Primex Realty Corporation

March 19, 2009 BIR RULING [DA-(C-040) 160-09] DA 225-03 Primex Realty Corporation Ground Floor, Richbelt Terraces No. 19 Annapolis Street Greenhills, San Juan Metro Manila Attention: Atty. Ericson O. Ang Legal Affairs Manager Gentlemen : This refers to your letter dated February 10, 2009 stating that in 1991, Spouses Emiliano and Ailyn Mendoza (Spouses Mendoza) with Tax Identification Number (TIN) 151-946-169 contracted to purchase Suite 8-C Greenrich Mansion Condominium covered by CCT No. 8584 and covered by Tax Declaration No. E-001-05791; that Primex Realty Corporation (Primex) is a corporation organized and existing under the laws of the Philippines with TIN 042-000-188-772; that on December 18, 1991, a Contract to Sell was executed by Primex in favor of Spouses Mendoza; that the contract stipulates that payment of the purchase price shall be divided into several payments which is embodied in the Contract to Purchase and to Sell; that following routine procedure, Primex declared the sale on its 1991 income tax return and paid for the income taxes due thereon even before complete receipt of the full purchase price; that since Spouses Mendoza did not complete the payment in 1991 and also did not require the corporation to immediately effect the registration of the CCT in their name, they inadvertently omitted the payment of the withholding taxes to secure the Certificate Authorizing Registration (CAR) from the Pasig BIR Office; that it was at the end of last year that the buyers have requested Primex to execute a Deed of Sale and to effect the registration of the CCT in their favor; and that considering that the income taxes for the sale constitute more than the withholding taxes due on the transaction, and said income taxes were duly declared and paid for the taxable year 1991 before the actual and complete receipt of the purchase price by Primex, you posit that there is a substantial compliance with the withholding tax requirement. Based on the foregoing representations, you now request for confirmation of your opinion that since the income taxes for the sale constitute more than the withholding taxes due on the transaction, and said income taxes were duly declared and paid for the taxable year 1991 before actual and complete receipt of the purchase price is deemed substantial compliance with the withholding tax requirements and that the corresponding CAR may now be issued without requiring the payment of the aforesaid tax. In reply thereto, please be informed that this Office had already ruled on the matter when it said in BIR Ruling No. DA 225-2003 dated July 16, 2003, as follows ". . . since the gain realized by Primex Realty Corporation from the sale has already been reflected in its income tax return in the year of sale, there is substantial compliance with Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94, implementing Section 50 (b) of then Tax Code, as amended. Such being the case, the RDO can now issue the corresponding CAR without requiring the payment of the creditable withholding tax by the buyer." Considering that the above-cited ruling is in all fours similar to the instant case, this Office hereby confirms your opinion that since the income tax was duly declared and paid for the taxable year 1991 even before the actual and complete receipt of the purchase price by the said Corporation, there is substantial compliance with the withholding tax requirements. Consequently, the RDO concerned may now issue the corresponding CAR so that title to the property may now be transferred in the name of Spouses Emiliano and Ailyn Mendoza. HaTDAE 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 null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service