BIR Ruling [DA-458-06]

July 26, 2006 BIR RULING [DA-458-06] 27 (D) (5); 196; 188; DA-225-2006; DA-105-2006 Margarita S. Roque 115 Victoria St., Magallanes Village Makati City M a d a m : This refers to your letter dated May 2006 requesting for a ruling that the transfer of a real estate property by R.V. Roque, Inc., as trustee in favor of Raul D. Roque, as trustor/beneficiary is exempt from capital gains, income, donor's and documentary stamp taxes. Based on your representations, as well as from the documents submitted, it appears that on December 20, 2005, R.V. Roque, Inc. and Raul D. Roque executed an Indemnity Agreement and Declaration of Trust with Deed of Assignment ("Deed"), whereby the former is the Trustee/Assignor and the latter is the Beneficiary/Assignee; that R. V. Roque, Inc. ("Trustee/Assignor") acknowledges that the real estate property with improvements covered by Transfer Certificate of Title No. 152670 were purchased out of the money belonging to Raul D. Roque ("Beneficiary/Assignee") and is being held by the Trustee/Assignor in trust and for the benefit of the Beneficiary/Assignee; that the Trustee/Assignor acknowledges that all income, profits and interest declared on the real estate property are similarly held in trust for the benefit of the Beneficiary/Assignee as the beneficial owner; that the Trustee/Assignor is under obligation to transfer the aforesaid real estate property including the income, profits and interest declared thereon to the Beneficiary/Assignee; that pursuant to the Deed, the Trustee/Assignor has transferred and assigned all its rights, title, and interest over the aforesaid real estate property including the profits and interests thereof unto the Beneficiary/Assignee; and that upon transfer and delivery by the Trustee/Assignor of the entire real estate property to the Beneficiary/Assignee, the former shall be discharged of its duties as trustee of the real estate property and shall have no power, discretion, rights and obligations in relation to the real estate property. In reply, please be informed that since the transfer of the real estate property by R.V. Roque, Inc., as trustee, in favor of Raul D. Roque, as trustor, is without monetary consideration and is merely a confirmation of title in favor of the beneficial owner, the same is not subject to the income and capital gains taxes imposed under Section 27 (A) and (D) (5) of the Tax Code of 1997, as amended. HcTEaA 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 R.V. Roque, Inc. to Raul D. Roque pursuant to the Indemnity Agreement and Declaration of Trust with Deed of Assignment, which is made without monetary consideration, is not subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended. However, the notarial acknowledgment to the said deed is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service