Exemption from Creditable Withholding Tax - Sale of Certain Real Properties

March 30, 1990 BIR RULING NO. 047-90 50 (b) 000-00 047-90 Gentlemen : This refers to your letter dated January 23, 1990 requesting confirmation of your opinion to the effect that the sale of certain real properties by TNC Manufacturing Corporation to your client, Philippine Alfa Silk Flowers Enterprises, Inc. is not subject to the creditable withholding tax under Revenue Regulations No. 12-89 as amended by Revenue Regulations No. 1-90. casia It is represented that the Deed of Sale was executed and consummated between the parties on December 12, 1989 and was notarized before Notary Public Jacqueline Theresa J. Romero on December 13, 1989; that the corresponding transfer tax thereon as required under Sec. 7 of the Local Tax Code was paid on December 11, 1989 at Trese Martirez City, Cavite; that the corresponding documentary stamp tax thereon in the amount of P20,000 was paid on December 13, 1989 at Trese Martirez City; and that the only reason why the registration of the transfer of ownership from TNC Manufacturing Corporation to Philippine Alfa Silk Flowers Enterprises, Inc. was not completed, despite the fact that the Deed of Absolute Sale was presented to the Register of Deeds of Trese Martirez City on December 13, 1989 was because your liaison man who brought the papers to Trese Martirez City ran out of funds after paying substantial amount of documentary stamp tax and other fees and taxes in connection with another deed of sale. In reply thereto, I have the honor to inform you that all sales, exchange or transfers of real properties (whether classified as ordinary or capital asset) by corporations, consummated on or after January 1, 1990, are subject to the creditable withholding tax. However, in the case of individuals, estates, trusts, trust funds or pension funds only sales, exchanges or transfers of real properties classified as ordinary assets, consummated on or after January 1, 1990 are subject to the creditable withholding tax. Moreover, the date of notarization appearing on the Deed of Sale shall be considered prima facie the date of consummation of the contract of sale. (RMC No. 7-90) Considering that documentary evidence submitted by you disclosed that the Deed of Absolute Sale executed by and between TNC Manufacturing Corporation and Philippine Alfa Silk Flowers Enterprises, Inc. was notarized on December 13, 1989; that the corresponding transfer tax thereon was paid on December 11, 1989 at Trese Martirez City; that the corresponding documentary stamp tax thereon in the amount of P20,000 was paid on December 13, 1989 at Trese Martirez City; and that the said Deed of Absolute Sale was actually presented before the Office of the Register of Deeds at Trese Martirez City on December 13, 1989 and entered as Entry No. 9782 in the Entry Book of the Office of the Register of Deeds of Trese Martirez City, the aforementioned sale of certain real properties by TNC Manufacturing Corporation to Philippine Alfa Silk Flowers Enterprises, Inc. is not subject to the 5% creditable withholding tax pursuant to Revenue Regulations No. 1-90. Very truly yours, (SGD.) JOSE U. ONG Commissioner