BIR Ruling [DA-497-03]

December 11, 2003 BIR RULING [DA-497-03] R.A. 4726 Mr . Alexander Tang No. 500 Juan Luna Binondo, Manila S i r : This refers to your letter dated November 13, 2003 requesting for a ruling that the conveyance by Uniphil Marketing Corporation, developer/assignor, of the common areas and seventy-eight (78) parking areas of the Regina Garden II Condominium to the Regina Garden II Condominium Corporation, is exempt from the capital gains tax/creditable withholding tax and documentary stamp tax. It is represented that Uniphil Marketing Corporation, a domestic corporation with address at No. 500 Juan Luna, Binondo, Manila, is engaged in the realty business; that it is the registered owner of a parcel of land located at 703 Reina Regente Street, Binondo, Manila, covered by TCT No. 176424 issued by the Registry of Deeds for Manila, with a land area of 1,026.90 square meters; that Uniphil Marketing Corporation has built a condominium building known as Regina Garden II Condominium; that on the other hand, the Regina Garden II Condominium Corporation is a non-stock, non-profit corporation formed for the purpose of holding the title, managing and maintaining the common and parking areas of the aforesaid project and more particularly described as follows: Particulars Area (sq.m.) TCT/CCT No. Tax Declaration Property Index No. No. Basement Floor: BF 03 10.00 14084 C-027-96-288- 117-08-288-02- 00096 017B3 BF23 10.00 14105 C-027-96-288- 117-08-288-02- 00116 017B23 BF 24 10.00 14106 C-027-96-288- 117-08-288-02- 00117 017B24 BF25 10.00 14107 C-027-96-288- 117-08-288-02- 00118 017B25 BF26 10.00 14108 C-027-96-288- 117-08-288-02- 00119 017B26 BF27 10.00 14109 C-027-96-288- 117-08-288-02- 00120 017B27 BF28 10.00 14110 C-027-96-288- 117-08-288-02- 00121 017B28 BF29 10.00 14111 C-027-96-288- 117-08-288-02- 00122 017B29 BF30 10.00 14112 C-027-96-288- 117-08-288-02- 00123 017B30 BF31 10.00 14113 C-027-96-288- 117-08-288-02- 00124 017B31 BF32 10.00 14114 C-027-96-288- 117-08-288-02- 00125 017B32 BF33 10.00 14115 C-027-96-288- 117-08-288-02- 00126 017B33 BF34 10.00 14116 C-027-96-288- 117-08-288-02- 00127 017B34 BF35 10.00 14117 C-027-96-288- 117-08-288-02- 00128 017B35 Ground Floor GF05 10.00 14124 C-027-96-288- 117-08-288-02- 00137 017B44 GF06 10.00 14125 C-027-96-288- 117-08-288-02- 00138 017B45 GF07 10.00 14126 C-027-96-288- 117-08-288-02- 00139 017B46 GF08 10.00 14127 C-027-96-288- 117-08-288-02- 00140 017B47 GF09 10.00 14128 C-027-96-288- 117-08-288-02- 00141 017B48 GF10 10.00 14129 C-027-96-288- 117-08-288-02- 00142 017B49 GF11 10.00 14130 C-027-96-288- 117-08-288-02- 00143 017B50 GF12 10.00 14131 C-027-96-288- 117-08-288-02- 00144 017B51 GF13 10.00 14132 C-027-96-288- 117-08-288-02- 00145 017B52 GF14 10.00 14133 C-027-96-288- 117-08-288-02- 00146 017B53 GF15 10.00 14134 C-027-96-288- 117-08-288-02- 00147 017B54 GF16 10.00 14135 C-027-96-288- 117-08-288-02- 00148 017B55 GF17 10.00 14136 C-027-96-288- 117-08-288-02- 00149 017B56 GF18 10.00 14137 C-027-96-288- 117-08-288-02- 00150 017B57 GF19 10.00 14138 C-027-96-288- 117-08-288-02- 00151 017B58 GF20 10.00 14139 C-027-96-288- 117-08-288-02- 00152 017B59 First Flr. FF02 10.00 14142 C-027-96-288- 117-08-288-02- 00160 017B67 FF03 10.00 14143 C-027-96-288- 117-08-288-02- 00161 017B68 FF04 10.00 14144 C-027-96-288- 117-08-288-02- 00162 017B69 FF05 10.00 14145 C-027-96-288- 117-08-288-02- 00163 017B70 FF06 10.00 14146 C-027-96-288- 117-08-288-02- 00164 017B71 FF07 10.00 14147 C-027-96-288- 117-08-288-02- 00165 017B72 FF08 10.00 14148 C-027-96-288- 117-08-288-02- 00166 017B73 FF09 10.00 14149 C-027-96-288- 117-08-288-02- 00167 017B74 FR10 10.00 14150 C-027-96-288- 117-08-288-02- 00168 017B75 FF12 10.00 14152 C-027-96-288- 117-08-288-02- 00170 017B77 FF13 10.00 14153 C-027-96-288- 117-08-288-02- 00171 017B78 FF14 10.00 14154 C-027-96-288- 117-08-288-02- 00172 017B79 FF15 10.00 14155 C-027-96-288- 117-08-288-02- 00173 017B80 FF16 10.00 14156 C-027-96-288- 117-08-288-02- 00174 017B81 FF18 10.00 14158 C-027-96-288- 117-08-288-02- 00176 017B83 2nd Flr. SF01 10.00 14159 C-027-96-288- 117-08-288-02- 00177 017B84 SF02 10.00 14160 C-027-96-288- 117-08-288-02- 00178 017B85 SF03 10.00 14161 C-027-96-288- 117-08-288-02- 00179 017B86 SF04 10.00 14162 C-027-96-288- 117-08-288-02- 00180 017B87 SF05 10.00 14163 C-027-96-288- 117-08-288-02- 00181 017B88 SF06 10.00 14164 C-027-96-288- 117-08-288-02- 00182 017B89 SF07 10.00 14165 C-027-96-288- 117-08-288-02- 00183 017B90 SF08 10.00 14166 C-027-96-288- 117-08-288-02- 00184 017B91 SF09 10.00 14167 C-027-96-288- 117-08-288-02- 00185 017B92 SF10 10.00 14168 C-027-96-288- 117-08-288-02- 00186 017B93 SF11 10.00 14169 C-027-96-288- 117-08-288-02- 00187 017B94 SF12 10.00 14170 C-027-96-288- 117-08-288-02- 00188 017B95 SF13 10.00 14171 C-027-96-288- 117-08-288-02- 00189 017B96 SF14 10.00 14172 C-027-96-288- 117-08-288-02- 00190 017B97 SF15 10.00 14173 C-027-96-288- 117-08-288-02- 00191 017B98 SF16 10.00 14174 C-027-96-288- 117-08-288-02- 00192 017B99 SF17 10.00 14175 C-027-96-288- 117-08-288-02- 00193 017B100 SF18 10.00 14176 C-027-96-288- 117-08-288-02- 00101 017B101 SF19 10.00 14177 C-027-96-288- 117-08-288-02- 00195 017B102 SF20 10.00 14178 C-027-96-288- 117-08-288-02- 00196 017B103 SF21 10.00 14179 C-027-96-288- 117-08-288-02- 00197 017B104 SF22 10.00 14180 C-027-96-288- 117-08-288-02- 00198 017B105 SF23 10.00 14181 C-027-96-288- 117-08-288-02- 00199 017B106 SF24 10.00 14182 C-027-96-288- 117-08-288-02- 00200 017B107 SF25 10.00 14183 C-027-96-288- 117-08-288-02- 00201 017B108 SF26 10.00 14184 C-027-96-288- 117-08-288-02- 00202 017B109 SF27 10.00 14185 C-027-96-288- 117-08-288-02- 00203 017B110 SF28 10.00 14186 C-027-96-288- 117-08-288-02- 00204 017B111 SF29 10.00 14187 C-027-96-288- 117-08-288-02- 00205 017B112 SF30 10.00 14188 C-027-96-288- 117-08-288-02- 00206 017B113 SF31 10.00 14189 C-027-96-288- 117-08-288-02- 00207 017B114 SF32 10.00 14190 C-027-96-288- 117-08-288-02- 00208 017B115 SF33 10.00 14191 C-027-96-288- 117-08-288-02- 00209 017B116 and that on March 25, 2003, a Deed of Reconveyance was executed by and between Uniphil Marketing Corporation and Regina Garden II Condominium Corporation whereby the former transferred and conveyed unto the latter the title to the above parcel of land together with the common and parking areas in compliance with R.A. No. 4726. In reply, please be informed that since the transfer is without monetary consideration and is not in connection with a sale made to the Homeowners Association, no income was generated and a fortiori , no creditable withholding tax is payable and collectible. In fact, the sales by Uniphil Marketing Corporation of the condominium units were made in favor of the individual unit owners of the condominium project, and the purpose of the transfer to the Regina Garden II Condominium Corporation of its common and parking areas and facilities is for its management, and for the common benefit and enjoyment of the members-unit owners. ( Section 10, R.A. No. 4726 ) Moreover, Section 196 of the Tax Code of 1997 provides that on all conveyance, deeds, instruments, or writings, other than grants, patents or original certificates of adjudication issued by the Government, whereby any land, tenement or other realty sold shall be granted, assigned, transferred or otherwise conveyed to the purchaser, or purchasers, or to any other person or persons designated by such purchaser or purchasers, there shall be collected a documentary stamp tax, at the rates . . . prescribed, based on the consideration contracted to be paid for such realty or on its fair market value determined in accordance with Section 6(E) of the said Code, whichever is higher: . . .. Inasmuch as the transfer of the common and parking areas and facilities to the Regina Garden II Condominium Corporation is not in connection with a sale, the same is not subject to documentary stamp tax prescribed in Section 196 of the said Code, supra . In view thereof, this Office holds that the aforesaid transfer is not subject to the creditable withholding tax prescribed by Revenue Regulations No. 2-98, as amended, 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 Tax Code of 1997. However, the notarial acknowledgment to said deed of conveyance is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the said Code. ( BIR Ruling No. 550-93 dated December 29, 1993 ; DA419-96 dated November 12, 1996 ) 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