BIR Ruling No. 409-2022

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE

Secs. 24(D(1), 98, 105, & 196, Tax Code BIR Ruling No. 546-19 OT 409-2022 OCT 0 7 2022

BDO Equitable Tower 8751 Paseo de Roxas Makati City 1226 BDO PRIVATE BANK

Attention: Maria Vilma D. Fabian Assistant Vice President Jaime T. Reyes II Vice President

Gentlemen:

of property, as a result of the termination of a trust agreement, by BDO Private Bank, Inc. to the beneficial owners is not subject to internal revenue taxes. This refers to your request for confirmation of your opinion that the re-conveyance

Background

1. On February 28, 2013, siblings YVETTE MARIE H. ALMENDRAL and with BDO - Wealth Advisory and Trust Group ("BDOPB") by virtue of which BDOPB an amount in cash in trust nevertheless reserving unto themselves the right to revoke, amend, annul, and cancel the trust created thereby. STEPHANIE L. HAGEDORN ("Trustors") entered into a Trust Agreement Trust Account No. was established. The Trustors conveyed to

2. Pursuant to the terms of the Trust Agreement, BDOPB purchased, with the funds the Registry of Deeds for the City of Muntinlupa (the "Property"). Since BDOPB is the trustee and legal title holder, the title was registered in the name of BDO existing thereon, situated at No. 159 Sarangani Street, Ayala Alabang Village, Private Bank, Inc., as Trustee for the Trust Account No. transferred to it in trust, a parcel of land consisting of Muntinlupa City covered by Transfer Certificate of Title No. ( ) square meters, together with the improvements

BDO Private Bank(YVETTE MARIE H.ALMENDRAL& STEPHANIE L.HAGEDORN) Of 4 0 g - 20 22 OCT 0 7 2022

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3. The Trustors now want the trust res, particularly the Property, to be transferred to

their names. To give full effect to the Trustors' intention, BDOPB and the

be consolidated in the Trustors names. There was no monetary or valuable Trustors executed a Deed of Conveyance so that the legal and beneficial title will

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 Trustors, Yvette Marie H. Almendral and Stephanie L.Hagedorn,who are the actual owners 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 Trustors 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 owners and the Trustee. The conveyance is merely to be treated as a continuation and confirmation of title in favor of the ultimate and real beneficiaries of the Property.

value-added tax because the aforesaid property is not held primarily for sale to customers or Likewise, the transfer of the Property to the Trustors is not subject to the 12%

for lease in the ordinary course of trade or business.

The transfer and re-conveyance of the Property to the Trustors 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 Trustors 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 P30.00under Section 188 of the Tax Code,as amended.

It is, however, understood that this Ruling is never intended, and shall not be construed, as giving authority to BDOPB to effect transfer of the Property in the name of the YVETTE MARIE H.ALMENDRAL and STEPHANIE L.HAGEDORN without the necessary

1 The new rate was used since the transaction took place after the effectivity of R.A. No.10963 (TRAIN Law)

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BDO Private Bank (YVETTE MARIE H. ALMENDRAL & STEPHANIE L. HAGEDORN) Page 3 of 3

Certificate Authorizing Registration (CAR) issued by this Bureau. In this regard, this Ruling shall be presented to the Revenue District Office (RDO) concerned in order for the latter to issue the CAR as prescribed in Revenue Memorandum Circular (RMC) No. 37-2012.

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.

E

Commissioner of Internal Revenue LILIA CATRIS GUILLERMO

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