Rovero Tower Condominium Corporation

October 14, 2009 BIR RULING [DA-(C-234) 601-09] Rovero Tower Condominium Corporation 77 West Avenue Quezon City Attention: Mr. Rogelio B. Urbina President Gentlemen : This refers to your letter dated August 26, 2009 stating that Rovero Tower Condominium Corporation is a non-stock, non-profit corporation organized primarily for the purpose of owning in its name the common area of the project known as Rovero Tower: that it is registered with the Securities and Exchange Commission (SEC) under SEC Registration No. 183950 dated November 22, 1990; that on the other hand, Sandra Rovero Cox is the registered owner of a parcel of land covered by TCT No. 333613 issued by the Registry of Deeds for Quezon City; that the said parcel of land was used as a site for the construction of a condominium building known as the Rovero Tower, a joint venture project between the late Tranquilino Rovero and Dalaya Construction and Development Corporation; that this project was brought before the provision of Republic Act (RA) No. 4726, otherwise known as the Condominium Act, by virtue of a Master Deed with Declaration of Restriction which deed has been officially annotated on the title thereby rendering the said parcel of land as common area; and that the annotation of the Master Deed with Declaration of Restriction is the operative act that converts the entire project as ownership in its name of all common areas in the project including the above described parcel of land. Based on the foregoing representations, you now request exemption from the payment of creditable withholding tax prescribed under Revenue Regulations No. 2-98, as amended, and documentary stamp tax imposed under Section 196 of the Tax Code of 1997. In reply, please be informed that since the transfer of the land and the common area is without consideration and is not in connection with a sale made to the Rovero Tower Condominium Corporation, no income was generated and a fortiori, no creditable withholding tax is payable and collectible. In fact, the transfer by Sandra Rovero Cox of the property and the common area were made in favor of the individual unit owners of the project, and the purpose of the assignment to the Rovero 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) CAIHaE Moreover, Section 196 of the Tax Code of 1997 provides that on all conveyance, 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 property and the common area and facilities to Rovero Tower Condominium Corporation is not in connection with a sale, the same is not subject to documentary stamp tax prescribed in Section 196 of the said Code, supra. In view thereof, this Office holds that the aforesaid transfer of the property 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 Tax Code of 1997. However, the notarial acknowledgment to said deed of conveyance is subject to the documentary stamp tax of P15.00 only pursuant to Section 188 of the said Code. (BIR Ruling No. 550-93 dated December 29, 1993; DA419-96 dated November 12, 1996) 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