Ms. Elva Rodriguez Sioson

March 6, 2007 BIR RULING [DA-138-07] DA 429-04 Ms. Elva Rodriguez Sioson No. 197 15th Avenue, Cubao Quezon City M a d a m : This refers to your letter dated January 26, 2007 stating that you, as Trustee, upon instruction of Jenny Gaton Rodriguez, as Principal, purchased a parcel of land located at No. 26 19th Avenue, San Roque, Quirino, Quezon City, from Avelina C. Navarez by virtue of a Deed of Absolute Sale dated March 17, 1994; that for this purpose, the Trustee executed a Declaration of Trust in favor of the Principal; that pursuant to said Deed, the Trustee acknowledged that she has purchased the above-mentioned property for and in behalf of the Principal, who has previously advanced funds to the Trustee; that the Trustee also acknowledged the right and interest of the Principal as beneficial owner of the Property; that on April 4, 1994, pursuant to the Declaration of Trust, the Principal instructed the Trustee to cause the transfer in Principal's name of the property, who is the beneficial owner of the same; and that said transfer which will be made pursuant to the trust established in the Declaration of Trust, shall be without consideration. cDCEIA Based on the foregoing representations, you now request confirmation of your opinion that 1. The transfer of title over a parcel of land without consideration by the Trustee in favor of the beneficial owner thereof is neither subject to capital gains tax nor to the creditable withholding tax imposed under Revenue Regulations No. 2-98, as amended; 2. The transfer of title over the aforesaid property by the Trustee in favor of the Principal shall not be subject to the 12% VAT because the said property is not held by the Trustee primarily for sale to customer or for lease in the ordinary course of business, considering that it only holds the same in trust for the Principal; 3. The transfer of title over the property without consideration by the Trustee in favor of the Principal shall not be subject to donor's tax imposed under Section 98 of the Tax Code of 1997 due to lack of donative intent on the part of the Trustee; and 4. The transfer of title over the property by the Trustee in favor of the Principal shall not be subject to documentary stamp tax imposed under Section 196 of the Tax Code of 1997. ACcTDS In reply thereto, please be informed that your opinion is hereby confirmed as follows: 1. The transfer of title over the aforesaid property by the Trustee in favor of the Principal, the beneficial owner thereof, to be effected through a Declaration of Trust is not subject to capital gains tax imposed under Section 24 (D) (1) of the Tax Code of 1997 nor to the creditable withholding tax prescribed in Revenue Regulations No. 2-98, as amended, considering that the transfer is not for monetary consideration and merely acknowledges and confirms the title and ownership over the above-mentioned property of Jenny Gaton Rodriguez, as the Principal. (BIR Ruling No. DA222-00 dated April 27, 2000) 2. The transfer of title over the property to the Principal is likewise not subject to the 12% value-added tax because the said property is not held primarily for sale to customers or for lease in the ordinary course of business. 3. The transfer of the said property to the Principal without any monetary consideration is not subject to gift tax imposed under Section 98 of the Tax Code of 1997, since there is no donative intent on the part of the parties. (BIR Ruling No. 061-93 dated February 10, 1993) 4. Finally, the Declaration of Trust executed by and between Elva Rodriguez Sioson, as Trustee, and Jenny Gaton Rodriguez, as Principal, whereby the former will convey to the latter the above-mentioned property without monetary consideration is likewise not subject to the documentary stamp tax imposed under Section 196 of the Tax Code of 1997, as amended. However, the notarial acknowledgment is subject to the documentary stamp tax of P15.00 under Section 188, supra . DcIHSa 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. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service