BIR Ruling [DA-096-99]

February 15, 1999 BIR RULING [DA-096-99] Millennium Plaza Condominium Association, Inc. Unit 214 Millennium Plaza Hotel Makati Avenue cor. Eduque Street Makati City Attention: Atty . J . L . Jorvina, Jr . Corporate Counsel Gentlemen : This refers to your letter dated November 26, 1998 requesting exemption from the capital gains tax and documentary stamp tax on the conveyance of the common areas of the Millennium Plaza Condominium in favor of the Millennium Plaza Condominium Association, Inc. a condominium corporation. It is represented that the condominium corporation was organized for the purpose of holding title to, managing and maintaining the common areas of the project; that the common areas are covered by TCT Nos. 173661, 173882 and 173883 of the Registry of Deeds for Makati City, which titles are in the name of RMD Estate and Development, Inc., the project owner-developer, that a Deed of Conveyance was executed by RMD Estate Development, Inc. in favor of the condominium association, transferring the title of the common areas without monetary consideration, pursuant to the requirements of the Condominium Act which mandated that the Condominium Corporation shall hold title to the common areas (including the land). In reply, please be informed that since the above-mentioned Deed of Conveyance 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 conveyance 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) Moreover, Section 185 of the Revised Documentary Stamp Tax Regulations (Regulations No. 26) provides that "conveyance 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 any creditable withholding tax under Section 57(B) of the Tax Code of 1997 in relation to Section 27 of the same Code. Neither is it subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. (BIR Ruling No. DA-444-98 dated October 1, 1998, citing BIR Ruling No. UN-083494 dated February 23, 1994) 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 No. 398-93 dated October 11, 1993) This ruling is being issued on the basis of the foregoing representations. However, it 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 & Enforcement Group)