FIRST E-BANK TOWER

CONDO V. CIR
G.R. No. 215801 & 218924, January 15, 2020
 Facts

The First E-Bank has submitted a formal request for declaratory relief with
the intention of challenging the validity of Revenue Memorandum Circular
No. 65-2012 (RMC No. 65-2012). This particular circular stipulates, among its
provisions, that the funds contributed by members and occupants of a
condominium corporation as dues or fees should be considered as part of
the corporation's overall income, thus subject to income tax.
 Arguments
First E-bank The CIR

The collected condominium The amounts paid by members and

charges and fees were exclusively tenants of a condominium
used for the maintenance and corporation form part of the gross
preservation of the building and its income of the latter subject to
premises income tax.
 Facts

First E-Bank aimed to clarify the tax implications surrounding the inclusion
of association dues, membership fees, and other assessments/charges
collected by condominium corporations. These collections were found to be
subject to both Income Tax and Value Added Tax (VAT) according to the
memorandum circular in question. The bank asserts its eligibility for
exemption from tax payment on these amounts.
 Issue
Is RMC No. 65-2012 valid?
 Ruling
No, RMC No. 65-2012 is invalid. The collection of association dues,
membership fees, and other assessments/charges is solely intended
for the benefit of condominium owners. It serves as a necessary
component to effectively oversee, maintain, and potentially
enhance the common areas and governance of the condominium.
 Ruling
Membership fees, assessment dues, and similar fees are merely
contributions or replenishments to the funds utilized for the
maintenance and operation of recreational clubs' facilities,
exclusively available to their members. These funds are held in trust
by the clubs to cover their operational and general expenses, and
therefore represent capital infusion.
 Ruling
For an amount to be considered as "income," there must be a
realized "gain." In the case of membership fees and assessment
dues, which are inherently dedicated to the maintenance,
preservation, and upkeep of the clubs' operations and facilities, no
gain is obtained from their collection.