Atty. Rufino R. Tan

December 4, 2009 BIR RULING [DA-(C-298) 738-09] DA138-07; DA222-00 Atty. Rufino R. Tan Unit 1705 Antel Global Corporate Center Julia Vargas Avenue Ortigas Center Pasig City Sir : This refers to your letter dated November 3, 2009 stating that the Trustor, now the Transferee Mr. Nilo Santos (Mr. Santos), is a co-owner to the extent of 1/4 of the lot where Burgundy Condominium is now constructed; that when the property was turned over the * to the developer for the joint venture agreement, Mr. Santos was in the United States and could not attend to the transaction with the developer; that the consideration for the turnover of the lot to the developer are condominium units equal to 30% of all units in the condominium building, to be shared 1/4 to Spouses Nora Santos and Vicente Santos, 1/4 to Spouses Mila Santos and Renato Tanseco, 1/4 to Elsa L. Santos, and the remaining 1/4 to Mr. Santos, the Trustor; that Mr. Santos requested because he was in the United States then, his 1/4 share of the condominium units be transferred and registered in the name of his sister, Nora Santos married to Vicente Santos in trust for Mr. Santos; that the 1/4 share of Mr. Santos consist of 39 units in the condominium project; that on June 1, 2001, five (5) units were transferred to the Trustor without payment of the transfer tax on the same ground that there was no transfer of ownership; and that on June 8, 2001, nine (9) units were transferred to the Trustor, again without payment of the transfer tax under the same terms and conditions. Based on the foregoing representations, you now request confirmation of your opinion that the transfer of the remaining fourteen (14) units by Spouses Nora and Vicente Santos, as Trustee, in favour of Mr. Santos, as Principal/Trustor, is not subject to capital gains tax/to the creditable withholding tax, value-added tax (VAT), donor's tax and documentary stamp tax. In reply thereto, please be informed that your opinion is hereby confirmed as follows: 1. The transfer of titles over the aforesaid properties by the Trustee in favor of the Principal, the beneficial owner thereof, effected through a Memorandum of Agreement is not subject to capital gains tax imposed under Section 24 (D) (1) of the Tax Code of 1997 nor to the creditable withholding tax prescribed in Revenue Regulations No. 2-98, as amended, considering that the transfer is not for monetary consideration and merely acknowledges and confirms the title and ownership over the above-mentioned properties of Mr. Santos, as the Principal. (BIR Ruling No. DA222-00 dated April 27, 2000) cDTACE 2. The transfer of titles over the properties to the Principal is likewise not subject to the 12% value-added tax because the said property is not held primarily for sale to customers or for lease in the ordinary course of business. 3. The transfer of the said properties to the Principal without any monetary consideration is not subject to gift tax imposed under Section 98 of the Tax Code of 1997, since there is no donative intent on the part of the parties. (BIR Ruling No. 061-93 dated February 10, 1993) 4. Finally, the Memorandum of Agreement executed by and between Spouses Nora and Vicente Santos, as Trustee, and Mr. Santos, as Principal, whereby the former will convey to the latter the above-mentioned properties without monetary consideration is likewise not subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended. However, the notarial acknowledgment is subject to the documentary stamp tax of P15.00 under Section 188, supra . 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, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service