Capital Gains Realized from the Sale, Exchange or Disposition of Shares of Stock

July 12, 1989 BIR RULING NO. 145-89 24 (e) (2) 000-00 145-89 Gentlemen : This refers to your letter dated February 22, 1989 requesting a ruling as to whether the transfer of Meralco shares covered by Stock Certificate Nos. CPB-13020, CPB-16798 and CPB-18756 with a face value of P482,770.00, P82,550.00 and P19,220.00 respectively by virtue of a Deed of Assignment executed by LSG-PTA Community Association, Inc. in your favor is subject to the capital gains tax. It is represented that for purposes of transferring in your name Meralco Stock Certificate Nos. CPB-13020, CPB-16798 and CPB-18756 previously issued to LSG-PTA Community Association, Inc. as well as the redemption of Stock Certificate No. CPB-13020, you are being required by Meralco to submit a Stock Transaction Capital Gains Tax Return duly stamped received by the BIR. cd In reply thereto, I have the honor to inform you that pursuant to Section 24(e)(2) of the Tax Code, capital gains realized from the sale, exchange or disposition of shares of stock in any domestic corporation shall be taxed as follows: (A) Net capital gains as defined in Section 33(a)(2) realized during each taxable year from sale or exchange or other disposition of shares of stock not traded through a local stock exchange: Not over P100,000 10% Over P100,000 20% (B) Capital gains presumed to have been realized from the sale, exchange or disposition of shares of stock listed and traded through a local stock exchange 1/4 of 1% based on the gross selling price of the share or shares of stock. Such being the case, LSG-PTA Community Association, Inc. as the assignor of the aforementioned Meralco shares and not you is subject to the capital gains tax at the applicable rates hereinabove mentioned. Moreover, pursuant to Sec. 8 of Revenue Regulations No. 2-82, no sale, exchange, transfer or similar transaction intended to convey ownership, or title to any share of stock shall be registered in the books of the corporation unless the receipt of payment of the tax herein imposed is filed with and recorded by the stock transfer agent or secretary of the corporation. cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner