Forbeswood Height Condominium Association, Inc.

August 3, 2009 BIR RULING [DA-(C-166) 433-09] S-30; BIR Ruling No. DA-362-2000 dated October 23, 2000, DA-426-2004 dated August 10, 2004 Forbeswood Height Condominium Association, Inc. 26th St. Rizal Drive, Crescent Park, West District Bonifacio Global City, Taguig City Attention: Ms. Melinda F. Dadural Property Manager Gentlemen : This refers to your letter dated November 07, 2007 which was indorsed to this Office by Revenue District Office No. 44, Taguig, requesting for a certificate of exemption as a non-stock, non-profit corporation. It is represented that Forbeswood Height Condominium Association, Inc. (the "Association") with Tax Identification Number 006-736-990 is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission under SEC Registration No. CN200708077 dated May 24, 2007; that the non-stock, non-profit corporation was organized primarily to own or hold title to the common areas in the condominium project and to manage the said project pursuant to and in accordance with the provisions of the said Condominium Act and the Amended Master Deed. In order to sustain the expenses attributable to its duties and functions, Forbeswood Height Condominium Association, Inc. is constrained to assess obligatory fees/dues from its members/unit owners, which are computed proportionately to their individual membership interest in the condominium. STDEcA In reply, please be informed that the association's receipts of the association dues, membership fees, power and water collections and other assessments/charges that will be collected from its members, which will be held in trust and which are to be used solely for administrative expenses in implementing its purpose/s and from which the aforesaid association could not realize any gain or profit as a result of its receipt thereof, are not includible in said corporation's gross income. Hence, the same are not subject to income tax and consequently to the expanded withholding tax. (BIR Ruling No. DA-362-2000 dated October 23, 2000 and DA-426-2004 dated August 10, 2004). Furthermore, Section 105 of the Tax Code of 1997, as amended, provides that VAT is collected upon any person who, in the course of trade or business, sells, barters, exchanges, leases goods or properties and renders service. 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 Forbeswood Height Condominium Association, Inc. will not sell, barter, exchange, lease any goods or property and will not 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 purpose/s as "trustee" of the fund thereof, it is not subject to VAT on such activity. (BIR Ruling No. DA-362-2000 dated October 23, 2000 and DA-426-2004 dated August 10, 2004). Accordingly, the Association is not subject to income tax and consequently, to withholding tax on its collection of corporation dues, membership fees, insurance premium, real property taxes, power, water and other receipts. Likewise, the Association's receipts of the above "collections" are exempt from VAT, because the Association merely 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. CIaHDc 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