Whether the Certificate of Redemption Involving a Parcel of Land Executed by PCIBank in Favor of Mr. Antonio A. Muñoz Pursuant to a Compromise Agreement is Subject to the 5% Expanded Withholding Tax

March 7, 1995 BIR RULING NO. 048-95 50 (b) 000-00 048-95 Justice Cecilia Muoz-Palma Quezon City M a d a m : This refers to your letter dated December 21, 1994 requesting our opinion on whether the Certificate of Redemption involving a parcel of land covered by TCT No. S-82514 situated in Paraaque, Metro Manila executed by PCIBank in favor of Mr. Antonio A. Muoz pursuant to a Compromise Agreement submitted by PCIBank, Ms. Fidela M. Muoz and Messrs. Tadeo M. Palma and Antonio A. Muoz relative to Civil Case No. 43879 which was approved by the Court is subject to the 5% expanded withholding tax imposed under Revenue Regulations No. 1-90 implementing Section 50(b) of the Tax Code, as amended. In reply, please be informed that since the Certificate of Redemption allowing the offer of Tadeo M. Palma to redeem for and in behalf of Fidela M. Muoz and Antonio A. Muoz the aforementioned property was result of the Compromise Agreement submitted by the parties and approved by the Regional Trial Court of Pasig, this Office is of the opinion as it hereby holds that the aforementioned transaction is not subject to the creditable withholding tax imposed under Revenue Regulations No. 1-90. Furthermore, it is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code. However, the notarial acknowledgment to said Certificate of Redemption is subject to the documentary stamp tax of P10.00 only pursuant to Section 188 of the Tax Code, as amended by Republic Act No. 7660. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue