Bank of the Philippine Islands

June 25, 2009 BIR RULING [DA-(C-106) 327-09] DA352-05 Bank of the Philippine Islands BPI Building, Ayala Avenue corner Paseo de Roxas Makati City Attention: Ms. Delia M. Afunggol Manager and Mr. Crisostomo J. Danguilan Assistant Vice President Gentlemen : This refers to your letter dated September 11, 2008 stating that Bank of the Philippine Islands (BPI), as Trustee of BPI Employees Retirement Fund, with Tax Identification Number (TIN) 219-299-494, is a universal banking corporation organized and existing under the laws of the Philippines; that BPI is the owner of two (2) parcels of land with total area of 1,822 square meters covered by TCT Nos. 123881 and 126025 issued by the Registry of Deeds for Makati which are still registered under Zodiac Realty Corporation, the original owner-developer, with all improvements thereon, but not limited to, the common areas of the condominium Project as follows: a) all roofs, foundations, columns, gilders, beams, supports, baring walls, the front and side canopies and all other common structural elements of the building; b) all ramps, driveways, and parking stalls; c) basements; and d) existing machinery and equipment, immovable partitions and furnishing necessary for the optimum utilization of the property located at Century Tower Building, 100 Tordesillas corner Dela Costa Streets, Salcedo Village, Makati City. that on the other hand, Century Tower Condominium Corporation is organized by virtue of the conversion of said parcels of land into a condominium project under "The Condominium Act"; that a Master Deed With Declaration of Restrictions of the Century Tower Building Project (Master Deed) was executed on February 28, 1988 and the same was annotated at the back of TCT Nos. 123881 and 126015; that after the aforesaid conversion into a condominium project, subsequent sale of the condominium units was effected; that the aforementioned parcels of land should have been titled in the name of the condominium corporation, but titles to the same still remained in the name of its previous owner-developer, Zodiac Realty Corporation; and that BPI now intends to assign, transfer and convey all its rights, interest and title over the aforementioned parcels of land through a Deed of Conveyance in favor of Century Tower Condominium Corporation without consideration. Based on the foregoing representations, you now request for an opinion that the conveyance of the above-mentioned properties by BPI to Century Tower Condominium Corporation, without consideration, in accordance with Republic Act (R.A.) No. 4726, otherwise known as the Condominium Act Section 5 of the Master Deed, is exempt from income tax/creditable withholding tax and the corresponding documentary stamp tax. In reply thereto, please be informed that since the transfer of the above-mentioned properties and the common area is without consideration and is not in connection with a sale made to the Century Tower Condominium Corporation, no income is generated and a fortiori, no creditable withholding tax is payable and collectible. In fact, the transfer by BPI of the said properties and the common area is made in favor of the individual unit owners of the project, and the purpose of the assignment to the Century Tower Condominium Corporation of the common areas and facilities is for its management, and for the common benefit and enjoyment of the members-unit owners. (Section 10, R.A. No. 4726) Moreover, Section 196 of the Tax Code of 1997, as amended, provides that on all conveyances, deeds, instruments, or writings, other than grants, patents or original certificates of adjudication issued by the Government, whereby any land, tenement or other realty sold shall be granted, assigned, transferred or otherwise conveyed to the purchaser, or purchasers, or to any other person or persons designated by such purchaser or purchasers, there shall be collected a documentary stamp tax, at the rates . . . prescribed, based on the consideration contracted to be paid for such realty or on its fair market value determined in accordance with Section 6 (E) of the said Code, whichever is higher: . . . Inasmuch as the transfer of the said properties and the common area and facilities to Century Tower Condominium Corporation is not in connection with a sale, the same is not subject to documentary stamp tax prescribed in Section 196, supra. IN VIEW THEREOF, this Office holds that the aforesaid transfer of the properties and the common area is not subject to the creditable withholding tax prescribed by Revenue Regulations No. 2-98, as amended, 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 said Code. However, the notarial acknowledgment to said deed of assignment is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code, 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, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service