Expanded Withholding Tax on Deed of Transfer of Real Property between Uniwide and Apex

June 21, 1991 BIR RULING NO. 116-91 21 (e) 118-87 116-91 S i r : This refers to your letter dated February 9, 1990 requesting, in effect, confirmation of your opinion that the Deed of Transfer of Real Property executed on February 8, 1990 by and between Uniwide Sales Realty and Resources Corporation (Uniwide) and Apex Philippines Construction and Development Corporation (Apex) is not subject to the expanded withholding tax prescribed under Revenue Regulations No. 1-90 amending Revenue Regulations No. 12-89. cdta Documentary evidence show that on May 26, 1989, Apex and Uniwide entered into a Trust Agreement whereby the latter agreed to buy from the heirs of Juanita Jabson, heirs of then Justice Ramon Jabson, Encarnacion Jabson-del Rosario, and Potenciana Jabson and her children by the late Manuel Jabson (hereinafter referred to as the Jabsons), a certain parcel of land (portion of lot 3 of the subdivision plan (LRC Psd-308953) situated at Caniogan, Pasig, Metro Manila, with an area of 73,841 square meters more or less, for and in behalf of the former, and to hold the same in trust for Apex until the title to the said property is transferred by the Jabsons in the name of Uniwide; that Apex will advance to Uniwide the money to be used in purchasing the above-mentioned property of the Jabsons for which Uniwide, in turn, will issue appropriate receipts for the money or moneys to be advanced by Apex, that on January 5, 1990, the Jabsons executed a Deed of Absolute Sale of said parcel of land in favor of Uniwide, for a consideration of Fifty-One Million Five Hundred Fourteen Thousand Four Hundred Pesos (P51,514,400.00); that on this sale transaction the Jabsons have paid the 5% capital gains tax and the prescribed documentary stamp tax; and that on February 8, 1990, Uniwide executed a Deed of Transfer ceding, transferring and conveying to Apex the aforesaid parcel of land without consideration under and by virtue of the Trust agreement earlier entered into by and between Apex and Uniwide. In reply, please be informed that all sales, exchanges, or transfers of real properties (whether classified as ordinary or capital asset) by corporations, consummated on or after January 1, 1990 are subject to the creditable withholding tax. (RMC No. 7-90 dated January 16, 1990) In other words, Revenue Regulations No. 1-90 amending Revenue Regulations No. 12-89 cover, among others, transfers or conveyance of ownership over real properties from one person to another. Accordingly, if as represented, Apex is the real owner of the aforementioned parcel of land, no corporate income tax accrued and became collectible under the creditable expanded withholding tax provisions of the said regulations, on account of the Deed of Transfer which pertains only to the transfer of the land by the trustee Uniwide of the real owner, Apex. Moreover, since, as represented, the Deed of Transfer of real property executed by Uniwide in favor of Apex has no consideration because the latter is the real owner of said property and the former acted only as trustee, it is subject only to the documentary stamp tax on certificates in the amount of P3.00 pursuant to Section 188 of the Tax Code as amended and not to the documentary stamp tax on deed of sale and conveyance of real property imposed by Section 196 of the same Code. This ruling is 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 without force and effect. Very truly yours, (SGD.) JOSE U. ONG Commissioner