Winville Development Corporation

October 8, 2008 BIR RULING [DA-(C-087) 279-08] Secs. 27 (D) (5), 196, 198; RR 2-98; DA-158-2007 Winville Development Corporation Unit E 16/F Strata 100 Building Ortigas Rd., Ortigas Center, Pasig City Attention: Eric S. Ang Authorized Representative Gentlemen : This refers to your letter dated September 5, 2008, requesting confirmation of your opinion that the reconveyance of the title of the property to the trustor from the trustee of the property is not subject to the capital gains tax imposed under Section 27 (D) (5) of the Tax Code of 1997, nor to the withholding tax under Revenue Regulations No. 2-98, as amended and neither to the documentary stamp tax under Section 196 of the same Code. EHSIcT It is represented that WINVILLE DEVELOPMENT CORP. (WINVILLE, for short) is an arranger of the development of condominium project which it has conceptualized; that it arranges, organizes and coordinates with investors who are willing to contribute their financial resources, constituting the investors' capital contribution, for the collective development by the investors of a given condominium project as prorate, pro-indiviso owners thereof whereby the individual units which will compromise the project shall eventually be owned by the investors as return of their investments; that one of such projects by WINVILLE is a proposed forty (40) floors condominium tentatively named "Chateau de Noble" (the project) to be erected on a parcel of land identified as Block 9, Lot 3, located at E-square, Crescent West District, Bonifacio Global City, which WINVILLE purchased as its contribution to the project; that to make certain the conceptualization and realization of the project, WINVILLE as Trustor and Allied Banking Corporation as Trustee, executed a Trust Agreement whereby a Trust was created for the Trustee, executed to hold and manage the subject parcel of land and for the holding of title thereto in trust for the benefit of WINVILLE and the investors to the condominium project; that hence, Transfer Certificate of Title No. 1069-P in the name of Allied Banking Corporation Trust and Investment Division as Trustee, was issued by the Registry of Deeds, Taguig City, for the subject parcel of land; that following serious agreements among the investors, the project was completely abandoned even before the commencement of any construction works; that hence, WINVILLE was constrained to terminate the Trust in accordance with the provision of the Trust Agreement and gave notice thereof to the Trustee with a request for the transfer and consolidation of the legal title to the trust property in the name of WINVILLE as the true and beneficial owner thereof; that conformably, with the terms of the Trust Agreement, Allied banking Corporation Trust and Investment Division as Trustee, executed a Deed of Assignment assigning the Trust property in favor of the Trustor, WINVILLE, without monetary consideration. In reply, please be informed that since the transfer of the subject property by Allied Banking Corporation as the Trustee in favor of WINVILLE as the true and beneficial owner is without monetary consideration and is merely a confirmation of title in favor of the beneficial owner thereof, the same is not subject to the capital gains tax imposed under Section 27 (D) (5) of the Tax Code of 1997 nor to the creditable withholding tax imposed under Revenue Regulations No. 2-98, as amended. Likewise, the conveyance of realties to trustees or other persons without consideration is not taxable under Section 185 of Revenue Regulations No. 26 otherwise known as the Revised Documentary Stamp Tax Regulations. Thus, the Deed of Reconveyance executed by WINVILLE in favor of Allied Banking Corporation which is made without valuable or 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 acknowledgement to said deed is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the same Tax Code, as amended. CDScaT This will authorize the Revenue District Officer (RDO) of the revenue district where the subject property is located to issue the corresponding Tax Clearance Certificate/Certificate Authorizing Registration with regard to the transfer by Allied Banking Corporation of the above-stated property in favor of WINVILLE without need of presentation of proof of payment of the capital gains tax/creditable withholding tax and documentary stamp tax. 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, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service