Buyer's Payment of Creditable Withholding Tax on Sale of Real Property is for Seller's Account

January 15, 1999 BIR RULING NO. 004-99 57 (B)-000-00-004-99 Mr. Francisco M. Patawaran, Jr. San Nicolas, Bamban, Tarlac S i r : This refers to your letter dated March 20, 1998 stating, in effect, that relative to the sale in your favor of 74 parcels of land covered by Transfer Certificate of Title Nos. 236610 to 236683 inclusive situated in Rivera Subdivision, San Nicolas, Bamban, Tarlac, by Philippine International Commercial Bank (PCI Bank) for and in consideration of Eight Hundred Thousand Pesos (P800,000.00) as evidenced by a Deed of Absolute Sale dated November 21, 1997, you paid the amount of Twenty Four Thousand Pesos (P24,000.00) as creditable withholding tax due on said sale; that in BIR Form 1743-W, the name of the taxpayer was erroneously listed in your name and not in the name of the seller, PCI Bank; and that because of this error, PCI Bank does not want to refund the said amount you paid as the creditable withholding tax liability on said sale unless the said payment is credited in the name of PCI Bank. It is noted that in the Deed of Absolute Sale executed by and between PCI Bank and Mr. Francisco M. Patawaran, Jr. on November 21, 1997, it is stated therein that the vendor (PCI Bank), shall reimburse the amount paid by the vendee (Mr. Francisco M. Patawaran, Jr.) for the creditable withholding tax but such reimbursement shall be limited to three percent (3%) of the purchase price, additional assessments made by the Bureau of Internal Revenue due to zonal valuation of the real properties sold being higher than the purchase price shall be for the account of the vendee, Mr. Francisco M. Patawaran, Jr. In reply, please be informed that under Section 2 of Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94 implementing then Section 50(b) of the Tax Code, as amended [now Section 57(B) of the Tax Code of 1997] insofar as taxable sale, exchange or transfer of real property specified in Section 1(j) of Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94 is concerned, individual buyers not engaged in trade or business are also constituted as withholding agents, but they need not register as such. Such being the case, and since the buyer, Mr. Francisco M. Patawaran, Jr., is the withholding agent in the instant case, hence, pursuant to their agreement, his said payment of the amount of P24,000.00 for the creditable withholding tax due on said sale should therefore be for the account of the seller, PCI Bank, the party liable for the tax due on the said sale transaction. This shall serve as an authority for the Revenue District Officer concerned to make the necessary correction in accordance with this ruling on BIR Form No. 1743-W that was filed by Mr. Francisco M. Patawaran, Jr. reflecting PCI Bank as the seller thereof. cdlex 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.) BEETHOVEN L. RUALO Commissioner of Internal Revenue