BIR Ruling [DA-162-05]

April 14, 2005 BIR RULING [DA-162-05] 24 (D) (1), 196, 98 DA-385-2004; DA-646-2004 Mr. Victor R. Kalaw 17th Floor Aurora Towers Araneta Center, Cubao Quezon City S i r : This refers to your letter dated March 28, 2005 requesting in effect for a ruling that the transfer of ownership of certain parcels of land by the nominees to its principals is not subject to the payment of capital gains tax, documentary stamp tax and other taxes. Documents submitted shows that on March 3, 1976, Luis R. Villafuerte, Jose T. Pardo and Victor R. Kalaw are principals who entered into a Nominee Agreement with Abraham L. La Vina, Manuel L. Ortega, Abraham B. Borreta, Jose Ll. Apolinario, Jr. and Jaime O. Bumanglag as nominees, for the purpose of holding title to certain parcels of land covered by Transfer Certificate of Title (TCT) No. T-228854 located at Barrio Sibul, San Miguel, Bulacan; that the TCT was registered in the name of the said nominees after payment of the required capital gains tax, documentary stamp tax and fees at the time of the registration of the transaction with the original sellers; that at present, the principals would like to register the property in their name in accordance with the Nominee Agreement, taking the position that the transaction is not subject to capital gains tax and other taxes because it had been previously paid before the issuance of the said TCT. In reply, please be informed that since the transfer of the properties by the nominees in favor of the principals are without monetary consideration, the same is not subject to the capital gains tax imposed under Section 24(D)(1) of the Tax Code of 1997. (DA-385-2004 dated July 16, 2004) Likewise, the conveyance of realties to trustees or other persons without consideration is not taxable under Section 185 of the Revised Documentary Stamp Tax Regulations. Thus, the Deed of Transfer executed by and between the Nominees and the Principals and was made without monetary consideration is not subject to the documentary stamp tax imposed under Section 196 of the 1997 Tax Code. However, the notarial acknowledgement to the said deed is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. The transfer of the above-mentioned properties is exempt from the donor's tax imposed under Section 98 of the same Code due to lack of donative intent on the part of the trustee. (BIR Ruling No. DA-646-2004 dated December 21, 2004) THIcCA This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group