The Transfer of Real Properties by Spouses Alejo and Teresita Ganut to PCGG in Trust for the Republic of the Philippines is a Form of Conditional Sale as Contemplated under Section 21 (e) of the Tax Code, as amended, Which Shall be Subject to the 5% Capital Gains Tax

October 25, 1995 BIR RULING NO. 171-95 Presidential Commission on Good Government Philcomcen Bldg., 6th Floor Ortigas corner ADB Avenue Pasig City Attention: Mr . Hermilo R . Rosal Gentlemen : This refers to your letter dated March 29, 1995 relative to the registration of five (5) parcels of land located in Caloocan City and Novaliches, Rizal, which were assigned to the Philippine Government by Spouses Alejo R. Ganut, Jr. and Teresita C. Ganut, pursuant to a Compromise Agreement dated October 4, 1994 whereby the latter transferred to the PCGG the titles to the aforesaid parcels of land in trust for the Republic of the Philippines. prll It will be recalled that Alejo Ganut is a trusted crony of the late President Ferdinand E. Marcos whose assets were the subject of sequestration by PCGG; that under a compromise agreement entered into by and between PCGG and the Spouses Alejo and Teresita Ganut, the following real properties will be transferred to the Government, viz: Location/Type (Sg. M.) TCT/TD No. Registered Owner(s) 1. Emerald Court Subd. TCT # 103234 Teresita C. Ganut Bagumbong, Cal. City Alejo R. Ganut, Jr. Residential Lot (240 sq. m.) 2. Emerald Court Subd. TCT # 103225 Teresita C. Ganut Bagumbong, Cal. City Alejo R. Ganut, Jr. Residential Lot (240 sq. m.) 3. Tala Estate TCT # 131830 Alejo R. Ganut, Jr. Caloocan City Residential Lot (240 sq. m.) 4. Brixtonville Subd. TCT # 45253 Teresita C. Ganut Caloocan City Alejo R. Ganut, Jr. 5. Pangarap Village TCT # 30047 Alejo R. Ganut, Jr. Novaliches, Rizal Residential Lot (300 sq. m.) that the said compromise agreement had already been approved by the United States District Court, for the District of Hawaii as well as the Sandiganbayan, Philippines. In reply, please be informed that pursuant to Section 21 (e) of the Tax Code, capital gains presumed to have been realized from the sale, exchange, or other disposition of real property located in the Philippines classified as capital assets, including pacto de retro sales and other forms of conditional sales by individuals shall be taxed at 5% based on gross selling price or the fair market value prevailing at the time of sale, whichever is higher. Such being the case, the transfer of the above described real properties by the Spouses Alejo and Teresita Ganut to PCGG in trust for the Republic of the Philippines, is a form of Conditional Sale as contemplated under Section 21 (e) of the Tax Code, as amended, which shall be subject to the 5% capital gains tax pursuant to the aforesaid Section of the Tax Code. Moreover, it is also subject to the documentary stamp tax at the rates prescribed under Section 196 of the Tax Code, as amended. aisadc Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue