Facilities Centre Condominium Corporation

January 26, 2009 BIR RULING [DA-(C-011) 043-09] RR 8-2005; DA-602-2006 Facilities Centre Condominium Corporation Facilities Centre, 548 Shaw Boulevard Mandaluyong City Attention: Mr. Vicente M.W. Araneta III President Gentlemen : This refers to your letter dated December 10, 2007, requesting certificate of exemption of the Condominium Corporation from the 25% withholding tax imposed under Revenue Regulations No. 8-2005. It is represented that Facilities Centre Condominium Corporation is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission; that it was granted in a previous ruling (RR7-003-156-2007) tax exemption from income and value-added tax; that it is a non-stock, non-profit condominium corporation organized to (1) own or hold to the common areas in the condominium project and (2) manage the corporation pursuant to and in accordance with the provisions of Republic Act No. 4726 and of the Master Deed and Declaration of Restrictions aforementioned; and that since it is exempt from income tax, it is your opinion that the refund to Facilities Centre Condominium Corporation by MERALCO of the excess utility payments is exempt from the withholding tax imposed under Revenue Regulations No. 8-2005. CSDAIa In reply, please be informed that Section 2.57.5 (B) (2) of Revenue Regulations (RR) No. 2-98, as amended by RR Nos. 3-2004 and 8-2005, is explicit that the expanded withholding tax does not apply to income payments to persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special. Facilities Centre Condominium Corporation is an exempt corporation organized for mutual aid association as contemplated under Section 30 (C) of the Tax Code of 1997. As such, it is exempt from the payment of income tax on income received by it as such organization (BIR Ruling No. S-30-22-2006 dated May 25, 2006) and consequently from the expanded withholding tax. Moreover, since the excess utility payments pertain to expense related to Facilities Centre Condominium Corporation's primary purposes, then the refund which will be received by Facilities Centre Condominium Corporation is not subject to the 30% regular corporate income tax because Facilities Centre Condominium Corporation is an exempt corporation under Section 30 (C) of the Tax Code of 1997. In sum, the MERALCO refund to Facilities Centre Condominium Corporation arising from the Supreme Court case of G.R. No. 141314 dated April 9, 2003 of the excess utility payments which were incurred and paid by Facilities Centre Condominium Corporation as an exempt organization under Section 30 (C) of the Tax Code of 1997 is exempt from the 30% regular corporate income tax, and consequently, from the 25% or 30% withholding tax imposed under RR No. 8-2005. TCaEAD 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service