BIR Ruling [DA-115-97]

March 19, 1997 BIR RULING [DA-115-97] Eagle Realty Corporation Providence Building Penthouse No. 55 Annapolis Street, Greenhills San Juan, Metro Manila Attention: Mr . Conrado P . Diaz President Providence Condominium Corporation and Mr . Roberto 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 Providence Condominium Corporation as Assignor and Eagle Realty Corporation as Assignee, regarding ten (10) unsold units which are part of the "Providence Building", a project of Eagle Realty Condominium, more particularly identified as follows: LLphil Unit No. Area CCT No. BC-1/BC-2 (Basement 35.62 & 43.10 707-R 708-R OS-3 166.40 714-R OS-6 115.00 717-R POS-7 145.78 743-R POS-8 184.28 744-R PST-4 36.99 740-R PST-5 35.07 741-R PST-6 38.50 742-R PU5-1 78.85 739-R T o t a l 878.94 ====== based on the following reasons: "1. The parties to the document are both Corporation. "2. There is no monetary consideration involved in the transfer of Title; 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) was previously the registered owner of one (1) parcel of land situated in Annapolis Street, Greenhills Metro Manila as evidenced by TCT No. 30988 of the land records of San Juan with an area of One Thousand Seventy Three (1,073) square meters, more or less. cdti "2. In 1988, EAGLE REALTY CORPORATION put up a project on afore-mentioned Property known as the "PROVIDENCE BUILDING". "3. For the implementation of its project, PROVIDENCE CONDOMINIUM CORPORATION was organized and registered pursuant to Republic Act 4726, otherwise known as the Condominium Act and the parcel of land aforementioned was transferred and registered in the name of PROVIDENCE CONDOMINIUM CORPORATION (the Transferor herein) without monetary consideration and it was done only to comply with the requirement of the Condominium Act. "4. PROVIDENCE CONDOMINIUM CORPORATION now holds title to the afore-mentioned property under Transfer Certificate of Title No. 3276-R of the land records of San Juan. "5. Under the Condominium Act, only the lot on which the project is erected and 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. "6. Upon completion of the project, (Providence Building), Condominium Certificates 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 creditable withholding tax' imposed under Revenue Regulations No. 6-85 as amended by Revenue Regulations No. 12-94. 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) prll 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, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)