BIR Ruling [DA-117-01]

June 29, 2001 BIR RULING [DA-117-01] R.A. 4726; 57 (B); 188 DA-117-2001 PARC Regent 109 H.V. dela Costa St. Salcedo Village Makati, Metro Manila Attention: Tomas M. Garcia Property Manager Gentlemen : This refers to your letter dated August 14, 2000 requesting for exemption from the payment of transfer tax, documentary stamp tax and other taxes relative to the conveyance of the common areas of Ray Burton Development Corporation in favor of Parc Regent Condominium Corporation based on the following grounds, to wit: (1) That the value of the land is imputed on the units of the condominium building and transfer tax assessed and paid every time a unit is transferred from seller to buyer; (2) That the subject transfer from the developer to the Condominium Corporation does not involve any monetary consideration and such transfer is not a regular business transaction but a mere requirement mandated by law for the common benefit of the unit owners. It is represented that Ray Burton Development Corporation is the registered owner of a parcel of land located at 109 H.V. de la Costa St., Salcedo Village, Makati City covered by Transfer Certificate of Title No. 150463; that the subject property has a total area of One Thousand One Hundred Eighty Eight (1,188) sq. m.; that Ray Burton Development Corporation developed and constructed on the above-stated property a Fifteen (15) storeys residential condominium building known as the Parc Regent Condominium; 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, Parc Regent Condominium Corporation was organized for the purpose of managing, holding title to, and maintaining all the common areas in the condominium building including the land on which said condominium is located; and that a Deed of Conveyance without consideration was executed between Ray Burton Development Corporation and Parc Regent Condominium Corporation for the purpose of conveying title to the land. In reply, please be informed that since the Deed of Conveyance above-mentioned was made without any monetary 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, pursuant to Section 10 of R.A. 4726, otherwise known as the Condominium Act. In view thereof, this Office is of the opinion as it hereby holds that the aforesaid Deed of Conveyance transferring the common areas of the condominium project to Parc Regent Condominium Corporation 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 conveyance is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. (BIR Ruling No. DA-122-2000 dated February 24, 2000) 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, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Acting Assistant Commissioner Legal Service