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BIR Ruling No. 163-89
BIR Ruling No. 163-89
Gentlemen :
This refers to your letters dated May 8 and 11, 1989 requesting a ruling on the
taxability of the sale of real properties covered by a Deed of Trust executed by spouses
Emilio Benitez, Sr., and Eulalia Benitez.
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Documentary evidence submitted disclosed that on December 31, 1975, the late
spouses Emilio Benitez, Sr., and Eulalia Brillo Benitez (hereinafter referred to as
trustors), executed a Deed of Trust conveying all their properties in favor of their
daughter, Sister Scholastica Benitez, OSB, and/or their son Faro Benitez (hereinafter
referred to as trustees) for the bene t of their six (6) children as bene ciaries of the
trust; that pursuant to paragraph 7 of the Deed of Trust, the rights and interest over 16
parcels of memorial lots acquired by the trustors from the Manila Memorial Park
Cemetery, Inc. shall be for the sole and exclusive use, bene t and enjoyment of Sister
Scholastica and/or the Community of Benedictine Sisters (Philippines), to the exclusion
of other bene ciaries and the legal title may be conveyed by the trustees any time
during the trust to Sister Scholastica and/or Community of Benedictine Sisters
(Philippines) (hereinafter referred to as Community) as in fact the same were already
conveyed to the latter under Deed of Assignment executed on September 3, 1976 or
after one of the trustors' (Emilio Benitez, Sr.) death; that the trustors granted and
conveyed to the trustees, in trust for the bene ciaries, certain parcels of land, together
with all existing improvements thereon; that the trustees or either of them, with the
consent of the other shall have the power to lease or mortgage said properties and
shall have and hold all rents, income and proceeds from any lease, mortgage or other
disposal of said properties in trust for the sole bene t of the bene ciaries; that the
trustees have likewise been designated to divide, apportion and pay over each of the
named bene ciaries, the equitable share or portion of the properties, pro ts, income
and/or proceeds from the properties until the termination of the trust which is fteen
(15) years from and after the execution of the trust indenture or when the last survivor
trustee shall have died unless sooner terminated by the conveyance or disposition of
the trust properties; that on April 8, 1976, or barely four months after the execution of
the aforesaid Deed of Trust, the trustor Emilio Benitez, Sr. died; that on November 3,
1977, or one year and 11 months after jointly executing the Deed of Trust, the surviving
wife Eulalia Benitez also died; that on different dates the trustees have transferred four
(4) parcels of land described as Lot 42 of the Subdivision Plan Psd-64478 situated in
Tagum, Davao; Lot 2 of the Subdivision Plan Psd-64478 located in Barrio Magugpo,
Tagum, Davao; Lot 2157-B-1 of the Subdivision Plan Psd-212920 located in Anibong,
Tacloban City; and lot 2157-B-3 of the Subdivision Plan 212920 located in Anibong,
Tacloban City; and that the trustees are planning to sell/transfer the remaining
properties located in Manila and covered by Transfer Certi cate of Title Nos. 20156,
20157, 20158 and 20159.
In reply, please be informed that the transfer of all the properties of the trustors
who died within three years from the date of said transfer come within the purview of
transfer in contemplation of death as provided under then Section 88 of the Tax Code
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before its amendment by P.D. No. 1705 reading:
"SEC. 88. Gross Estate. — The value of the gross estate of the decedent
shall be determined by including the value at the time of his death of all property,
real or personal, tangible or intangible, wherever situated, except real property
situated outside the Philippines.