BIR Ruling [UN-215-94]

July 19, 1994 BIR RULING [UN-215-94] Mr. Edgardo M. Capulong 9 Ephesus Street Multinational Village Paraaque, Metro Manila S i r : This refers to your request for a ruling as to whether or not the Armed Forces of the Philippines Retirement & Separation Benefits System (AFPRSBS) is liable to pay the capital gains tax on the sale of its real property in your favor. It is represented that you purchased from AFPRSBS a parcel of land in the amount of P1,240,000.00 for which the amount of P62,000.00 had been withheld, representing the 5% creditable withholding tax; that you requested for a refund from the seller, the AFPRSBS, but is issued a Sworn Statement dated August 14, 1993 that it is not subject to the withholding tax by virtue of Section 2(c) of P.D. 361 which provides that all earnings of the System shall not be subject to any tax whatsoever and that this Office has also ruled on June 23, 1993 "that AFPRSBS is an employees' trust and, therefore, income of the trust fund from its investments are exempt from income tax and consequently from the withholding tax pursuant to Section 53(b) of the Tax Code, as amended", which are the basis of the seller in rejecting your request for refund. In reply, please be informed that, in a letter dated June 23, 1993, this Office has indeed ruled that the AFPRSBS is an employee's trust within the contemplation of Section 53(b) formerly Section 56(b)] of the Tax Code, as amended. Accordingly, income of the trust fund from its investments is exempt from income tax and consequently from the withholding tax. cdtech In view thereof, the sale of AFPRSBS of a parcel of land on your favor is exempt from income tax and consequently from the 5% creditable withholding tax imposed by Revenue Regulations No. 1990 amending Revenue Regulations No. 12-89. Since, as represented, you were the one who paid the amount of P62,000.00 as 5% expanded withholding tax, you may file a written request for your refund with the Appellate Division, this Bureau within two (2) years from the date of payment of the said tax pursuant to Section 204 of the Tax Code, as amended. (BIR Ruling No. 53(b) 041-94 dated February 28, 1994). Very truly yours, ALICIA P. CLEMENO Acting Assistant Commissioner (Legal Service)