BIR Ruling [DA-179-01]

October 03, 2001 BIR RULING [DA-179-01] Castillo Laman Tan Pantaleon & San Jose Law Offices The Valero Tower 122 Valero Street, Salcedo Village Makati City Attention: Attys. Maria Victoria D. Sarmiento Fred Pamaos Gentlemen : This refers to your letter dated September 5, 2001 requesting for confirmation that the sale of shares of stock by RCBC Retirement Fund (the Retirement Fund) to Rohm Assets Philippines, Inc. (Rohm Assets), is exempt from the payment of capital gains tax. It is represented that the Retirement Fund is a trusteed retirement plan duly certified by the Bureau of Internal Revenue (BIR) as a tax exempt retirement plan; that it is the beneficial owner of shares of stock in Rohm Realty Corporation (Rohm Realty); that the Retirement Fund, pursuant to a Deed of Assignment, sold said shares of stock to Rohm Assets for a total consideration of P13,260,000.00; that while the consideration is based on the par value of the shares, the difference between the par value and the book value of the subject shares was treated as gift, for which the corresponding donor's tax in the amount of P6,710,488.20 had been paid, pursuant to Section 100 of the Tax Code of 1997. 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 RCBC Retirement Fund 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 sale of its shares of stock in Rohm Realty Corporation to Rohm Assets shall be Realty Corporation in exchange for the 90,000 shares of Rohm Assets shall be 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