Request for Review of BIR Ruling No. ITAD-080-12 Issued on 16 February 2012

May 7, 2014 DOF OPINION 1st Indorsement Respectfully referred to Hon. Kim S. Jacinto-Henares, Commissioner of Internal Revenue, for appropriate action, the attached case docket of the Request for Review of BIR Ruling No. ITAD-080-12 (the "Request") filed with this Department on 29 March 2012, by Follosco Morales & Herce on behalf of Provident Securities Pte. Ltd. ("Provident"). The Request seeks the review of BIR Ruling No. ITAD-080-12 issued on 16 February 2012, which denied Provident's Tax Treaty Relief Application ("TTRA") filed with the Bureau of Internal Revenue ("BIR")-International Tax Affairs Division ("ITAD") on 22 April 2010. The TTRA sought confirmation from the BIR-ITAD that the following transactions are exempt from Philippine income tax: 1. The surrender of common shares in OCBC Securities Philippines, Inc. ("OSPI") in exchange for property in connection with the latter's liquidation; and 2. The assignment by Provident to Mr. Andrew Chua Lim of its right to receive the property of OSPI as liquidating dividends. As basis for the foregoing, the TTRA cites the Convention between the Republic of the Philippines and the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income , signed on 01 August 1977 ("RP-Singapore Tax Treaty"). BIR Ruling No. ITAD-080-12 denied the TTRA on the basis of Revenue Memorandum Order No. 01-2000 ("RMO 01-2000"), which requires that a TTRA must be made fifteen (15) days before the transaction. In this connection, in Ruling No. ITAD-080-12, the BIR noted that Provident received the consideration for the transfer of its property to Mr. Lim on 21 December 2009, while it filed the TTRA only on 22 April 2010. HCTEDa In connection therewith, we take note of the ruling of the Supreme Court in the case of Deutsche Bank AG Manila Branch v. Commissioner of Internal Revenue , G.R. No. 188550 dated 19 August 2013, which has already attained finality. Said case dealt with the validity of the requirement under RMO 01-2000 that any availment of a tax treaty relief must be preceded by an application with BIR-ITAD at least fifteen (15) days before the transaction. In ruling that RMO 01-2000 must not be strictly construed as to deprive persons of the benefit of a tax treaty, the Supreme Court held that in conformity with the generally accepted principle in international law of pacta sunt servanda , ". . . laws and issuances must ensure that the reliefs granted under tax treaties are accorded to the parties entitled thereto. The BIR must not impose additional requirements that would negate the availment of the reliefs provided for under international agreements ." The Supreme Court further stated that, "Bearing in mind the rationale of tax treaties, the period of application for the availment of tax treaty relief as required by RMO No. 1-2000 should not operate to divest entitlement to the relief as it would constitute a violation of the duty required by good faith in complying with a tax treaty. . . . At most, the application for a tax treaty relief from the BIR should merely operate to confirm the entitlement of the taxpayer to the relief." In view of the said Decision and Resolution of the Supreme Court, we respectfully refer the Request for Review of BIR Ruling No. ITAD-080-12 filed by Follosco Morales & Herce on behalf of Provident to your Office, for appropriate action. Thank you for your attention. (SGD.) CARLO A. CARAG Undersecretary Revenue Operations & Legal Affairs Group