Dynamic Realty and Resources Corporation

December 9, 2009 BIR RULING [DA-(C-306) 756-09] Dynamic Realty and Resources Corporation Suite 2203B, 22/F PSE Center East Tower, Exchange Road, Ortigas Center Pasig City Attention: Ms. Marilyn T. Rada Accounting Manager Gentlemen : This refers to your letter dated February 11, 2008 stating that Dynamic Realty & Resources Corporation (Dynamic) is a realty corporation organized and existing under the laws of the Philippines; that at present, the corporation is developing Hampton Gardens Condominiums, a community of condominium projects being developed by phase, located at C. Raymundo Avenue, Maybunga, Pasig City; that of the completed condominium projects almost all the units therein were sold on instalment basis where some of the initial payments during the year of sale exceeded 25% of the selling price while other sales did not exceed 25% of the selling price during the year of sale involving transactions covered by taxable years 2002 up to 2007; that while the buyers failed to withhold the expanded withholding tax on the initial payment made pursuant to Section 30 of Revenue Regulations No. 17-2003, Dynamic paid the expanded withholding taxes and reported the income from these instalment sales and fully paid the corresponding income tax thereon; that the payments were all reflected in the Dynamic's annual income tax returns and substantiated with its annual financial statement, audited and certified by its independent auditor; that the individual buyers are persons not engaged in trade or business who were not aware of the technical distinction between instalment sales and deferred-payment sale; that the income tax return, withholding tax payments and breakdown of sales transactions are attached hereto; and that the total income tax payments made by Dynamic is more than the 6% expanded withholding tax supposedly to be withheld by the buyers pursuant to Revenue Regulations No. 17-2003. Based on the foregoing representations, you now request confirmation of your opinion that the reported income of Dynamic from 2002 to 2007 from the sale of its real properties which has been paid as income tax is more than the 6% of the amount required to be withheld, be deemed substantial compliance with the withholding tax requirements; and that the surcharge, interest and penalty incident to the failure to withhold the creditable withholding tax due on the sale of real properties may be properly waived considering that there is substantial compliance with Revenue Regulations No. 17-2003. In reply thereto, please be informed that since the gain realized by Dynamic from the sale of the real properties since 2002 to 2007 have already been reflected in its income tax returns in the year of sale and paid which is more than the 6% creditable withholding tax to be withheld, this Office holds that there is substantial compliance with Revenue Regulations No. 17-2003, implementing Section 57 (B) of the Tax Code of 1997. Such being the case, the Revenue District Office (RDO) can now issue the corresponding Certificate Authorizing Registration (CAR) without requiring the payment of the creditable withholding tax by the buyer and the corresponding penalties, surcharge and interest. DCIEac 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, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service