Philippine Investment Two (SPV AMC), Inc.

February 1, 2008 BIR RULING [DA-064-08] Section 58 (A); BIR Ruling No. DA-373-00 & 011-2005 Philippine Investment Two (SPV AMC), Inc. Unit 1615, Ayala Tower One & Exchange Plaza cor. Ayala Avenue and Paseo de Roxas Makati City Attention: Mr. Norman H. Macasaet Managing Director Gentlemen : This refers to your letter dated July 26, 2007 requesting that you be allowed to remit the creditable withholding tax (CWT) and pay the documentary stamp tax (DST) on the real properties owned and acquired (ROPAs) covered by the Deed of Sale between Development Bank of the Philippines ("DBP" for brevity) and Philippine Investment Two (SPV-AMC), Inc. ("PI2, Inc." for brevity) at Revenue District Office (RDO) No. 50-South Makati, where the Buyer is registered. As represented, on or around August 2, 2007, DBP executed in favor of PI2, Inc. deeds of absolute sale over certain non-SPV eligible ROPAs. The 188 ROPAs covered by the deeds of absolute sale are located in the different towns and provinces and are within the tax jurisdiction of various RDOs. PI2, Inc.'s place of business is Makati City and it does not maintain any branch or extension office. Considering the number of ROPAs involved in the transaction, it would be time-consuming and extremely cumbersome for PI2, Inc. to pay the aforementioned taxes at the RDOs where each of the properties is located. PI2, Inc. wants to ensure that it pays the relevant taxes accurately and in a timely manner. However, due to resource, manpower and time constraints, PI2, Inc. would have difficulty meeting the September 5, 2007 deadline for the payment of DST and the September 10, 2007 deadline for the remittance of the CWT, if it were to pay them at the different RDOs. PI2, Inc. would like to avoid paying interest and penalties which may be imposed for late payment. DEHaTC In reply, please be informed that Section 58 (A) of the Tax Code of 1997, as amended provides "SEC. 58. Returns and Payment of Taxes Withheld at Source . (A) Quarterly Returns and Payments of Taxes Withheld. Taxes deducted and withheld under Section 57 by withholding agents shall be covered by a return and paid to, except in cases where the Commissioner otherwise permits, an authorized agent bank, Revenue District Officer, Collection Agent, or duly authorized Treasurer of the city or municipality where the withholding agent has his legal residence or principal place of business, or where the withholding agent is a corporation, where the principal office is located." However, in the case of sale of real properties, like the herein ROPAs, Revenue Regulations (RR) No. 8-98, amending RR Nos. 11-96 and 2-98, issued on September 2, 1998 provides for the time and place of payment of the creditable withholding tax (CWT) on the sale, transfer or exchange of real property classified as ordinary asset, viz .: "SEC. 5. Time and Place of Payment of Creditable Withholding Tax. Creditable withholding taxes deducted and withheld by the withholding agent/buyer on the sale, transfer or exchange of real property classified as ordinary asset, shall be paid by the withholding agent/buyer upon filing of the return with the Authorized Agent Bank (AAB) located within the Revenue District Office (RDO) having jurisdiction over the place where the property being transferred is located within ten (10) days following the end of the month in which the transaction occurred. Provided, however, that taxes withheld in December shall be filed on or before January 25 of the following year." HaAISC Thus, requiring the subject withholding agent to pay/remit the CWT with the AAB located within the RDO having jurisdiction over the place where the property being transferred is located. But in a similar case involving the same parties and kind of transaction, the Commissioner of Internal Revenue approved in a letter dated May 31, 2007 the proposed payment scheme of PI2, Inc. as follows: "In view of the foregoing, this Office hereby approves your proposed payment scheme, whereby the CWT returns, as well as the payment thereof, be made through a lump-sum payment at Revenue District No. 50, South Makati, provided that the payments will be credited to the appropriate RDOs where the property is located for purposes of issuance of the respective Certificates Authorizing Registration (CAR)." THAICD Accordingly, this Office has no reason to depart from the pronouncement of the Commissioner in its May 31, 2007 letter and hereby allows you to remit the CWT and pay the DST on the ROPAs covered by the Deed of Sale between DBP and PI2, Inc. at RDO No. 50-South Makati which has jurisdiction over the principal office of the withholding agent provided that the payments will be credited to the appropriate RDOs where the property is located for purposes of issuance of the respective CAR. 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 as null and void. EAIcCS Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service