Mr. Vic C. Lim

December 8, 2009 BIR RULING [DA-(C-301) 746-09] Mr. Vic C. Lim Room 404, 473 Sto. Cristo Street Binondo, Manila Sir : This refers to your letter dated November 16, 2009 stating that the New Divisoria Center Condominium Corporation is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. 108593 dated July 24, 2004; that it is organized primarily "[t]o own or hold title to the common areas in the condominium project known and identified as the NEW DIVISORIA CENTER CONDOMINIUM CORPORATION which has been constituted pursuant to the provisions of Republic Act 4726, on the property described in and brought under the operation of said Act by that Master Deed with Declaration of Restriction executed by the NEW DIVISORIA CENTER. 1. To make and adopt needful rules and regulations concerning the proper use, enjoyment, and occupancy of the condominium units and common and limited common areas in the project and to fix penalties by way of liquidated damages and assessments for violation thereof; and 2. To adopt such measures as may be necessary for the protection and safeguard of the condominium unit owners and their property in the project including the power to contract for security services for the entire project and in accordance with the Master Deed with Declaration of Restrictions of the Project, to obtain and maintain insurance coverage on the entire project." Based on the Foregoing representations, you now request for a ruling that the condominium/association dues, which include power, water and miscellaneous fees as well as membership fee, insurance premium and real property taxes collected by NEW DIVISORIA CENTER CONDOMINIUM CORPORATION are not subject to income tax and consequently to withholding tax. In reply thereto, please be informed that the association dues, membership fees and other assessment/charges collected from the members, which are merely held in trust and which are to be used solely for administrative expenses in implementing their purpose(s) i.e., to protect safeguard the welfare of the owners, lessees and occupants; provide utilities and amenities for their members, and from which the Corporation could not realize any gain or profit as a result of their receipt thereof are not includible in said corporations' gross income. Accordingly, the same are not subject to income tax and consequently to withholding tax. EcIDaA Moreover, inasmuch as the corporation does not sell, barter, exchange, nor lease any goods or property and neither does it render service for a fee but merely implement the administration of the required services to collect the association dues from the unit owners pursuant to their corporate purpose(s) as trustees of the fund thereof, they are not subject to the value-added tax on such activity. (BIR VAT Ruling No. 026-97 dated April 1, 1997) 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