BIR Ruling No. 097-11

April 6, 2011 BIR RULING NO. 097-11 Sec. 52 of the Tax Code of 1997; BIR Ruling No. 010-02; BIR Ruling No. DA-171-08; BIR Ruling No. DA-011-2006; BIR Ruling No. DA-528-2006 SGV & Co. 6760 Ayala Avenue Makati City Attention: Atty. Lucil Q. Vicerra Principal, Tax and Customs Services Gentlemen : This refers to your letter dated January 17, 2011 stating that your client, Amkor Technology Philippines, Inc. (Amkor), is a subsidiary of Amkor Technology Singapore Holding Pte., Ltd.; that Amkor is a corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. 69355; that it is primarily organized "To engage in, conduct, and operate the business of manufacturing, assembling, processing, exporting, buying and selling semiconductor products and components, and in connection therewith, to the extent permitted by law, to acquire, construct, lease, own and maintain, factories, machinery, equipment, appliances, airplanes, ships, lighters, docks, piers, warehouses, storage and shipping facilities, lands, buildings, structures and works of all kinds, and for other purposes incidental to any of its business." ScTCIE that in a Special Meeting of the Board of Directors of Amkor duly called and held on December 15, 2009, it was unanimously passed recommending the shortening of the term of existence of the Corporation thereby dissolving the corporation, and to amend Article Fourth of the Articles of Incorporation of the Company, as follows: "RESOLVED, that the resolution passed by the Board on April 2, 2009 be and they hereby are cancelled; and be it "Further RESOLVED, that Article FOURTH of the Articles of Incorporation of the Company be correspondingly amended to read as follows: 'FOURTH: That the term for which the corporation is to exist is up to December 31, 2010.'" that on January 15, 2010, the SEC approved its application for the shortening of its corporate term until said date; and that considering that Amkor uses the calendar year (December 31) as its taxable period, the short period return to be filed as a result of its dissolution is in fact its final income tax return (ITR) for taxable year 2010 since the same will cover the entire taxable year. Based on the foregoing representations, you now request for an extension of sixty (60) days from January 30, 2011 or until March 31, 2011, to submit its final ITR without the imposition of any interest or surcharge. In reply thereto, please be informed that Section 52 (C) of the Tax Code provides: "(C) Return of Corporation Contemplating Dissolution or Reorganization. Every corporation shall, within thirty (30) days after the adoption by the corporation of a resolution or plan for its dissolution, or for the liquidation of the whole or any part of its capital stock, including a corporation which has been notified of possible involuntary dissolution by the Securities and Exchange Commission, or for its reorganization, render a correct return to the Commissioner, verified under oath, setting forth the terms of such resolution or plan and such other information as the Secretary of Finance, upon recommendation of the Commissioner, shall, by rules and regulations, prescribe. The dissolving or reorganizing corporation shall, prior to the issuance by the Securities and Exchange Commission of the Certificate of Dissolution or Reorganization, as may be defined by rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, secure a certificate of tax clearance from the Bureau of Internal Revenue which certificate shall be submitted to the Securities and Exchange Commission." In applying the above-cited provisions, this Office in elucidated the matter in BIR Ruling No. 010-02 dated February 19, 2002 , as follows: "Prior to the amendment of the Tax C ode by Republic Act No. 84 24 (Ta x Reform Act of 1 997), the filing of short period return was expressly required for corporations contemplating dissolution but not for corporations contemplating reorganization such as merger. Nevertheless, the requirement for the filing of the short period return has been applied to absorbed corporations in cases of merger. Thus, the Supreme Court decided that the short period return of an absorbed corporation should be filed within 30 days after the cessation of its business or thirty days after the approval of the Articles of Merger. [ Bank of the Philippine Islands vs. Commissioner of Internal Revenue , G.R. No. 144653, August 28, 2001.] The Supreme Court affirmed the decision of the Court of Tax Appeals that based its pronouncement on Sec. 78 of the then T ax Co de and Sec. 244 of Revenue Regulations No. 2, viz. : IcTEaC 'Sec. 78. Return of corporation contemplating dissolution. Every corporation shall, within thirty days after the adoption by the corporation of a resolution or plan for the dissolution of the corporation or for the liquidation of the whole or of any part of its capital stock, render a correct return to the Commissioner of Internal Revenue, verified under oath, setting forth the terms of such resolution or plan and such other information as the Minister of Finance shall by regulations, prescribe. Sec. 244. Return of corporation contemplating dissolution or retiring from business . All corporations, partnership, joint accounts and associations, contemplating dissolution, shall within 30 days after the approval of such resolution authorizing their dissolution, and within the same period after their retirement from business, file their income tax return covering the profit earned or business done by them from the beginning of the year up to the date of such dissolution or retirement and pay the corresponding income tax due thereon upon demand by the Commissioner of Internal Revenue . . .' Although under the foregoing provisions, the reckoning point for the 30-day period is the "adoption by the corporation of a resolution or plan" for the dissolution, the Supreme Court still reckoned the 30-day period from the SEC's approval of the merger. This is because the SEC's approval of the merger is the operative act that gives legal effect to the merger and results to the cessation of the separate juridical personality of absorbed corporation. Therefore, this Office hereby rules that in a merger of consolidation, the phrase "within thirty (30) days after the adoption by the corporation of a resolution or plan for its dissolution" in Section 52 (C) of the T ax Code of 19 97 refers to the 30-day period from the SEC's approval of the merger, this being the interpretation of the provision by the Supreme Court in the above-mentioned case. As regards the request for an additional time for the Allstate to file the Short Period Return, that is, within 60 days from the date of the SEC's approval of the merger, having found your reasons to be meritorious, your request is hereby granted." This was later reiterated in BIR Ruling No. DA-171-08 dated March 17, 2008 , as follows: ". . . the above-cited reasons are found to be meritorious, thus, your request for an extension of 90 days reckoned from the original deadline of August 4, 2007, or until November 2, 2007 within which to file the short period return of NPP is hereby granted pursuant to Secti on 53 of the Tax C ode. (BIR Ruling Nos. DA-011-2006 dated January 19, 2006 and D A-528-20 06 dated September 1, 2006) Applying the aforequoted law and the jurisprudential authorities cited above to the case under consideration, this Office hereby GRANTS an extension of sixty (60) days from January 30, 2011 until March 31, 2011, for Amkor to submit its final ITR for the taxable year 2010, without the imposition of any interest and penalty. 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. aCATSI Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue