BIR Ruling [DA-221-04]

April 23, 2004 BIR RULING [DA-221-04] 57 (B), 196 DA-019-2000 Integral Realty Corporation Cortijos Greenhills Condominium 25 Eisenhower St. San Juan, Metro Manila Attention: Mr. Rolando V. Tongco President Gentlemen : This refers to your letter dated September 25, 2003, requesting in effect for a confirmation of your opinion that the conveyance of a parcel of land by Integral Realty Corporation (Integral for brevity) in favor of One Wilson Place Condominium Corporation is not subject to creditable withholding tax and documentary stamp tax. Documents submitted shows that Integral is the owner of a parcel of land with an area of 1,475 sq.m. located at Wilson St., San Juan, Metro Manila covered by Transfer Certificate of Title (TCT) No. 7219-R of the Registry of Deeds for San Juan, Metro Manila; that Integral constructed the One Wilson Place Condominium Project on the aforesaid parcel of land; that One Wilson Place Condominium Corporation, on the other hand, was incorporated and formed to own or hold title to the land and other common areas of the aforesaid condominium project and to manage and operate the project in accordance with the provisions of Republic Act No. 4726 (Condominium Act) and the Master Deed with Declaration of Restrictions; and that Integral thru a Deed of Assignment will assign the above-described parcel of land to the condominium corporation without consideration and for the purpose of management of the project for the common benefit of the unit owners. In reply, please be informed that since the Deed of Assignment was made without consideration and is not in connection with a sale made to One Wilson 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 One Wilson Place Condominium Corporation is for the management of the project for the common benefit of the unit-owners. (Section 10, R.A. 4726) Moreover, Section 185 of the Revised Documentary Stamp Tax Regulations (Regulations No. 26)provides that "conveyances of realty not in connection with a sale, to trustees or other persons without consideration are not taxable." cTECHI 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 assignment is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. ( BIR Ruling No. DA-019-2000 dated January 11, 2000 ) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained 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 Assistant Commissioner Legal Service