BIR Ruling [DA-125-04]

March 22, 2004 BIR RULING [DA-125-04] 57 (B), 196; DA-169-2003 Ramon F. Garcia & Company Certified Public Accountants Suite 410 Manila Bank Building Ayala Avenue, Makati City Attention: Mr. Ramon F. Garcia For the Firm Gentlemen : This refers to your letter dated October 31, 2003 requesting for a ruling in behalf of your client, FTR Development Corporation (FTR) that the transfer of its parcel of land and the common areas of the condominium built therein in favor of West Burnham Place Condominium Corporation is exempt from the payment of the creditable withholding tax and documentary stamp tax. Documents submitted shows that FTR is a real estate developer which constructed the West Burnham Place Condominium in Baguio City pursuant to R.A. No. 4726 otherwise known as the "Condominium Act"; that on December 14, 1998, FTR Development Corporation established the WEST BURNHAM PLACE CONDOMINIUM CORPORATION for the purpose of holding title and managing all the common areas of the West Burnham Place Condominium Corporation Project including the land in which the building was erected; and that on November 3, 2003, FTR executed a Deed of Conveyance of Real Estate for the transfer of land title (TCT No. T-66862) to West Burnham Place Condominium Corporation. In reply, please be informed that since the Deed of Conveyance was made without consideration and is not in connection with a sale made to WEST BURNHAM PLACE 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 WEST BURNHAM PLACE CONDOMINIUM CORPORATION is for the management of the project for the common benefit of the unit owners (Section 10, R.A. 4726, otherwise known as the "Condominium Act of the Philippines"). 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 is not taxable." In view thereof, this Office is of the opinion as it hereby holds that the aforesaid transaction is not subject to the creditable withholding tax prescribed by Section 2.57(B) of Revenue Regulations No. 2-98, implementing 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 acknowledgement 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. 169-2003 dated May 23, 2003 ) 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. STHAaD Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service