BIR Ruling [DA-129-00]

March 1, 2000 BIR RULING [DA-129-00] Bank of Commerce Banker's Centre, 6764 Ayala Avenue Makati City Attention: Mr . Freddie M . Domingo Vice-President Gentlemen : This refers to your letter dated October 28, 1998 requesting for a confirmatory ruling as to whether BIR Ruling No. 103-98 dated June 29, 1998 on ROPOA is applicable to all banks. It is represented that BIR Ruling No 103-98 dated June 29, 1998 provides, in part, that: ". . . ROPOA are included in the inventory of properties for sale to the public in the ordinary course of banking operations and thus, should be treated as "ordinary assets" of PNB. Hence, the sale, exchange or other disposition will not be subject to capital gains tax imposed under Sec. 27(D)(5) of the Tax Code of 1997." that the above-mentioned ruling was issued in favor of the Philippine National Bank (PNB); that the facts and circumstances on which the said ruling was based, similarly applies to Bank of Commerce (BOC); that BOC is a banking institution with ROPOA included in its inventory of properties for sale to the public; that you are of the opinion that capital gains tax should not likewise be imposed against you on the sale of your ROPOA assets; that you were advised that BIR Ruling No. 103-98 is applicable to all banks; and that a confirmation from this Office that the said BIR Ruling is applicable to all banks will expedite transactions with the BIR District Offices as well as with the appropriate Registry of Deeds. In reply, please be informed that since, as represented, the facts and circumstances upon which BIR Ruling No 103-98 dated June 29, 1998 was based similarly to that of BOC's ROPOA which are included in its inventory of properties for sale to the public, this Office is of the opinion as it hereby holds that the sale, exchange or other disposition by BOC of its ROPOA being an ordinary asset by classification as in the case of other banking institutions is not subject to the capital gains tax imposed under Section 27(D)(5) of the Tax Code. However, the sale, exchange or other disposition of BOC's ROPOA classified as ordinary assets as well as that of other banking institutions are subject to the creditable withholding tax imposed under Revenue Regulations No. 2-98 implementing Section 57(B) of the Tax Code of 1997. (BIR Ruling No. 103-98 dated June 29, 1998) Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)