BIR Ruling [DA-184-01]

October 8, 2001 BIR RULING [DA-184-01] 27; 57 (B); 188 DA-164-98 Domus Mariae Foundation, Inc . Caritas Building, Jesus Street, Pandacan 1011, Metro Manila Attention: Msgr. Francisco G. Tantoco, Jr. Executive Vice-President Gentlemen : This refers to your letter dated March 10, 1999 requesting for a ruling that the transfer and conveyance of two (2) parcels of land considered as common areas, including the existing multi-purpose hall constructed thereon by the Domus Mariae Foundation, Inc. in favor of the Domus Mariae Village Homeowners Association, is exempt from the creditable withholding tax and documentary stamp tax. It is represented that Domus Mariae Foundation, Inc. (hereinafter referred to as "Foundation"), is a non-stock, non-profit domestic corporation duly registered with the Securities and Exchange Commission on February 24, 1983 with S.E.C. Reg. No. 110454; that the Foundation participated in socialized housing to further reduce the cost of the housing units for the benefit of the underprivileged and homeless; that one of the Foundation's socialized housing project is the Domus Mariae Village Homeowners Association (hereinafter referred to as "Association") with an area of Four Thousand Five Hundred Fifty Three (4,553) sq.m. as certified by the HLURB located at Ibayo Calzada, Ruhale St., Tipas, Relocation Center Taguig, Metro Manila covered by Transfer Certificate of Title No. 18475 of the Registry of Deeds for the Province of Rizal, Metro Manila District; that the socialized housing of the Association consists of Seventy-Six (76) units which includes two (2) parcels of land as common areas and multi-purpose hall covered by Transfer Certificate of Title Nos. 18473 and 18474 with a total area of Two Hundred Seventy-Three (273) sq.m.; that the Foundation intends to transfer and convey the latter parcels of land in favor of the Association in compliance with its obligation to provide open and facility spaces in the subdivision for the use of the homeowners; that a Deed of Conveyance was executed by and between the Foundation and the Association, whereby the former conveyed title to the said two (2) parcels of land as the common areas of the socialized housing, including the mufti-purpose hall constructed therein, in favor of the latter, free from all liens and encumbrances; that the said Deed of Conveyance was executed without any monetary consideration, in pursuance of the requirements of BP 220 as amended; and that the said conveyance is therefore sought to be exempted from the creditable withholding tax and documentary stamp tax inasmuch as said conveyance is being done simply to comply with the requirements of BP 220 as amended, and for the use and protection of the homeowners. 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 Association, no income was generated and a fortiori, no creditable withholding tax is payable and collectible. The purpose of the conveyance to the Association of its common areas and facilities is for the management, common benefit and enjoyment of the homeowners. In view thereof, this Office is of the opinion as it hereby holds that the aforesaid Deed of Conveyance transferring the common areas and the existing multi-purpose hall in favor of the Domus Mariae Village Homeowners Association is not subject to the creditable withholding tax prescribed by 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 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-164-98 dated April 22, 1998 ) 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