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LOAN PORTFOLIO 3
(Amounts in Thousand)
ACCOUNT NAME
BALANCE OF PRINCIPAL
AS OF MAY 31, 2001
ANDRES BORJA
ATLANTA GROUP
PHILIPPINE WIRELESS
MONDRAGON
MARICHRIS/MA. THERESA
GOTESCO
SUSAN LIM
E. UYTIEPO
GEORGE GO
FIL-ESTATE LAND
ASIAN GLOBE
IPII
ACTIVE REALTY
METROPOLITAN
FIL-ESTATE LAND
J. RODRIGUEZ III
REYNOLDS PHIL.
LA. FIRMACION
DJJ & SONS
EL BUEN ASENSO
LU FIRMACION
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5,000
91,563
47,231
31,667
65,000
190,000
5,000
2,600
44,531
6,928
77,990
44,536
13,251
1,613
200,000
30,000
6,576
2,744
22,397
17,100
6,800
Philippine Taxation Encyclopedia 2013
JAIME CANCIO
C. QUIAMBAO
R. RUBIO
A. DOMINGO
AMA COMPUTER
ATSUSHI HARADA
CONCEPCION, PS
DAVID DALISAY
DE ROCA, DARLITO
DE ROCA, RIC
MICLAT, ROMY & ANICETA
CORTEZ, FELIX & MARISSA
TOTAL
300
2,954
906
300
925
1,094
186
870
925
650
186
840
922,663
=====
B.
ACQUIRED ASSETS
FORMER OWNER
DESCRIPTION/LOCATION
Active Realty Dev't Corp. 146 lots located at Town & Country Southville,
Bian, Laguna with a total area of 23, 604 sq.m.
9 lots located at Town & Country Southville,
Bian, Laguna with a total area of 1,193 sq.m.
6 lots located at Town & Country North Marilao,
Bulacan with a total areas of 2,696 sq.m.
8 Mount Malarayat Golf & Country Club shares
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Agusan River
Ladislao Firmacion
Gotesco Properties
Gloria Lanuza
Gallardo Lopez
C.
DESCRIPTION/LOCATION
Upper Ground, Unit 2, World Trade
Exchange Building, No. 215 Juan Luna
St., Binondo, Manila with area of
294.72 sq.m.
with 2 parking slots
No DST under the above quoted provision shall be due on the surrender by
TMBC of the shares of stock to TA. The surrender of the shares does not
constitute a sale, assignment or transfer because TA is not taking title to the
surrendered shares, and the shares are retired and not retained as treasury shares.
In effect, TA does not realize any benefit, as owner or otherwise, from its receipt
of the shares.
3. Transfer by TA to TMBC of real property is not subject to DST on sale or
transfer of real property.
Section 189 of Revenue Regulation No. 26, otherwise known as the
"Documentary Stamp Tax Regulations" provides, viz:
"SEC. 189. Conveyances by Corporation to Owner of All the Capital.
A conveyance of real estate by a corporation without valuable
consideration to an owner of all its capital stock in consequence of its
dissolution is not subject to tax." (Emphasis & italics supplied)
The pertinent provisions in the Tax Code of 1997 as regards this issue are
as follows:
"Sec. 180. Stamp tax on all bonds, loan agreements, promissory notes,
bill of exchange, drafts, instruments and securities issued by the
Government or any of its instrumentalities, deposits substitute debt
instruments, certificates of deposits bearing interest and others not
payable on sight or demand. On all bonds, loan agreements, including
those signed abroad, wherein the object of the contract is located or used in
the Philippines, bills of exchange (between points within the Philippines),
drafts, instruments and securities issued by the Government or any of its
instrumentalities, deposit substitute debt instruments, certificates of
deposits drawing interest, orders for the payment of any sum of money
otherwise than at sight or on demand, on all promissory notes, whether
negotiable or non-negotiable, except bank notes issued for circulation, and
on each renewal of any such note, there shall be collected a documentary
stamp tax of P0.30 on each P200.00, or fractional part thereof, of the face
value of any such agreement, bill of exchange, draft, certificate of deposit
or note. . ." (emphasis supplied)
SEC. 198. Stamp tax on assignments and renewals of certain
instruments. Upon each and every assignment or transfer of any
mortgage, lease or policy of insurance, or the renewal or continuance of
any agreement, contract, charter, or any evidence of obligation or
indebtedness by altering or otherwise, there shall be levied, collected and
paid a documentary stamp tax, at the same rate as that imposed on the
original instrument. (emphasis supplied)
The above-quoted Sections clearly provide for the imposition of DST on the
renewal or continuance of loan agreements and promissory notes. In the instant
case, DST shall not be imposed on the assignment by TA of its Loan Portfolio
(loan agreements and promissory notes) to TMBC, since the same is not for
renewal or continuance (BIR Ruling No. 139-97 December 29, 1997). The term
"assignment or transfer" in Section 198 of the Tax Code of 1997 applies only to
"mortgage, lease or policy of insurance". Thus, in BIR Ruling No. 041-86 dated
April 8, 1986, this Office defined the term "renew" within the context of Section
198 of the Tax Code of 1997 as follows:
". . . One of the definitions of the word "renew" found in Webster's New
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(b)
Since the DST on mortgage is based on the amount secured, the DST on the
assignment of mortgage, if any, shall be based on the outstanding balance of the
original loan at the time of the transfer or assignment. (BIR Ruling No. 139-97, id.)
6. TMBC shall realize capital gain or loss when TA distributes its assets as
liquidating dividends.
The tax treatment of liquidating dividends depends on the characterization
of the income in the form of such dividends received by shareholders as a result of
the dissolution of the corporation in which they hold shares.
The second paragraph of Section 73 (A) of the Tax Code of 1997 states:
"Where a corporation distributes all of its assets in complete liquidation or
dissolution, the gain realized or loss sustained by the stockholder, whether
individual or corporate, is a taxable income or a deductible loss, as the case
may be."
In the case of Wise & Co., Inc., et al. vs. Bibiano L. Meer, Collector of
Internal Revenue (78 Phil 655 [1947]), the Supreme Court, in interpreting a
similarly worded provision as above cited as in Section 25(a) of Act No. 2833
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("Income Tax Law"), as amended by Section 4 of Act No. 3761 [which is partially
lifted from section 201(c) of the US Revenue Act of 1918], adopted the judicial
construction of the US Supreme Court in the case of Hellmich vs. Hellman (276
US 233), where it was held that the amounts distributed in the liquidation of a
corporation shall be treated as payments in exchange for stock or shares, and any
gain or profit realized thereby shall be taxed to the distributee as other gains or
profits. The Supreme Court also stated that "(W)hen the corporation was dissolved
and in the process of complete liquidation and its shareholders surrendered their
stock to it and it paid the sums in question to them in exchange, a transaction took
place, which was no different in its essence from a sale of the same stock to a third
party who paid therefor".
In BIR Ruling No. 190-84 dated December 21, 1984, the issue raised was
precisely whether the liquidating gain (that is, the difference between the fair
market value of the properties received and the cost basis of the shares to the
stockholders) derived by an individual stockholder is subject to the then 10%/20%
tax rates under Section 34(g) of the then Tax Code or to the graduated income tax
rates under then Section 21(b). This Office ruled that such gain should be subject
to the tax rates under then Section 21(b). The same conclusion was reached in
other rulings of the BIR (BIR Ruling Nos. 322-87 dated October 19, 1987; 136-88
dated April 12, 1988; 021-89 dated February 13, 1989; 270-91 dated December
23, 1991; DA-223-98).
In effect, following the interpretation of these rulings, liquidating gain is to
be treated as the gain from the sale or exchange of shares, consistent with the
decision of the Supreme Court in Wise & Co., Inc., supra, subject, however, not to
the 5%/10% final tax rate under Sections 24(C), 25(A)(3) or (B), 27(D)(2),
28(A)(7)(c) and (B)(5)(c) of the Tax Code of 1997, but to the ordinary income tax
rates provided under Sections 24(A)(1), 25(A)(1) and (B) [that is, the 25% rate],
27(A) or (E), 28(A)(1) or (2) and (B)(1) of the Tax Code of 1997, depending on
the status of the shareholder/stockholder (for instance, whether the shareholder is a
corporation or an individual, resident or non-resident).
Finally, this Office also notes that a similar treatment has been given to
corporate shareholders of a dissolving corporation, in that the liquidating gain
realized is subject to the ordinary corporate income tax rate rather than to the then
10%/20%; or the current 5%/10% final tax rates. (see for instance BIR Ruling
Nos. DA-214-96 dated June 26, 1996 and 171-92 dated May 28, 1992)
This Office also takes note of BIR Ruling No. DA-367-99 dated January
24, 1999 issued under designated authority, and similar rulings where the BIR
departed from the above-mentioned rulings, and ruled that the liquidating gain is
subject to the 5%/10% capital gains tax rate. The basis for this ruling was BIR
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Ruling No. 015-82 dated January 20, 1982, where the BIR held that the liquidating
gain received by individual shareholders is subject to the then 10%/20% final tax,
but, this ruling was effectively overturned in the subsequent BIR Ruling No.
190-84 and many other similar rulings mentioned above. Thus, BIR Ruling No.
DA-529-99 and rulings similar to it have no basis, having been based on a ruling
that had already been revoked.
Accordingly, this Office rules once and for all that:
1.
2.
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Divided into 6,250,000 shares, with par value of P100.00 per share;
Divided into 6,250,000 shares, with par value of P100.00 per share;
Transfer shall include interest accrued or to be accrued on the loan.
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Endnotes
1 (Popup - Popup)
This ruling has been reversed and set aside by the Commissioner of Internal Revenue
in BIR Ruling No. 479-11 dated 5 December 2011.
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