Sagittarius Condominium Corporation

November 13, 2009 BIR RULING [DA-(C-264) 669-09] Revenue Regulation 2-98; BIR Ruling DA-484-04 Sagittarius Condominium Corporation H.V. Dela Costa St. Salcedo Village Makati City Attention: Ms. Luzviminda Miquel Accountant Gentlemen : This refers to your letter dated July 31, 2009 regarding the taxes withheld from association dues, water and electric bills paid to SAGITTARIUS CONDOMINIUM CORPORATION, a non-stock and non-profit corporation. It is represented that MEDICARD PHILIPPINES, INC. automatically deducts 2% withholding tax from the bills you send them. The said tax withheld from association dues, water and electric bills are primarily used to cover for improvements, operating and maintenance expenses. In reply, thereto, pleased be informed that in BIR Ruling DA-484-04 dated September 10, 2004, this Office had ruled that only payments considered as income to the recipient are subject to withholding, to wit: ". . . gross receipts subject to tax under the Tax Code do not include monies or receipts entrusted to the taxpayer which do not belong to them and do not redound to the taxpayer's benefit; and it is not necessary that there must be a law or regulation which would exempt such monies and receipts within the meaning of gross receipts under the Tax Code. Accordingly, inasmuch as the money received by Telicphil for NDTN costs does not represent income to Telicphil, said amount therefore, shall not likewise be subject to income tax and consequently to withholding tax." ADCEcI Considering that the bills sent by SAGITTARIUS CONDOMINIUM CORPORATION are used to cover for improvements, operating and maintenance expenses, such payments would not constitute income on the part of SAGITTARIUS CONDOMINIUM CORPORATION. Such being the case, said payments shall not be subject to income tax and consequently to withholding tax. 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 void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service