Veterans Bank

November 23, 2009 BIR RULING [DA-(C-278) 695-09] 209-91; DA616-07; DA044-04 Veterans Bank 101 V.A. Rufino cor. Dela Rosa Street Legaspi Village Makati City Attention: Atty. Adeline Cambri-Cortez Documentation Lawyer and Atty. Roel S. Costuna FVP, Chief Legal Counsel Gentlemen : This refers to your letter dated October 22, 2009 stating that on July 30, 1991, College Assurance Plan Philippines, Inc. (CAPPI) and Pension Trust Fund of Comprehensive Annuity Plans and Pension Corporation (CAPPension) entered into a Trust Agreement with the Bank of Commerce (BOC) to manage and administer the retirement funds of CAPPI (the Retirement Fund) for the benefit and account of the regular employees of CAPPI upon their retirement or separation, which document was acknowledged on July 31, 1991 as Document No. 235, Page No. 48, Book No. LXVII, Series of 1991 of the Notarial Register of Atty. Nilberto R. Briones, a Notary Public for Makati City; that as part of the management and administration function of the Retirement Fund, BOC was authorized by CAPPI to invest or reinvest the Retirement Fund in new securities or properties, real, personal or mixed subject to CAPPI's confirmation and acquired a total of five hundred thirty four thousand four hundred thirty nine (534,439) common shares of stock of BOC covered under various stock certificates and specifically identified as follows: Stock Certificate No. No. of Shares 0358 500,000 0593 39 0580 34,400 Total 534,439 ====== that on April 8, 2008, the Board of Directors of CAPPI approved the transfer of the Retirement Fund to the new trustee, Philippine Veterans Bank (PVB) through its Trust and Investment Division (TID); that on April 14, 1998, a Trust Agreement was executed by and between CAPPI and PVB-TID; and that subsequently, on July 20, 2009, BOC, PVB and CAPPI executed a Deed of Assignment whereby BOC assigned, transferred and conveyed the Retirement Fund to CAPPI's new trustee, PVB-TID. Based on the foregoing representations, you now request confirmation of your opinion that 1. The change of trustee of the CAPPI Retirement Fund and CAPPension Trust Fund from BOC to PVB for the purpose of consolidating the administration of the Trust Fund is not taxable, and therefore, the shares of stock of CAPPI Retirement Fund and CAPPension Trust Fund in the name of BOC, as the former trustee, may be transferred and registered in the name of newly designated trustee bank, the PVB-Trust and Investment Division; TcSaHC 2. The subsequent transfer of the BOC shares of stock of CAPPI and CAPPension from the BOC-Trust Services Group to PVB-Trust and Investment Division as a result of the change in trustee is not subject to capital gains tax and documentary stamp tax. In reply thereto, please be informed that your opinion is hereby confirmed as follows 1. In BIR Ruling No. DA616-07 dated December 6, 2007 , which is a reiteration of BIR Ruling No. 209-91 dated October 18, 1991 , this Office ruled that ". . . the change of trustee of the EEI Retirement Plan from RCBC to ERFI for the purpose of consolidating the administration of the EEI Retirement Plan is not taxable, and therefore, all properties both real and personal, monies, shares of stock, etc., in the name of the former trustee may be transferred to the newly designated trustee." Accordingly, the shares of stock of CAPPI Retirement Fund and CAPPension Fund in the name of Bank of Commerce, as the former trustee, may be transferred and registered in the name of the newly designated trustee bank, the Philippine Veterans Bank Trust and Investment Division. 2. Since there is no actual transfer of ownership over the aforementioned shares of stock as a result of the change of trustee from BOC to PVB-Trust and Investment Division, the said transfer is not subject to income or capital gains tax under Section 24 (D) of the Tax Code of 1997, as amended. Moreover, the Deeds of Assignment are not subject to the documentary stamp tax under Section 196 of the same Code. However, the notarial acknowledgment is subject to the documentary stamp tax of P15.00 under Section 188 of the Tax Code of 1997. (BIR Ruling No. DA-044-2004 dated February 4, 2004) 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, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service