BIR Ruling [DA-047-01]

March 22, 2001 BIR RULING [DA-047-01] 27, 57 (B), 188 DA-437-98 Philippine Seven Corporation 7th Floor, The Columbia Tower Ortigas Avenue Mandaluyong City Attention: Atty . Evelyn S . Enriquez Manager, Legal and Corporate Affairs Gentlemen : This refers to your letter dated September 4, 2000 requesting for a ruling that the conveyance of a parcel of land and/or the common and semi-common areas of the Ferguson Park Tower Condominium Corporation by your company, as owner-developer, in favor of Ferguson Park Tower Condominium Corporation is exempt from capital gains tax and documentary stamp tax. It is represented that you are the owner-developer of a condominium project consisting of eight (8) storey building constructed on a parcel of land located at M.H. del Pilar Street corner A. Flores and Guerrero Streets, Ermita, Manila, covered by Transfer Certificate of Title No. 198509; that the above project was developed and completed in accordance with the requirements of the Condominium Act and at present all units therein have been transferred/sold to unit owners; that a management body, Ferguson Park Tower Condominium Corporation; that on the basis and in compliance with the provisions of the Condominium Act, the Deed of Assignment in accordance with the master Deed and Declaration of Restrictions, as amended, was executed between Philippine Seven Corporation and Ferguson Park Tower Condominium whereby you assigned and conveyed the above described parcel of land and the common areas covered by CTC No. 24476 of the condominium project in favor of Ferguson Park Tower Condominium Corporation which accepted the same; and that from the nature of the above conveyance, you are of the opinion that since the above transfer of property was not in connection with a sale as there was no consideration involved, said conveyance is not subject to capital gains tax and documentary stamp tax. In reply, please be informed that since conveyance above-mentioned is without 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. The purpose of the assignment 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) In view thereof, this Office is the opinion as it hereby holds that the aforesaid Deed of Assignment is not subject to the creditable withholding tax prescribed by Revenue Regulations No. 2-98, 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 since there is no monetary consideration in the subject assignment. However, the national acknowledgment to said deed of assignment is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the said Code. AHcaDC 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