BIR Ruling [DA-305-00]

August 14, 2000 BIR RULING [DA-305-00] 27, 57 (B), 188 DA-437-98 DA-305-2000 Burgundy Place Condominium Association, Inc . #174 B. Gonzales St., Loyola Heights Quezon City Attention: Mr . Raymund S . Catabijan Internal Auditor Gentlemen : This refers to your letter dated June 20, 1999 requesting for a ruling that the conveyance of the common areas, including the land of a condominium project known as the Burgundy Place by Burgundy Realty Corporation in favor of Burgundy Place Condominium Association, Inc., is exempt from the creditable withholding tax and documentary stamp tax. It is represented that Burgundy Realty Corporation, a domestic corporation, is the registered owner of a parcel of land situated at Block 37, Lot 2 B. Gonzales St., Loyola Heights, Quezon City covered by Transfer Certificate of Title No. 86300 where the condominium project known as The Burgundy Place was constructed; that the subject property has an area of 815.80 square meters, more or less; that on the other hand, Burgundy Place Condominium Association, Inc. is a non-stock, non-profit corporation organized by the homeowners in the said project, created among others, for the purpose of managing and holding title to all the common areas in the condominium project including, the land on which the condominium is located; that a Deed of Conveyance was executed by and between Burgundy Realty Corporation and Burgundy Place Condominium Association, Inc. whereby the former conveyed title to the said land, the common areas of the building, facilities and equipment of the project, 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 R.A. No. 4726, otherwise known as the Condominium Act, 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 the Condominium Act, and for the protection of the unit-owners. In reply, please be informed that since the Deed of Conveyance above-mentioned is without consideration and is not in connection with a sale made to the condominium corporation, no income was generated and a fortiori , no creditable withholding tax is payable and collectible. The purpose of the assignment to the condominium corporation is for the management of the project for the common benefit of the unit-owners. (Section 10, R. A. No. 4726) ACcaET In view thereof, this Office is of the opinion as it hereby holds that the aforesaid Deed of Conveyance 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 Tax Code of 1997 since there is no monetary consideration in the subject assignment. However, the notarial acknowledgment to said deed of assignment is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the said Code. 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.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group