BIR Ruling [DA-018-99]

January 11, 1999 BIR RULING [DA-018-99] Las Villas de Valle Verde Condominium Corporation Kaimito Street, Valle Verde II Subdivision Pasig City Attention: Mr . Anthony M . Gonzales President Gentlemen : This refers to your letter dated September 29, 1998, requesting for a ruling that the conveyance of common areas and facilities in the condominium by the owner/developer in favor of the condominium corporation for its maintenance is exempt from the payment of the corresponding taxes. cdpr It appears that you are a non-stock, non-profit domestic corporation duly registered with the Securities and Exchange Commission (SEC) for the maintenance of the common areas and facilities in the condominium, whose members are the condominium owners themselves; that the common areas and facilities are still registered in the name of Conglomerate Developers, Inc., which are covered by TCT Nos. 24188, 24186, 24189, 24184, 24185, 24190 and 24187 of the Register of Deeds for the Province of Rizal; and that several Deeds of Conveyance were executed by Conglomerate Developers, Inc. transferring the said common areas and facilities in your favor without consideration. In reply, please be informed that since the said Deeds of Conveyance are without consideration and are not in connection with a sale made to the condominium corporation, no income was generated and a fortiori , neither capital gains tax nor creditable withholding tax is payable and collectible. The purpose of the conveyance to the condominium corporation is for the management of the project for the common benefit of the unit owners. (Section 10, R.A. 4726) Moreover, Section 185 of the Revised Documentary Stamp Tax Regulations (Regulations No. 26) provides that "conveyances of realty not in connection with a sale, to trustees or other person without consideration are not taxable." In view thereof, this Office is of the opinion as it hereby holds that the aforesaid Deeds of Conveyance are not subject to any creditable withholding tax under Section 57(B) in relation to Section 27 of the Tax Code of 1997. Neither is it subject to the documentary stamp tax imposed under Section 196 of the same Tax Code. However, the notarial acknowledgment to said Deeds of Conveyance are subject to the documentary stamp tax of P15.00, pursuant to Section 188 of the said Tax Code. (BIR Ruling No. UN 083-94 dated February 23, 1994) This ruling is issued on the basis of the foregoing representations. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be declared null and void. cdtech Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)