Mary Anne U. Baladad

June 30, 2008 BIR RULING [DA-392-08] 27 (D) (5); 196; 188; DA-225-2006; DA-105-2006 Mary Anne U. Baladad c/o Legal Department, National Irrigation Administration EDSA, Diliman, Quezon City M a d a m : This refers to your letter dated June 16, 2008 requesting for a ruling that the transfer of shares of stock by Rosario J. Santos, as trustee/assignor, in favor of Erlinda U. Baladad, as trustor/beneficiary is exempt from capital gains, income, donor's and documentary stamp taxes. Based on your representations, as well as from the documents submitted, it appears that on May 17, 2007, Rosario J. Santos and Erlinda U. Baladad executed an Indemnity Agreement and Declaration of Trust with Deed of Assignment ("Deed"), whereby the former is the Trustee/Assignor and the latter is the Beneficiary/Assignee; that Rosario J. Santos (Trustee/Assignor) acknowledges that the Seventeen Thousand Seven Hundred Three (17,703) shares of stock of MERALCO, covered by Certificate of Stock No. CPB-54243 dated June 18, 2004 was purchased out of the money belonging to Erlinda U. Baladad ("Beneficiary/Assignee") and is being held by the Trustee/Assignor in trust and for the benefit of the Beneficiary/Assignee; that the Trustee/Assignor acknowledges that all income, profits and interest on such shares of stock are similarly held in trust for the benefit of the Beneficiary/Assignee as the beneficial owner; that the Trustee/Assignor is under obligation to transfer the aforesaid shares of stock including the income, profits and interest thereon to the Beneficiary/Assignee; that pursuant to the Deed, the Trustee/Assignor has transferred and assigned all her rights, title, and interest over the aforesaid shares of stock including the profits and interests thereon unto the Beneficiary/Assignee; and that upon transfer and delivery by the Trustee/Assignor of the certificate of stock to the Beneficiary/Assignee, the former shall be discharged of her duties as trustee of shares of stock and shall have no power, discretion, rights and obligations in relation to the said shares of stock. In reply, please be informed that since the transfer of MERALCO shares with Certificate of Stock No. CPB-54243 by Rosario J. Santos, as trustee, in favor of Erlinda U. Baladad, as trustor, is without monetary consideration and is merely a confirmation of title in favor of the beneficial owner, the same is not subject to the income and capital gains taxes imposed under Section 24 (C) of the Tax Code of 1997, as amended, as well as donor's and documentary stamp taxes. 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 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service