BIR Ruling [DA-004-03]

January 1, 2003 BIR RULING [DA-004-03] 24 (D) (1); 123-93 The Bengzon Law Firm 9th Floor, Ayala Life-FGU Center 6811 Ayala Avenue Makati City Attention: Atty. Manolito S. Soller Gentlemen : This refers to your letter dated September 20, 2002 requesting for a ruling on the tax implication of the transfer by your client, Comprehensive Annuity Plans and Pension Corporation ("CAP2" for brevity) of its eight (8) parcels of land together with the improvements thereon to its Trustee, Allied Banking Corporation. It is represented that CAP2 is primarily engaged in the selling of pre-need pension, as well as other types of pre-need plans and services; that a Trust Fund was created by CAP2 to guarantee its undertaking to fund the pension plans of its planholders and in compliance with the rules and regulations for pre-need companies implemented by the Securities and Exchange Commission (SEC);that relative thereto, CAP2 entered into and executed a Trust Agreement with the Trust Services Department of Allied Banking Corporation; and that in its desire to comply with the new rules and regulations for pre-need companies duly promulgated by the SEC, CAP2 intends to transfer the eight (8) parcels of land together with the improvements thereon and more particularly described as follows: TCT No. Registered Name Location Area (sq.m.) Value T-77318 CAP2 Calzada, Balayan, 1,781 P38,417,000.00 Batangas T-181223 CAP2 Poblacion, 1,000 P21,349,000.00 Kabangkalan City, Negros Occidental T-183723 CAP2 ] 600 ] T-321018 CAP2 Centro East, 1,500 P28,500,000.00 Santiago, Isabela T-171496 CAP2 Pagsawitan, Sta. 700 27,207,000.00 Cruz, Laguna T-58.882 a.f. CAP2 Tibunga (San 760 12,000,000.00 Miguel),Iligan City T-58.881 a.f. CAP2 ] 658 ] T-58.880 a.f. CAP2 ] 658 ] in favor of said Trustee Bank, by virtue of five (5) Deeds of Trust all executed on August 2, 2002. In reply thereto, please be informed that since there is no actual transfer of over the above-mentioned properties from CAP2, the Trustor, to Allied Banking Corporation, the Trustee and administrator of the Trust Fund, the said transfer is not subject to capital gains tax under Section 24(D)(1) of the Tax Code of 1997. Moreover, the Deeds of Trust executed to convey the aforementioned properties to Allied Banking Corporation, as Trustee, to form part of the Trust Fund is not subject to the documentary stamp tax imposed under Section 176 of the Tax Code of 1997. However, the notarial acknowledgment is subject to the documentary stamp tax of P15.00 under Section 188 of the said Code. 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. AaDSEC Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service