BIR Ruling [UN-129-94]

April 11, 1994 BIR RULING [UN-129-94] Atty. Silverio Benny J. Tan E-1 Casa Verde Townhomes Rodriguez-Lanuza Pasig, Metro Manila S i r : This refers to your letter dated October 21, 1993 requesting for a ruling as to the taxability of the transfer of title to some real properties situated in the Philippines from the trustors in favor of the trustees of a Revocable Inter Vivos Trust or a Living Trust. cdta It is represented that your clients, Mariano Robles, Jr., Albert B. Robles (for and in his own behalf and as Attorney-in-fact for Philip B. Robles, Canadian, Frederick B. Robles and Robert B. Robles, Filipinos), Rosalie R. Vivas, Edward John B. Robles, Ronald B. Robles, and Celso P. Vivas, all Filipinos, of legal age and residing in the Philippines, executed a Deed of Revocable Trust under the name of "MARRO TRUST", in which Mariano, Albert (as Attorney-in-fact for Philip, Frederick and Robert), Rosalie, Edward John and Ronald are the grantors, with Albert and Celso as the grantees; and that it is your opinion that the real estate transfers and registrations contemplated under the said Trust are exempt from the 5% capital gains tax and documentary stamp tax on the transfer of real properties, there being no actual transfer of ownership involved in the case. In reply, please be informed that under Section 21(e) of the Tax Code, as amended, 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 or other forms of conditional sales, by individuals, including estates and trust shall be taxes at the rate of 5% based on the gross selling price or the fair market value prevailing at the time of sale, whichever is higher. Such being the case, and considering that there is no actual transfer of ownership over the aforementioned property as a result of the transfer of the property to Albert B. Robles and Celso P. Vivas, as trustees for the "MARRO TRUST", the said transfer is not subject to the 5% capital gains tax under Section 21(e) of the Tax Code, as amended. Moreover, the deed conveying the aforementioned property to Albert and Celso as trustees is not subject to documentary stamp tax. (BIR Ruling No. 86-92 dated March 19, 1992) The aforementioned real property may now be registered by the Registry of Deeds concerned in the names of Albert B. Robles and Celso P. Vivas as trustees for the "MARRO TRUST". This ruling is being issues on the basis of the foregoing facts as represented. However, if it will be disclosed upon investigation that the facts as represented are different, then this ruling shall be considered null and void. Very truly yours, JAIME M. MAZA Assistant Commissioner (Legal Service)