First Producers Holdings Corporation

October 31, 2008 BIR RULING [DA-(C-115) 377-08] 57 (B), 196; DA-178-2003 First Producers Holdings Corporation 20th Floor, 8737 Paseo de Roxas (PDCP Bank building) Makati City Attention: Mr. Armand M. Luna Director Gentlemen : This refers to your letter dated September 8, 2008 requesting for a ruling that the Deed of Conveyance transferring the common areas of the condominium project of First Producers Holdings Corporation to the First e-Bank Tower Condominium Corporation is not subject to the documentary stamp tax imposed under Section 196 of the National Internal Revenue Code of 1997. It is represented that on March 25, 2008 First Producers Holdings Corporation and First e-Bank Tower Condominium Corporation executed a Deed of Transfer of Condominium Land Title assigning and transferring to the Condominium Corporation the right and authority to hold title over TCT No. 138405 and all the common areas of the condominium for purposes of managing the same. 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 First e-Bank Tower 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 First e-Bank Tower 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". ADSIaT 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 (8) 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 of Land and Common Areas 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 null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service