Exemption of Deed of Conveyance from DST

June 13, 1989 BIR RULING NO. 125-89 196 045-87 125-89 Gentlemen : This refers to your letter dated March 1, 1989 stating that a developer or company owning a piece of land develops and constructs a condominium project and sells the units to different buyers who now own the units they have purchased together with a percentage share of the common land on which the building stands and the common areas and appurtenances of the condominium building; that the selling price of each condominium unit when sold by the developer naturally already includes a proportionate cost of share of the common land and the building common areas and appurtenances as the developer knows that as soon as the project is finished as units are sold, a condominium association of the unit owners will incorporate to administer and manage the condominium, and the title to the common land and common areas and appurtenances will have to be transferred to the condominium association; that as each condominium unit is sold it is individually titled and documentary stamps and transfer and registration fees and capital gains tax paid; that each title to a unit sold is annotated on the Certificate of Title of the land; that as required by the Condominium Act, the developers lose ownership in the land and must transfer the title of the land to the condominium association as common property; that this is usually done by a Deed of Conveyance without any monetary consideration because the value of the land which is condominium common property is a already included in the purchase price of each individually titled condominium unit; that the transfer by conveyance, therefore, is sought to be exempt from documentary stamps, as it is clear that conveyance is being done only to comply with the Condominium Act and for the protection of the unit owners and in view of the fact that documentary stamp taxes have already been paid as each individual unit is titled; and that the above circumstances pertain to the conveyance by the LPL Realty and Development Corporation of the title to the land covered by TCT No. S-12237, to the LPL Towers Condominium Corporation, the association of all individual unit owners of LPL Towers. Based on the foregoing representations, you now request in effect a ruling as to whether or not the Deed of Conveyance executed by the LPL Realty and Development Corporation in your favor relative to the Condominium Apartment Building known as the LPL Towers covered by TCT No. S-12237 on August 11, 1988 is subject to documentary stamp tax. In reply, please be informed that "conveyance of realty not in connection with a sale, to trustees or other persons without consideration are not taxable." (Sec. 185, Regulations No. 26 or the Revised Documentary Stamp Tax Regulations) In the instant case, the Deed of Conveyance in question is without consideration and the conveyance is not in connection with a sale made to the condominium corporation. In fact, the sale by the developer, LPL Realty and Development Corporation, of condominium units were made in favor of individual unit owners of the condominium project; and the purpose of the conveyance to the condominium corporation is for the management of the project for the common benefit of the unit owners.(Section 10, R.A. No. 4726 or the Condominium Act) Accordingly, the aforesaid Deed of Conveyance is not subject to the documentary stamp tax imposed by Section 196 of the Tax Code, as amended. However, the acknowledgment is subject to the documentary stamp tax on certification, pursuant to Section 188 of the Tax Code, as amended. cd Very truly yours, (SGD.) JOSE U. ONG Commissioner