BIR Ruling [DA-005-03]

January 1, 2003 BIR RULING [DA-005-03] 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, College Assurance Plan Philippines, Inc. ("CAP1" for brevity) of its three (3) parcels of land together with the improvements thereon to its Trustee, Allied Banking Corporation. It is represented that CAP1 is primarily engaged in selling of pre-need educational plans, as well as other types of pre-need plans and services; that a Trust Fund was created by CAP1 to guarantee its undertaking to fund the education 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, CAP1 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, CAP1 intends to transfer the three (3) parcels of land together with the improvements thereon and more particularly described as follows: TCT No. Registered Name Location Area (sq.m.) Value T-40951 CAP1 Poblacion, 494 sq.m. P24,726,000.00 Digos, Davao del Sur T-32656 CAP1 " 716 ] T-183723 CAP1 Quezon Blvd., 946 12,181,000.00 Kidapawan City, North Cotabato in favor of said Trustee Bank, by virtue of two (2) Deeds of Trust all executed on August 7, 2002. In reply thereto, please be informed that since there is no actual transfer of ownership over the above-mentioned properties from CAP1, 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. CTDHSE Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service