BIR Ruling [DA-684-99]

December 10, 1999 BIR RULING [DA-684-99] Alcat, Inc . 8 Polk St., North Greenhills San Juan, Metro Manila Attention: Mr . Pedro L . Alvarado President Gentlemen : This refers to your letter dated July 12, 1999 requesting for a ruling that the conveyance of the common areas of your condominium project including the land on which it is located is exempt from the payment of documentary stamp tax and creditable withholding tax. It appears that Alcat, Inc., is a registered owner of two (2) parcels of land situated at 222 P. Tuazon Blvd., Cubao, Quezon City covered by Transfer Certificates of Title Nos. RT-103119 (307126) and RT-103120 (307127); that you developed the aforesaid properties and constructed thereon a condominium building known as the "88 Fernandina Condominium" Project; that the common areas of the said project which includes the lobbies, driveway, roof deck, maintenance/utility room and administration office are duly covered by Condominium Certificates of Title Nos. N-16275, N-16276, N-16280, N-16281, N-16282, N-16283 and N-16284; that "Fernandina 88 Condominium Corporation" was organized for purposes of holding titles to, managing and maintaining the common areas of the said project pursuant to the provisions of the Master Deed with Declaration of Restrictions as provided for by Republic Act No. 4726, otherwise known as the Condominium Act; and that a Deed of Conveyance will be executed in favor of the condominium corporation for the purpose of conveying titles to the common areas including the land on which said condominium building is located. In reply, please be informed that since the Deed of Conveyance above-mentioned will be made without consideration and is not in connection with a sale made to the condominium corporation, no taxable income will be generated and a fortiori , no creditable withholding tax is payable and collectible. The purpose of the conveyance 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 really 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 Conveyance 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 conveyance is subject to the documentary stamp tax of P15.00 only 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)