BIR Ruling [DA-371-04]

July 5, 2004 BIR RULING [DA-371-04] 57 (B), 188; DA-020-2002 Cayanga Zuiga & Angel Attorneys-at-Law Second Floor, One Corporate Plaza 845 Pasay Road, Legaspi Village Makati City Attention: Attys. Benjamin L. Angel and Claudine Vanessa O. Colmenares Gentlemen : This refers to your letter dated March 19, 2003 requesting for a confirmation of your opinion that the conveyance of the common areas of the condominium project by Joncor Management and Development Corporation (JONCOR) in favor of Sunday Homes Condominium Corporation is not subject to documentary stamp tax and creditable withholding tax. It is represented that Joncor is a corporation engaged in the development of condominium projects and a registered owner of a parcel of land with an area of One Thousand Five Hundred Four (1,504) sq. m., more or less located at the corner of N. Domingo and Lt. Artiaga Sts., San Juan, Metro Manila covered by Transfer Certificate of Title No. 26407 issued by the Register of Deeds of Pasig City; that the building and the other improvements constructed thereon have been constituted into a condominium/townhouse project known as the Sunday Homes Condominium Corporation in accordance with the provisions of Republic Act No. 4726, otherwise known as the Condominium Act, by registering with the Register of Deeds of Pasig, the Master Deed with Declaration of Restrictions of the project; that pursuant to the provisions of the Master Deed with Declaration of Restrictions as provided for by the Condominium Act, Sunday Homes Condominium Corporation was organized for the purpose of holding title to, managing and maintaining the common areas of the project which is defined in the Master Deed to include the above-described parcel of land; that the developer, Joncor, earlier formally turned-over the management of the common areas to the Sunday Homes Condominium Corporation which accepted the same; and that for the purpose of conveying title to the above parcel of land to the condominium corporation, Joncor has executed a Deed of Conveyance in favor of Sunday Homes Condominium Corporation. 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 Sunday Homes 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 Sunday Homes Condominium Corporation is for the management of the project for the common benefit of the unit-owners. (Section 10, R.A. 4726) 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." DIEAHc 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) 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 acknowledgement to said deed of assignment is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. (BIR Ruling No. 020-2002 dated February 13, 2002) 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