BIR Ruling No. 067-14

February 20, 2014 BIR RULING NO. 067-14 Secs. 24 (D) (1), 188 & 196 Tax Code of 1997, as amended; 000-00 Balgos Gumaru & Jalandoni Law Offices 1009 West Tower, PSE Center Exchange Road, Ortigas Center Pasig City 1605 Attention: Andrea A. Perez Gentlemen : This refers to your letter dated June 6, 2011, requesting on behalf of your client, Mrs. Angela Perez Ellis (Mrs. Ellis), for a confirmation of your opinion that the conveyance of the title of the property to the trustor from the trustee is not subject to the capital gains tax imposed under Section 24 (D) (1) of the Tax Code of 1997, as amended. It is represented that sometime in June 1987, Mrs. Ellis, a Natural Born Filipino Citizen but an Australian, was a flight attendant of Cathay Pacific Airways and residing in Hong Kong when she decided on buying a house and lot in Barrio Kapitolyo, Pasig City; that the subject house and lot was covered by Transfer Certificate of Title (TCT) No. 7537 of the Register of Deeds of Metro Manila District II; 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 the chance of acquiring the property, asked her unmarried sister, Adela M. Perez, to buy the property for her; that to facilitate the consummation and registration of the sale, it was decided that the property be acquired by her sister, Adela M. Perez, in her name with all the funds coming from Mrs. Ellis; that to show that the property in fact really belongs to Mrs. Ellis, Adela M. Perez executed in October 1987 a Declaration of Trust and Acknowledgment, whereby she acknowledged that she was just holding the property she bought in trust for her sister, Mrs. Ellis; that said document was authenticated before Notary Public Mariano Balgua of Manila on October 10, 1987 and 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 of Adela M. Perez, she executed a Deed of Conveyance dated April 15, 2011 so that the title thereto can be transferred to its real owner, Mrs. Angela Perez Ellis. IDSETA Attached to Records is an Affidavit from Mariano Balgua acknowledging that he notarized a document denominated as "Declaration of Trust and Acknowledgment" executed by Adela Munoz Perez on October 20, 1987, registered in his Notarial Book as Document No. 165, Page No. 52, Book No. III, Series of 1987 and certified true copy 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 by Adela M. Perez as the Trustee in favor of Mrs. Angela Perez Ellis, as the true and beneficial owner is without monetary consideration and is merely a confirmation of title in favor of the beneficial owner thereof, the same is not subject to the capital gains tax imposed under Section 24 (D) (1) of the Tax Code of 1997, as amended. Furthermore, the said conveyance of the real property is not likewise subject to 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 documentary stamp tax of P15.00 pursuant to Section 188 of the said Code. This will authorize the Revenue District Officer (RDO) of the revenue district where the subject property is located to issue the corresponding Tax Clearance Certificate/Certificate Authorizing Registration with regard to the transfer by Adela M. Perez of the above-stated property in favor of Mrs. Angela Perez Ellis without need of presentation of proof of payment of the capital gains tax and documentary stamp 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, then this ruling shall be considered null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue