BIR Ruling

April 21, 1972 De Guzman, Dimaano & Associates United St., Mandaluyong Rizal Gentlemen : This refers to your letter dated April 20, 1972 requesting information as to whether or not the gains derived from a stock transaction hereinbelow described is subject to tax. It appears that International Resources, Ltd., a nonresident foreign corporation sold its shares of the Marcopper Mining Corporation, also a domestic corporation. The agreement of sale was executed on October 29, 1968 at Jersey City, New Jersey, U.S.A. The certificate of stock was delivered by the Secretary of Marcopper to the purchaser at said place. Simultaneously with the agreement of sale an escrow agreement was executed, and in accordance with the terms thereof, the certificates were delivered to Bankers Trust Company, the escrow agent, also in New Jersey which shall hold the same pending the full payment of the purchase price. The down payment was paid in New Jersey and the promissory notes representing the balance were likewise executed thereat. In reply, I have the honor to inform you that, it appearing that the sale of the shares of stock was effected and consummated in New Jersey, U.S.A. and considering that the seller-owner thereof is a nonresident foreign corporation, the gains derived by it from the said transaction is deemed derived from sources within the United States, and therefore, not subject to Philippine income tax in accordance with the decision of the Supreme Court of the Philippines in Collector vs. Anglo California National Bank, G.R. No. 12476, January 29, 1960. Not being subject to Philippine income tax, the purchaser, Performance Investment Corporation, is not under obligation to withhold any amount from the remittances of installment payments on the balance of the purchase price. The 2% stock transaction tax prescribed by R. A. No. 6141 is not also due and payable because the shares were acquired and sold prior to the enactment of said law. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue