BIR Ruling [DA-470-98]

November 3, 1998 BIR RULING [DA-470-98] Federal Tower Condominium Corporation Dasmarias St., corner Muelle de Binondo St. Binondo, Manila Attention: Mr . Roberto L . Lao Building Administrator Gentlemen : This refers to your letter dated December 26, 1995 stating that Federal Tower Condominium Corporation is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission (SEC) with SEC Registration No. ANO92-03882 dated September 28, 1992; that it was organized pursuant to the Master Deed with Declaration of Restriction of the Federal Tower Condominium Project, the Condominium Act and the Corporation Code for the purpose of holding title to all common and limited areas and to manage the condominium project; that the Federal Tower Condominium Corporation regularly assess every month (Regular Assessment) the unit owners of the condominium building an amount equivalent to the expenditures of the Condominium Corporation in a given month in proportion to the area owned by said unit owners; that the Regular Assessment is a replenishment for expenses incurred by the condominium corporation for security, janitorial, electrical and water for the common areas, administrative expenses and other common expenses for utilities and services; that the regular assessment is made pursuant to Section 6.1, Article VI of the Amended Master Deed with Declaration of Restriction; and that the Regular Assessment, while paid to the Condominium Corporation, is a contribution of members to the fund from which administrative expenses, utilities and maintenance of the common areas, are drawn. In connection therewith, you are now requesting for a ruling to the effect that the receipts of the Regular Assessment billed to the unit owners of the condominium building which are used solely for administrative expenses, utilities and maintenance of the common areas do not form part of the Federal Tower Condominium Corporation's taxable income subject to income tax and consequently exempt from withholding tax. In reply, please be informed that the Federal Tower Condominium Corporation's receipts of the Regular Assessment from the unit owners which are merely held in trust and which are to be used solely for administrative expenses, utilities and maintenance of the common areas for the benefit of the said unit owners and which the Federal Tower Condominium Corporation could not realize any gain or profit as a result of its receipt thereof are not includible in said Corporation's gross income. Hence, the same is not subject to income tax and consequently to the expanded withholding tax. (BIR Ruling No. 103-94 dated May 16, 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, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)