BIR Ruling

May 9, 1973 CCP Securities Corporation Makati Stock Exchange Bldg. Ayala Avenue, Makati, Rizal Attention: Mercedita S . Nolledo Assistant Vice-President Gentlemen : This refers to your letter dated March 29, 1973 requesting information regarding the purchase of Central Bank Certificates of indebtedness in order that a taxpayer may avail of the benefits provided under Presidential Decree No. 16, as amended, suspending the capital gains tax. You would like to be informed on the following: "1. What is meant by the terms original, primary or new issue? Would purchase from authorized dealers of the Central Bank be construed as primary issue? "2. The above mentioned Presidential Decree requires among others that no gain or loss shall be recognized on the portions of the gains realized that correspond to the portion of the proceeds of the sale, disposition transfer of capital assets provided it is invested in capital stock of preferred production enterprises or in the purchase of new issues of government bonds, securities, debentures and notes within six (6) months from the date the gains were realized, provided these investments are not disposed of, transferred, assigned, or conveyed for a period of 3 years from the date the investments were made . "The question arises when the instrument invested in matures before the three year period has elapsed. Would the holder have to purchase of another issue in order to comply with the three (3) year requirement? "3. Other than the regulations provided for under Revenue Regulations No. 7-72 are there any special forms or requirements that must be complied with?" In reply thereto, I have the honor to inform you as follows: 1. The new or primary issues of Central Bank Certificate of Indebtedness as contemplated under Presidential Decree Nos. 16 and 16-A, and implemented by Revenue Regulations No. 7 and 7-A includes those original issues by the Central Bank before or after the promulgation of said Decree on October 3, 1972. Those certificates purchased from authorized dealers of the Central Bank are also considered "new issues" for purposes of the Decree and its implementing regulations. 2. It is required that said certificates are not to be disposed of, transferred, assigned or conveyed within a period of three (3) years from the date of the investment. If the certificates mature before the three-year period has elapsed, then the investor is required to re-invest the proceed in the same or in another new issues of Government instruments in order to comply with the requirement. In such case, the investor must report to this Office within thirty (30) days from re-investment stating the kind of investment and the amount of investment. (Sec. 5, Revenue Regulations No. 7-72) 3. There are no additional conditions and requirements other than those mentioned in Revenue Regulations No. 7-72 that should be complied with in this regard. aisa dc Very truly yours, (SGD.) CONRADO P. DIAZ Acting Commissioner of Internal Revenue