BIR Ruling No. 026-12

January 12, 2012 BIR RULING NO. 026-12 Revenue Regulations (RR) No. 005-09; 00-000 Solar Entertainment Corporation Century Tower 100, Tordesillas corner H.V. Dela Costa Salcedo Village, Makati City Attention: Mr. Wilson Y. Tieng President Gentlemen : This refers to your letter dated June 10, 2010 requesting for a ruling that the corresponding Certificates Authorizing Registration (CARs) pertaining to the transfer of eleven (11) parcels of land, composing of assets formerly owned by Domestic Satellite Corporation ("DOMAST"), which Solar Entertainment Corporation ("SOLAR") had purchased from the Asset Privatization Trust (APT) through a negotiated bidding be issued by BIR, Pasay although the said parcels of land are located in various localities since all the necessary returns and proper taxes relative to the said purchase were all paid in BIR, Pasay District Office. Based on your representations, as well as from the documents submitted, the facts are as follows: 1. SOLAR is a domestic corporation registered with the Bureau of Internal Revenue on June 30, 1994 with TIN No. 002-927-038-000. It is engaged in the production and distribution of motion picture and video. 2. APT is a government agency created pursuant to Proclamation No. 50 acting as trustee for the Government of the Republic of the Philippines to take title to and possession of, conserve, provisionally manage and dispose of certain non-performing assets of the National Government. 3. On October 20, 2000, the Board of Trustees of APT approved the disposition on a whole lot basis, through negotiated bidding, of the rights, interest and participation of APT in the lands, franchise, buildings, improvements and various machinery and equipment, together with the legal cases affecting the same, formerly belonging to DOMSAT. EIAScH 4. On November 10, 2000, SOLAR submitted in the negotiated bidding the highest offer to purchase APT's rights, interest and participation in the parcels of land covered by Transfer Certificates of Title (TCT) No. 241665, T-26578, (T-24678), 6749, T-57877, Tax Declaration No. 533424, 14174, 14175, 14177, 14179, 14180, T-109702, 5224, T-42237, T-44015, T-44448, T50373, with an aggregate area of Eighty Four Thousand Four Hundred Fifteen (84,415) square meters ("Subject Properties") in the amount of Forty-Two Million Six Hundred Eighty-Eight Thousand Eight Hundred Eighty-Eight Pesos (P42,688,888.00). 5. On November 13, 2000, the APT Board of Trustees approved the sale of the Subject Properties in favor of SOLAR. 6. On November 29, 2000, a Deed of Absolute Sale on the Subject Properties was executed between the Government of the Republic of the Philippines, through it trustee, APT, as vendor, and SOLAR, as vendee. 7. After taking care of the legal cases involving the titles to the Subject Properties, SOLAR filed all the pertinent documents related to the aforementioned sale with the BIR Marikina for the issuance of CARs. Thereafter, the representatives of SOLAR were informed by BIR Marikina that the payment of documentary stamp tax (DST) should have been paid at BIR Pasay where the principal place of business of SOLAR is located. 8. At BIR Pasay, the said representative was asked to pay a penalty for the wrong venue in the amount of P160,083.34 which SOLAR promptly paid on December 24, 2008. 9. SOLAR is now asking the BIR District Office in Pasay City to issue all the CARs for the Subject Properties although the same are located in different provinces on the ground that SOLAR was asked and allowed by the BIR to pay the lump sum amount for DST in only one BIR office in Metro Manila and not in different provinces where the properties are located. 10. In support of this request, SOLAR submitted photocopies of the following documents, to wit: (1) Deed of Absolute Sale; (2) Proclamation No. 50; (3) Administrative Order No. 14; (4) Deed of Transfer; (5) Asset Specific Catalogue for DOMSAT; (6) APT Official Receipt No. 3288425; (7) APT Official receipt No. 3288464; (8) DST Return dated November 29, 2000; (9) Certification from BIR confirming payment of DST dated August 26, 2008. In reply, please be informed that Revenue Regulations (RR) No. 005-09 dated March 16, 2009 expressly provides that the CAR shall be issued by the Revenue District Office where the property being transferred is located, to wit: "Section 5. Issuance of Certificate Authorizing Registration (CAR)/Tax Clearance Certificate (TCL). Upon presentation of the Capital Gains Tax Return or Creditable Withholding Tax Return and Documentary Stamp Tax Return with a bank validation evidencing full payment of the capital gains tax or the expanded creditable withholding tax and documentary stamp tax due on the sale, transfer, barter, exchange or other disposition of real property classified as capital or ordinary asset, as the case may be, the RDO of the revenue district office where the property being transferred is located shall issue the corresponding Certificate Authorizing Registration (CAR) or Tax Clearance Certificate (TCL) for the registration of the property in favor of the transferee. IcDESA xxx xxx xxx The CAR/TCL shall be signed by the Revenue District Officer of the district having jurisdiction over the place where the property is located." (emphasis supplied) Since the aforecited provisions of RR-5-2009 clearly state that it is the Revenue District Officer of the revenue district office where the property being transferred is located who shall issue and sign the corresponding Certificate Authorizing Registration (CAR) or Tax Clearance Certificate (TCL) for the registration of real property in favor of the transferee, the request of SOLAR to secure the respective CARs at Revenue District No. 51 Pasay is hereby denied. Please be guided accordingly. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue