BIR Ruling [DA-336-00]

August 30, 2000 BIR RULING [DA-336-00] Bank of the Philippine Islands BPI Building, Ayala Avenue corner Paseo de Roxas Makati City Attention: Ms . Ma. Lourdes B . Montelibano Assistant Vice President and Ms. Emily C. Chan Manager Gentlemen : This refers to your letter dated September 13, 1999 requesting on behalf of your client, PAL PILOTS' RETIREMENT BENEFIT PLAN, for a ruling as to whether or not the sale of real properties owned by the employees' trust fund is subject to income tax and consequently to creditable withholding tax. In reply, please be informed that Section 60(B) of the Tax Code of 1997 provides that "the tax imposed by Title II shall not apply to employee's trust which forms part of a pension, stock bonus or profit-sharing plan of an employer for the benefit of some or all of his employees (1) if contributions are made to the trust by such employer, or employees, or both for the purpose of distributing to such employees the earnings and principal of the fund accumulated by the trust in accordance with such plan, and (2) if under the trust instrument it is impossible, at any time prior to the satisfaction of all liabilities with respect to employees under the trust, for any part of the corpus or income to be (within the taxable year or thereafter) used for, or diverted to, purposes other than for the exclusive benefit of his employees: Provided, That any amount actually distributed to any employee or distribute shall be taxable to him in the year in which so distributed to the extent that it exceeds the amount contributed by such employee or distributee." Such being the case, any gains to be derived from the sale of real property owned by PAL PILOTS' RETIREMENT BENEFIT PLAN FUND, a qualified pension plan within the contemplation of R.A. No. 4917, is not subject to income tax and consequently to creditable withholding tax prescribed under Revenue Regulations No. 2-98. (BIR Ruling No. 010-90 dated January 31, 1990) aTcIAS 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, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal & Inspection Group