BIR Ruling [DA-066-00]

February 1, 2000 BIR RULING [DA-066-00] Atty . Felix D . Gragasin Dynasty Cinema Bldg. 827 Rizal Avenue Sta. Cruz, Manila S i r : This refers to your letter dated March 1, 1999 requesting for a ruling that the conveyance of the common areas of your client's condominium project is not subject to documentary stamp tax and creditable withholding tax. It is represented that Universal Reliance, Inc. is the registered owner and developer of a condominium project known as Le Mar Ben Classic Condominium; that the aforesaid project is a residential and commercial complex located at No. 666 F. Torres St. Sta. Cruz, Manila covered by Transfer Certificate of Title No. 183933 issued by the Registry of Deeds for the City of Manila; that when the condominium units were sold to the buyers, the corresponding withholding taxes had been withheld and subsequently paid to the Revenue District Office of Sta. Cruz, Manila, including the documentary stamp taxes; that Le Mar Ben Classic Condominium Homeowners Association, Inc. was formed for the purpose of managing and holding title to all the common areas in the condominium project including the land on which said condominium is located; and that a Deed of Assignment of Common Areas without consideration was executed between Universal Reliance, Inc. and Le Mar Ben Classic Condominium Homeowners Association, Inc. for the purpose of transferring title to the land. In reply, please be informed that since the Deed of Assignment of Common Areas 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 (Regulation No. 26) provides that "conveyances of really 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 above mentioned Deed of Assignment of Common Areas 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 subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. 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.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group