Exemption from CWT - Requirements

December 29, 1993 BIR RULING NO. 550-93 EXEMPTION FROM CWT REQUIREMENTS 50 (b) 196 045-87 550-93 Goldland Group of Companies #10 Eisenhower Street, Greenhills San Juan, Metro Manila Attention: Mr . Macario Maat Liaison Officer This refers to your letter dated February 10, 1993 requesting for exemption from the payment of creditable withholding tax and documentary stamp tax on (1) the conveyance of Goldland Empire Estate, Inc. of its parcel of land situated at Eisenhower Street, Greenhills, San Juan, Metro Manila, covered by TCT No. 2656-R together with the common areas of the building and facilities of the condominium project constructed thereon known as Goldland Tower in favor of Goldland Tower Condominium Corporation, and (2) the conveyance of Goldland Development & Realty Group, Incorporated of its parcels of land situated at Eisenhower St., Greenhills, San Juan, Metro Manila, covered by TCT Nos. 2906-R and 2907-R together with the common areas of the building and facilities of the condominium project constructed thereon known as Goldland Plaza in favor of the Goldland Plaza Condominium Corporation pursuant to the provisions of Republic Act No. 4726, otherwise known as the Condominium Act. cdt It is represented that you have filed your Deed of Conveyance in favor of the abovenamed condominium corporation with the BIR, Mandaluyong Branch; that the said office transmitted the documents relative to the conveyances made by Goldland Empire Estate, Inc. on November 14, 1991 and Goldland Development & Realty Groups, Inc. on November 9, 1992 to this Office; and that similar conveyances involving Goldland Regency Estate, Inc. and Cityland Development Corporation were subsequently approved exempting payment of the creditable withholding tax and documentary stamp tax. In reply, please be informed that under Revenue Memorandum Circular No. 7-90 clarifying some pertinent provisions of Revenue Regulations No. 12-89, as amended by Revenue Regulations No. 1-90 implementing Section 50(b) of the Tax Code, as amended, all sales, exchanges or transfers of real properties, whether classified as ordinary or capital assets, by corporations, consummated on or after January 1, 1990, are subject to the creditable withholding tax based on the gross selling price which for this purpose means the consideration stated in the sales document or the fair market value/zonal value, whichever is higher. From the foregoing, however, the conveyances were made pursuant to the provisions of Republic Act No. 4726, otherwise known as the Condominium Act and without any monetary consideration, so that this Office is of the opinion as it hereby holds that the said conveyances are not subject to the creditable withholding tax imposed under Revenue Regulations No. 1-90 implementing Section 50(b) of the Tax Code, as amended. Moreover, conveyances of realty, not in connection with a sale, to trustee 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 Deeds of Conveyance in question are without consideration, the conveyances are not in connection with a sale made to the aforenamed condominium corporation and the purpose of the conveyances to the condominium corporations involved is for the management of the projects for the common benefit of the unit owners (Section 10, R.A. 4726, or the Condominium Act). Accordingly, the aforesaid Deeds of Conveyance are not subject to the documentary stamp tax imposed by Section 196 of the Tax Code. However, the acknowledgment of said Deeds of Conveyance is subject to the documentary stamp tax on certificate, pursuant to Section 188 of the same Code. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue