Sale, Exchange or Transfer of Real Property Whether Capital or Ordinary Asset by a Corporation Which is Habitually Engaged in the Real Estate Business, shall be Subject to a Creditable Withholding Tax of 2.5% Based on the Gross Selling Price or Total Amount of Consideration or Its Equivalent Paid to the Seller/Owner

March 18, 1994 BIR RULING NO. 078-94 50 (b) 000-00 078-94 E.L. Punsalan & Associates Suite 403, Valgosons Realty Bldg. 2151 Pasong Tamo, Makati Metro Manila Attention: Atty . Eranio L . Punsalan Gentlemen : This refers to your letter dated August 12, and September 15, 1993 stating that your clients, Meridien East Realty and Development Corporation and Meridian Pacific Equities, Inc. sold condominium units the initial payments of which exceeded twenty five percent (25%) of the selling price and the balance thereof payable on installments; and that since the sale is considered a cash sale and not a sale on installment basis, your clients allegedly reflected the income derived therefrom in their income tax return for the year of sale and correspondingly paid the income tax due thereon; and that the following are the condominium units sold on a deferred payment basis: cdti Client's Name Project Unit No. Meridien Pacific Equities LE METROPOLE 101, 102, 105, 301, 304, 501, 503, 504, 604, 701, 702, 703, 903, 904, 1,002, 1,004, 1,101, 1,203, 1,204, 1,502, 1,503, 1,504, 1,603, 1,604, PH1, PH2 & PH3 Meridien East Realty LE TRIOMPHE 301, 302, 406, 703, 805, 907, 1,003, 1,105, 1,204, 1,401, 1,503, 1,504, LPH1 & LPH2 LA MAISON 304, 401, 408 & 506 In connection therewith, you are requesting that the aforementioned sales are not creditable withholding tax on sales, exchanges real property under Revenue Regulations No. 1-90. In reply thereto, I have the honor to inform you that pursuant to Revenue Regulations No. 1-90 sale, exchange or transfer of real property whether capital or ordinary asset by a corporation which is habitually engaged in the real estate business, certified as such by the Chamber of Real Estate and Builders Association, Inc, (CREBA), and who is registered with HUDCC shall be subject to a creditable withholding tax of two and one-half percent (2.5%) based on the gross selling price or total amount of consideration or its equivalent paid to the seller/owner. Revenue Regulations No. 1-90 covers all types of sale, i.e., cash sale, sale on installment basis and sale on a deferred payment basis. Thus, even if the aforementioned sales of your clients' condominium units are on a deferred payment basis, the sales are still subject to the creditable withholding tax under Revenue Regulations No. 1-90 based on their gross selling price. The Certificate Authorizing Registration (CAR) is issued upon presentation by the seller of proof of actual full payment of capital gains tax/expanded withholding tax and documentary stamp tax due on the sale of real property. Such being the case, the aforementioned sales of condominium units, the gross selling price of which has been fully paid as of this date and the gain realized from said sales has been reflected as part of their taxable income in the year of sale, the RDO concerned may now issue the CAR to the seller upon submission of the following: (1) Quarterly ITR or final ITR and receipts of payment of income tax on the year the specified condominium units were reported as part of the Gross Income. (2) The withholding tax payment under RR 1-90 on the initials down payments on said units. (3) Instrument of Sales (4) Breakdown of cash (sales) transaction during the quarter/year. cdta Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue