Whether the Homeowners Development Corporation is Subject only to the 0% Creditable Withholding Tax Rate on Its Sale of Lots Considering that the Sale per Lot Therein Does Not Exceed P500,000.00

February 7, 1994 BIR RULING NO. 036-94 50 (b) 275-90 036-90 Homeowners Development Corporation 154 Katipunan Ave., St. Ignatius Village Quezon City Attention: Ms . Denia P . Acorda Accountant Gentlemen : This refers to your letter dated March 16, 1993 stating that you are a real estate Company and owner of Panorama Hills Subd. located in Cupang, Antipolo, Rizal; that the said subdivision is registered with the Housing and Land Use Regulatory Board (HLURB); and that in support thereof you have attached with your said letter the following documents: cdtech Certificate of Registration License to Sell Development Permit CREBA Certificate of Membership Based on the foregoing representations you now request in effect for a ruling as to whether you are subject only to the 0% creditable withholding tax rate on your sale of lots at Panorama Hills Subdivision, Cupang, Antipolo, Rizal, considering that your sale per lot therein does not exceed P500,000.00. 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 1-90 implementing Section 50(b) of the Tax Code, as amended, to be entitled to the lower creditable withholding tax rate of 0% the vendor corporation should comply with the following requirements: (1) the vendor must be habitually engaged in real estate business, certified as member by the Chamber of Real Estate and Builders Association, Inc. (CREBA); (2) the vendor must be registered with and certified to as engaged in low-cost housing projects by the Housing and Urban Development Coordinating Council (HUDCC)/Housing and Land Use Regulatory Board (HLURB). However, the presentation of the copies of the Certificate of Registration and License to Sell for subdivision or condominium project issued by HLURB shall be sufficient proof for the purpose of the required HUDCC/HLURB Certification in the regulations (Revenue Regulations No. 12-89, as amended by Revenue Regulations No. 1-90; Revenue Memorandum Circular No. 16-90); and (3) the consideration for the sale of the lot or house and lot per transaction does not exceed P500,000.00. Such being the case, and since you have been duly certified by CREBA to be its member, habitually engaged in the real estate business and have been issued with the corresponding Certificate of Registration and License To Sell by the Housing and Land Use Regulatory Board (HLURB) and the sale of the lots on your said subdivision project (Panorama Hills Subdivision, Cupang, Antipolo Rizal) per Deed of Sale shows a consideration of less than P500,000.00 per lot, which consideration is subject, of course, to proper verification by the Revenue District Officer (RDO) under whose jurisdiction the project or realty is situated, this Office is of the opinion as it hereby holds that your sales of lots in your aforenamed subdivision project (Panorama Hills Subdivision, Cupang, Antipolo, Rizal) are subject to the lower creditable withholding tax rate of 0% pursuant to Revenue Regulations No. 1-90 implementing Section 50(b) of the Tax Code, as amended. It is, however, understood that the Certificate Authorizing Registration (CAR) shall only be issued after it is established upon proper verification by the RDO concerned that considering the rules on valuation of real property, the actual selling price per sale transaction of the lots in this case does not really exceed P500,000.00. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue