BIR Ruling [DA-103-00]

February 15, 2000 BIR RULING [DA-103-00] 57 (B), 188; DA-521-99 Filinvest Alabang, Inc. Administration Bldg., Filinvest Corporate City Alabang-Zapote Road, Alabang Muntinlupa City Attention: Ms . Rosaline Y . Qua First Vice-President Gentlemen : This refers to your letter dated September 9, 1999 requesting for a confirmation of your opinion that your conveyance of the common areas of Aspen Tower Condominium Project in favor of Aspen Tower Condominium Corporation (ATCC) is not subject to documentary stamp tax and creditable withholding tax. It is represented that Filinvest Alabang, Inc. (FAI) is the registered owner of a parcel of land located along Corporate Avenue, Filinvest Corporate City, Alabang, Muntinlupa City covered by Transfer Certificate of Title No. 207975; that the subject property has a total area of One Thousand Four Hundred Eighty (1,480) sq.m.; that FAI is engaged in the business of real estate development; that it constructed on the above-stated property the Aspen Tower Condominium Project; that pursuant to the provisions of Republic Act No. 4726, otherwise known as the Condominium Act and in accordance with the Master Deed and Declaration of Restrictions, ATCC was organized 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 on August 18, 1999 a Deed of Assignment without consideration was executed between FAI and ATCC for the purpose of conveying title to the land. In reply, please be informed that since the Deed of Assignment 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 Assignment 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 assignment is 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, 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)