Whether the Sale of Certain Projects is Subject to the Lower Rate of 0% Creditable Withholding Tax Imposed under Revenue Regulations No. 1-90 Considering that such Projects Meet all the Requirements to be entitled to the Lower Rate of 0% Creditable Withholding Tax

February 7, 1994 BIR RULING NO. 038-94 50 (b) 275-92 038-94 Univac Development, Inc. 2nd Floor, Dao I Bldg., Salcedo St. Legaspi Village, Makati, Metro Manila Attention: Atty . Rene C . Diolosa General Manager Gentlemen : This refers to your letter dated February 15, 1993 stating that the sister corporations, namely: Univac Development, Inc. (UDI) and First Aikka Development, Inc. (FADI) are primarily engaged in land development and lot selling in joint venture with land owners; that initially, you already sought the Honorable Commissioner's favorable ruling relative to the application of the lower rates of 0% or 2.5% creditable withholding tax in one of your univac subdivision project in Baguio City which is at Dreamland Phases I and II at Pico, La Trinidad, Benguet and that it has been your experiences, however, that even with such ruling, the Bureau of Internal Revenue Regional Offices or its Officers refused to acknowledge and apply such ruling in transactions of your other projects which are similarly situated or of the same nature. In other words, similar transactions in your other projects located in Baguio City and Metro Manila were not accorded the 0% exemption from creditable withholding tax despite their meeting the criteria, i.e.,; (1) Certification that you and your project are registered with the Housing and Land Use Regulatory Board (HLURB); (2) Certification of Registration from HLURB for the project subdivision; (3) License to sell from HLURB; (4) Certification from CREBA that the corporations UDI and FADI are registered with CREBA; and (5) Contract To Sell shows that the consideration for the sale of the corporation's property (realty) does not exceed P500,000, to be entitled to the lower rate of 0% creditable withholding tax. cdtech Based on the foregoing representations, you now request a ruling that the sale of your following projects is subject to the lower rate of 0% creditable withholding tax imposed under Revenue Regulations No. 1-90 considering that such project meets all the requirements to be entitled to the lower rate of 0% creditable withholding tax: Project Location Owner Dreamland Manila Bo. Vergara Mandaluyong Univac Dev't Subdivision Metro Manila Inc. & Ruby Industrial Corp. Dreamland Sucat Bo. San Dionisio, Paraaque Univac Dev't Subdivision Metro Manila Inc. & Glorde Enterprises Crystal Dale Crystal Cave, Baguio City First Aikka Subdivision Dev't., Inc. & Eugenio Barredo et. al 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 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. Such being the case, and since you and your sister corporation, FADI are duly certified by CREBA to be its members, 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 said projects per Contract to Sell with the buyers thereof shows a contract price of less than P500,000 per lot, which consideration is subject, of course, to 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 aforenamed projects and including that of your Sister Corporation, FADI, namely: Project Location Owner Dreamland Manila Bo. Vergara, Mandaluyong Univac Dev't Subdivision Metro Manila Inc. & Ruby Industrial Corp. Dreamland Sucat Bo. San Dionisio, Paraaque Univac Dev't. Subdivision Metro Manila Inc. & Glorde Enterprises Crystal Dale Crystal Cave, Baguio City First Aikka Subdivision Dev't., Inc. & Eugenio Barredo et. al are entitled 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 in this connection, that the Certificate Authorizing Registration (CAR) shall only be issued after it is established upon proper verification by the RDO concerned that the actual selling price per sale transaction of the lot or house and lot or project in this case does not really exceed P500,000. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue