BIR Ruling

December 3, 1974 San Miguel Corporation 6766 Ayala Avenue Makati, Rizal Attention: Mr . D . T . Reyes Assistant Vice-President S i r : This refers to your letter dated September 23, 1974 requesting confirmation of your treatment of the land and improvements thereon comprising your former Royal Plant in Cebu City as capital assets considering that you have no longer any use thereof nor do you foresee any further use of the property now or in the future. cdt It appears that you transferred your soft drinks business from Cebu City to Mandaue City in view of inadequate facilities in the former as well as lack of space and prevailing traffic congestion and limited factory premises in favor of much better facilities in Mandaue for manufacturing, including transportation, warehousing and shipping and where space is more available for present use as well as for future improvements and expansion. It appears further that all of the machinery and equipment in the old Cebu plant were transferred to the new Mandaue plant. In reply, I have the honor to inform you that the above referred to property falls within the ambit of the ruling issued by this Office to you dated August 18, 1971. In said ruling, this Office held that your Echague plant which you have abandoned with no further foreseeable use thereof became a mere investment property of your corporation it not being used anymore in your trade or business and, therefore, is a capital asset citing Steward Title Guaranty Co., 20TC 630; Providence Coal Mining Co. v. Glenn, 39 AFTR, 219. Your treatment, therefore, of the property in question as capital asset is hereby confirmed. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5