Paco Catholic School

April 16, 2010 BIR RULING [DA-(VAT-009) 050-10] 109 (P); Sec. 4.109-1 (B) (p), RR 16-2005; DA-(VAT-011) 270-08 Paco Catholic School 1521 Paz Street, Paco, Manila Attention: Msgr. Domingo A. Cirilos, Jr. School Director Gentlemen : This refers to your letter requesting, in effect, for exemption from the payment of value-added tax (VAT) on the sales by Paco Catholic School ("PCS" for brevity) of residential condominium units for a consideration less than the threshold amount as provided for under Section 109 (P) of the Tax Code of 1997, as amended. It is represented that the PCS, a non-stock, non-profit educational institution owned and operated by the Roman Catholic Archdiocese of Manila (RCAM), has been granted by the Housing and Land Use Regulatory Board (HLURB) a Development Permit on July 10, 2007, to build an Eleven (11) Storey PCS Residences, a condominium project for the employees of PCS; that the said condominium project is located at 1285 Calixto Dyco Street, Lucban, Paco, Manila; that the HLURB has certified the same to be a socialized housing project; that the said housing project has been conceived by the school administration of PCS, through its Board of Trustees, in order to provide its employees an affordable and decent homes; that the condominium units will be sold at a cost of Php360,000 and Php540,000 for 20 square meters and 30 square meters, respectively, payable for fifteen (15) years with a monthly amortization of Php4,400 and Php6,600 with no equity nor deposit; and that the condominium units will be sold to the teachers and employees of PCS at cost of construction, thus, PCS will not earn any income from the sale thereof. In reply thereto, please be informed that Section 4.109-1 (p) of RR 16-2005 as amended, provides, viz. : aDcHIC "SEC. 4.109-1. VAT-Exempt Transactions. xxx xxx xxx (P) The following sales of real properties are exempt from VAT, namely: . . . (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; . . . ." From the foregoing, considering that the consideration per residential condominium unit sold by PCS to its employees does not exceed the threshold of Two Million and Five Hundred Thousand Pesos (P2,500,000.00), the said sales by PCS of residential condominium units therefore are exempt from the 12% VAT imposed under Sec. 4.106-1 of RR 16-2005, as amended. (BIR Ruling No. DA-(VAT-011) 270-08 dated October 2, 2008) 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, ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) GREGORIO V. CABANTAC Deputy Commissioner