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