Banco de Oro

July 9, 2009 BIR RULING [DA-(C-121) 359-09] 27 (D), 196; DA-407-06 Banco de Oro 12 ADB Avenue, Ortigas Center Mandaluyong City Attention: Ms. Maria Carina S. Antonio Vice President and Ms. Virlane S. Mendoza Senior Manager Gentlemen : This refers to your letter dated September 11, 2008 requesting on behalf of Philam Plans, Inc. (PPI), for confirmation that the conveyance of a parcel of land resulting from a bonafide assignment by a former trustee to another trustee shall not be subject to capital gains tax and documentary stamp tax. It appears that PPI with Tax Identification No. (TIN) 000-488-404-000 is a corporation duly organized and existing under and by virtue of the laws of the Philippines with principal office at Philam Bldg., U.N. Avenue, Ermita Manila. It is licensed by the Securities and Exchange Commission (SEC) to engage in the sale of pre-need plans. Pursuant to Rule 16.1 of the New Rules on the Registration and Sale of Pre-need Plans under Section 16 of the Securities and Regulations Code (SRC): "To guarantee the delivery of Benefits such as monetary consideration, cost of services rendered or property delivered, deposits shall be made by the issuer into a Trust Fund to be established for each type of plan in accordance with the rates used in the actuarial studies submitted under Rule 4.1, par. 7 (i) (C)". On March 16, 1994, a Trust Agreement was executed between PPI and Far East Bank and Trust Corporation (FEBTC), now Bank of the Philippine Islands or BPI (in view of their merger), wherein PPI appointed FEBTC as one of its Trustees. Subsequently, on May 4, 1999. PPI also executed another Trust Agreement with Equitable PCI Bank, now Banco de Oro Unibank, Inc. or BDO, (also by virtue of their merger) with TIN 000-708-174-000, wherein PPI likewise appointed BDO as one of its Trustees. Pursuant to its appointment and its capacity as trustee, BPI entered into a Deed of Absolute Sale dated December 2000, wherein it purchased from PERF Realty Corporation (PERF for brevity) a parcel of land located in Calamba, Laguna and covered by Transfer Certificate of Title (TCT) No. T-187404. As a consequence of the sale, a new TCT No. T-676591 was issued in the name of BPI. Sometime in 2004, the Trust Agreement between BPI and PPI was terminated. Consequently, on May 6, 2004, BPI assigned all its rights and interests over the Calamba property to BDO as evidenced by a Deed of Assignment of Trust Rights. Inasmuch as the Trust Agreement between PPI and BPI was terminated in 2004, it became necessary for PPI to transfer the subject property which was then held by BPI as Trustee to BDO, another trustee of PPI. AEIHCS It is your opinion that since there is no actual transfer of beneficial ownership over the subject property as provided for in the Deed of Assignment of Trust, the said transfer is not subject to income or capital gains tax under Sec. 27 (D) (5) of the Tax Code of 1997, as amended and to the documentary stamp tax under Section 196 of the same Code. In reply thereto, please be informed that since there is no actual transfer of ownership over the aforementioned property as a result of the change of trustee from BPI-Trustee to BDO-Trustee under a Deed of Assignment of Trust Rights, the said transfer is not subject to capital gains tax under Section 27 (D) (5) of the 1997 Tax Code as amended nor to the creditable withholding tax imposed under Revenue Regulations No. 2-98, as amended. Moreover, the said deed of assignment which is made without valuable or monetary consideration is not subject to the documentary stamp tax imposed under Section 196 of the same Tax Code. However, the notarial acknowledgement is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the same Tax Code of 1997, as amended. (BIR Ruling No. DA-407-2006 dated June 28, 2006) 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service