BIR Ruling [DA-332-97]

October 9, 1997 BIR RULING [DA-332-97] Mr. Ramon P. Tioseco Rm. 214 Bank of PI Bldg. Aurora Boulevard cor. Cambridge St., Cubao, Quezon City S i r : This refers to your letter dated April 3, 1997 requesting in effect for a ruling that the conveyance of the common areas, including the land of the Spouses Roel D. Feliciano and Pacita T. Feliciano, owner-developers of a condominium project known as Loyola Heights Condominium, to the Loyola Heights Condominium Corporation, the condominium corporation, is exempt from the payment of the creditable withholding and documentary stamp taxes. Documents submitted show that the Spouses Roel D. Feliciano and Pacita T. Feliciano are the owner-developers of two (2) parcels of land located at the corner of E. Abada corner F. dela Rosa Streets, Loyola Heights Quezon City and covered by Transfer Certificates of Title Nos. 66829 and 368781/T-9116 upon which the Loyola Heights Condominium Project was constructed; that the Loyola Heights Condominium Corporation, a domestic corporation, is the condominium corporation that was organized for the purpose of holding title to, managing and maintaining the common areas of the project, as defined in the Amended Master Deed and Declaration of Restrictions; that a Deed of Assignment was executed between the owner-developers and the condominium corporation whereby the former conveyed title to the said land, the common areas of the building and facilities of the project, in favor of the latter, free from all liens and encumbrances; and that said deed was executed without any monetary consideration, in pursuance of the requirements of the Condominium Act which mandates that the Condominium Corporation shall hold title to the common areas (including the land). In reply, please be informed that since the Deed of Assignment 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 conveyance 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) TaDAIS 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 Deed of Assignment is not subject to any creditable withholding tax under Section 50 (b) in relation to Section 24 of the Tax Code, as amended. Neither is it subject to the documentary stamp tax imposed under Section 196 of the Tax Code, as amended. However, the notarial acknowledgment to said deed of conveyance is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the Tax Code, as amended by Republic Act No. 7660. (BIR Ruling No. UN-083-94 dated February 23, 1994) 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.) SIXTO S. ESQUIVIAS IV OIC, Assistant Commissioner Legal Service