BIR Ruling [DA-114-97]

March 19, 1997 BIR RULING [DA-114-97] Eagle Realty Corporation Providence Building Penthouse No. 55 Annapolis Street, Greenhills San Juan, Metro Manila Attention: Mr . Conrado P . Diaz President Eagle Court Condominium Corporation and Mr . Roberta C . Diaz President Eagle Realty Corporation Gentlemen : This refers to your letter dated December 18, 1996 requesting for exemption from the capital gains tax, documentary stamp tax and the creditable withholding tax on the "Deed of Transfer & Re-conveyance With Assignment of Rights" executed by Eagle Court Condominium Corporation as Assignor and Eagle Realty Corporation as Assignee, regarding four (4) unsold units which are part of the "Eagle Court", a project of Eagle Realty Condominium, more particularly identified as follows: Unit No. Area CCT No. 101 166.40 2528 326 76.18 2512 328 76.18 2514 335 82.75 2521 T o t a l 403.01 ====== based on the following reasons: "1. The parties to the document are Corporation; "2. There is no monetary consideration involved; and that "3. The execution of the document is merely to correct a mistake due to oversight." It is represented that: "1. EAGLE REALTY CORPORATION (the Transferee herein) was previously the registered owner of two (2) parcels of land situated in Matalino Street, Quezon City as evidenced by TCT Nos. 301803 and 284283 both of the land records of Quezon City. "2. In 1983, EAGLE REALTY CORPORATION put up a project on aforementioned lots known as the "EAGLE COURT". "3. For the implementation of its project, EAGLE COURT CONDOMINIUM CORPORATION was organized and registered pursuant to Republic Act 4726, otherwise known as the Condominium Act and the two (2) parcels of land aforementioned were transferred in the name of EAGLE COURT CONDOMINIUM CORPORATION (the Transferor herein) without any monetary consideration. "4. EAGLE COURT CONDOMINIUM CORPORATION now holds titles to the aforementioned lots under TCT Nos. 30885 and 30886. "5. Under the Condominium Act, only the common areas in the project shall be registered in the name of the Condominium Corporation and all the unit owners are automatically members of the Condominium Corporation. cdpr "6. Upon completion of the project, (Eagle Court), Condominium Certificate were issued not only on the common areas as mandated by the Condominium Act but also on the unsold units. Hence, the need for the execution of the attached document in order that said unsold units be titled in the name of EAGLE REALTY CORPORATION who is the true and real owner thereof and has always been in the control, management, possession and use of said unsold units." In reply, please be informed that since the Deed of Transfer & Re-conveyance With Assignment of Rights is without any monetary consideration, and considering further that the execution of the said document is merely to correct a mistake, this Office is of the opinion as it hereby holds that the aforementioned transaction is not subject to the capital gains tax, imposed under Section 21 (e) of the Tax Code nor to the creditable withholding tax imposed under Revenue Regulations No. 1-90 Furthermore, it is not likewise subject to the documentary stamp tax imposed under Section 196 of the Tax Code. However, the notarial acknowledgment to the said document is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the Tax Code, as amended by Republic Act No. 7660. (BIR Ruling No. 027-93 dated January 15, 1993) 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. prcd Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: ALICIA L. TOMACRUZ Head Revenue Exec. Assistant (Legal Service)