BIR Ruling [DA-270-03]

August 18, 2003 BIR RULING [DA-270-03] 57 (B), 196 DA-169-2003 EGI Albergo Di Ferroca Condominium Corporation No. 01 Villamor Road, Brgy. Lualhati, Baguio City Attention: Mr. Eulalio Ganzon President Gentlemen : This refers to your letter dated July 31, 2003 requesting for a ruling that the transfer by FAR Corporation of its parcel of land and the common areas of the condominium built therein in favor of EGI Albergo di Ferroca Condominium Corporation is exempt from the payment of the creditable withholding tax and documentary stamp tax. Documents submitted shows that FAR Corporation is a duly organized corporation existing under Philippine laws and a registered owner of two (2) parcels of land located along No. 01 Villamor Road, Baguio City consisting of Five Thousand One Hundred Nineteen (5,119) square meters, more or less, covered by Transfer Certificate of Title Nos. 27715 and 27716, respectively; that Egi Albergo di Ferroca Condominium Corporation is a non-stock, non-profit association of unit owners duly registered with the Securities and Exchange Commission with the main objective to own or hold title to the common areas including the land; and that FAR Corporation is going to turn over to the condominium corporation the land on which the condominium project is situated for the purpose of holding and managing common areas. 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 Egi Albergo di Ferroca 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 EGI Albergo di Ferroca 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"). SHTaID 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." 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 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. 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. Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service