BIR Ruling [DA-021-02]

February 14, 2002 BIR RULING [DA-021-02] 57 (B) DA-019-2000 Cityland Development Corporation 2/F & 3/F Cityland Condominium 10 Tower I 6815 H.V. dela Costa Street, Ayala Avenue North Makati Attention: Ms. Ma. Lilia T. de Guzman Senior Legal Counsel Gentlemen : This refers to your letter dated November 9, 2000 requesting for confirmation of your opinion that the conveyance by Cityland Development Corporation of the parking space for the disabled which forms part of the common areas of the Cityland Wackwack Royal Mansion, Inc. is exempt from the creditable withholding tax and documentary stamp tax. It is represented that Cityland Development Corporation (Cityland) is the owner and developer of a condominium project known as Wack Wack Royal Mansion located at Wack Wack Road, Wack Wack Greenhills East, Mandaluyong City; that on September 24, 1999, Cityland executed a Deed of Assignment covering the common areas and administration room in favor of Cityland Wack Wack Royal Mansion, Inc. (Condominium Corporation) covered by Transfer Certificate of Title No. 63870 and Condominium Certificate of Title No. 9336 respectively, both of the Registry of Deeds of Mandaluyong; that the assignment was effected to ensure proper maintenance of the condominium facilities/amenities for the common benefit of the members of the association/residents; that on January 11, 2000, BIR Ruling No. DA-019-2000 was issued wherein it was hold that the above-mentioned Deed of Assignment is not subject to creditable withholding and documentary stamp taxes; that it was later learned that a parking for the disabled in the said condominium project which forms part of the common areas of the condominium was erroneously excluded in the Deed of Assignment; and that on September 12, 2000, Cityland and the Condominium Corporation executed another Deed of Assignment for the conveyance of the said disabled parking known as Parking Lot No. 36 and covered by Condominium Certificate of Title No. 9824 of the Registry of Deeds for Mandaluyong. In reply, please be informed that since the above-mentioned Deed of Conveyance is without consideration and is not in connection with a sale made to a condominium corporation, no income was generated and no creditable withholding tax is payable and collectible. In fact, the sale by the developer of condominium units was made in favor of individual unit-owners of the condominium project; and the purpose of the conveyance of the common areas of the condominium is for the management of the project for the common benefit of the unit-owners. (Section 10, R.A. No. 4726) Moreover, Section 185 of the Revised Documentary Stamp Regulations (Regulations No. 26) provides that "conveyances of realty, not in connection with a sale, to trustees or other persons without consideration are not taxable." In view thereof, this Office is of the opinion as it hereby holds that the aforesaid Deed of Conveyance executed by and between Cityland Development Corporation and Cityland Wack Wack Royal Mansion, Inc. is not subject to the creditable withholding tax prescribed by Section 2.57(B) of Revenue Regulations No. 2-98 as amended by RR 6-2001, as amended, implementing 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 Tax Code of 1997. However, the notarial acknowledgment to said deed of conveyance is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the said Code. (BIR Ruling No. DA-019-2000 dated January 11, 2000) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Acting Assistant Commissioner Legal Service