Shobe_CEO » BIR Ruling No. 021-98 (February 19, 1998)

BIR Ruling No. 021-98 (February 19, 1998)

June 5th, 2009

000-00-021-98

Mr. Mariano B. Padilla

141 Fort Santiago St.,

Bago-Bantay

Quezon City

S i r :

This refers to your letter dated September 5, 1997 requesting, in effect, for a ruling that the transfer without consideration of one-half (½) portion of five (5) parcels of land by virtue of the Deed of Transfer executed by and between a trustee and a trustor is exempt from taxes.

Documents submitted to this Office disclosed that Mr. Mariano B. Padilla and the late Roy B. Padilla, Sr. are the registered owners of five (5) parcels of land located in Plaridel, Bulacan, more particularly described as follows:

Property TCT No. Area Registry of Deeds

Land RT-20752(T-259737) 151 sq. m. Province of Bulacan

Land RT-20753(T-259738) 687 sq. m. Province of Bulacan

Land RT-20754(T-259739) 688 sq. m. Province of Bulacan

Land RT-20755(T-259740) 680 sq. m. Province of Bulacan

Land RT-20756(T-259741) 687 sq. m. Province of Bulacan

that prior to their acquisition, Mr. Mariano B. Padilla and the late Roy B. Padilla, Sr. have agreed by themselves that they would buy said properties in equal shares; that the latter would become the trustee of one-half (½) portion of the above-mentioned properties; that in 1987, before the death of Mr. Roy B. Padilla, he withdrew his becoming a trustee of said properties for his failure to give his share appertaining to him, i.e., not a single centavo was ever contributed to pay the one-half (½) share due from him; that on June 27, 1997, the administrator for and in behalf of the late Roy B. Padilla, received from Mr. Mariano B. Padilla a letter claiming that he is the sole and exclusive owner of the aforesaid properties; that on July 22, 1997, a Deed of Transfer was executed by and between the Estate of Roy B. Padilla, Sr. represented by the Legal Administrator, Mr. Roberto A. Padilla, in favor of Mr. Mariano B. Padilla; that in an Order dated July 16, 1997 entitled “In the Matter of the Petition for Judicial Settlement of the Estate left by the Honorable Judge Gregorio E. Manio, Jr. of the Regional Trial Court, Fifth Judicial Region, Branch No. 40, Daet, Camarines Norte, it was ruled as follows:

“xxx xxx xxx

“WHEREFORE, finding the Motion to be meritorious, the same is hereby granted. Let the properties listed below be excluded from the inventory of the properties, real and personal, of deceased Roy B. Padilla, to wit:

Location Title No. Area

Plaridel, Bulacan RT-20752(T-259737) 151 sq.m.

Plaridel, Bulacan RT-20753(T-259738) 687 sq.m.

Plaridel, Bulacan RT-20754(T-259739) 688 sq.m.

Plaridel, Bulacan RT-20755(T-259740) 680 sq.m.

Plaridel, Bulacan RT-20756(T-259741) 687 sq.m.

“Accordingly, the administrator herein is hereby authorized to effect the transfer and conveyance of the above-enumerated properties to Mr. Mariano B. Padilla.

“Upon execution thereof, let copies of each deed be submitted to this Court for final approval.

“So Ordered.

“Given this 16th day of July, 1997 at Daet, Camarines Norte.”

that on July 22, 1997, in compliance with the aforesaid Order, the Estate of Roy B. Padilla and Mr. Mariano B. Padilla executed a Deed of Transfer and agreed to transfer and convey absolute title over the subject properties in favor of the latter without any consideration; that on July 30, 1997 the same court issued an Order as follows: cdasia

“Submitted is a Deed of Transfer covering the properties subject of the Order of this Court dated July 16, 1997 authorizing the transfer and conveyance of the said properties to Mr. Mariano B. Padilla.

“Finding that the terms and conditions of the Deed of Transfer effected by the administrator to be in conformity with the Order of this Court aforementioned, the same is hereby finally APPROVED together with its attached annexes.

“So Ordered.”

and that it was alleged that the said Order of the Court had already become final and executory.

In reply, please be informed that since the transfer of the subject one-half (½) portion of five (5) parcels of land is without any consideration pursuant to the Deed of Transfer dated July 22, 1997, and considering further that the execution of the Deed of Transfer was approved by the Regional Trial Court, Branch No. 40, Daet, Camarines Norte in compliance with its Order dated July 16, 1997, and finally APPROVED in its Order dated July 30, 1997, which Order allegedly had already become final and executory, the transfer of the aforementioned properties to Mr. Mariano B. Padilla is not subject to the (5%) capital gains tax imposed under Section 21(e) of the Tax Code, as amended. [now 6% imposed under Section 24(D)(1) of the Tax Code of 1997]

Moreover, the alleged transfer of the subject properties is exempt from the donor’s tax imposed under Section 91 of the Tax Code, as amended, [now Section 98 of the Tax Code of 1997] due to lack of donative intent on the part of the Estate of Roy B. Padilla.

Furthermore, the Deed of Transfer is not subject to the documentary stamp tax imposed under Section 196 of the Tax Code, as amended [now Section 196 of the Tax Code of 1997]. However, the notarial acknowledgment to the said deed is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code, as amended [now Section 188 of the Tax Code of 1997]

This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. dctai

Very truly yours,

(SGD.) LIWAYWAY VINZONS-CHATO

Commissioner of Internal Revenue

Entry Filed under: Shobe_CEO