BIR Ruling [DA-095-97]

March 13, 1997 BIR RULING [DA-095-97] Asset Privatization Trust 10th Floor, BA-Lepanto Building 8747 Paseo de Roxas Makati City Attention: Mr . Melvin S . Mallen Trust Legal Assistant Gentlemen : This refers to your letter dated December 26, 1996 requesting for the issuance of Certificate Authorizing Registration (CAR) by the Revenue District Office No. 18 relative to the sale of two (2) parcels of land formerly owned by Philippine Cotton Corporation (PCC), Philcotton Bldg., Shaw Blvd., Pasig City, by the Asset Privatization Trust (APT) to the Cotabato Cotton Corporation (CCC) so that title to said "Properties" can be registered by the Register of Deeds in the name of CCC. It is represented that PCC is a government-owned and controlled corporation identified for privatization by the President of the Philippines on July 22, 1987; that it is the owner of three (3) parcels of land located in Barrio Sulit, Polomolok, South Cotabato, more particularly described as Lot No. 2411, Lot No. 2398 which is covered by TCT No. 32075 of the Registry of Deeds for the Province of South Cotabato and Lot No. 2397, with a total land area of Two Hundred Thirty Eight Thousand Two Hundred Forty Two (238,242) square meters; that on a portion of the aforedescribed lands, specifically within a contiguous area of Forty Nine Thousand Eight Hundred Forty Eight (49,848) square meters, are buildings and other ground improvements, machinery and equipment, furniture and fixture, more particularly listed and described on pages five (5) to thirty two (32) of the APT Asset Specific Catalogue for GOCC 03-C/GC-261 Philippine Cotton Corporation collectively referred to as the "Properties"; that the Asset Privatization Trust (APT) a government agency created pursuant to Proclamation No. 50, as amended was designated by the Committee on Privatization (COP) as the disposition entity for PCC; that on December 6, 1991 the COP approved the offer made by the Cotton Industry Investors Group to purchase the "Properties" for P28,700,000.00; that on December 26, 1991, the Cotton Industry Investors Group duly incorporated themselves into a Philippine corporation under the corporate name of Cotabato Cotton Corporation (CCC) and registered with the Securities and Exchange Commission; that CCC assumed all the rights and obligations of the Cotton Industry Investors Group relative to its offer to purchase said "Properties;" that on May 5, 1992 a Deed of Absolute Sale was executed by and between PCC and CCC whereby for and in consideration of Twenty Eight Million Seven Hundred Thousand Pesos (P28,700,000.00) Philippine Currency, PCC sells, transfers and conveys all of its rights, title and interests over the "Properties" to CCC; and that PCC paid the creditable expanded withholding tax of P1,435,000.00 under C.R. No. 1324181576 dated May 22, 1992 and documentary stamp tax of P287,000.00 under C.R. No. 24665046 dated May 5, 1992. In reply, please be informed that pertinent provisions of Revenue Memorandum Order No. 34-96 amplifying Revenue Regulations No. 13-85, as amended by Revenue Regulations No. 11-96 dated August 7, 1996, regarding the preparation and issuance of the Tax Clearance Certificate (TCL) or the Certificate Authorizing Registration (CAR) for registration of real estate transactions, provide as follows: xxx xxx xxx "3. CAPITAL GAINS TAX. "Since as aforestated, Revenue Regulations No. 11-96 was issued in line with the computerized tax administration, the following procedures in the processing of capital gains tax returns and issuance of the corresponding TCL/CAR shall be followed until the mass roll out of all the thirteen computerized systems in 1997: xxx xxx xxx "3.4. If the property is located in a non-Pilot RDO and the taxpayer is registered with a pilot-RDO, the pilot-RDO where the taxpayer is registered shall issued the TCL. "3.5. If the taxpayer is registered with a non-pilot RDO and the property is located in another non-pilot RDO, the non-Pilot RDO where the property is located shall issue the CAR. "3.6. If the document of transfer or assignment involves several properties located in different areas, some in the Pilot RDO and others in Non-Pilot RDOs, and the taxpayer is registered in a Pilot-RDO, the Pilot RDO where the taxpayer is registered shall process the application and issue the TCL. A copy of the Taxpayer Record Update (TRU) duly accomplished by the taxpayer shall be furnished to the Non-Pilot RDO where property transferred is located. Certified true copies of the TCL issued by the Pilot RDO shall be issued to the taxpayer for purposes of registration of the properties located in different areas." In the case of transfers made by corporation, the same procedure shall also apply, that is, for purposes of registration of transfers of real properties in favor of the transferee by the Register of Deeds, if the computerized tax system is already operational in the RDO where the transferor is registered, the Tax Clearance (TCL) shall be issued by the said RDO. Otherwise, it shall be the RDO having jurisdiction of the place where the property are located that shall issue the Certificate Authorizing Registration (CAR). Currently, the computerized tax systems have been initially rolled-out in the following revenue district pilot areas: RDO No. 30 Binondo RDO No. 32 Quiapo, San Miguel, Sta. Mesa, Sampaloc RDO No. 33 Ermita, Intramuros, Malate RDO No. 52 Paraaque RDO No. 81 Cebu North District Such being the case, since the computerized tax system is not yet operational in the RDO at Pasig, neither in the RDO at Cotabato, the Certificate Authorizing Registration (CAR) of the "Properties" in favor of Cotabato Cotton Corporation shall be issued by the RDO of South Cotabato having jurisdiction of the place where the said properties formerly owned by Philippine Cotton Corporation are located. (BIR Ruling No. 123-96 dated November 21, 1996) This will, therefore, authorize the Revenue District Officer, RDO No. 111, South Cotabato, to issue the Certificate Authorizing Registration of the properties in favor of Cotabato Cotton Corporation upon presentation of the evidence of payment of the creditable expanded withholding tax and documentary stamps tax. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue