BIR Ruling [DA-225-06]

April 7, 2006 BIR RULING [DA-225-06] 98; 085-82 Sps. Ramon and Maria Luisa Gonzalez 156 Bunga St., Ayala Alabang Village Muntinlupa City S i r : This refers to your letter dated September 21, 2005 requesting for a ruling that the transfer of a property by a trustee to the trustor-owner is exempt from capital gains tax. Documents submitted shows that Spouses Ramon Y. Gonzalez and Maria Luisa C. Gonzalez are the registered owners of a parcel of land with improvements thereon covered by Transfer Certificate of Title (TCT) No. 150124/T-754 (now TCT 160055) located at 156 Bunga St., Ayala Alabang Village, Muntinlupa City. On December 29, 1988, the Spouses executed a Deed of Trust constituting Far East Bank and Trust Co. as their trustee over the aforestated property, and it was entered as Doc. No. 482, Page No. 97; Book No. X Series of 1988 in the Notarial registry of Atty. Clarissa M. Pealosa of the City of Manila. On March 15, 2004 pursuant to a Distribution/Transfer of Trust Property to the Beneficiary and Termination of Trust Agreement, the trustee (now Bank of the Philippine Islands or BPI) will distribute and transfer to Ma. Olivia C. Gonzalez, (Beneficiary) the subject property. The Spouses were issued a Certificate Authorizing Registration (CAR 2004 00236431) on January 7, 2005 by BIR Revenue Region No. 8-RDO No. 53 of Las Pias/Muntinlupa to transfer the title of the real property in the name of the trustors. It is your opinion that since there is no consideration involved in the said transfer the same is exempt from capital gains tax. In reply, please be informed that since the transfer of the aforestated property by BPI in favor of Sps. Gonzalez is without monetary consideration, the name is not subject to the capital gains tax imposed under Section 27(D)(5) 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 transfer by BPI to Sps. Gonzalez which is 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. It is to be understood that in the event BPI will transfer the aforesaid property to Ma. Olivia C. Gonzalez the same is subject to donor's tax imposed under Section 98 of the same Tax Code. 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 as null and void. IADCES Very truly yours, Commissioner of Internal Revenue By: (SGD.) PABLO M. BASTES, JR. OIC, Head Revenue Executive Assistant Legal Service