Pacific Plaza Condominium Corporation

December 9, 2009 BIR RULING [DA-(C-309) 759-09] DA-330-07 Pacific Plaza Condominium Corporation The Pacific Plaza, Apartment Ridge Row Ayala Avenue, Makati, Metro Manila Attention: Ms. Jocelyn L. Fernandez Gentlemen : This refers to your letter April 9, 2008 requesting for exemption from the payment of income tax and other internal revenue taxes. Documents submitted to this Office disclosed that the Pacific Plaza Condominium Corporation, with Taxpayer's Identification No. 000-658-172-000, is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission under SEC Registration No. 158634 dated January 6, 1994; and that the purpose for which Pacific Plaza Condominium Corporation was incorporated is for the following purpose: "to own or hold title to the common areas of Pacific Plaza Condominium project which has been constituted pursuant to the provisions of Republic Act No. 4726 otherwise known as the "Condominium Act" on a piece of real property at Ayala Avenue, Makati, Metro Manila registered in the name of Pacific Plaza, Inc. the (owner/Developer) and covered by Transfer Certificate of Title Numbered 155114 and 155115 issued by the Register of Deeds of Makati under the Master Deed and Declaration of Restrictions dated May 25, 1988 duly executed by the Owner/Developer and recorded at the Office of the Register of Deeds of Makati, Metro Manila; and to manage, administer, maintain and preserve the Condominium Project in accordance with the provisions of the Condominium Act and the said Master Deed and Declaration of Restrictions once the same is turned over by the Owner/Developer to the Corporation, and such other purposes as may be necessary, incidental or convenient to the accomplishment of said purposes." In reply, please be informed that a condominium corporation or homeowners' association is not among those enumerated as exempt from payment of income tax under Section 30 of the Tax Code of 1997. Under Section 30 (E), the said exemption only applies to "non-stock corporations or associations organized and operated exclusively for religious, charitable, scientific, athletic or cultural purposes or for the rehabilitation of veterans, no part of its net income or asset shall belong or inure to the benefit of any member, organizer, officer or any specific person". As your association is not organized for the purposes stated above, your association may be held liable for income tax under this Section. (BIR Ruling No. DA-330-07 dated June 14, 2007) DSEIcT However, pursuant to BIR Ruling No. DA-196-2001, the collection of dues for the purpose of merely providing homeowners with beneficial services is not one of the contemplated activities subject to income tax since no income was generated for the association by this activity. In addition, the act of collection by the association from the tenants of their respective shares in the payment of said services is not itself subject to VAT as contemplated under Section 105 of the Tax Code of 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, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service