Republic of the Philippines DEPARTMENT OF FINANCE * Floor EDPC Building, BSP Complex, Roxas Boulevard, 1004 Manila www:blgfgoviph | central@blglgoviph | #63 2 527 2780 / 527 2790 FEB 12 2020 Atty. MA. FE CAROLYN GO-PINOY Atty. FREDERICK R. TAMAYO Legal Counsel Rockwell Land Corporation 8 Rockwell, Hidalgo Drive Rockwell Center, Makati City Subject: Transfer Tax Exemption of the Land and Common Areas of Rockwell Land Corporation Dear Attorneys GO-PINOY and TAMAYO: This pertains to your request for opinion on the exemption from transfer tax of the land and common areas of Rockwell Land Corporation (Rockwell), a corporation duly organized and existing under Philippine laws, to 205 Santolan Condominium Corporation (205SCC), a non- stock and non-profit corporation duly organized and existing under Philippine laws, with principal address at 205 Sontolan by Rockwell, Santolan Road, Barangay Valencia, Quezon City. It is represented that Rockwell is the registered owner of a parcel of land located at Santolan Road, Bray. Valencia, Quezon City, covered by Transfer Certificate of Title (TCT) No. 004- 201301 1636 of the Registry of Deeds for Quezon City, with an area of 18,073 m? more or less. Further, Rockwell developed the parcel of land into a residential condominium project, known as 205 Santolan by Rockwell, pursuant to Republic Act (RA) No. 4726, otherwise known as the Condominium Act. In compliance with the requirements of the said law, 205SCC was formed for the purpose of holding the common areas and management of the same project. In addition, Rockwell intends to transfer the title of the land and the common areas of 205 Santolan by Rockwell to 205SCC, without any consideration and for the benefit of the unit ‘owners, pursuant to the provisions of the Condominium Act, which provides that the condominium corporation shall hold title to the common areas as well as the Master Deed and Declaration of Restrictions (MDDR) of the condominium project. The MDDR also provides that the unit buyers shall automatically become members of the condominium corporation in order to hold rights over the land and other common areas after the turnover of the project from the developer to the condominium corporation upon its completion. Similar to the previous rulings of this Bureau, it is also your view and contention that the transfer contemplated above is a confirmation of ownership or title over the condominium units previously acquired by the unit buyers/owners. The subject local transfer tax over the sale of the units is already imputed in the total contract price when the units were sold and transferred to the unit owners. Therefore, it is your claim that the subsequent registration of the land in the name of the condominium corporation and the transfer of the common areas is a mere formality or a suspensive condition that accrues to the unit owners, who are also members of the condominium corporation. Moreover, 205SCC will only hold the ownership of the subject Page 1 of 2land and common areas in trust for the unit owners, who are autom: ‘condominium corporation, ally members of the To support aforementioned contentions, you cited DOF-BLGF Opinion dated 10 May 2011, Opinion No. 023-2016 dated 03 August 2016, and Bureau of Internal Revenue (BIR) rulings 041-92, 052-091, 125-89, and 026-85, which held that no transfer taxes may be assessed on such conveyances. To further provide clarity on the matter, reference is made to the latest BLGF Opinion dated 19 September 2018, treating a similar case, to wit: “Clearly, when the condominium unit owner paid the corresponding local transfer tax for the condominium unit purchased from xxx, the payment already included the proportionate interest to the land and other common areas, and subjecting the same to another transfer tax would result in taxing the same subject twice. The subsequent transfer in this instant case is not from the unit owner, who as earlier pointed out already effectively acquired ownership of the unit and the proportionate interest in the land and the common areas and facilities and paid the required local transfer tax, but rather from the developer to the condominium corporation in accordance with the provisions of the ‘Condominium Act” In view of the foregoing, this Bureau concurs with the representations made above and takes cognizance of the supporting documents submitted by Rockwell to this Bureau. Hence, this Bureau is of the ion that the transfer of title of land from Rockwell to 205SCC is not a taxable transaction by the local goverment “since there is no transfer of beneficial ownership, but rather a transfer made for the corporate purpose of holding in trust the management of the land and common areas by the condominium corporation over the condominium units already acquired by buyers/owners. The transfer of interest in the land (mother lot) and common areas was already deemed effected upon the sale of the condominium unit to the unit buyers, which undivided interest is being held by the condominium corporation as required by lav’. This Opinion’ is issued based on the information provided and to guide local treasurers in collecting taxes and other local impositions. If upon subsequent verification or submission of information proves the contrary or if the matter is the subject of a pending court case, this Opinion will be deemed null and void We hope we have provided clarity on the matter. Very truly yours, BrivF hh NINO RAYMOND B. ALVINA Executive Director 21047 " BLGF Opinion dated 14 September 2018 Zipline wih the BLGF mandate under Executive Order No. 127 to, among others, ‘Provide consultative services and technical assistance to tha ocal government and the general pubic on local taxation rel property assessment and other related meters” Transfer Tax Exemption of the Land and Common Areas of Rockwall Land Corporation Page 2 of 2