BIR Ruling No. 294-2022

REPUBLIC OF THE PHILIPPNES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE

Quezon City

Secs.24 (D) (1),188 & 196 of the BIR Ruling No. 779-18 BIR Ruling No. 067-2014 Tax Code of 1997, as amended

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67 Fifth Street, New Manila 1112 Quezon City Metro Manila W.TAN LAW GROUP

Attention: PEARLYN S. TAN

Gentlemen:

Internal Revenue Code (Tax Code) Sf 1997, as amended. Stamp tax (DST) imposed under Section 24(D)(1) and Section 196 of the National the Trustor from the Trustees is noi subject to capital gains tax (CGT) and documentary This refers to your reouest f - confirmation that the reconveyance of properties to

It is represented that Mr. Ro!ndo V. Tongco (the Trustor") entered into a Trust Agreement with his children Raymond Misael V. Tongcc, Rosalie Michell T. Gomez, Re,'na Monica T. Salazar and Rowena Mabelle V. Tongco (the "Trustees"), for the purpose of holding only legal title to the properties tliat he was in the process of purchasing covered by Transfer C.:rtific.tes of Title (tCT) Nos. and

Pursuant :- the Trust Agreen'ient, a Deed of Absolut:- Sale was entered into by and between Spouses Jose G. Go and Marie Y. Go and Lim Bee Hua with the Trustees on under TCT Nos. July 28, 2010. Said properties were transferred and registerr-d in the names of the T ustees aad

title to the properties and acknowleaged their status as T:ustees. Further, under the said Trust Agreement, the parties agreed that either party ma: terminate said agreement for any reason upon prior written notice io the other. Under the Trust Agreement, the Trustees confirmid that they merely held legal

intended to terminate the Trust Agreement, and thereafier executed a Cancellation of Trust and Deed of Conveyance whi.ch was signed by all th? parties. In the said document, On November 19, 2019, the Trustor gave due uotice to the Trustees that he

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the Trustees agreed to cancel the T'rust Agreement and ts convey the properties held by them in trust back to the Trustor. All the parties acknowledged that based on the Trust Agreement, the Trustor has been the true and beneficial owner of the property, and so the conveyance back to the Trustor was made without any mcnetary consideration.

In reply, please be informed that Section 24 (D) (1) of the Tax Code of 1997, as amended, provides that:

SEC. 24. Income Tax Rates.

XXX XXX XXX

(D) Capitai Gains from Sale of Real Property.

In General. - The provisions of Section 39(B) notwithstanding. a final tax of six percent (6%) based on the gross selling price or current fair market value as determined in accordance with Section &(E) of this Code, whichever is higher, is hereby imposed upon 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, including estates and trusts: Provided, That the tax liability, if any, on gains from sales or other dispositions of rea? property to the government or any of its political subdivisions or agencies or to government-owned or controlled corporations shall be determined either under Section 24(A) or'under this Subsection, at the option of the taxpayer.

Since the transfer of the su5ject properties by the Trustees in favor of the Trustor, as the true and beneficial owner is without monetary.consideration and is merely a confirmation of titie in favor of the. beneficial owner thereof, the same is not subject to the

C'GT imposed under Section 24 (D) (1) of the Tax Code of 1997, as amended.

Moreover, the said conveyance c: :he real properties is not likewise subject to the DST imposed under Section 196 of the Tax Code of 1997. However, the notarial acknowledgment to the said deed is subject to the DST of P30.00 pursuant to Secton 188 of the said Code.

Furthermore, in BIR Ruling No. 031-99 dated March 19, 1999, this Cffice has already ruled that:

"...the conveyance by the Trustee in favor of the Trustor of the subject properties 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 subject properties."

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the Revenue District Office concerned in order for the latter to issue the CAR after land titles in the name of the Trustor without the necessary Certificate Authorizing submission of the requirements provided under Revenue Memorandum Order (RMO) No) 15-2003, as amended. construed, as giving authority to the concerned Register of Deeds to effect transfer of the Registration (CAR) issued by this Bureau. In this regard, this Ruling shall be presented to It is, however, understood that this Ruling is never intended, and shall not be

However, if upon investigation, it will be ascertained tha: the facts are different, then this ruling shall be considered null and void. This ruling is being issued on t'be basis of the foregoing facts as represented.

Very truly yours,

MO

K- Commissioner of Internal Revenue CAESAR R. DULAY I b 051839

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