Change of Trustee to Consolidate the Administration of the Perpetual Care Fund of MMPC is not Taxable

October 18, 1991 BIR RULING NO. 209-91 53 000-00 209-91 Gentlemen : This refers to your letter dated July 3, 1991 requesting opinion on behalf of your client, the Manila Memorial Park Cemetery, Inc. (MMPC) on the tax consequence of a change of trustee. It is represented that in every "Offer to Purchase" that MMPC enters into with its customers, a specific amount is indicated as deposit for Perpetual Care which is set aside and delivered to Trustee Bank to form part of a trust fund the income or earnings of which is specifically to be applied for perpetual care of the cemetery; that MMPC has existing Perpetual Care Trust Agreement with two Trustee Banks whereby MMPC is obliged to deliver to the Bank the amounts paid by the customers for perpetual care in an irrevocable trust fund the income of which shall be applied to perpetual care of the cemetery; that under said Perpetual Care Fund Agreements, the Trustee Bank is obligated to hold the Fund as a trust fund the income from which is to be applied for the aforestated purposes; that the principal of the Fund cannot be diminished, decreased, reduced or impaired nor may be income be diverted to any other purposes than the perpetual care of the cemetery; that under Section 12 of the Perpetual Care Trust Agreement between MMPC and the Trustee Banks MMPC may change the Trustee, subject to the notice requirements provided therein and designate a successor Trustee; that it is the intention of MMPC to have only one Trustee Bank to administer the Perpetual Care Fund; and that to carry out this intention, MMPC shall remove the other Trustee Bank and designate only one Trustee thereby consolidating the administration of the Perpetual Care Fund in a single Trustee Bank. In reply thereto, I have the honor to inform you that the designation of a single Trustee Bank or a change of trustee or trustees for the purpose of consolidating the administration of the Perpetual Care Fund of MMPC is not taxable, and therefore, all properties both real and personal, monies, shares of stock, etc. in the name of the former Trustee Bank or Trustee Banks and described as such may be transferred to the newly designated Trustee Bank. Very truly yours, (SGD.) JOSE U. ONG Commissioner