Cityland Condominium 10 Tower I and II, Inc.

February 14, 2008 BIR RULING [DA-096-08] RR 8-2005; DA-602-2006 Cityland Condominium 10 Tower I and II, Inc. 154-156 H.V. Dela Costa Street Ayala North, Makati City Attention: Ms. Joelyn Z. Lailuddin President Gentlemen : This refers to your letter dated April 11, 2007, requesting certificate of exemption of the Condominium Corporation from the 25% withholding tax imposed under Revenue Regulations No. 8-2005. It is represented that Cityland Condominium 10 (Tower I and II), Incorporated was granted in a previous ruling (S-30-012-2006) tax exemption from income tax and value added tax; that it is a non-stock, non-profit condominium corporation organized to promote the best interests, as well as to safeguard the welfare of the unit owners and occupants of the condominium buildings known as Cityland Condominium 10 Tower I and II, located at 2/F Cityland Condominium 10 Tower I, 156 H.V. Dela Costa St., Ayala North, Makati City, by maintaining the building and its facilities, and adopting measures, consistent with laws, to enhance and regulate the use and enjoyment by its occupants of said building facilities; that since Cityland Condominium 10 (Tower I and II), Incorporated is exempt from income tax, it is your opinion that the refund to Cityland Condominium 10 (Tower I and II), Incorporated by MERALCO of the excess utility payments is exempt from the withholding tax imposed under Revenue Regulations No. 8-2005. In reply, please be informed that Section 2.57.5 (B) (2) of Revenue Regulations (RR) No. 2-98, as amended by RR Nos. 3-2004 and 8-2005, is explicit that the expanded withholding tax does not apply to income payments to persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special. STaAcC Cityland Condominium 10 (Tower I and II), Incorporated is an exempt corporation organized for mutual and association as contemplated under Section 30 (C) of the Tax Code of 1997. As such it is exempt from the payment of income tax on income received by it as such organization (BIR Ruling No. S-30-22-2006 dated May 25, 2006) and consequently from the expanded withholding tax. Moreover, since the excess utility payments pertain to expense related to Cityland Condominium 10 (Tower I and II), Incorporated's primary purposes, then the refund which will be received by Cityland Condominium 10 (Tower I and II), Incorporated is not subject to the 35% regular corporate income tax because Cityland Condominium 10 (Tower I and II) Incorporated is an exempt corporation under Section 30 (C) of the Tax Code of 1997. In sum, the MERALCO refund to Cityland Condominium 10 (Tower I and II), Incorporated arising from the Supreme Court case of G.R. No. 141314 dated April 9, 2003 of the excess utility payments which were incurred and paid by Cityland Condominium 10 (Tower I and II), Incorporated as an exempt organization under Section 30 (C) of the Tax Code of 1997 is exempt from the 35% regular corporate income tax, and consequently, from the 25% or 35% withholding tax imposed under RR No. 8-2005. 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. ISCTcH Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service