BDO Private Bank

May 5, 2022 BIR RULING NO. OT-210-2022 Secs. 24 (D) (1), 98, 105, & 196, Tax Code; BIR Ruling No. 546-19 BDO Private Bank BDO Equitable Tower 8751 Paseo de Roxas Makati City 1226 Attention: Maria Vilma D. Fabian Vice President Jaime T. Reyes II Assistant Vice President Gentlemen : This refers to your letter request for confirmation of your opinion that the re-conveyance of property, as a result of the termination of a trust agreement, by BDO Private Bank, Inc. to JILL ADRIANNE T. LAO ("Trustor"), is not subject to internal revenue taxes. Background 1. On June 13, 2017, Trustor entered into a Trust Agreement with BDO-Wealth Advisory and Trust Group ("BDOPB") by virtue of which Trust Account No. 00-0-000-0000 was established. The Trustor conveyed to BDOPB an amount in cash in trust nevertheless reserving unto herself the right to revoke, amend, annul, and cancel the trust created thereby. 2. Pursuant to the terms of the Trust Agreement, BDOPB purchased, with the funds transferred to it in trust, a parcel of land consisting of Four Hundred Sixteen (416) square meters, together with the improvements existing thereon, situated at Lot 6, Block 1, Moonlight Loop, Blue Ridge B, Quezon City covered by Transfer Certificate of Title No. 000-0000000000 of the Registry of Deeds for Quezon City (the "Property"). Since BDOPB is the trustee and legal title holder, the title was registered in the name of BDO Private Bank, Inc., as Trustee for the Trust Account No. 00-0-000-0000. 3. The Trustor now wants the trust res , particularly the Property, to be transferred to her name. To give full effect to the Trustor's intention, BDOPB and the Trustor executed a Deed of Conveyance so that the legal and beneficial title will be consolidated in the Trustor's name. There was no monetary or valuable consideration for this consolidation of title. In reply thereto, please be informed as follows: The transfer of title over the Property by the Trustee, BDOPB in favor of the Trustor, Jill Adrianne T. Lao, who is the actual owner thereof is not subject to capital gains tax imposed under Section 24 (D) (1) of the National Internal Revenue Code of 1997 (Tax Code), as amended, nor to the creditable withholding tax prescribed in Revenue Regulations (RR) No. 2-98, as amended, considering that the transfer and re-conveyance is not motivated by a valuable consideration and merely acknowledges, confirms and consolidates the legal title and actual ownership over the Property in the name of the Trustor. Furthermore, the conveyance by the Trustee in favor of the Trustor of the Property which the former acquired by virtue of the Trust Agreement is not to be treated as another transfer separate and distinct from the sale between the original owner and the Trustee. The conveyance is merely to be treated as a continuation and confirmation of title in favor of the ultimate and real beneficiary of the Property. Likewise, the transfer of the Property to the Trustee is not subject to the 12% value-added tax because the aforesaid property is not held primarily for sale to customers or for lease in the ordinary course of trade or business. The transfer and re-conveyance of the Property to the Trustor without any monetary consideration is not subject to gift tax imposed under Section 98 of the Tax Code, as amended, since there is no donative intent on the part of the Trustee. Finally, the Deed of Conveyance executed to terminate the trust relationship between the Trustor and the Trustee, and the consolidation of the legal title and actual ownership over the Property is a transfer and re-conveyance without monetary consideration, and as such not subject to the documentary stamp tax (DST) imposed under Section 196 of the same Tax Code, as amended. However, the notarial acknowledgment to such deed is subject to the DST of P30.00 1 under Section 188 of the Tax Code, as amended. 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, CAESAR R. DULAY Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS Deputy Commissioner Legal Group Officer-in-Charge Footnotes 1. The new rate was used since the transaction took place after the effectivity of R.A. No. 10963 (TRAIN Law).