Request for Authority to Secure Tax Clearance Certificate and Certificate Authorizing Registration

January 5, 2000 BIR RULING NO. 005-00 245 000-00 005-2000 Filinvest Land, Inc. 173 P. Gomez St., San Juan Metro Manila Attention: Mr . Efren M . Reyes Senior Vice President Gentlemen : This refers to your letter dated February 21, 1998 requesting for an authority to secure Tax Clearance Certificate (TCL) and Certificate Authorizing Registration (CAR) from Revenue District Offices of the Bureau of Internal Revenue having jurisdiction over the places where your sales (branch) offices are located. LexLib It is represented that Filinvest Land, Inc. (FLI) is a publicly listed domestic corporation with principal office located at 173 P. Gomez St., San Juan, Metro Manila; that it is principally engaged in the business of acquiring, developing, leasing and selling real estate; that its real estate projects include socialized and affordable housing packages, middle end and high end houses and/or lots, industrial estates, leisure projects and condominiums; that most of the real estate projects of FLI are located in Metro Manila, Cavite, Laguna and Batangas; that also, FLI has projects in Cebu and Davao to capitalize on the fast economic growth in these areas and to extend its operations to the Visayas and Mindanao regions; that to serve the needs of its projects as well as its customers, FLI will set-up branch offices in Cebu City and Davao City; that these branch offices will conduct operations of the business as an extension of the principal office of FLI in San Juan; that marketing, selling, accounting and administrative activities will be done at the branch offices; that at present, FLI obtains the TCL and CAR on the sale of its real estate projects from the BIR District Office in San Juan in compliance with Revenue Memorandum Order No. 17-97 dated April 1, 1997 which requires that every sale of real property, the TCL/CAR shall be issued by the Revenue District Officer where the seller-transferor is registered or is required to be registered; that for the branch offices and project in Cebu and Davao, it will be difficult for FLI to still comply with the requirement of paying all taxes related to the sale of a house and lot or lot only and securing the TCL/CAR with Revenue District Office where its head office is located for the following reasons: 1. FLI will have branch offices in Cebu and Davao, which will be capable of handling the task of securing the TCL/CAR for its sales. These branch offices will have personnel who are well versed with the requirements of securing the Tax Clearance as well as transferring the ownership of real estate. 2. FLI will incur additional and considerable cost in transporting the documents to the head office for submission to the BIR for the purpose of securing tax clearances. There is also a risk that these documents may be lost in transit when transported. If the tax clearance will be obtained in Cebu or Davao, then the additional costs and risk of loss can be avoided. 3. The tax clearance can be processed faster by the BIR District Offices in Cebu and Davao. The revenue officials who will approve the TCL/CAR are more familiar with the location of the properties and they can better evaluate each application for tax clearance. 4. Most of the buyers of FLI for its real estate projects in Cebu and Davao are residents of these area. All sales documents as well as the titles, tax declarations and certificates will be kept in the branch offices. It will be inconvenient for FLI and its buyers if documents will have to be sent to the principal office for the processing of the tax clearance. 5. The government will not be unduly prejudiced if there is a change in the venue of paying the creditable withholding tax and documentary stamp tax and securing the tax clearances. The same amount of taxes will be paid regardless of the venue. In reply, please be informed that under Section 3 of Revenue Regulations No. 8-98, the capital gains tax return shall be filed by the seller within thirty (30) days following each sale or disposition of realty classified as capital asset located in the Philippines including pacto de retro sales and other forms of conditional sales by individuals, including estates and trusts and payment made to an Authorized Agent Bank (AAB) located within the Revenue District Office having jurisdiction over the place where the property being transferred is located. On the other hand, under Section 5 of Revenue Regulations No. 8-98, the creditable withholding taxes deducted and withheld by the withholding agent/buyer on the sale, transfer or exchange of real property classified as ordinary asset by individuals or corporations shall be paid by the withholding agent/buyer upon filing of the return with the Authorized Agent Bank (AAB) 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. LibLex Moreover, Section 6 of Revenue Regulations No. 8-98 provides that upon presentation of the capital gains tax return or creditable withholding tax return with a bank validation evidencing full payment of the capital gains tax or the creditable withholding tax due on the sale, exchange, transfer, barter or other disposition of real property classified as capital or ordinary asset, as the case may be, the Revenue District Office where the property being transferred is located shall issue the corresponding Tax Clearance Certificate (TCL) or Certificate Authorizing Registration (CAR) for the registration of the real property in favor of the transferee. Such being the case, your request for an authority to secure Tax Clearance Certificate (TCL) and Certificate Authorizing Registration (CAR) from the Revenue District Office having jurisdiction over the place where your sales (branch) offices are located is hereby granted provided that the said place is likewise the place where the realty sold is located. Otherwise, the above stated rules stated on Revenue Regulations No. 8-98 shall be followed. 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