BIR Ruling [DA-078-01]

May 4, 2001 BIR RULING [DA-078-01] 24 (d) (1) Bengzon Narciso Cudala Jimenez Gonzalez & Liwanag SOL Building, 112 Amorsolo Street Legaspi Village Makati City Attention: Attys . Ma . Romela M . Bengzon and May Jane B . Austria-Delgado Gentlemen : This refers to your letter dated November 9, 2000 requesting for a ruling on the tax implication of the transfer by your client, College Assurance Plan Philippines, Inc. (CAP) of four (4) parcels of land, together with the improvements thereon, to its Trustee, Allied Banking Corporation, as administrator of CAP's Trust Fund. It represented that CAP is primarily engaged in the selling of educational assistance plans, as well as other types of pre-need plans and services; that the Trust Fund was created by CAP to guarantee its undertaking under its Scholarship Funding Agreement; that in compliance with the pertinent corporate laws, including rules and regulations of the Securities and Exchange Commission (SEC), CAP intends to transfer and in fact has transferred to the Trustee said four (4) parcels of land, together with the improvements thereon, under three (3) separate Deeds of Trust all dated October 16, 2000 and more particularly described as follows: TCT No. Location Area (sq.m.) Appraised Value 144517 Makati City 828 P200,860,804.70 144518 Makati City 917 P292,450,915.40 13894 Puerto 2,100 P29,169,000.00 Princesa, Palawan 116505 Baliuag, Bulacan 1,021 P20,420,000.00 In reply thereto, please be informed that since there is no actual transfer of ownership over the above-mentioned properties from CAP, the Trustor, to Allied Banking Corporation, the Trustee and administrator of the CAP 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 196 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal & Inspection Group