Wack Wack Heights Condominium Association, Inc.

November 27, 2008 BIR RULING [DA-(C-148) 477-08] Section 32 & 105; BIR Ruling No. DA-008-2000 & DA-196-2001 Wack Wack Heights Condominium Association, Inc. No. 646, Lee Street, Adition Hills Mandaluyong City Attention: Ms. Elisa Marie F. Conde Property Manager Gentlemen : This refers to your letter dated September 1, 2008 requesting for a Certificate of Exemption for your association. ESHAcI As represented, Wack Wack Heights Condominium Association, Inc. ("WWHCAI" or the "Association") is a non-stock, non-profit association duly registered with the Securities and Exchange Commission (SEC). The purposes for which your organization was formed are as follows: "1. To own or hold title to the common areas in the condominium project; and 2. To manage the said Project pursuant to and in accordance with the provisions of the said Condominium Act and the Amended Master Deed." In reply, please be informed that the Association's receipts of the association dues and other assessments/charges collected from the members, are merely held in trust and used solely for administrative expenses in order to protect and safeguard the welfare of the owners, lessees and occupants of the property, provide utilities and amenities, the maintenance of services and management, and which the Association could not realize any gain or profit as a result of its receipt thereof are not includible in said association's gross income. Accordingly, the Association's collections used solely for administrative expenses in implementing its corporate purposes is not subject to income tax or any withholding tax. Pursuant to Section 105 of the Tax Code of 1997, VAT is collected upon any person, who in the course of business, sells, barters, exchanges, leases goods or properties, renders services. The phrase "in the course of trade or business" means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a non-stock, non-profit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity. Considering that the Association does not sell, barter, exchange, lease goods or property and neither does it render service for a fee but merely implements the administration of the required services to collect the association dues from the unit owners pursuant to its corporate purposes as "trustee" for the fund thereof, it is not subject to the VAT on such activity (BIR Ruling No. DA-008-00 dated January 5, 2000 and DA-196-01 dated October 17, 2001) aTICAc In view of the foregoing, the Association is not subject to income tax and consequently to withholding tax on its collection of association dues, membership fee, insurance premium, real property taxes, power and water and other receipts/miscellaneous fees. The Association's receipts of the "collections" are exempt from the VAT. Finally, the Association only acts as the collecting agency to pool the respective shares of the unit owners and merely implement the administration of the required services pursuant to its corporate purposes as trustee of the funds thereof for payment of common expenses, hence, not subject to VAT. 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