Ordinance Amending City Ordinance No. 07-2011 Titled "An Ordinance Enacting the Revenue Code of Tuguegarao City" Particularly Section 2.A.08 on Administrative Provision, Sub-Section 18 (c) on Assessment Levels"

November 11, 2008 BIR RULING [DA-(TSF-009) 418-08] Sec. 32 (B) (6) (a); DA-322-2006 Asahi Synchrotech Manila Corporation Suite 503 ITC Building 337 Sen. Gil Puyat Makati City Attention: Josenia B. Nantes Administrative/HR Manager Gentlemen : This refers to your letter dated August 04, 2008 stating that Asahi Manila Development Corporation (AMDC) has an existing retirement fund deposited in BPI Asset Management in the amount of P1.6 Million. In the year 2006, all employees of AMDC were transferred to an affiliated company, Asahi Synchrotech Manila Corporation (ASMC). Consequently, AMDC now intends to transfer the existing retirement fund to the account of ASMC. In connection therewith, you now request confirmation of your opinion that the Retirement Plan of AMDC when taken over by ASMC as successor employer, will retain its tax exempt status and if the same is a "reasonable private benefit plan" within the contemplation of Section 32 (B) (6) (a) of the Tax Code of 1997, as amended, and the retirement benefits that may be received therefrom can be tax exempt. In reply thereto, please be informed that this Office in BIR Ruling No. 049-97 dated April 14, 1997 and later reiterated in BIR Ruling No. DA-117-04 dated March 16, 2004, ruled that ". . . Since the foregoing reorganization and consequent succession by SBRL as the employer of what used to be the SPII Retirement Plan are not prejudicial to the employee-members of the existing SBRL Retirement Plan and to the absorbed employee-members of what used to be the SPII Retirement Plan, they will not affect SBRL Retirement Plan's qualification under Republic Act No. 4917 [now Section 32(B)(6)(a) of the Tax Code of 1997, as amended] and therefore, the fund created to implement the provisions of the plan and the retirement pay to qualified retirees remain exempt pursuant to said law as decided in BIR Ruling No. DA-201-96 dated June 18, 1996. "In addition, pursuant to Section 53(b) of the Tax Code, as amended [now Section 60(B) of the Tax Code of 1997, as amended] the employee's trust which forms part of a pension, stock bonus or profit-sharing plan of an employer for the benefit of some or all of his employees shall be exempt from tax, . . . "Considering finally, that pursuant to the reorganization SBRL, shall absorbed the SPII employees and operations and that all assets of SPII, including its leasehold rights on land owned by the SPII Retirement Plan will be transferred to SBRL in liquidation, and SPII will be dissolved and liquidated, SBRL will be constituted as the successor corporation, SPII having been dissolved and liquidated. ETDHaC "Accordingly, your opinions are hereby confirmed, to wit: "1. SBRL can succeed, although temporarily as employer in the SPII Plan to effect the smooth transfer of SPII employees and their actuarial accrued benefits to the SBRL Plan; "2. The SPII Retirement Plan, when taken over by SBRL as successor employer, will maintain its tax exempt status, and the sale by the SPII Plan Trustee of the land and the leasehold rights therein is exempt from tax; "3. The transfer of the actuarial accrued benefit of the SPII employees to the SBRL is exempt from tax; and "4. The excess funds of the SPII Retirement Fund, including the proceeds from the sale of the land the leasehold rights thereon, after the transfer of the actuarial accrued benefits of the employees to SBRL Retirement Plan, and paying off other liabilities of the SPII Retirement Plan will revert to SBRL as successor or employer and taxable to SBRL and not SPII." Such being the case, this Office holds that your opinion is hereby confirmed that the Retirement Plan of the AMDC when taken over by ASMC as successor employer, will retain its tax exempt status. Hence, ASMC Employees Retirement Plan is a reasonable private benefit plan within the contemplation of Section 32 (B) (6) (a) of the Tax Code of 1997, as amended, and the retirement benefits that may be received therefrom can be tax exempt. This ruling is being issued in the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service