BIR Ruling [DA-646-99]

November 22, 1999 BIR RULING [DA-646-99] KSY Land Development Corporation Unit 2305 Orient Square Building 26 Emerald Avenue, Ortigas Center Pasig City Attention: Atty . Carlos D . Cinco Corporate Secretary Atty. Ellen Claire G. Sonido Asst. Corporate Secretary Gentlemen : This refers to your letter dated July 6, 1998 requesting for a ruling that your assignment of the common areas, including the land of your condominium building is not subject to documentary stamp tax, donor's tax and creditable withholding tax. It appears that KSY Land Development Corporation (KSY) is the owner-developer of a parcel of land located at H.V. dela Costa St., Salcedo Village, Makati City covered by Transfer Certificate of Title No. 177813; that the subject has a total area of Nine Hundred Eighty One (981) sq. m.; that you constructed on the above-stated lot the alpha Salcedo Condominium Project; that pursuant to the provisions of Republic Act No. 4726, otherwise known as the Condominium Act and in accordance with the Master Deed with Declaration of Restrictions, Alpha Salcedo Condominium Corporation (ASCC) was organized for the purpose of holding title to, managing and maintaining the common areas in the condominium project including the land on which said condominium is located; that when the units were sold to the buyers, documentary stamp tax, transfer and registration fees and income tax including creditable withholding tax were paid; and that on July 1, 1998, a Deed of Assignment without consideration was executed between KSY and ASCC for the purpose of conveying title to the land. In reply, please be informed that since the Deed of Assignment above-mentioned was made without consideration and is not in connection with a sale made to the 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." 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 under 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 acknowledgment 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. llcd 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)