VAT Ruling No. 078-01

October 29, 2001 VAT RULING NO. 078-01 Sec. 105 VAT Ruling Nos. 26-97, 334-88, BIR Ruling Nos. 42-89, DA-362-10-23-00, DA-008-01-05-00 Pacific Star Building Condominium Corporation 20th Floor, Pacific Star Building Sen. Gil Puyat Avenue, Makati City Attention: Ms. Marilyn A. Kong PSB-Chief Accountant Gentlemen : This refers to your letter dated July 6, 2000 requesting for the issuance of a non-VAT taxpayer/VAT-exempt taxpayer certificate. It is represented that Pacific Star Building Condominium Corporation is registered with the Securities and Exchange Commission as a non-stock, non-profit condominium corporation; that it was created pursuant to Republic Act No. 4726, otherwise known as the "Condominium Act"; that its primary purpose is to hold in ownership the common areas of Pacific Star Building, to manage, administer, maintain and preserve the same in good and habitable condition, and to promote the welfare and safety of all occupants therein in accordance with the provisions of the Master Deed with Declaration of Restrictions and the pertinent laws thereto. In reply, please be advised that under Section 105 of the National Internal Revenue Code of 1997, VAT is collected upon any person, who in the course of trade or business, sells, barters, exchanges, leases goods or properties and renders service. The phrase "in the course of trade or business" means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a non-stock, non-profit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity. Considering that the Pacific Star Building Condominium Corporation will not sell, barter, exchange, lease any good or property and will not render service for a fee but merely implements the administration of the required services to collect the association dues from the unit owners pursuant to its corporate purpose/s as "trustee" of the fund thereof, it is not subject to VAT on such activity (VAT Ruling Nos. 26-97, 334-88, BIR Ruling Nos. DA-362-10-23-00, DA-008-01-05-00). This ruling, being issued on the basis of the foregoing facts as represented, will constitute as basis for the issuance of a new certificate of registration to Pacific Star Building Condominium Corporation as non-VAT taxpayer by the Revenue District Officer of RDO No. 49-North Makati. 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, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group