BIR Ruling [DA-599-99]

October 8, 1999 BIR RULING [DA-599-99] International Distillers Association, Inc . CPJ Building 105 C. Palanca Street Legaspi Village Makati City Attention: Ms . Caselda T . Dela Guerra Gentlemen : This refers to your letter dated July 15, 1999 requesting for a ruling that the conveyance by International Distillers Associated, Inc., developer/assignor of the common areas, including the land of a condominium project known as the CPJ Condominium Building to the CPJ Building Condominium Corporation is exempt from the creditable withholding tax and documentary stamp tax. It is represented that International Distillers Associated, Inc., a domestic corporation and is the registered owner of a parcel of land located at Alvarado Street, Legaspi Village, Makati City, covered by TCT No. 138052 issued by the Registry of Deeds for Makati, with a total land area of 919 square meters; that it is the developer of the CPJ Condominium Building; that on the other hand, CPJ Building Condominium Corporation is a non-stock association organized by the homeowners in the said condominium project, created among others, for the purpose of holding title to, managing and maintaining the common areas of the project; that a Deed of Assignment was executed by and between International Distillers Associated, Inc. and CPJ Building Condominium Corporation whereby the former conveyed title to the said land, the common areas of the building, facilities and equipment of the project, in favor of the latter, free from all liens and encumbrances; that said deed was executed without any monetary consideration, in pursuance of the requirements of R.A No. 4726, otherwise known as the Condominium Act, as amended; that the said assignment is therefore sought to be exempted from the creditable withholding tax and documentary stamp tax inasmuch as said conveyance is being done simply to comply with the requirements of the Condominium Act, and for the protection of the unit-owners. In reply, please be informed that since the Deed of Assignment above-mentioned is without consideration and is not in connection with a sale made to the condominium corporation, no income was generated and a fortiori, no creditable withholding tax is payable and collectible. In fact, the sale by the developer of condominium unit was made in favor of individual unit-owners of the condominium project; and the purpose of the conveyance to the association is for the management of the project for the common benefit of the unit-owners. (Section 10, R.A. No. 4726) Moreover, Section 185 of the Revised Documentary Stamp 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. In view thereof, this Office is of the opinion as it hereby holds that the aforesaid Deed of Assignment is not subject to the creditable withholding tax prescribed by 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 Tax Code of 1997. However, the notarial acknowledgment to said deed of conveyance is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the said Code. (BIR Ruling No. 550-93 dated December 29, 1993; DA-419-96 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, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group