VAT Ruling No. 063-97

October 6, 1997 VAT RULING NO. 063-97 Sec. 4 (B) (w); 54-96, 33-97; 063-97 Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles 30th Floor, Citibank Tower 8741 Paseo de Roxas Makati City, Philippines Attention: Atty . Amado R . Santiago III Gentlemen : This refers to your letter dated 18 September 1997 on behalf of your client, Suntech Realty, Inc. (SUNTECH), requesting confirmation that the sale of a real property by Outdoor Technologies (Philippines), Inc. (OUTDOOR) in favor of SUNTECH shall not be subject to the 10% value-added tax. cdt It is represented that OUTDOOR is a domestic corporation engaged in the business of manufacturing, buying, selling and dealing, at wholesale, sports specialties, athletic equipment, leisure wear and camping equipment; that in December 1995, OUTDOOR purchased from Carmelray Development Corporation two (2) parcels of land located at Carmelray Industrial Park, Calamba, Laguna, which are intended for its manufacturing plant; that because of disagreement with its foreign joint-venture partner, OUTDOOR did not proceed with building a manufacturing plant on the said properties; that from the time of purchase, said properties remained idle nor were leased-out; that now, OUTDOOR intends to sell the properties to SUNTECH, hence, this request. In reply, please be informed that Section 4(B)(w) of Revenue Regulations No. 6-97, amending Revenue Regulations No. 7-95, provides: "SEC. 4. Exemptions . . . . xxx xxx xxx "(w) The following sales of real properties are exempt from VAT, namely; (1) Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business;" xxx xxx xxx Inasmuch as the two (2) parcels of land of OUTDOOR are not primarily held for sale to customers or held for lease in the ordinary course of trade or business, then this Office is of the opinion that the sale of the said properties by OUTDOOR in favor of SUNTECH is not subject to the 10% value-added tax. (BIR Ruling No. 54-96 dated May 14, 1996; BIR Ruling No. 33-97 dated April 1, 1997). This ruling is being issued to Suntech Realty, Inc. based on the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different, then this ruling be considered null and void. aisadc Very truly yours, SIXTO S. ESQUIVIAS IV OIC, Assistant Commissioner (Legal Service)