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REPUBLIC OF THE PHILIPPINESDEPARTMENT OF FINANCE

BUREAU OF INTERNAL REVENUE

Quezon City

Person to Contact: Chief, Law DivisionTel. Nos. 926-55-361 927 -09-63

BALGOS GUMARU & JALANDONI LAW OFFICES1009 West Tower, PSE CenterExchange Road, Ortigas CenterPasig City 1605

Attention: Andrea A. Perez

Gentlemen:

This refers to your letter dated June 6, 201I, requesting on behalf of yourclient, Mrs. AngelaPerez Ellis (Mrs. Ellis), for a confirmation of your opinion that theconveyance of the title of the property to the trustor from the trustee is not subject tothe capital gains tax imposed under Section 24 (D) (1) of the Tax Code of 1997,asamended.

It is represented that sometime in June 1987, Mrs. Ellis, a Natural BornFilipino Citizen but an Australian, was a flight attendant of Cathay Pacific Airwaysand residing in Hong Kong when she decided on buying a house and lot in BarrioKapitolyo, Pasig City; that the subject house and lot was covered by TransferCertificate of Title (TCT) No. 7537 of the Register of Deeds of Metro Manila DistrictII; that the subject property was owned by Spouses Virgilio A. Rojales and Noemi N.Rojales who were then preparing to migrate to the United States of America (USA)and were in a hurry to dispose of the property; that Mrs. Ellis not wanting to lose thechance of acquiring the property, asked her unmdrried sister, Adela M. Perez, to buythe property for her; that to facilitate the consummation and registration of the sale, itwasdecided that the property be acquired by her sister, Adela M. Perez, in her namewith all the funds coming from Mrs. Ellis; that to show that the property in fact reallybelongs to Mrs. Ellis, Adela M. Perez executed in October 1987 a Declaration ofTrust and Acknowledgment, whereby she acknowledged that she was just holding the

Secs. I 000-0024(DX1),188 & 196Tax Code I I ,'' i;*t1 'jof 1997, asamended

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_*.Jr__-i.itMrs. Angela Perez EllisPage.2 of 2

property she bought in trust for her sister, Mrs. Ellis; that said document wasauthenticated before Notary Public Mariano Balgua of Manila on October 10, 7987and registered in his Notarial Book as Document No. 165, Page No. 52, Book No. III,Series of 1987 but not annotated in the title; and that pursuant to the commitment ofAdela M. Perez, she executed a Deed of Conveyance dated April 15, 201 1 so that thetitle thereto can be transferred to its real owner, Mrs. Angela Perez Ellis.

Attached to Records is an Affidavit from Mariano Balgua acknowledging thathe notarized a document denominated as "Declaration of Trust and Acknowledgment"executed by Adela Munoz Perez on October 20, 1987, registered in his Notarial Bookas Document No. 165, Page No. 52, Book No. III, Series of 1987and cerlified truecopy of page 52 of the loose leaf which contain the entries of the document.

In reply, please be informed that since the transfer of the subject property byAdela M. Perez as the Trustee in favor of Mrs. Angela Perez Ellis, as the true andbeneficial owner is.without monetary consideration and is merely a confirmation oftitle in favor of the beneficial owner thereof, the same is not subject to the capitalgains tax imposed under Section 24 (D) ( 1 ) of the Tax Code of 1997 , as amended.

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

This will authorize the Revenue District Officer (RDO) of the revenue districtwhere the subject property is located to issue the corresponding Tax ClearanceCertificate/Certificate Authorizing Registration with regard to the transfer by AdelaM. Perez of the above-stated property in favor of Mrs. Angela Perez Ellis withoutneed of presentation of proof of payment of the capital gains tax and documentarystamp tax.

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, thenthis ruling shall be considered null and void.

Very truly yours,

KIM S. JA O-HENARESCommissionbr f Internal Revenue

K- 1-JRC '0215 e 0

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