BIR Ruling [UN-255-95]

July 10, 1995 BIR RULING [UN-255-95] Meadowlark Development Corporation 2/F F.I. Ponce Bldg., Pres. Ave. BF Homes, Paraaque, Metro-Manila Attention: Ms . Ma . Cristina L . Maglutac Treasurer Gentlemen : This refers to your letter dated June 23, 1995 requesting in effect, a certificate of exemption from the payment of the withholding tax pursuant to Revenue Regulations No. 12-94, amending Revenue Regulations No. 6-85 otherwise known as the "Expanded Withholding Tax Regulations." cdll It is represented that Meadowlark Development Corporation is a domestic corporation engaged in the business of providing appropriate management and research functions for the development and establishment of agri-business and/or energy related private enterprise, among others, with the view of investing and earning dividends therefrom; that it was incorporated on January 6, 1986; that since then, it is alleged that the corporation has not been earning from its operation due to cause or causes beyond its control; that after having incurred net operations losses for the past two (2) years (1992 and 1993) in business operations, as evidenced by its duly audited financial statements and income tax returns, Meadowlark Development Corporation executed a Deed of Dacion en Pago on September 23, 1994 by transferring its property located in Pampanga to liquidate an obligation in favor of Mr. Frederico Calilung. In reply, please be informed that Section 3(d) of the Revenue Regulations No. 12-94, amending Revenue Regulations No. 6-85 otherwise known as the "Expanded Withholding Tax Regulations", provides that "Section 3. Section 4 of Revenue Regulations No. 6-85 is hereby amended to read as follows: "Section 4. Exemption from Withholding The withholding of tax prescribed in these regulations shall not apply to income payments in the following cases: xxx xxx xxx (d) In the case of a payee who suffered net operating losses during the immediately preceding two (2) tax years; xxx xxx xxx Such being the case, since your company suffered net operating losses during the immediately preceding two (2) tax years, 1992 and 1993, this Office is of the opinion as it hereby holds that transfer of its property located in Pampanga in favor of Mr. Frederico Calilung, is exempt from the creditable withholding tax. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation the facts turned out to be different, then this ruling shall not apply and/or considered null and void. (BIR Ruling No. 126-94, dated August 15, 1994). cdtech Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)