BIR Ruling [DA-494-05]

December 7, 2005 BIR RULING [DA-494-05] Secs. 204 & 230; DA-303-2000; DA-017-01; D4-494-2005 Feloli Realty, Inc. Gen. Luis Street Kaybiga, Caloocan City Attention: Mr. Jose Marie Ramos Gentlemen : This refers to your letter dated September 26, 2005 inquiring in behalf of Feloli Realty, Inc. (FRI), whether or not it can transfer its Tax Credit Certificate (TCC) No. 00002295 in the amount of P19,089,881.45 to interested third party. In reply, please be informed that this Office has ruled that a TCC validly issued pursuant to the Tax Code of 1997 can be transferred or assigned by the owner, provided that the TCC sought to be transferred must not have expired and remains valid in the hands of the original holder pursuant to the provisions of Section 230 of the Code. (BIR Ruling No. DA-017-01 dated February 12, 2001 citing BIR Ruling Nos. 192-99 and DA303-2000). Moreover, please be informed that in order to be valid, the transfer of FRI's TCC to interested third party, must be made in accordance with the conditions and procedures regarding the transferability of TCCs, set forth in Revenue Regulations No. 5-2000, issued on July 19, 2000, which reads: "SEC. 4. Assignment or Transfer. a) Transferability of TCC. Taxpayers with TCCs issued by the BIR in their name hold the same in the concept of an owner. Consequently, BIR-issued TCCs may be transferred in favor of an assignee subject only to the following conditions: (i) The transfer must be with prior approval of the Commissioner or his duly authorized representative who shall verify whether or not the TCC sought to be transferred is still valid in the hands of the original holder. (ii) The transfer should be limited to one transfer only. (iii) The transferee shall use the TCC assigned to him strictly in payment of his direct internal revenue tax liability and in no case shall the same be available for conversion to cash in his hands. b) Assignment Procedures. The transfer or assignment of a TCC from the original holder to his or its assignee shall be subject to the following procedures: (i) The TCC sought to be assigned or transferred shall be presented before the Commissioner or his duly authorized representative for verification. If found to be valid and still with creditable balance, the TCC shall be marked "Valid for Transfer", countersigned by the said officer. (ii) Upon execution of the Deed of Assignment, the transferor shall present the same, together with the original copy of the TCC. (iii) The original copy of the TCC shall still be cancelled even if only a portion of its face value is transferred or assigned, in which case, new TCC(s) shall be issued representing the respective portions pertaining to the transferee(s) and/or the balance remaining for the account of the transferor. (iv) Any TCC issued in favor of the transferee or assignee shall be valid for five (5) years, but subject to the following conditions which must be annotated therein, as follows: 1. Not valid for further transfer; 2. Not valid for cash conversion." Accordingly, FRI may transfer its TCC in accordance with the conditions and procedures as above-stated. Very truly yours, (SGD.) JOSE MARIO C. BUAG OIC, Commissioner of Internal Revenue