BIR Ruling [DA-080-01]

May 4, 2001 BIR RULING [DA-080-01] 24 (D) (1); 123-93 Bengzon Narciso Cudala Jimenez Gonzalez & Liwanag SOL Building, 112 Amorsolo Street Legaspi Village Makati City Attention: Atty . Ma . Romela M . Bengzon Gentlemen : This refers to your letter dated December 6, 2000 requesting for a ruling on the tax implication of the transfer by your client, College Assurance Plan Philippines, Inc. ("CAPP" for brevity) of shares of stocks thereon to its Trustee, Bank of Commerce, formerly Boston Bank of the Philippines, as administrator of CAPP's Trust Fund. It is represented that CAPP is a domestic corporation organized and existing under and by virtue of Philippine laws. It is primarily engaged in selling of educational assistance plans, as well as other types of pre-need plans and services. On April 30, 1991, CAPP entered into a Trust Agreement with Bank of Commerce under which a Trust Fund was created to be managed and administered by the Bank of Commerce as trustee for the benefit and account of CAPP. CAPP made several equity investments in CAPLIFE-INSURANCE CORPORATION in the form of subscription to common stock as evidenced by CAPLIFE Stock Certificate No. 001 with 449,993 shares and Stock Certificate No. 022 with 74,999, respectively. In compliance with the pertinent corporate laws, including rules and regulations of the Securities and Exchange Commission (SEC), CAPP decided to transfer its said CAPLIFE shares to its Trustee to form part of the Trust Fund by virtue of Deed of Assignment dated December 5, 2000. In reply thereto, please be informed that since there is no actual transfer of ownership over the above-mentioned shares of stock from CAPP, the Trustor, to Bank of Commerce, the Trustee and administrator of the CAPP 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 Bank of Commerce, 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal & Inspection Group