BIR Ruling [DA-506-06]

August 22, 2006 BIR RULING [DA-506-06] DA 087-02; 60 (B) Bank of the Philippine Islands Asset Management & Trust Group 17th Floor BPI Head Office Ayala Avenue corner Paseo de Roxas Makati City Attention: Ms. Ma. Leonora V. Mendoza Assistant Vice-President Gentlemen : This refers to your letter dated July 31, 2006 requesting for an opinion that the sale of a parcel of land by BPI Group of Companies Retirement Fund (BPI RTF) located in Cebu City containing an area of 1,748 square meters is not subject to capital gains tax pursuant to Section 60(B) of the Tax Code of 1997; and the subsequent issuance of the Certificate Authorizing Registration (CAR) by the Revenue District Office (RDO) No. 81, Cebu City, so that title to the said property may now be issued in favor of the prospective buyer. In reply thereto, please be informed that Section 60(B) of the Tax Code of 1997 provides that "Sec. 60(B) Exception . The tax imposed by Title II shall not apply to employees' 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. . ." Considering that BPI RTF is an employees' trust fund established under then R.A. No. 4917 for the exclusive benefit of all the employees and the corpus or income of the fund is not used for or diverted to purposes other than for the exclusive benefit of the members and their beneficiaries, this Office holds that its investments remain exempt from income tax and consequently from withholding tax pursuant to Section 60(B) of the Tax Code of 1997. Accordingly, the sale of the above-mentioned property by the BPI RTF is not subject to capital gains tax imposed under Section 24(D)(I) of the Tax Code of 1997. (BIR Ruling No. DA673-99 dated December 12, 1999) This will therefore serve as an authority for the RDO concerned to issue the corresponding CAR so that title to the said property may now be issued in the name of the buyer. 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. ISTDAH Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service