BIR Ruling [DA-178-01]

October 03, 2001 BIR RULING [DA-178-01] Castillo Laman Tan Pantaleon & San Jose Law Offices The Valero Tower 122 Valero Street, Salcedo Village Makati City Attention: Atty. Maria Victoria D. Sarmiento Fred Pamaos Gentlemen : This refers to your letter dated July 10, 2001 requesting for confirmation that the assignment of shares of stock of your client, Rohm Electronic Phils., Inc. Employees' Retirement Plan (the Retirement Plan), is exempt from the payment of capital gains tax. It is represented that the Retirement Plan is a trusteed retirement plan duly certified by the Bureau of Internal Revenue (BIR) as a tax exempt retirement plan; that on the other hand, Rohm Assets Philippines, Inc. (Rohm Assets), is a corporation organized and existing under the laws of the Philippines, with an authorized capital stock of P60 million divided into 600,000 shares at P100.00 par value per share, further classified as Class A (24,000 shares) and Class B (360,000 shares); that the Retirement Plan is the owner of the shares of stock in Rohm Estates Corporation Inc. (54,000 preferred shares, with a total book value of P55,315,980) and Rohm Realty Corporation (18,000 preferred shares, with total book value of P4,878.00); that on April 19, 2001, a Deed of Assignment was executed by and between the Retirement Plan and Rohm Assets whereby the former assigned the said shares of stocks to the latter in exchange for 90,000 fully paid and non-assessable Class B shares of the latter. In reply thereto, please be informed that one of the benefits and/or privileges that a qualified employees' retirement plan within the purview of Section 32(B)(6)(a) of the Tax Code of 1997 is entitled, is exemption from income tax of the income of the trust fund from its investments. (Section 60(B) of the Tax Code of 1997) Such being the case, and since Rohm Electronic Phils., Inc. Employees' Retirement Plan is a qualified employees retirement plan within the purview of Section 32(B)(6)(a) of the Tax Code of 1997, the capital gains, if any, which will be realized by it from the assignment of its shares of stock in Rohm Estates Corporation, Inc. and Rohm exempt from the payment of capital gains tax imposed under Section 24(C) of the Tax Code of 1997. ( BIR Ruling No. 368-88 dated August 3, 1988 ) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) MILAGROS V. REGALADO Acting Assistant Commissioner Legal Service