Atty. Jonathan Herbert C. Uy

January 23, 2009 BIR RULING [DA-(C-007) 036-09] R.A. No. 4726; DA-309-2007 Atty. Jonathan Herbert C. Uy Unit 3503, Atlanta Centre, No. 31 Annapolis Street, Greenhills, San Juan City Sir : This refers to your letter dated September 23, 2008 requesting in behalf of your client, Atlanta Land Corporation for a confirmation that it is exempted from the payment of capital gains tax and the documentary stamp tax on the transfer/conveyance of title to the land and common areas from the developer to the condominium corporation. It is represented that Atlanta Land Corporation ("ALC"), formerly Asiana Realty and Development Corporation, a domestic corporation duly recognized and existing by virtue of law and engaged in the sale and development of condominium projects; that ALC now desires to assign/transfer the land and/or interest in favor of Atlanta Center Condominium Corporation, a non-stock, non-profit organization, duly organized under the law for the management of the project/building for the common benefit of the unit owners; that ALC executed a Deed of Conveyance to transfer the abovementioned real property covered by TCT No. 5766-R representing the undivided interest in the common area, in favor of Atlanta Center Condominium Corporation, with no additional payment received by ALC. In reply, please be informed that since the Deed of Conveyance was 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 Atlanta Center 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 transaction is not subject to the creditable withholding tax prescribed by Section 2.57 (B) of 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 same Code. However, the notarial acknowledgement to said deed of conveyance is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. The transfer is also not subject to VAT since under Section 105 of the Tax Code of 1997, any person who, in the course of trade or business, sells, barters, exchanges, leases goods or properties, renders services and any person who imports goods shall be subject to VAT imposed in Sections 106 to 108 of the same Tax Code, as amended. Hence, by conveying the common areas, facilities and equipment, including the land on which the condominium building stands, ALC, neither sells, barters, exchanges goods, properties nor renders services to be subject to VAT. CEIHcT This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service