Whether a Certain Transaction is Not Subject to the Capital Gains tax but only to the Documentary Stamp Tax Imposed under Section 176 of the Tax Code, as amended by R.A. No. 7660

December 6, 1995 BIR RULING NO. 186-95 21 (d); 176 000-00 186-95 Meralco Ortigas Avenue Pasig, 1602 Metro Manila Attention: Mr . A . F . Factura Assistant Vice-President Legal Service Gentlemen : This refers to your letter dated May 18, 1995 addressed to the Revenue District Officer of Pasig, Metro Manila, stating that in 1974, Meralco Securities Corporation (MSC) issued a Warrant to all customers of Meralco in consideration of their continued valued patronage; that the Warrant evidences the right of a registered owner thereof to acquire in exchange of said Warrant, one share of Meralco class "A" stock certificate from Meralco Foundation, Inc. which has purchased the share of capital stock of MSC covered by the Warrant; and that a present, the warrant holders have signified their intention to exchange their Warrants for Meralco class "A" stock certificate. Based on the foregoing, you are requesting confirmation of your opinion that the transaction is not subject to the capital gains tax but only to the documentary stamp tax imposed under Section 176 of the Tax Code, as amended by R.A. No. 7660. In reply, please be informed that since the transaction is without consideration and merely gives the warrant-holder the right to exchange his Warrant for one (1) Meralco class "A" stock certificate, your opinion that the same is not subject to the capital gains tax imposed under either Section 21(d) or Section 24(e)(2) of the Tax Code, as amended, is hereby confirmed. However, the transfer of the certificate of stock from Meralco Foundation, Inc. to the warrant-holder is subject to the documentary stamp tax imposed under Section 176 of the same Code. aisadc Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue