BIR Ruling [DA-358-00]

October 18, 2000 BIR RULING [DA-358-00] Common Areas DA-587-98 EGI Rufino Plaza Condominium Complex First Zone, Commercial Block Condominium Corporation EGI Rufino Plaza, Sen. Gil Puyat Avenue Pasay City, Metro Manila Attention: Mr . Eulalio Ganzon President Gentlemen : This refers to your letters dated August 11, 2000 and September 15, 2000 requesting in effect for a ruling that the transfer by E. Ganzon, Inc . of its parcel of land and the common areas of condominium built therein in favor of EGI Rufino Plaza Condominium Complex First Zone, Commercial Block Condominium Corporation (EGI Rufino) is exempt from the payment of the creditable withholding tax and documentary stamp tax. It is represented that E. Ganzon, Inc. is a corporation duly organized and registered under Philippine laws; that it is the developer of a residential/commercial condominium project known as the EGI Rufino Plaza Condominium Complex located along Taft Avenue, Pasay City, with an aggregate land area of 2,687.24 square meters, more or less, and covered by TCT Nos. 16856, 16857 and 16859 issued by the Registry of Deeds for Pasay City; that a Deed of Assignment was executed by E. Ganzon, Inc. for the purpose of assigning to EGI Rufino to ownership and management of the land and the common areas which will promote the common benefit and enjoyment of the member/unit owners of said condominium project; and that said transaction is without any monetary consideration. In reply, please be informed as follows: Since the above-mentioned transfer of the condominium project from E. Ganzon, Inc. to EGI Rufino is without consideration and is not in connection with a sale made to EGI Rufino, no income was generated by E. Ganzon, Inc., 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 of R.A. 4726, otherwise known as the "Condominium Act of the Philippines"). Thus, the aforesaid, Deed of Assignment is not subject to any creditable withholding tax under Sec. 57(B), in relation to Sec. 27(A) of the Tax Code of 1997. Moreover, the subject conveyance of the land and the common areas of the Condominium building from E. Ganzon, Inc. to EGI Rufino is not subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. However, the acknowledgment to the said deed of conveyance is subject to the documentary stamp tax of P15.00 on certification pursuant to Sec. 188 of the Tax Code of 1997. (BIR Ruling No. DA-587-98 citing DA-164-98 dated April 22, 1998 and BIR Ruling No. 75-97 dated July 10, 1997) 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. aHTDAc Very truly yours, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group