Peralta Law Offices

March 10, 2009 BIR RULING [DA-(C-039) 146-09] 57 (B), 196; DA-178-2003 Peralta Law Offices Don Raul Building 77 Kamuning Rd., Quezon City Attention: Atty. Percival B. Peralta Gentlemen : This refers to your letter dated November 6, 2008 requesting on behalf of your client, Alta Vitas Land & Holdings, Inc. for a confirmation of your opinion relative to its conveyance of parcels of land in a condominium project in favor of Providence Tower 2000 Condominium Corporation. It is represented that Alta Vitas Land & Holdings, Inc. (Alta Vitas for brevity) with Tax Identification No. (TIN) 004-837-000, is a corporation duly organized and registered under Philippine laws to engage in real estate development. One of its projects was the construction and development of a condominium building identified as the Providence Tower 2000 (Project). The aforesaid Project was brought under the provisions of Republic Act (R.A.) No. 4726, as amended, otherwise known as the Condominium Act and is located on the parcels of land owned and registered in the name of Alta Vitas, and is covered by Transfer Certificates of Title (TCT) Nos. 239210 and 239211. Pursuant to the Project's Master Deed with Declaration of Restrictions, a condominium corporation shall be established to hold title to the parcel of land and the common areas of the Project. Thus, Providence Tower 2000 Condominium Corporation with TIN 208-495-387, a non-stock and non-profit corporation was organized and registered with the Securities and Exchange Commission (SEC). Pursuant to the provisions of the Master Deed with Declaration of Restrictions of the Project and also in harmony with the provisions of the Condominium Act, Alta Vitas will execute a Deed of Conveyance, where it will transfer titles over the lots, without monetary consideration in favor of Providence Tower 2000 Condominium Corporation so that the latter may hold title over the land and the respective common areas of the condominium. In reply, please be informed that since the conveyance of the land and common areas in the condominium project was made without consideration and is not in connection with a sale made to Providence Tower 2000 Condominium Corporation. Inasmuch as the purpose of the conveyance to Providence Tower 2000 Condominium Corporation is for the management of the project for the common benefit of the unit-owners and no taxable income has been generated, therefore, no creditable withholding tax prescribed under 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 is payable and collectible. Neither is such conveyance subject to the documentary stamp tax imposed under Section 196 of the same Tax Code. 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." 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. (BIR Ruling No. DA-178-2003 dated June 5, 2003) 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