SGV & Co.

July 10, 2008 BIR RULING [DA-(C-004) 022-08] 58 (A); 200 (C); DA-064-2008 SGV & Co. 6760 Ayala Avenue Makati City Attention: Atty. Romulo S. Danao, Jr. Partner, Tax and Transfer Pricing Services Gentlemen : This refers to your letter dated April 23, 2008 requesting for a ruling authorizing the member companies of the Star Group of Companies (Star Group) to file the creditable withholding tax (CWT) and the documentary stamp tax (DST) returns and pay the CWT and DST due on their respective purchases of portfolios of non-performing assets (NPAs) composed of real and other properties owned and acquired (ROPOAs) at the Revenue District Office (RDO) No. 44, Taguig, where the member companies are registered. aHESCT It is represented that Star (SPV-AMC) Philippines Inc., Star Two (SPV-AMC) Inc., Star Three (SPV-AMC) Inc., StarProperties (SPV-AMC) Philippines Inc., Star Asset Management ROPOAS, Inc. and Onshore Strategic Assets (SPV-AMC) Inc. are member companies of the Star Group (collectively referred herein as the "member companies"); that the member companies are all registered with RDO No. 44, Taguig mainly as special purpose vehicles/asset management companies which acquire portfolios of NPAs; that the ROPOAS in the portfolio are usually located in different towns and provinces and are within the jurisdiction of various RDOs; that, given the number of properties involved in the acquisition of portfolios by each of the member companies, it would be extremely cumbersome and time consuming for the member companies to file the CWT and DST returns and pay the tax due at every RDO where the properties are located; and that time, resource and manpower constraints would make it difficult, if not impossible, for the member companies to meet the deadlines if they were to file the returns and pay the taxes at the different RDOs. HAEDCT In reply thereto, 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 at Source. 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 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 sale of real properties, Revenue Regulations (RR) No. 8-98 issued on September 2, 1998 provides for the time and place of payment of the CWT on the sale, transfer or exchange of real property classified as ordinary asset, viz. : ISaCTE "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." 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. However, inferring from Section 58 (A) of the Tax Code, exceptions from the foregoing rules on the place of payment of the tax and filing of the return may be taken under certain circumstances. In BIR Ruling No. DA-064-2008 issued on February 1, 2008, this Office allowed the taxpayer therein to file the returns and pay the tax on its acquisition of several assets at the RDO having jurisdiction over its principal office. The relevant portion of the said ruling is herein quoted as follows: "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 P12, 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).' 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 ROPOAs covered by the Deed of Sale between DBP and P12, 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." ADCEaH On the filing of the DST return and payment thereof, Section 200 (C) of the Tax Code of 1997 states that: "Section 200. Payment of Documentary Stamp Tax. (C) Where to File. Except in cases where the Commissioner otherwise permits, the aforesaid tax return shall be filed with and the tax due shall be paid through the authorized agent bank within the territorial jurisdiction of the Revenue District Office which has jurisdiction over the residence or principal place of business of the taxpayer." In view of the foregoing and the Star Group's reasonable representations, this Office hereby authorizes the "member companies" to file their CWT and DST returns and pay the CWT and DST due on its purchase of portfolios of NPAs, if any, at RDO No. 44, Taguig where they are registered, provided that the payments will be credited to the appropriate RDOs where the properties are located for purposes of issuance of the respective CARs. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered as null and void. CcEHaI Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service