BIR Ruling [DA-160-04]

April 2, 2004 BIR RULING [DA-160-04] Sec. 80 BP 68; Sec. 58 (E); 064-91 Stateland, Inc. 3rd Floor State Centre Building 333 Juan Luna Street Binondo, Manila Attention: Bienvenido S. Uy Senior Vice-President Gentlemen : This has reference to your letter dated October 20, 2003, requesting for exemption from the requirement to transfer the Transfer Certificates of Title (TCTs) covering real properties in the name of Central Land, Inc. (the absorbed corporation) to that of Stateland, Inc. (the surviving corporation) notwithstanding the approval of the merger by the Securities and Exchange Commission (SEC). EAHDac In reply, please be informed of the provision of Section 80 of the Corporation Code of the Philippines (Batas Pambansa Blg. 68) which provides in part: "Sec. 80. Effects of merger or consolidation . The merger or consolidation, as provided in the preceding sections, shall have the following effects: xxx xxx xxx 2. The separate existence of the constituent corporations shall cease, except that of the surviving or the consolidated corporation; 3. The surviving or the consolidated corporation shall possess all the rights, privileges, immunities and powers and shall be subject to all the duties and liabilities of a corporation organized under this code; xxx xxx xxx Once the SEC issues the certificate of merger, the acquired corporation ceases to exist and only one corporation survives. The surviving corporation takes all the assets, rights and liabilities of the absorbed corporation by operation of law. This means, among other things, that creditors of the absorbed corporation are the creditors of the surviving corporation. Similarly, pending suits against the absorbed corporation, if successful, will be paid by the surviving corporation. It is at this context that the properties of the absorbed corporation, Central Land, Inc. are required to be transferred to Stateland, Inc. because the former has no more legal personality. In other words, it cannot anymore have title to any property after the merger took place. Moreover, the annotation requirement embodied in the BIR Ruling that confirms the merger of State Land Investment Corp., Central Land, Inc. and Central Equity Ventures, Inc. is an additional requirement recognized under Section 58 (E) of the Tax Code of 1997 to capture the deferred gain on the transfer of the properties by virtue of the merger (BIR Ruling No. 064-91 dated April 18, 1991). Considerably, this annotation requirement can only be made after the transfer of the Transfer Certificates of Title from Central Land, Inc. to State Land, Inc. DCcTHa In view of all the foregoing, your request for exemption from the requirement to transfer the Transfer Certificates of Title is hereby denied for lack of legal basis. Consequently, you are required to submit to the Law Division, Bureau of Internal Revenue, a certified true copy issued by the Register of Deeds, of the duly annotated Transfer Certificates of Title within sixty (60) days from receipt hereof. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group