BIR Ruling No. 338-2017

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE

Iist

Quezon City

Secs.27;98;106;188& 196 BIR Ruling No. 067-14 #338-2017

7-12-2017

JOHNNY Y.QUISUMBING No. 17. Matahimik St. Sikatuna Village Quezon City

Sir:

opinion that the conveyance of the title of the property from the trustee to the trustor is not subject to the capital gains tax, income tax, donor's tax, value-added tax and documentary stamp tax imposed under the relevant provisions of the Tax Code of 1997, as amended. This refers to your letter dated March 7, 2016, requesting for confirmation of your

Background

1. On March 16, 1989, Mr. Johnny Y. Quisumbing purchased two adjoining parcels Properties") at a price of of land which are located at Matahimik Street, Quezon City and covered by Transfer Certificates of Title (TCT) Nos. Pesos (P and (the "Subject for each lot

or a total of 'esos (P

2. The Subject Properties, though purchased by Mr. Johnny Y. Quisumbing (the

"Trustor,were registered under the name of the latter's family corporation,FR Realty and Development Corporation (the "Trustee Corporation). to improve the Trustee Corporation's credit rating with the bank. Further, the funds used to

the subscribed capital of the Trustee Corporation was only capability to buy the Subject Properties. from the Trustee Corporation since at the time the Subject Properties were bought. purchase the Subject Properties came from the Trustor's personal funds and not Pesos (P ) paid-up, thus, clearly showing that the Trustee Corporation has no ), with Hundred Pesos

3. The title of the Subject Properties were placed in the name of the Trustee the Subject Properties and that the equitable title will remain with the Trustor. Corporation with an understanding that the latter shall only hold the legal title to

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Johnny Y. Quisumbing Page 2 of 3

4. Accordingly, to recognize that the Trustor is the real owner of the Subject acknowledged that Subject Properties were bought using the personal funds of owned exclusively by the Trustor. executed on March 17, 1989, a day after the Trustor bought the Subject Properties. a Memorandum of Agreement (MOA"). whereby the Trustee Corporation the Trustor and not of the Trustee Corporation, and that Subject Properties are Properties, the Trustee Corporation as represented by its then President. Fe Y Quisumbing, and concurred by all of the stockholders of the Trustee Corporation

5. The MOA, which proves that the Trustee Corporation is merely holding the Document No. 119, Page No. 25, Book No. VII, Series of 1989. Subject Properties in trust for the Trustor, was authenticated before Notary Public Macarius S. Galutera of Quezon City and registered in his Notarial Book as

6. On August 18, 2004, the Trustee Corporation authorized the Trustor to exercise all the rights of an owner over the Subject Properties through a Board Resolution on even date and signed by all of the stockholders of the Trustee Corporation. The said authorization remains valid to date.

7. Thus, pursuant to the commitment of the Trustee Corporation, it executed a Deed can be transferred to the Trustor, being the real owner. of Conveyance dated October 8, 2015 so that the title over the Subject Properties

as the true and beneficial owner is without monetary consideration and is merely a donor's tax under Section 98, and value-added tax under Section 106, all of the Tax Code of Realty and Development Corporation, as the Trustee in favor of Mr. Johnny Y. Quisumbing confirmation of title in favor of the beneficial owner thereof. the same is not subject to the ordinary income tax under Section 27(A), capital gains tax imposed under Section 27(D)(5) 1997, as amended. (BIR Ruling No. 067-14 dated February 20, 2014) In reply, please be informed that since the transfer of the Subject Properties by FR

However, the notarial acknowledgment to the said deed is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the said Code. documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended. Furthermore, the said conveyance of the real property is not likewise subject to the

Development Corporation of the Subject Properties in favor of Mr. Johnny Y. Quisumbing the subject property is located to issue the corresponding Tax Clearance Certificate/Certificate Authorizing Registration with regard to the transfer by FR Realty and This will authorize the Revenue District Officer (RDO) of the revenue district where