Crowne 88 Condominium Corporation

April 17, 2009 BIR RULING [DA-(C-055) 198-09] R.A. 4726; 256-07 Crowne 88 Condominium Corporation 88 Panay Ave. Brgy. South Triangle Quezon City Attention: Armando Alegre President Gentlemen : This refers to your letter dated January 8, 2009 requesting for a confirmation that the transfer of the parcel of land and common areas of the condominium project built thereon by Grand 88 Realty & Development in favor of Crowne 88 Condominium Corporation is exempt from the payment of capital gains tax. It is represented that Grand 88 Realty & Development (Grand 88) is a corporation established under the laws of the Philippines; that Grand 88 erected the Crowne 88 Condominium located at 88 Panay Avenue, Quezon City; that Grand 88 is the registered owner of the said condominium under TCT No. N-146129 and N-146130 issued by the Register of Deeds for Quezon City on January 3, 1996; that Grand 88 executed a deed of assignment in favor of Crowne 88 Condominium Corporation to convey, assign and transfer the abovementioned parcels of land as mandated by the condominium code. In reply, please be informed that since the aforementioned conveyance is without consideration and is not in connection with a sale made to the condominium corporation, no income is 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, pursuant to Section 10 of R.A. 4726, otherwise known as the Condominium Act. 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." Further, since the conveyance of common areas to Crowne 88 Condominium Corporation is without monetary consideration and is not in connection with a sale, it is likewise not subject to VAT imposed under Section 106 of the Tax Code of 1997, as amended, nor to capital gains tax imposed under Section 27 (D) (5) of the Tax Code of 1997, as amended. 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, as amended. 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, as amended. 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