Phil-Ville Development & Housing Corporation

February 5, 2007 BIR RULING [DA-066-07] 109; DA-481-2005 Phil-Ville Development & Housing Corporation 17 Gov. Pascual Avenue, Malabon Metro Manila Attention: Mrs. Cecilia Que Yabut Vice-President Gentlemen : This refers to your letter dated August 18, 2006 requesting for a ruling relative to the VAT status of the sales of Phil-Ville Development & Housing Corporation. (Phil-Ville) It is represented that Phil-Ville is primarily engaged in real estate developing and selling wherein residential house and lot are valued ranging from P477,000.00 to P706,350.00 and residential lots are valued ranging from P239,000.00 to P1,040.000.00; that it is registered with the Securities and Exchange Commission (SEC) and with the Bureau of Internal Revenue with Taxpayers Identification No. 000-724-909-000; and that the primary purpose for which Phil-Ville is incorporated is "to acquire, hold and dispose of, by purchase, sale, exchange, mortgage, lease or otherwise, conditionally or absolutely, real estate or any interest therein, either as principal or as real estate broker." In reply, please be informed that Section 4.109-1 (B) (p) (4) or Revenue Regulations No. 16-2005 provides, viz: "Sec. 4.109-1 VAT-Exempt Transactions. xxx xxx xxx (B) Exempt transactions. (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from VAT: xxx xxx xxx (p) The following sales of real properties are exempt from VAT, namely: xxx xxx xxx (4) Sale of residential lot valued at One Million Five Hundred Thousand Pesos (P1,500,000.00) and below, or house & lot and other residential dwellings valued at Two Million Five Hundred Thousand Pesos (P2,500.000.00) and below where the instrument of sale/transfer/disposition was executed on or after July 1, 2005; Provided, that amounts stated herein shall be adjusted to its present value using the Consumer Price Index, as published by the National Statistics Office (NSO); Provided, further, that such adjustment shall be published through revenue regulations to be issued not later than March 31 of each year; If two or more adjacent residential lots are sold or disposed in favor of one buyer, for the purpose of utilizing the lots as one residential lot, the sale shall be exempt from VAT only if the aggregate value of the covered by separate titles and/or separate tax declarations, when sold or disposed to one and the same buyer, whether covered by one or separate Deed of Conveyance, shall be presumed as a sale of one residential lot." Inasmuch as Phil-Ville is primarily engaged in real estate selling, the unit price of which is at minimum of P477,000.00 for residential house & lot and a minimum of P239,400.00 for residential lots, the same falls within the VAT-exempt transactions provided for under Section 4.109-1 of RR 16-2005, implementing Section 109 (w) of the Tax Code of 1997, as amended by RA 9337, provided that the sale of the residential lot is valued at One Million Five Hundred Thousand (P1,500,000.00) and below, and the sale of the house and lot and other residential dwellings is valued at Two Million Five Hundred Thousand (P2,500,000.00) and below, provided further that the sale of two or more adjacent residential lots, sold or disposed in favor of one buyer, does not exceed P1,500,000.00. ESaITA 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, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service