BIR Ruling [DA-049-02]

March 21, 2002 BIR RULING [DA-049-02] 57 (B), 188 005-2002 Marbibi and Associates Law Office Suite 200-A Regina Bldg., Escolta, Manila Attention: Atty. Teresita C. Marbibi Counsel for Panview Properties, Inc. Gentlemen : This refers to your letter dated January 25, 2002 requesting for exemption from the payment of creditable withholding tax and documentary stamp tax in connection with the conveyance of the common areas of Pan View Properties, Inc. in favor of Annapolis Wilshire Plaza Condominium Association, Inc. It is represented that Annapolis Wilshire Plaza Condominium Association, Inc. is a non-stock, non-profit corporation organized for the purpose of holding title to managing, and maintaining the common areas of the project pursuant to Republic Act No. 4726, otherwise known as the Condominium Act; that by virtue of the abovementioned conveyance by Pan View Properties, Inc. the condominium association shall thereafter hold the title to the land, as well as the common areas of the building including the land, as well as facilities of the project; and that in as much as the conveyance does not involve any consideration and is not connected with a sale made to the condominium association, it is your contention that no income will be realized from the said transaction. In reply, please be informed that since the Deed of Conveyance above-mentioned was made without consideration and is not in connection with a sale made to the condominium corporation, no taxable income will be generated and a fortiori , no 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 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 is not subject to the 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 Code. However, the notarial acknowledgment to said deed of conveyance is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. ( BIR Ruling DA-005-2002 dated January 17, 2002 ) 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