Tax Consequence Arising from the Sale of Shares of Stocks

May 9, 1980 BIR RULING NO. 047-80 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants P. O. Box 589, Manila 2800 Attention: Mr . M . Gutierrez Tax Division Gentlemen : This refers to your letter dated April 21, 1980 requesting a ruling as to the tax consequence arising from the sale made by your client, PVO International, Inc. (PVO) of its shares of stocks in San Pablo Manufacturing Corporation (SPMC). You have represented that your client, a non-resident foreign corporation not doing business in the Philippines has sold to United Coconut Planters Bank its total shareholding of 20,700,000 shares in SPMC on January 3, 1980 for an aggregate value of P108,000.000; and that of said shareholdings, 1,200,000 shares were acquired by your client before November 5, 1970 while the balance of 19,500,000 shares were acquired after said date. In reply, I have the honor to inform you that the gain derived from the sale of the 1,200,000 shares acquired by your client before November 5, 1970 is subject to 35% capital gains tax and, hence to the 35% withholding tax imposed by Sections 53 and 54 of the Tax Code while the sale of the 19,500,000 shares acquired by it after said date is subject to the 1/4 of 1% stock transaction tax imposed by Section 210(a) of the same Code. (BIR Ruling No. 016-79 dated April 18, 1979). Very truly yours, RUBEN B. ANCHETA Deputy Commissioner