Fort 1 Global City Center, Inc.

July 15, 2009 BIR RULING [DA-(C-129) 375-09] Secs. 27 & 106; DA-(C-050) 177-08; DA-662-99; UN-072-94; DA-245-05; DA-103-07; DA-455-07; DA-459-05 Fort 1 Global City Center, Inc. MC Home Depot, 32nd St. cor. Bonifacio Blvd. Bonifacio Global City, Taguig Attention: Ms. Mary Jane Malcontento Vice-President Gentlemen : This refers to your letter dated June 26, 2009 stating that the Fort 1 Global City Center, Inc. Project ("F1 Global Project" for brevity) was conceptualized, commenced, and built principally through the initiative of a group of investors; that together, they created and established an escrow account with the Banco de Oro Trust Department ("BDO-TD" for brevity) and appointed the latter as trustee; that as trustee, BDO-TD managed the contributed funds of the individual investors and disbursed payment to all trade in the execution and completion of the construction of the FPSCC Project; that part of the trusted funds was used to pay for the purchase of the parcel of land owned by Fort Bonifacio Development Corporation (FBDC), covered by Transfer Certificate of Title (TCT) No. 1231-P of the Registry of Deeds of the Province of Rizal, where the condominium project is constructed; that the title of the above property was transferred to F1 Global City Center, Inc. upon payment of taxes due thereon; that BDO-TD contracted the services of a highly-experienced project manager and contractor to build the condominium project; and that BDO-TD will eventually distribute the condominium and parking units to the investors, the beneficial owners of the FPSCC Project. HcTEaA On the basis of the foregoing, you are requesting, in effect, confirmation of your opinion that the conveyance of the condominium and parking units by BDO-TD, the Trustee, to the individual Trustors, in the F1 Global Project, without any monetary consideration, is not subject to the 6% capital gains tax (CGT) under Section 27 (D) (5) of the Tax Code of 1997, as amended, the documentary stamp tax (DST) on deeds of sale and conveyance of real property imposed under Section 196, and the value-added tax (VAT) under Section 106 (A) (1) of the same Code. In reply, please be informed that all sales, exchanges or other dispositions of real property located in the Philippines, classified as capital assets, including pacto de retro s ales and other forms of conditional sales, by individuals, including estates and trusts, are subject to 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 Tax Code of 1997, as amended, whichever is higher. Accordingly, if as represented, the investors are the real owners of the aforesaid condominium and parking units, and that the respective transfer thereof in their favor is without any monetary consideration, the said transaction, therefore, is not a taxable transaction; hence, the transfers from the trustee to the ' cestui que trust ' or beneficial owners of the condominium and parking units are not subject to the CGT imposed under Section 27 (D) (5) of the Tax Code of 1997, as amended, income tax imposed under Section 27 (A) of the same Code, and consequently, to the withholding tax imposed under Revenue Regulations No. 2-98, as amended, implementing Section 57 of the Tax Code. (BIR Ruling Nos. DA-245-05 dated June 7, 2005, DA-(C-050) 177-08 dated August 27, 2008, DA-103-07 dated February 16, 2007, DA-455-07 dated August 17, 2007, DA-459-05 dated November 10, 2005 and DA-662-99 dated November 29, 1999) Moreover, the said transfers are not subject to VAT imposed under Section 106 (A) (1) of the same Tax Code, the same not being a sale transaction and not made in the regular course of trade or business. Further, the deeds conveying said condominium and parking units are not subject to documentary stamp tax imposed under Section 196 of the Tax Code of 1997 (BIR Ruling No. 662-99 dated November 29, 1999 citing UN-072 dated February 22, 1994). However, the documentary stamp tax on certificates in the amount of Fifteen Pesos (P15.00) imposed by Section 188 of the Tax Code of 1997, as amended, shall be collected. 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. AEIHaS Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service