BIR Ruling No. 399-14

October 17, 2014 BIR RULING NO. 399-14 Sec. 2(r), Rev. Bulletin No. 1-2003; BIR Ruling No. 253-11 Isla Lipana & Co. 29th Floor, Philamlife Tower 8767 Paseo de Roxas 1226 Makati City Attention: Alexander B. Cabrera Managing Partner, Tax Dear Gentlemen : This refers to your letter dated June 16, 2010 requesting, on behalf of your client, PMFTC, Inc. ("PMFTC"), confirmation of the following opinions with respect to the transfer of assets of Philip Morris Philippines Manufacturing, Inc. ("PMPMI") including its accounts payables and accruals, Fortune Tobacco Corporation ("FTC") including its accounts payable, accrued expenses and syndicated loan, Parity Packaging Corporation ("Parity"), Northern Tobacco Redrying Co., Inc. ("Northern") and Dominium Realty & Construction Corporation ("Dominium") hereinafter referred to as "Transferors", to PMFTC in exchange for shares of stock of the latter. 1. That no gain or loss should be recognized on the said exchange as it falls within the provision of Section 40(C)(2) of the National Internal Revenue Code (NIRC); and 2. That the said transfer of properties in exchange for PMFTC shares of stock is not subject to documentary stamp tax pursuant to Section 199(m) of the NIRC. In reply, please be informed that during the course of our evaluation and processing of your request, this Office was notified by this Bureau's Office of the Excise Large Taxpayers Audit Division II that the foregoing transactions are within the scope of an audit investigation it is conducting covering all internal revenue tax liabilities of PMPMI for calendar year 2010 pursuant to Letter of Authority No. 124-2011-00000049 dated July 19, 2011. aHDTAI Section 2 (r) of Revenue Bulletin No. 1-2003 dated July 14, 2003 provides: "Section 2. List of No-Ruling Areas. The following shall hereby be construed and identified as "No-Ruling Areas": xxx xxx xxx r) Issue/s or transactions involving directly or indirectly the same taxpayer/s which is/are the subject of an investigation, on-going audit , administrative protest, claim for refund or issuance of tax credit certificate, collection proceedings, or a judicial appeal subject to Section 3 hereunder. Accordingly, the taxpayer must submit and include the following statement in the request for ruling: "The issue/s or transaction subject of the request is not under investigation, on-going audit, administrative protest, claim for refund or issuance of a tax credit certificate, collection proceedings, or a judicial appeal of the taxpayer/s involved." Inasmuch as PMPMI is among the transferors in the exchange transaction covered by the Deed of Assignment dated February 25, 2010 and which is within the scope of an on-going audit, the issues arising therefrom and being requested for legal opinion are thus considered "No-Ruling Areas" pursuant to Section 2 (r) of Revenue Bulletin 01-03. Consequently, this Office cannot issue a determinative ruling or legal opinion thereon. ( BIR Ruling No. 253-11 dated July 26, 2011 ) Please be guided accordingly. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue