Exemption from the Payment of the Capital Gains Tax - Sale of Share of Stock

February 28, 1990 BIR RULING NO. 022-90 24 (e) 000-00 022-90 Gentlemen : This refers to your letter dated September 18, 1989 stating that with reference to the sale of one (1) share of stock with a par value of P500.00 of International Sports Development Corporation by Republic Bank (now Republic Planters Bank), the registered owner thereof, in favor of your client, Mr. Gregorio Rocha Suarez, Stock Certificate No. 1860 which covered the said share sold was duly endorsed in favor of your said client on August 2, 1979; that due to oversight, the sale was not immediately recorded with the issuing corporation for purposes of transferring the share in the name of your client; that it was lately that your client, as the new owner thereof, presented the endorsed Certificate of Stock to the issuing corporation in order to have it registered in his name; and that your client is being required to present clearance from this Office to the effect that the corresponding capital gains tax under P.D. No. 1739 dated September 17, 1980 is duly paid before said share could be registered in his name. cd Based on the foregoing representation, you now request a ruling as to whether or not the aforesaid sale of share of stock by Republic Bank in favor of your client, Mr. Gregorio Rocha Suarez is subject to the payment of capital gains tax provided under P.D. No. 1739. In reply, please be informed that since the aforementioned sale by Republic Bank of its share of stock in International Sports Development Corporation covered by Stock Certificate No. 1860 in favor of your client, Mr. Gregorio Rocha Suarez, took place on August 2, 1979 as shown on said Stock Certificate the gains derived therefrom are not therefore subject to the payment of the capital gains tax provided under Presidential Decree No. 1739 which took effect thereafter on September 17, 1980. This transaction is, therefore, governed by Section 34(g) of the Tax Code, as added by P.D. No. 779 which took effect on January 1, 1976. However, P.D. No. 1116 indefinitely suspended the effectivity of then schedular income tax on capital gains arising from stock transactions prescribed under P.D. No. 779. Such being the case, any capital gains arising from such sale transaction, shall be subject to income tax under then Title II of the Tax Code as determined in accordance with then Section 34(b) of the same Code. No sale, exchange, transfer, or similar transaction intended to convey ownership of, or title to, any share or shares of stock which had been acquired on or after November 4, 1970, shall be registered in the books of a corporation, unless the receipt of payment of the taxes abovementioned or a copy thereof, is filed and recorded by the stock transfer agent or secretary of the corporation. aisadc Very truly yours, (SGD.) JOSE U. ONG Commissioner