Sunly Properties, Inc.

October 2, 2008 BIR RULING [DA-(VAT-011) 270-08] 109 (P); RR 16-2005; Sec. 4.109-1 (B) (p) Sunly Properties, Inc. Rm. 1414, State Center Building 333 Juan Luna Street, Binondo Attention: Atty. Arnold M. Corporal VP for Legal & Administration Gentlemen : This refers to your letter dated July 16, 2008 requesting confirmation that sales by Sunly Properties, Inc. ("Sunly" 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, are exempt from value-added tax (VAT). ISHCcT It is represented that Sunly is a domestic corporation organized and existing under Philippine laws; that it is engaged in the business of "buying and selling real properties, construction of buildings, houses, condominium units/buildings and the like, either for commercial, industrial and/or residential purposes for its own use, for lease and the like or any businesses allied to the above"; that as a developer of real estate projects, Sunly and its projects are also registered with the Housing and Land Use Regulatory Board (HLURB); that one of Sunly's projects that is registered with the HLURB is the "329@ Armstrong" condominium projects (the "Project"); that the said project consists of a five (5) storey residential condominium building with twenty-seven (27) residential condominium units; that the selling price of the residential condominium units varies from a low of P785,000.00 to a high of P1,805,000.00; that when a buyer of a residential condominium unit purchases a unit on installments, he/she shall be required to execute a Contract to Sell with the company; that the price applicable to the unit purchased shall be indicated in the box section found in Section 5 of the Contract to Sell; that once the unit has been fully paid, or if the buyer pays the entire purchase price on cash basis, a Deed of Absolute Sale shall be executed by Sunly in favor of the buyer, which shall likewise indicate the price applicable to the unit purchased in the consideration clause of the Deed of Absolute Sale; and that in no case shall the purchase price for a unit exceeds the amount P2,500,000.00. In reply thereto, please be informed that Section 4.109-1 (p) of RR 16-2005 as amended, provides, viz. : "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 Sunly does not exceed the threshold of Two Million and Five Hundred Thousand Pesos (P2,500,000.00), the said sales by Sunly of residential condominium units therefore are exempt from the 12% VAT imposed under Sec. 4.106-1 of RR 16-2005, as amended. 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. IcTEAD Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service