BIR Ruling [DA-299-00]

August 11, 2000 BIR RULING [DA-299-00] 24 (D) (1), 188; 125-93; DA-299-2000 Chato Eleazar Liboro & Santos Law Office 8th Floor, Strata 2000 Emerald Avenue Ortigas Center 1605 Pasig City Attention: Atty . Victor Y . Eleazar and Atty . Vivienne P . Tiempo Gentlemen : This refers to your letter dated March 8, 2000 requesting on behalf of your clients, Glorificador O. Orprecio and Kazuko Miyazato Orprecio for a ruling based on the following representation of facts: ". . . Glorificador O. Orprecio and Kazuko Miyazato Orprecio, residing in Dagupan City, Philippines and San Francisco, California, United States of America, respectively, have established a revocable inter vivos (living) trust referred to as the Orprecio Family Trust dated September 10, 1999 . . . Pertinent to the execution of this Trust, Glorificador and Kazuko, the "Settlors", would like to change the manner of holding title to their conjugal real properties currently located in Baguio City and Dagupan City and to transfer the titles of these properties under the names of the Trustees consisting of Glorificador O. Orprecio and Kazuko Miyazato Orprecio and their daughter, Keiko Baxter. This is a revocable trust under Section 63 of the National Internal Revenue Code, as amended by R.A. 8424 (the 1997 Tax Reform Act), where Glorificador and Kazuko, as trustors and two of the trustees, continue to hold all incidents of ownership to these trust properties. ECISAD In reply, please be informed that under Section 24(D)(1) of the Tax Code of 1997, notwithstanding the provisions of Section 39(B) of the same Code, a final tax of six percent (6%) based on the gross selling price or current fair market value as determined in accordance with Section 6(E) of the same Code, whichever is higher, is hereby imposed upon capital gains presumed to have been realized from the sale, exchange, or other disposition of real property located in the Philippines, classified as capital assets, including pacto de retro sales and other forms of conditional sales, by individuals, including estates and trust. Such being the case, and considering that there is no actual transfer of ownership over Glorificador O. Orprecio and Kazuko Miyazato Orprecio as trustees for the Orprecio Family Trust, the said transfer is not subject to the six percent (6%) capital gains tax under Section 24(D)(1) of the Tax Code of 1997. Moreover, the deed conveying the aforementioned properties to Glorificador O. Orprecio and Kazuko Miyazato Orprecio and their daughter, Keiko Baxter as trustees is not subject to documentary stamp tax imposed by Section 196 of the Tax Code of 1997, but the notarial acknowledgment is subject to the documentary stamp tax of P15.00 under Section 188 of the same Code. The aforementioned real properties may now be registered by the Registry of Deeds concerned in the name of Glorificador O. Orprecio, Kazuko Miyazato Orprecio and Keiko Baxter as trustees for the Orprecio Family Trust (BIR Ruling No. 125-93 dated April 5, 1993) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI OIC, Deputy Commissioner (Legal & Inspection Group)