BIR Ruling No. 015-65

April 12, 1965 BIR RULING NO. 015-65 The Regional Director Regional District No. 5 Bureau of Internal Revenue Soriano Bldg., Manila S i r : This has reference to your letter dated October 5, 1964 requesting a ruling on whether or not the Development Bank of the Philippines is a real estate dealer and its income tax return accompanied by a certificate issued by an Independent Certified Public Accountant. One of the functions of the Development Bank of the Philippines as provided in Republic Act No. 3147 is to grant loans against security of real estate and/or other acceptable assets. This is effected by a mortgage contract executed by the debtor-mortgagor giving his property (real or personal) as security to the Development Bank of the Philippines in consideration of certain amount lent by the latter. The Development Bank of the Philippines, in the ordinary course of business, acquires title to mortgaged properties either by judicial or extrajudicial foreclosure proceedings. During the intervening period when the Development Bank of the Philippines is in possession of said properties and before its disposition according to law, the same are offered for rent. Although the act of selling and renting of such property by the said Bank is merely incidental to its principal business nevertheless, by engaging in such activity it becomes a real estate dealer pursuant to Section 194(s) of the Tax Code which provides, viz: ". . . Any person shall be considered as engaged in business as real estate dealer by the mere fact that he is the owner or sublessor of property rented or offered to rent for an aggregate amount of four thousand pesos or more a year . . ." Under the above definition it is not necessary that the renting or leasing of property be the principal business of the taxpayer. It is enough that he is the owner or sublessor of property rented or offered for rent for an aggregate amount of P4,000.00. The Development Bank of the Philippines is a government owned corporation engaged in business for profit. As, such it is subject to tax just like any private corporation (Republic Act No. 104). For engaging in business as a real estate dealer it is subject to the fixed tax prescribed in Section 182(3)(s) of the Tax Code. Considering that the Development Bank of the Philippines is a government corporation and its books of accounts are continuously audited by the General Auditing Office, the income tax return filed by it need not be accompanied by a Certified Public Account's certificate prescribed by Section 8-A of Revenue Regulations No. V-1, as amended, otherwise known as the Bookkeeping Regulations. Very truly yours, (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue