to MOA dated December

29. 2014, the project name was revised as Monkayo Housing Project 3A. Brgy.

Union. Monkayo. Compostela Valley and the name of the Association was revised as

Union Extension Homeowners Association, Inc.

On June 15. 2015, a Contract Agreement was executed by and bctween

Pacific Concrete Products. Inc. and Union Extension Homeowners Association. Inc.

whereby Pacific Concrete Products. Inc. offered its services to the families who are

members of Union Extension Homeowners Association, inc. by delivering 312

developed homclots and completed housing units under the TSPRP.

The purchased developed lots and completed housing units shall be financed

through the CIAP of the NHA for Two Hundred Twenty Thousand Pesos

(P220.000.00) for every developed lot and completed housing unit per family.

On July 29. 2015. Pacific Concrete Products, Inc. and the NHA cxecuted a

Deed of Absolute Salc whereby the former. transferred and conveyed 312 developed

lots with an aggregate area of Eightcen Thousand Nine Hundred Thirty One square

mcters (18.931 sq.m.) portion of the subject property to NHA at an agreed price of

Thirty Four Million Three Hundred Twenty Thousand Pesos (P34,320.000.00).

In reply, please be informed that pursuant to Sections 19 and 20 of Republic

Act (RA) No. 7279. pertinent portions of which state that:

National Housing Authority, being the primary government ugency in "Sec. 19. Incentives for the National Housing Authority. --- The

charge of providing housing for the underprivileged and homeless. shali be exempted from the payment of all fees and charges of uny kind, whether local or national. such as income und reuliy tuxes. All

documents or contracts executed by and in favor of the Nationul Housing Authority shall also be exempt from the payment of documentary stamp tax and registration fees. including fees required

for the issuance of transfer certificutes of title.

socialized housing and further reduce the cost of housing units for the Hous ig. +Sec.2 To encourage greater private sector participation in Incentives for Private Sector Purticipating in Socialized

benefit of the underprivileged and homeless. the following incentives

shall he extended to the private sector:

XXX XXX XXX

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"(d) Exemption from the payment of the following.

( Project-related income tuxes.

(2) Capital Gains Tax:

83 Value-added tax for the project contractor concerned: "

the landowner/developer of properties who sells his properties for use in a socialized

housing project are exempt from the payment of the capital gains tax and project-

related income taxes.

Such being the case, the sale of 312 house and tot packages_on the 18,931

Sq.m. portion of the subiect property coveredby TCT No. by

Pacific Concrete Products, Inc. to NHA is exempt from capital gains tax. project- related income taxes and consequently from withholding tax. (BIR Ruling No. 500- 2014 dated December 29. 2014)

Moreover, pertinent portions of RMC No. 42-01 dated October 5. 2001.

provide, viz.:

XXX XXX XXX

Nutional Housing Authority (NHA) --- The NHA. heing

the primary government ugency in charge of providing housing.for the underprivileged and homeless citizens shall be exempted from the

payment of the following national internal re venue taxes:

in favor of the NHA in connection with socialized housing projects 2 Documentary stamp tax on sales transactions executed hy and

Since Section 19 of R.A. 7279 exenpis "all documents or contructs executed by: and in favor of the NHA." the exemption from documentary stamp tax extends to the other party (either seller or huver) that is dealing or transacting with the NHA.

XXX XXX XXX

The exemption from documentary stamp tax of NHA in connection with any of its socialized housing project extends to the other party (either seller or buyer) that deals or transacts with the NHA. Consequently. since NHA is a party to the sale. no documentary stamp tax shall be due on such sale. either on NHA or the party with which NHA is transacting. Accordingly, the transfer by Pacific Concrete Products. Inc. to NHA of 312 house and lot packages on the 18,931 _.sq.m. portion of the Subject property covered by TCT No. are likewise exempt from documentary stamp tax imposed under Section 196 of the Tax Code of 1997. as amended. (BIR Ruling No. 500-2014 dated December 29, 2014)

Pacific Concrete Products. Inc_Monkayo Housing Project 3A 004m2017 112201

Page 4 of 4

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

pursuant to RA 7279.

Please take note that this ruling is never intended and shall not be construed as

giving authority to the concerned Register of Deeds to effect transfer of the land in the

name of the buyer without the necessary certificate of authority to register issued by

this Bureau. In this regard. this ruling shall be presented to the Revenue District

Office (RDO) concerned in order for the latter to issue the Certificate Authorizing

Registration (CAR) after the submission of the requirements provided under RMO

15-2003.

Moreover, pursuant to Section 20 (d(3 of RA 7279,the sale of 312 house

and lot packages on the 18,931 sq.m. portion of the subject property covered by

goods/articles by Pacific Concrete Products, Inc. shall be subject to VAT, even if the TCT No. shall be exempt from VAT.However, the purchases of

said purchases are to be used for the socialized housing project, since VAT is an

indirect tax which can be passed on by the seller of the goods/services. It shall be

understood that Pacific Concrete Products.Inc. must issue non-VAT official receipts

on its gross receipts from the said socialized housing project.

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, then

this ruling shall be considered null and void.

Very truly yours. Aowour

K-1-JRC Commissioner of Internal Revenue CAESAR R. DULAY 002874