BIR Ruling [DA-350-98]

July 28, 1998 BIR RULING [DA-350-98] Cruz-Feliciano Law Offices 2nd Floor Feliciano Building 7426 Santillan, Makati City Attention: Atty . Myrna Cruz-Feliciano Gentlemen : This refers to your letter dated May 27, 1998 requesting for a ruling that the conveyance by the Landwealth Utilization and Development Corporation (Landwealth) of common areas and facilities in its condominium project in favor of Landwealth Mansion Phase V Condominium Corporation (Mansion) without monetary consideration is exempt from the creditable withholding tax and the documentary stamp tax. aisadc It is represented that Landwealth is the owner/developer of a condominium project known as Landwealth Mansion Phase V Condominium erected on six (6) parcels of land covered by TCT Nos. 126553, 126554, 139815, 125246, 125247 and 125244 of the Register of Deeds for Manila; that the condominium unit-owners organized themselves and called the organization Mansion for the common benefit of the unit owners; and that a Deed of Conveyance was executed by Landwealth conveying the common areas and facilities of the project without monetary consideration in favor of Mansion for the latter to manage, maintain and operate adequate services/facilities for its members who are the unit owners in said condominium project. In reply, please be informed that "conveyance of realty not in connection with a sale, to trustees or other persons without consideration are not taxable" (Sec. 185, Regulations No. 26 of the Revised Documentary Stamp Tax Regulations). In this case, the Deed of Conveyance in question is without consideration, and the conveyance is not in connection with a sale made to Mansion. In fact, the sales by Landwealth of the condominium units were made in favor of the individual unit owners of the condominium project, and the purpose of the conveyance to Mansion of its common areas and facilities is for its management for the common benefit and enjoyment of the unit owners. In view thereof, this Office is of the opinion as it hereby holds that the transfer and conveyance by Landwealth of the common areas and facilities of its condominium project. Landwealth Mansion Phase V Condominium Project, in favor of Mansion without monetary consideration is exempt from capital gains tax and consequently to the creditable withholding tax imposed under Revenue Regulations No. 12-94, as amended; and that the said Deed of Conveyance is not also subject to the documentary stamp tax imposed by Section 196 of the Tax Code of 1997. However, the acknowledgment is subject to the documentary stamp tax on the certificate in the amount of P15.00 pursuant to Section 188 of the Tax Code of 1997. (BIR Ruling No. 349-93 dated July 30, 1993) This ruling is issued on the basis of the foregoing representations. However, if upon investigation, it will be disclosed that the facts are different from that as represented, then this ruling shall be considered null and void. LLpr Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)