BIR Ruling

December 3, 1976 Messrs. Francisco, De Castro & Zulueta Attorneys-at-Law Vivelyn Bldg., 7248 - F. Malugay St. Makati, Rizal Attention: Atty . Renato Z . Francisco Gentlemen : In reply to your letter of the 3rd instant, I have the honor to inform you that the Retirement Plan adverted to in your inquiry will not lose its qualification under Republic Act No. 4917 as amplified by Revenue Regulations No. 1-68 if it invests some of its funds in loans extended to the employee-members who, as represented, will acquire shares of stock of their employer-company under the latter's newly created employees' stock option plan as long as such loans are granted in accordance with the rules on the granting of loans from the Fund to the members which must be clearly and specifically provided in the aforesaid Plan; the loans are granted in a uniform and non-discriminatory manner; the loans are repayable within a specified period of time with adequate security and a reasonable rate of interest; and the entire interests or earnings derived from such loans will form part of the trust/fund for the exclusive benefit of the employee-members or their beneficiaries. (See Section 5, Revenue Regulations No. 1-68 dated March 25, 1968) Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3