Ordinance Temporarily Suspending Section 6E.01. on Penalty for Violations of Section 2N.01, Article N on the Imposition of Fixed Tax on Transportation Business of City Ordinance No. 07-2011 Titled "An Ordinance Enacting the Revenue Code of Tuguegarao City"

November 10, 2008 BIR RULING [DA-(C-127) 407-08] DA 044-02 E. Ganzon, Inc. 7F EGI-Rufino Plaza Taft corner Sen. Gil Puyat Avenue Pasay City Attention: Mr. Eulalio Ganzon President Gentlemen : This refers to your letter dated October 14, 2008 stating that the E. Ganzon, Inc. (EGI) is a corporation organized and existing under the laws of the Philippines; that on the other hand, EGI Taft Tower Condominium Corporation (Taft Tower) is a non-stock, non-profit corporation comprised by unit owners of the EGI Taft Tower Condominium which is existing and operating under the laws of the Philippines pursuant to Republic Act (RA) No. 4726, as amended; that EGI is the registered owner of a parcel of land located at 2339 Taft Avenue, Malate, Manila, covered by TCT No. 212934 issued by the Registry of Deeds for the City of Manila; that Taft Tower is established to own the property and the common areas and to manage the property; and that in compliance with RA No. 4726, EGI will transfer, convey and assign by way of Deed of Conveyance unto the Taft Tower all the rights, title and interests of EGI in and to the property above-described. Based on the foregoing representations, you now request exemption from the payment of creditable withholding tax prescribed under Revenue Regulations No. 2-98, as amended, and documentary stamp tax imposed under Section 196 of the Tax Code of 1997. In reply thereto, please be informed that since the transfer of the land and the common area is without consideration and is not in connection with a sale made to the Taft Tower, no income was generated and a fortiori, no creditable withholding tax is payable and collectible. In fact, the transfer by EGI of the property and the common area were made in favor of the individual unit owners of the project, and the purpose of the assignment to the Taft Tower of its common areas and facilities is for its management, and for the common benefit and enjoyment of the members-unit owners. (Section 10, R.A. No. 4726) Moreover, Section 196 of the Tax Code of 1997 provides that on all conveyances, deeds, instruments, or writings, other than grants, patents or original certificates of adjudication issued by the Government, whereby any land, tenement or other realty sold shall be granted, assigned, transferred or otherwise conveyed to the purchaser, or purchasers, or to any other person or persons designated by such purchaser or purchasers, there shall be collected a documentary stamp tax, at the rates . . . prescribed, based on the consideration contracted to be paid for such realty or on its fair market value determined in accordance with Section 6 (E), infra , whichever is higher: . . . . Inasmuch as the transfer of the property and the common area and facilities to the Association is not in connection with a sale, the same is not subject to documentary stamp tax prescribed in Section 196, supra. IN VIEW OF THE FOREGOING, this Office holds that the aforesaid transfer of the property and the common area is not subject to the creditable withholding tax prescribed in Revenue Regulations No. 2-98, as amended, implementing Section 57 (B) in relation to Section 27 of the Tax Code of 1997. Neither is it subject to the documentary stamp tax imposed under Section 196, infra. However, the notarial acknowledgment to said deed of conveyance is subject to the documentary stamp tax of P15.00 only pursuant to Section 188, supra. AacCHD 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