Tax Consequences Relating to Inherited Property Co-Owned

November 7, 1997 BIR RULING NO. 119-97 50 (b) 21 (c) 000-00 119-97 Cruz Durian & Alday 451 Cabildo Street Intramuros, Manila Attention: Atty . Rafael T . Durian Gentlemen : This refers to your letter dated March 4, 1997 stating that your clients, Uy Eng Lio and Uy Ching Hua, are owners by way of inheritance from their late father, Uy Liam Chiu (aka Ong Ho) of one-half (1/2) undivided portion of a property located in Tondo, Manila formerly covered by Transfer Certificate of Title (TCT) No. 187192 of the Registry of Deeds of Manila in the name of the Philippine National Bank (PNB) (1/2) and Ong Ho (1/2), and presently under TCT No. 197223 of the same Registry of Deeds in the name of Uy Eng Lio and Uy Ching Hua (1/2) and Philippine National Bank (1/2); that on December 15, 1988, PNB executed a Deed of Assignment conveying its one-half (1/2) undivided interest in the property to Ms. Luisa Ong de los Santos in disregard of the right of pre-emption of the other co-owner; that the capital gains tax, documentary stamp tax and other fees covering the Deed of Assignment were paid and the said deed was annotated by the Registry of Deeds of Manila as Entry No. 63431T-187192 Assignment on the title; that when your clients learned of the conveyance, they filed a complaint in the Regional Trial Court of Manila, Branch 50 docketed as Civil Case No. 90-52784 entitled "Uy Eng Lio and Uy Ching Hua (aka Aida Lugay), etc. vs. Luisa Ong de los Santos and Philippine National Bank" for legal redemption of the portion of the property conveyed by PNB to Luisa Ong de los Santos; that after more than five (5) years of hearings, the Defendants, (PNB and Luisa Ong de los Santos) realizing the rights of the Plaintiffs (Uy Eng Lio and Uy Ching Hua) to legal redemption of the property entered into a Compromise Agreement allowing the Plaintiffs to redeem the portion of the property conveyed by PNB to Luisa Ong de los Santos which was embodied in the Judgment of the Court; that the redemption price was the same P310,000.00, the same price that Luisa Ong de los Santos paid to PNB, plus interest over the years or a total of P601,400.00, receipt of which was acknowledged by the Defendants. cdta Moreover, the documentary stamp tax imposed under Section 196 of the Tax Code, as amended, is no longer applicable as regards the conveyance of the properly to Uy Eng Lio and Uy Ching Hua pursuant to the Compromise Agreement since the DST was already paid on December 15, 1988 when PNB conveyed the same property to Ms. Luisa Ong de los Santos. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue