DDC Land, Inc.

July 9, 2008 BIR RULING [DA-(VAT-001) 018-08] R.A. 7279; RR 11-97;S-20-038-2006; S-20-017-2007; S-20-012-2008 DDC Land, Inc. 14th Floor, Unit No. 6 Marbella I Condominium Roxas Boulevard, Pasay City Attention: Ms. Ma. Conchita Misa OIC-Finance Division Gentlemen : This refers to your letter dated May 20, 2008 requesting for exemption from value-added tax (VAT) pursuant to the provisions of Republic Act (R.A.) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". From the documents submitted, it appears that DDC Land, Inc. (formerly, Dry Dock Corporation) is a domestic corporation engaged in the business of developing low cost housing projects since year 2001; that on March 3, 2008, the Office of the Sangguniang Panlungsod of the City of Santa Rosa, Laguna and its City Mayor granted a Development Permit, through the City's Kapasiyahan Blg. 54-2008, to DDC Land, Inc. to develop a residential subdivision project known as "Santa Rosa Garden Villas III (Phase 3)", including an Alteration Permit of Site Development of Santa Rosa Garden Villas III (Phase 1 and 2); that said development project shall be constructed on a parcel of land with an area of 122,902.76 square meters situated in Barangay Ibaba, Aplaya and Caingin, City of Santa Rosa, Laguna; that pursuant to Kapasiyahan Blg. 54-2008 issued by the City of Santa Rosa, Laguna, DDC Land, Inc. shall be the developer of a low cost housing project known as "Santa Rosa Garden Villas III (Phase 3)", including an Alteration Permit of Site Development of Santa Rosa Garden Villas III (Phase 1 and 2); and that said project was certified by the City of Santa Rosa, Laguna through its City Mayor as a low cost housing project intended for the underprivileged and homeless. In reply, please be informed that Section 109 (P) of the Tax Code of 1997, as amended by R.A. 9337, provides: EacHSA "(P) Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business, or real property utilized for low-cost and socialized housing as defined by Republic Act No. 7279, otherwise known as the Urban Development and Housing Act of 1992, and other related laws, residential lot valued at One million five hundred thousand pesos (P1,500,000) and below, house and lot, and other residential dwellings valued at Two million five hundred thousand pesos (P2,500,000) and below: Provided, That not later than January 31, 2009 and every three (3) years thereafter, the amounts herein stated shall be adjusted to their present values using the Consumer Price Index, as published by the National Statistics Office (NSO) ;" On the other hand, Section 3 (r) of R.A. 7279 provides that socialized housing refers to "housing programs and projects covering houses and lots or homelots only undertaken by the Government or the private sector for the underprivileged and homeless citizens which shall include sites and services development, long term financing, liberalized terms on interest payments and such other benefits . . . ." Accordingly, as developer of a low cost housing project known as the Santa Rosa Garden Villas III (Phase 3), including the alterations in the Site Development of Santa Rosa Garden Villas III (Phase 1 and 2), DDC Land, Inc. is exempt from VAT, which shall include sites and services development, long term financing, liberalized terms on interest payments pertaining to the said project. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered as null and void. cSIADH Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service