Columbian International Towers Condominium Corporation

September 16, 2008 BIR RULING [DA-(VAT-029) 224-08] Sections 32 & 105; BIR Ruling No. DA-362-2000 & DA-426-2004 Columbian International Towers Condominium Corporation 2nd Floor, 500 Santol St., Sta. Mesa Manila Attention: Mr. Eduardo M. Gutierrez President Gentlemen : This refers to your letter dated August 4, 2008 requesting for exemption from income and VAT. It is represented that Columbian International Towers Condominium Corporation is a non-stock, non-profit corporation registered with Securities and Exchange Commission with SEC. Reg. No. 0103228 dated February 03, 1982; that the primary purpose for the creation of the said corporation is to hold or own title to the common areas in the condominium project known as "Columbian International Towers Condominium Corporation" which has been constituted, pursuant to the provisions of Republic Act No. 4726 on the properties described in and brought under the operation of said Act by the Master Deed and Declaration of Restrictions and to manage and operate the said condominium project. Moreover, the Association shall have, among others, the following incidental purposes: 1) To provide and contract services for public utilities and for the maintenance, repair, sanitation and cleanliness of the common areas in the project, as well as for the beautification and improvement thereof and for its reconstruction, restoration or repair when necessitated by damage, destruction, obsolescence, depreciation, expropriation or condemnation of the whole or any part thereof; 2) To maintain, clean, repair, reconstruct or rebuild any unit in the project if and when the owner refuses to do so and such is necessary to protect, safeguard or conserve the value and attractiveness of the common areas or any portion of the project; 3) To contract for the services of persons or firms to assist in the management and operation of the project, including administrative, legal, accounting, engineering and other professional and technical services; 4) To operate, by itself or thru others, restaurants and/or canteen facilities within the common areas of the project in order to serve the needs of the occupants of the project and, incidentally, outsiders wishing to avail of such facilities, and to use any income therefrom to meet its operating and maintenance needs and other expenditures. CcEHaI In reply, please be informed that the Association's receipts of the association dues and other assessments/charges collected from the members, are merely held in trust and used solely for administrative expenses in order to protect and safeguard the welfare of the owners, lessees and occupants of the property, provide utilities and amenities, the maintenance of services and management, and which the Association could not realize any gain or profit as a result of its receipt thereof are not includible in said association's gross income. Accordingly, the Association's collections used solely for administrative expenses in implementing its corporate purposes is not subject to income tax or any withholding tax. cCSDaI Pursuant to Section 105 of the Tax Code of 1997, VAT is collected upon any person, who in the course of business, sells, barters, exchanges, leases goods or properties, renders services. The phrase "in the course of trade or business" means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a non-stock, non-profit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity. Considering that the Association does not sell, barter, exchange, lease goods or property and neither does it render service for a fee but merely implements the administration of the required services to collect the association dues from the unit owners pursuant to its corporate purposes as "trustee"' for the fund thereof, it is not subject to the VAT on such activity (BIR Ruling No. DA-426-2004 dated August 10, 2004 and BIR Ruling No. DA-362-2000 dated October 23, 2000). 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