BIR Ruling [DA-688-99]

December 10, 1999 BIR RULING [DA-688-99] Ocean Park Condominium and Realty, Inc . Roxas Blvd., Malate, Metro Manila Attention: Mr . Adolfo M . Peralta First Vice-President Gentlemen : This refers to your letter dated January 8, 1999 requesting for a ruling that the conveyance by Ocean Park Condominium and Realty, Inc. (formerly Gamel Management Corporation), project owner/developer, of the common areas including the land of a condominium project known as Ocean Tower, located at Roxas Boulevard, Malate, Manila to the Ocean Tower Condominium Corporation is exempt from the creditable withholding tax and documentary stamp tax. It is represented that Ocean Park Condominium and Realty, Inc. is the registered owner of a parcel of land located at Roxas Boulevard, Malate, Manila, covered by Transfer Certificate of Title No. 119170 of the Registry of Deeds for the City of Manila; that it built a condominium building known as the Ocean Tower on the aforesaid parcel of land and thereafter sold the condominium units to various purchasers; that on the other hand, Ocean Tower Condominium Corporation is a corporation duly organized and existing under and by virtue of the laws of the Philippines with principal office and place of business at Roxas Boulevard, Malate, Manila, was created as a management body, to own and manage the land and other common areas of the Ocean Tower Condominium building; that a Deed of Conveyance was executed by and between Ocean Park Condominium and Realty, Inc. and Ocean Tower Condominium Corporation whereby the former conveyed title to the said land, the common areas of the building in favor of the latter, free from all liens and encumbrances, in pursuance to the requirements of R.A. No. 4726, otherwise known as the Condominium Act, as amended; that the said conveyance 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. LexLib In reply, please be informed that since the Deed of Conveyance above-mentioned is without consideration and is not in connection with a sale made to a 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 units was made in favor of individual unit-owners of the condominium project; and the purpose of the conveyance to the corporation 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 Conveyance 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. DA-437-98 dated September 25, 1998) 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)