BIR Ruling [DA-182-00]

March 28, 2000 BIR RULING [DA-182-00] Secs. 46 & 47; DA 491-98; DA-182-2000 First Philippine Holdings Corporation 4/F Benpres Building, Pasig, Metro Manila Attention: Mr . Cesar Z . Gomez Vice-President Gentlemen : This refers to your letter dated December 22, 1999 requesting permission to change your accounting period from fiscal year basis ending June 30 to calendar year basis in accordance with Section 172 of the Income Tax Regulations and Section 47 of the Tax Code of 1997. It is represented that First Philippine Holdings Corporation (FPHC) is a domestic corporation duly organized and existing under the laws of the Republic of the Philippines; that it was incorporated on June 30, 1961 and is engaged primarily in the business of acquiring and dealing with real and personal property including but not limited to bonds, debentures, promissory notes, shares of stock or other securities obligations; that since its incorporation, FPHC has been employing the fiscal year basis starting July 1 and ending June 30 of every year; that FPHC's parent company, Benpres Holdings Corporation (Benpres), requested FPHC to change its accounting period from fiscal year ending June 30 to calendar year, effective in 1999, for the purpose of aligning FPHC's accounting period with Benpres; that on December 20, 1999, the Securities and Exchange Commission approved the amendment of FPHC By-Laws changing the company's accounting period from fiscal year to calendar year; and that in support of your request, you submitted to this Office a photocopy of your annual income tax return for the year 1999 and a photocopy of the amended By-Laws changing the accounting period from calendar year to fiscal year basis. In reply, please be informed that your request is hereby granted, provided, you comply with the provisions of Sections 46 and 47 of the Tax Code of 1997 which states: "SEC. 46. Change of Accounting Period . If a taxpayer, other than an individual, changes his accounting period from fiscal year to calendar year, from calendar year to fiscal year or from one fiscal year to another, the net income shall, with the approval of the Commissioner, be computed on the basis of such new accounting period, subject to the provisions of Section 47. prcd "SEC. 47. Final or Adjustment Returns for a Period of less than Twelve (12) Months . "(A) Returns for Short Period Resulting from Change of Accounting Period . If a taxpayer other than an individual, with the approval of the Commissioner, changes the basis of computing net income from fiscal year to calendar year, a separate final or adjustment return shall be made for the period between the close of the fiscal year for which return was made and the following December 31. If the change is from calendar year to fiscal year, a separate final return or adjustment return shall be made for the period between the close calendar year for which return was made and the date designated as the close of the fiscal year. If the change is from one fiscal year to another fiscal year, a separate final or adjustment return shall be made for the period between the close of the former fiscal year and the date designated as the close of the new fiscal year. "(B) Income Computed on Basis of Short Period . Where a separate final or adjustment return is made under Subsection (A) on account of a change in the accounting period, and in all other cases where a separate final and adjustment return is required or permitted by rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, to be made for a fractional part of a year, then the income shall be computed on the basis of the period for which separate final or adjustment return is made." Accordingly, FPHC should file a separate final or adjustment return for the period corresponding to July 1 and December 31, 1999, which is the period between the close of the fiscal year for which a return was made and the date designated at the close of the calendar year. This will serve as your authority to change your accounting period from fiscal year to calendar year upon your compliance with the requirement of filing a short period return. (BIR Ruling No. 060-96 dated May 22, 1996) Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)