BIR Ruling [DA-116-99]

February 26, 1999 BIR RULING [DA-116-99] Laguna Properties Holdings, Inc. 4th Floor Makati Stock Exchange Building Ayala Avenue Makati City Attention: Atty. Jim Fondevilla Legal Counsel Gentlemen : This refers to your letter dated February 18, 1999 requesting for our assistance regarding the issuance of the Certificate Authorizing Registration (CAR) on your real estate transactions, the creditable withholding taxes (CWT) of which had been paid prior to the effectivity of Revenue Regulations No. 8-98. It is represented that you were faithfully paying all your CWTs on or before the 10th day of each month at RDO No. 50 South Makati in compliance with the then existing Revenue Regulations before the effectivity of RR 8-98. On September 21, 1998, the effectivity date of RR 8-98, said RDO No. 50 stopped the issuance of your CARs, including for those transactions where you had already paid the CWT at the said RDO prior to the effectivity of RR 8-98 and that you were referred to the RDO-Batangas having jurisdiction over your Batangas and Laguna properties, which, however, denied your request for the issuance of the corresponding CARs thereto on the ground that since you paid the CWT in RDO-South Makati, they said that the CAR should also be issued by RDO-Makati. RDO-Batangas agreed though to process your CAR but on the condition that you have to pay the corresponding penalty for wrong venue. You are now in a quandary as to which RDO really has jurisdiction to issue the CAR on your said real estate transactions. In reply, please be informed that Sections 6 and 8 of Revenue Regulations No. 8-98 provide as follows: HICSTa "Section 6. Tax Clearance Certificate . Upon presentation of the Capital Gains Tax Return or Creditable Withholding Tax Return with a bank validation evidencing full payment of the capital gains tax or the creditable withholding tax due on the sale, transfer, barter, exchange or other disposition of real property classified as capital or ordinary asset, as the case may be, the Revenue District Officer (RDO) of the revenue district where the property being transferred is located shall issue the corresponding Tax Clearance (TCL) or Certificate Authorizing Registration (CAR) for the registration of the real property in favor of the transferee. " "xxx xxx xxx "Section 8. Effectivity Clause . These Regulations shall take effect fifteen (15) days after publication in any newspaper of general circulation." It is clear from the aforequoted provisions of RR 8-98 that in the absence of a Transitory Provision on real estate transactions of the same nature as in your particular case, the RDO of the place where the property being transferred is located shall issue the corresponding Tax Clearance (TCL) or Certificate Authorizing Registration (CAR) upon the effectivity of the said Regulations upon presentation by the taxpayer of the CGT or CWT Return with a bank validation evidencing full payment of the capital gains tax or the creditable withholding tax due on the sale, transfer, barter, exchange or other disposition of the subject real property. Thus, even if the CGT or CWT had been paid in the place where the taxpayer is registered, it becomes mandatory for the RDO having jurisdiction over the place where the property is located to issue the corresponding TCL or CAR, as the case may be, for as long as the conditions set forth under the aforequoted Sec. 6 of RR 8-98 had been complied with. It shall be understood, therefore, that in this particular case, RDO-South Makati, where your CWT had been paid, should officially indorse the said request for the issuance of TCL or CAR to RDO-Batangas which has jurisdiction over the place where the subject properties are located, together with the returns filed and all other pertinent documents related thereto, but without penalizing you for wrong venue because the venue for the payment of the CWT was still correct at the time of your payment thereof since it was still in accordance with the provisions of the then existing revenue regulations on the matter, (i.e., RR No. 11-96, as amended by RR 2-98) before the effectivity of RR 8-98. This ruling is being issued on the basis of your representations. However, if it is found out upon investigation that the facts are different from the said representations, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner