Servequest, Inc.

November 7, 2008 BIR RULING [DA-(C-124) 401-08] 24 (D) (1), RR 2-98, 196, 188; DA-158-2007 Servequest, Inc. 182 C. Aguirre Ave. BF Homes, Paraaque City Attention: Mr. Roberto A. Alvarez, Jr. President Gentlemen : This refers to your letter dated May 12, 2008 requesting in effect, for a ruling that the transfer of properties by Roberto A. Alvarez, Jr., (RAAJ) as trustor and Servequest, Inc. as trustee is not subject to the capital gains tax imposed under Section 24 (D) (1) of the Tax Code of 1997, nor to the creditable withholding tax under Revenue Regulations (RR) No. 2-98, as amended, and neither to the documentary stamp tax imposed under Section 196 of the same Tax Code. Documents submitted show that RAAJ is the registered owner of several properties covered by Transfer Certificates of Title (TCT) Nos. T-1156347, T-1156348, T-1156354, T-1156356 T-1165381 and those evidenced by Condominium Certificates of Title (CCT) Nos. 102912 and 102911. RAAJ is likewise the President and majority owner of Servequest, Inc. which is a realty corporation registered with the Securities and Exchange Commission (SEC) under SEC Reg. No. A200113709. On January 17, 2008, RAAJ assigned the aforesaid properties to Servequest, Inc. through a Declaration of Trust for the purpose of reinforcing the latter's Housing Receivables Financing Line from the Home Development Mutual Fund (HDMF or commonly known as the Pag-IBIG Fund). In reply, please be informed that since the transfer of the subject properties by RAAJ in favor of Servequest, Inc. is not motivated by a valuable consideration, the same is not subject to the capital gains tax imposed under Section 24 (D) (1) of the Tax Code of 1997 nor to the creditable withholding tax imposed under RR No. 2-98, as amended. Likewise, the conveyance of realties to trustees or other persons without consideration is not taxable under Section 185 of Regulations No. 26 otherwise known as the Revised Documentary Stamp Tax Regulations. Thus, the Declaration of Trust in favor of Servequest, Inc. which is made without monetary consideration is not subject to the documentary stamp tax imposed under Section 196 of the 1997 Tax Code, as amended. However, the notarial acknowledgement to said Declaration of Trust is subject to the documentary stamp tax of P15.00 pursuant to Section 188 of the same Tax Code, as amended. This will authorize the Revenue District Officers (RDO) of the revenue district where the subject properties are located to issue the corresponding Tax Clearance Certificate/Certificate Authorizing Registration with regard to the transfer by RAAJ of the above-stated realties in favor of Servequest, Inc. without need of presentation of proof of payment of the capital gains tax/creditable withholding tax and documentary stamp tax. 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. HCacTI Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service