BIR Ruling [DA-030-97]

January 16, 1997 BIR RULING [DA-030-97] Integral Estates Corporation Cortijos Greenhills Condominium 25 Eisenhower Street San Juan Metro Manila Attention: Mr . Rolando V . Tongco President Gentlemen : This refers to your letter dated August 13, 1996 requesting for a ruling that the transfer of the ownership of a land by the Integral Estates Corporation, owner-developer, to the Nobel Plaza Condominium Corporation, the condominium corporation, is exempt from the payment of the creditable withholding tax and documentary stamp tax. It is represented that the Integral Estates Corporation constructed the Nobel Plaza Condominium Project with 124 condominium units on a lot with an area of 840 square meters covered by TCT No. 196865 located at Valero St., Salcedo Village, Makati City; that Condominium Certificates of Title (CCT) have been issued to the various buyers of the condominium units upon payment of the corresponding documentary stamp tax, creditable expanded withholding tax, transfer tax and registration fees on each sale; that under the Condominium Law (R.A. No. 4726), the developer loses ownership in the land and must transfer the title of the land to the condominium corporation as a common property for the common benefit of all owners; that in your case, you did it by executing a Deed of Assignment in favor of Nobel Plaza Condominium Corporation without any consideration because the value of the land is already included in the purchase price of each individual titled condominium unit. In reply, please be informed that since the Deed of Assignment is without any consideration and is not in connection with a sale made to the condominium corporation, no income was generated and a fortiori , no creditable withholding tax is payable and collectible. In fact, the sales by the developer of condominium units were made in favor of individual unit owners of the condominium project; and 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. No. 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 persons without consideration are not taxable. In view thereof, this Office is of the opinion, as it hereby holds that the aforesaid Deed of Assignment by Integral Estates Corporation of the real property covered by TCT No. 196865, where the Nobel Plaza Condominium Project was constructed, to the Condominium Corporation, is not subject to any creditable withholding tax under Section 50 (b) in relation to Section 24 of the Tax Code, as amended. Neither is it subject to the documentary stamp tax imposed under Section 196 of the Tax Code, as amended. However, the notarial acknowledgment to the said Deed of Assignment is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the Tax Code, as amended by Republic Act No. 7660. (BIR Ruling No. UN-083-894 dated February 23, 1994). cdtech Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)