HG III Construction and Development Corporation

February 19, 2009 BIR RULING [SH-(009) 122-09] S20-072-2007 HG III Construction and Development Corporation (Formerly Golden City Engineering and Construction) 3368 Harvard Street, Pinagkaisahan Makati City Attention: Mr. Elmer S. Ceguerra President Gentlemen : This refers to your letter dated February 26, 2008 requesting exemption from the payment of value-added tax (VAT) pursuant to Section 20 of Republic Act (R.A.) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". It is represented that HG III Construction and Development Corporation is a contractor for the development of the 50 hectares resettlement project, Phase III located at Barangay Poblacion, Muntinlupa City; that pursuant to Presidential Proclamation (PP) No. 234 dated August 15, 2002, as amended by PP No. 335 dated February 27, 2003, the 50 hectare portion of the New Bilibid Prison (NBP) reservation was placed under the administration of the National Housing Authority (NHA); that on July 26, 2007, it has entered into a Joint Venture Agreement with the National Housing Authority (NHA); and that the identified 50-hectare NBP site was reserved for socialized housing development pursuant to the instructions of President Gloria Macapagal Arroyo to benefit qualified affected families of the NSLP, Muntinlupa Segment. In reply thereto, please be informed that pursuant to Section 20 of R.A. No. 7279, pertinent portion of which reads: "Section 20. Incentives for Private Sector Participating in Socialized Housing. To encourage greater private sector participation in socialized housing and further reduce the cost of housing units for the benefit of the underprivileged and homeless, the following incentives shall be extended to the private sector: SDAaTC xxx xxx xxx (d) Exemption from the payment of the following: xxx xxx xxx (3) Value-added tax for the project contractor concerned;" as project contractor of NHA, HG III Construction and Development Corporation is exempt from the payment of VAT on its gross receipts from the said project. However, its purchases of goods/articles shall be subject to VAT, even if the said purchases are to be used for socialized housing project, since VAT is an indirect tax which can be passed on by the seller of the goods/services. 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, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service