Atty. Jonathan Herbert C. Uy

September 25, 2009 BIR RULING [DA-(C-220) 572-09] 57 (B); 106; 196; DA-194-06 Atty. Jonathan Herbert C. Uy Unit 3503, Atlanta Centre No. 31 Annapolis Street, Greenhills San Juan City Sir : This refers to your letter dated March 20, 2009 requesting for a confirmatory ruling that the transaction involving the conveyance/transfer of title of the road lot from your client, Atlanta Land Corporation, the project developer, to New Manila Crest Homeowners Association Inc. is exempt from the payment of capital gains tax and documentary stamp tax. It is represented that Atlanta Land Corporation is a domestic corporation duly organized and existing by virtue of law; that it is engaged in the sale and development of real estate projects; that it now desires to assign/transfer the land and/or interest in favor to the New Manila Crest I Homeowners Association, Inc., a non-stock, non-profit organization, duly organized under the law for the purpose of management of the project for the common benefit of the owners of New Manila Crest I consisting of 8 Townhouse Units; and that in this regard, Atlanta Land Corporation executed a Deed of Conveyance to transfer/assign Transfer Certificate of Title No. 164288 representing the undivided interest in the common road lot in favor of New Manila Crest Homeowners Association, Inc. with no additional payment being received in consideration thereof. In reply, please be informed that conveyances of realty not in connection with a sale, to trustees or other persons without consideration are not taxable. (Section 185, Regulations No. 26). The Deed of Conveyance is not in connection with a sale made to the association. In fact, the purpose of the conveyance to the association of the subject properties is for the common benefit of the subdivision homeowners. Accordingly, the transfer of the road lot by Atlanta Land Corporation to New Manila Crest Homeowners Association, Inc., without monetary consideration, is not subject to capital gains tax and creditable withholding tax, since the conveyance of the said facilities is not for a monetary consideration. The purpose of the conveyance to the homeowners association is for the management of the project for the common benefit of the homeowners. (Section 10, R.A. 4726) DAEcIS Since the said conveyance is not a sale, it is likewise not subject to VAT imposed under Section 106 of the Tax Code of 1997, as amended, neither will it be subject to the documentary stamp tax on sales or conveyance of real property imposed under Section 196 of the same Code. However, the notarial acknowledgment to said Deed of Conveyance is subject to documentary stamp tax of fifteen (P15.00) pursuant to Section 188 of the Tax Code of 1997, as amended. (DA-040-2001 dated March 20, 2001, DA-194-06 dated March 28, 2006) In view thereof, this Office is of the opinion as it hereby holds that the aforesaid transfer is not subject to the creditable withholding tax under Section 57 (B) in relation to Section 27 of the Tax Code of 1997. Neither is it subject to the VAT and documentary stamp tax imposed under Sections 106 and 196 of the same Code. The said deed of conveyance, however, is subject to the documentary stamp tax of P15.00 pursuant to Section 183 of the Tax Code of 1997. (BIR Ruling No. DA-123-02 dated July 23, 2002) 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