BIR Ruling [DA-403-99]

July 13, 1999 BIR RULING [DA-403-99] Cityland Development Corporation 2nd Floor, Cityland Condominium 10 Tower 1 6815 Ayala Avenue North, Makati City Attention: Atty. Alberto Wilfredo O. Oxales, Jr. Senior Legal Counsel Gentlemen : This refers to your letter dated May 8, 1998 stating that Cityland Development Corporation (CDC) is a corporation duly organized and existing under Philippine laws; that CDC is the owner and developer of Cityland Dela Rosa Condominium located at Brgy. Pio del Pilar, Dela Rosa St., Makati City; that for the purpose of managing the condominium project, and enforcing and implementing the Master Deed with Declaration of Restrictions and the Condominium Rules and Regulations, Cityland Dela Rosa Condominium, Inc., a non-stock, non-profit corporation, was organized so that the common benefit of the unit buyers/owners be better served; that said condominium building consists of saleable units, common areas and facilities which include several kinds of rooms necessary for the management and maintenance of the condominium; that kinds of rooms necessary for the management and maintenance of the condominium; that CDC likewise, provided a unit or room which has always been used by the Condominium Corporation as a utility and administration room necessary for the management, maintenance and preservation of the condominium building; that on April 23, 1998, CDC executed a Deed of Assignment covering the aforesaid unit/room particularly described as follows: Condominium Certificate Title No. 37524, "Unit No. 2634 located on the lower ground with an area of 14.60 of Dela Rosa Condominium" in favor of the Cityland Dela Rosa Condominium Inc.; and that said assignment is without any monetary consideration and no income whatsoever, is generated therefrom. Based on the foregoing, you now request confirmation of your opinion that the assignment/conveyance of the said unit/room is not subject to capital gains/withholding tax and documentary stamp tax imposed under Section 196 of the Tax Code of 1997. In reply, please be informed that the aforesaid Deeds of Assignment/Conveyance is not subject to the corporate income tax of 34% under Section 27(A) of the Tax Code of 1997, since the conveyance is without monetary consideration, hence, not subject to creditable withholding tax on the sale, exchange or transfer of real properties under Revenue Regulations No. 12-94 as amended by Revenue Regulations No. 2-98. Likewise, since there is not monetary consideration for the conveyance of the subject condominium unit/room the said Deed of Conveyance is not subject to the documentary stamp tax under Section 196 of the Tax Code of 1997, but only to the documentary stamp tax of P15.00 on certification under Section 188 of the Tax Code of 1997. (BIR Ruling No. 115-94 dated July 1, 1994) HTIEaS Furthermore, the absence of donative intent herein likewise renders the transfer not subject to donor's tax imposed under Section 98 of the Tax Code of 1997. It has been held that in a direct gift, the element of donative intent must be present in the transfer of property to be donated for it to be subject to donor's tax. (BIR Ruling No. 029-90 dated March 15, 1990 citing Perez vs. Commissioner , CTA Case No. 1707, February 10, 1969) This ruling is being issued on the basis of the foregoing facts as represented. However, if it will be disclosed upon investigation that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group