BIR Ruling [DA-052-01]

March 27, 2001 BIR RULING [DA-052-01] R.A. 4726; 27 57 (B); 188 DA-305-2000 Justice Hector L . Hofilea (Ret . ) Suite 208 Ermita Center Building, 1350 Roxas Boulevard, Ermita, Manila Dear Justice Hofilea, This refers to your letter dated December 27, 2000 requesting for a confirmatory ruling that the transfer and conveyance of the common areas of the condominium project known as AWIA OFFICE CONDOMINIUM (Condominium Project for brevity), including the land on which it stands, by your client, ADRIAN WILSON INTERNATIONAL ASSOCIATIONS, INC. (AWIA for brevity) in favor of AWIA CONDOMINIUM CORPORATION is exempt from payment of income tax, creditable withholding tax, capital gains tax and documentary stamp tax. It is represented that AWIA CONDOMINIUM CORPORATION (Condominium Corp. for brevity) is a domestic corporation organized and existing under and by virtue of the laws of the Philippines. It is the owner-developer of a parcel of land located at corner Sinag and Libertad Streets, Mandaluyong City, Metro Manila, with an aggregate area of Three Hundred Thirty Two (322) square meters more or less covered by Transfer Certificate of Title No. 9707 of the Register of Deeds for Mandaluyong City (hereinafter referred to as the "Land"). AWIA has developed and established the Condominium Project upon the Land pursuant to the provisions of Republic Act No. 4726, otherwise known as the Condominium Act and in accordance with the terms, conditions, and restrictions provided in the Amended Master Deed with Declaration of Restrictions of the Condominium Project dated February 24, 2000. The Condominium Corporation was formed and organized pursuant to the Condominium Act, Batas Pambansa No. 68, otherwise known as the Corporation Code of the Philippines and Master Deed for the purpose of holding title to or owning the Common Areas as defined in the Master Deed, including the Land upon which the Condominium Project has been developed or established. To comply with the provision of the Condominium Act, Corporation Code and Master Deed, AWIA executed a Deed of Transfer dated November 20, 2000 and has ceded, conveyed, and transferred its interest, rights, and title to the Land and the common areas in favor of the Condominium Corporation, without any monetary consideration. In reply, please be informed that since the Deed of Transfer 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 income tax, capital gains tax, or creditable withholding tax is payable and collectible. The purpose of the conveyance to the Condominium Corporation is for the management of the Condominium Project for the common benefit of the unit-owners pursuant to Section 10 of R.A. 4726, otherwise known as the Condominium Act. In view thereof, this Office is of the opinion as it hereby holds that the aforesaid Deed of Conveyance is not subject to income tax, capital gains tax, or creditable withholding tax prescribed by Revenue Regulations No. 20-98, 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 same Code. However, the notarial acknowledgment to said Deed of Transfer is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. (BIR Ruling No. DA 305-2000 dated February 24, 2000) HEAcDC This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained 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