SGV & Co.

October 16, 2008 BIR RULING [DA-(C-098) 300-08] DA523-06 SGV & Co. 6760 Ayala Avenue Makati City Attention: Atty. Romulo S. Danao, Jr. Gentlemen : This refers to your letter dated September 1, 2008 stating that Star (SPV-AMC) Philippines Inc., Star Two (SPV-AMC) Inc., Star Three (SPV-AMC) Inc., Star Properties (SPV-AMC) Philippines Inc., Star Asset Management ROPOAS, Inc. and Onshore Strategic Assets (SPV-AMC) Inc. are member companies of the Star Group of Companies (member companies); that these member companies are all registered with the RDO No. 44, Taguig; that the member companies function mainly as special purpose vehicles/asset management companies which acquire portfolios of non-performing assets (NPAs) consisting of real and other properties owned and acquired (ROPOAs or properties); that these properties are eventually sold to third-party buyers; that as part of its sales service, the member companies undertake the processing of all ancillary transactions in the transfer and registration of the real properties as an agent of the buyers; that through this practice, they ensure the remittance of the proper taxes to the government; that the member companies file the creditable withholding tax (CWT) and documentary stamp tax (DST) returns and remit the taxes due thereon on behalf of and in the name of their buyers; that the ordinary procedure requires that the CWT returns be filed and the payment thereof be made at the RDO which has jurisdiction over the place where the property is located; that as for the DST returns, the same shall be filed and payment thereof be made at the RDO where the taxpayer resides; that however, considering that seventy-five percent (75%) of the collective property inventory of the member companies are located outside of Metro Manila and are thus within the tax jurisdiction of various RDOs, the member companies are experiencing difficulties in complying with the prescribed periods for filing and payment of the CWT and DST at the RDOs where the properties are located; and that time, resource and manpower constraints would make it difficult for the member companies to meet the deadlines if they were to file the returns and pay the taxes at the different RDOs where the properties are located. In connection therewith, you now request on behalf of Star Group for authorization so that each member companies will, on behalf of and in the names of the buyers, file and pay the CWT and DST in one RDO, specifically at RDO No. 44, Taguig, where the member companies 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 certificates authorizing registration (CAR). To allow each member company to file the needed returns on time, pay the tax due (if there are taxes due) on time and avoid interests and penalties for late filing and/or payment. In reply thereto, please be informed that Section 58 (A) of the Tax Code of 1997 provides that "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 other 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 is a corporation, where the principal office is located." TAaEIc Corollarily, Section 5 of Revenue Regulations No. 8-98 provides that "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." Finally, Section 200 of the Tax Code of 1997 reads as follows: "SEC. 200. Payment of Documentary Stamp Tax. (B) 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 stressing the rationale of the above-mentioned principles, this Office elucidated the matter in BIR Ruling No. DA523-06 dated August 31, 2006, as follows: ". . . on several occasions, the Commissioner of Internal Revenue granted the request of taxpayers to file tax returns and pay the taxes due thereon outside the jurisdiction of the respective RDOs based on the exigency of the case and to generate immediately the much needed revenues by the Government. HCTDIS In view thereof and since the above proposed centralized payment scheme would prove beneficial to all the parties as it will allow BPHI a less cumbersome filing and payment process, thus, affording convenience to it, and on the other hand, enabling the National Government to improve its cash flow without delay, the proposed centralized payment scheme of BPHI, therefore, is hereby approved. . . ." Accordingly, the above-cited ruling is sufficient ground to allow the member companies to file and pay, on behalf of and in the name of its buyers, the CWT and DST on the sale of the properties at RDO No. 44, Taguig, instead of the RDOs where the properties are located. WHEREFORE, in view of the foregoing, this Office hereby GRANTS authority to the Star Group member companies to file, on behalf of and in the name of its buyers, the CWT and DST returns and pay the CWT and DST due on the sale of the ROPOAs at RDO No. 44, Taguig, where all the member companies 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 disclosed that the facts are different, then this ruling shall be considered null and void. IESAac Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service