SRD & Co.

July 16, 2008 BIR RULING [DA-(C-008) 049-08] Section 24 (D) (1); DA-240-2004 SRD & Co. Certified Public Accountants 8F Ayala Life FGU Center Mindanao Avenue cor. Biliran Road Cebu Business Park, Cebu City Attention: Mr. Owen Y. Algoso Tax and Corporate Group Gentlemen : This refers to your letter dated November 17, 2006 which was received by this Office by way of 1st Indorsement dated May 21, 2007 Revenue Region No. 13, Cebu City, requesting in behalf of your client, Sacred Heart School of the Society of Jesus, Inc., for a confirmation that the reconveyance of the properties previously conveyed through a Trusteeship Agreement is exempt from the payment of capital gains tax and documentary stamp tax. SDIaCT It is represented that the Trustor-corporation, Sacred Heart School of the Society of Jesus, Inc. is an educational institution duly registered with the Securities and Exchange Commission with Registration No. 9684 dated March 11, 1955; that the Trustee, Phillip Go, of legal age, married to Nenita Ngo is a resident of 505 C. Padilla St., Cebu City; that on November 11, 2002, a Trusteeship Agreement was executed by and between the Trustor and the Trustee whereby the former wants to acquire certain real properties in Canduman, Mandaue City to be used as a new site for its school and in order to prevent the unnecessary increase in the selling price of the properties identified for acquisition since the Trustor wanted his identity confidential; that the said properties were acquired by the Trustee from the funds of the Trustor in the amount of P44,671,990.75; that the subject properties are covered by the following Transfer Certificates of Title No. 53498, 53872, 53502, 54410, 54412, 54411, and 53126; that on May 19, 2006, a Deed of Assignment was executed by the same parties reconveying the subject properties to the Sacred Heart School of the Society of Jesus, Inc., without any monetary consideration. In reply, please be informed that since the transfer of the aforestated properties by Phillip Go in favor of the Sacred Heart School of the Society of Jesus, Inc. is without monetary consideration and is merely confirmation of title in favor of the beneficial owner thereof, the same is not subject to the capital gains tax imposed under Section 27 (D) (5) of the Tax Code of 1997 nor to the creditable withholding tax imposed under Revenue Regulations No. 2-98, as amended. CAETcH Likewise, the conveyance of realties to trustees or other persons without consideration is not taxable under Section 185 of the Revised Documentary Stamp Tax Regulations. Thus, the transfer by Phillip Go to the Sacred Heart School of the Society of Jesus, Inc. which is made without monetary consideration is not subject to the documentary stamp tax imposed under Section 196 of the 1997 Tax Code. However, the notarial acknowledgment to the said deed of reconveyance is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code of 1997. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered as null and void. cDECIA Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service