Whether the Vendor Bank of the Parcel of Land is Entitled to the 2.5% Creditable Withholding Tax Instead of 5% on Sales or Transfer of Real Property Pursuant to Revenue Regulations No. 6-85 as amended by Revenue Regulations Nos. 12-89 and 1-90

February 7, 1994 BIR RULING NO. 035-94 50 (b) 000-00 035-94 Mr. Arnaldo P. Vallesfino #5-G 20th Avenue, Murphy Quezon City S i r : This refers to your letter dated April 6, 1993 stating that on March 16, 1993 your sister Armida Vallesfino Mendez purchased a parcel of land situated at Marietta-Romeo Subdivision, Cainta, Rizal covered by TCT No. 592371 from the Philippine Savings Bank for and in consideration of P173,000.00; that the said bank is habitually engaged in real estate business in addition to their present banking business and operations by way of offering for sale to the public their acquired assets (foreclosed real property) and that the aforenamed bank is also accredited and a duly registered member of good standing of the Chamber of Real Estate and Builders' Associations (CREBA), Inc. and listed in the Rooster of Membership submitted to the BIR District Offices. cdt Based on the foregoing representations and documents submitted, you now request a ruling as to whether the vendor bank of the said parcel of land is entitled to the 2.5% creditable withholding tax instead of 5% on sales or transfer of real property pursuant to Revenue Regulations No. 6-85 as amended by Revenue Regulations Nos. 12-89 and 1-90. In reply, please be informed that under Revenue Memorandum Circular No. 7-90 as amended by Revenue Memorandum Circular No. 16-90 clarifying some pertinent provisions of Revenue Regulations No. 12-89 as amended by Revenue Regulations No. 1-90 implementing Section 50 (b) of the Tax Code, as amended, to be entitled to the lower creditable withholding tax rate of 2.5%, the vendor must be habitually engaged in real estate business, that is, it must have at least six (6) real estate transactions during the preceding taxable year, certified as member by the Chamber of Real Estate and Builders' Association, Inc. (CREBA), and is registered with HUDCC/HLURB; However, the presentation of copies of the certificate of Registration and License to sell for a subdivision or condominium project issued by HLURB shall be sufficient proof for the purposes of the required HUDCC/HLURB certification in the aforesaid regulations. (Revenue Memorandum Circular No. 16-90) However, due to the position taken by the HLURB Commissioner that it has no legal basis to require or allow banks to register with it, the third requirement provided in Revenue Regulations No. 1-90, i.e. registration of the bank-seller of foreclosed real properties with the HUDCC or HLURB, shall not be required. In other words, in order that a bank may be entitled to the lower rate of 2.5% creditable withholding tax on sales or transfers of real property on or after March 1, 1990 it only has to be habitually engaged in the real estate business; i.e. , it must have at least six (6) real estate transactions during the preceding taxable year, and it is registered with CREBA. In view thereof, the presentation of the license to sell and the Certificate of Registration from HLURB is dispensed with insofar as banks who meet the above requirements are concerned. (BIR Unnumbered Ruling dated June 29, 1990) cdta Such being the case, and since the Philippine Savings Bank is habitually engaged in the real estate business and is registered with CREBA, the sale by it of the parcel of land situated at Marietta-Romeo Subdivision, Cainta Rizal covered by TCT No. 592371 in favor of your sister Armida Vallesfino Mendez on March 16, 1993 is subject to the lower rate of 2.5% creditable withholding tax imposed under Revenue Regulations No. 1-90 implementing Section 50 (b) of the Tax Code, as amended. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue