BIR Ruling No. 422-2022

BUREAU OF INTERNALREVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE

RA No. 11524; Sections 27 (D)(2), 98. BIR Ruling No. OT-016-2022 amended; Confederation of Coconut Republic of the Philippines; 175 and 188 of the Tax Code, as COCOFED, et. al vs.Republic of the Philippines and Danilo. S. Ursua vs. Farmers Philippines T-422-2022 NOV 0 4 202Z Organization VS. Aquino. of et. the a.

Bureau of Treasury Intramuros, 1002 Manila Ayuntamiento Building. Cabildo Street corner A. Soriano

Attention: Rosalia V. De Leon Treasurer Gentlemen:

the Philippines ("ROP") is exempt from transfer taxes: confirmation that the transfer of Coconut Levy Assets, specifically the following shares of stock in the Coconut Industry Investment Fund (CIIF) Oil Mills Group, to the Republic of This refers to your request on behalf of the Bureau of Treasury (BTr, for

Name of Corporations Number of Shares

Legaspi Company, Inc. Iligan Coconut Industries, Inc. Cagayan de Oro Oil Company, Inc. Granexport Manufacturing Corp. San Pablo Manufacturing Corp. Southern Luzon Coconut Oil Mills 220,000,000 320,000,000 142,714,449 150,167,387 195,700,000 199,890

ROP, deliver all stock certificates and other evidence of ownership to the BTr for safekeeping Regulations("IRR) instructs all government agencies and any person having Coconut Levy Assets and/or Fund in its administration, authority, custody or control to reconvey title to the and transfer all cash Coconut Levy Assets to the trust fund. Section 6 of Republic Act RA No. 11524 and its Implementing Rules and

kind of property which have been acquired through Coconut Levy Fund, including its fruits or income delivered therefrom. This also includes the CIIF-Oil Mills Group, which refers to the Coconut Levy Assets, as defined under Section 3 (b) of RA No. 11524, refer to any

2 Joint Memorandum Circular No. 001-2021 I Coconut Farmers and Industry Trust Fund Act

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CIIF Companies namely: Southern Luzon Coconut Oil Mills, Cagayan de Oro Oil Co., Inc., Iligan Coconut Industries, Inc., San Pablo Manufacturing Corp., Granexport Manufacturing Corp., and Legaspi Oil Co., Inc.

Aquino, et. al.3, COCOFED, et. al vs. Republic of the Philippines* and Danilo. S. Ursua vs. Court's decisions in Confederation of Coconut Farmers Organization of the Philippines vs. Republic of the Philippiness. Moreover, the issuance of said shares is to give effect to and implement the Supreme

shares of stock in the CIIF Companies and the issuance of new stock certificates under the name of the ROP are not subject to capital gains tax (CGT),donor's tax and docunentary stamp tax (DST). In this regard, you now request confirmation of your opinion that that the transfer of all

In reply, we rule as follows:

Capital Gains Tax

net capital gains realized during the taxable year from the sale, exchange or other disposition amended, provides that a final tax at the rate of fifteen percent (15%) shall be imposed on the of shares of stock in a domestic corporation. Section 27(D)(2) of the National Internal Revenue Code of 1997 ("Tax Code"), as

case since the transfer of shares does not involve the sale, barter or exchange of shares and pursuant to the decisions of the Supreme Court. contemplated under the said Code. Moreover, the transfer of the subject shares of the CIIF Companies is made pursuant to the directive under Section 6 of RA No. 11524 and its IRR. The above-mentioned section of the Tax Code, as amended, finds no application in this

monetary consideration is not subject to capital gains tax. Accordingly, the transfer of the subject shares in favor of the ROP, without any

Donor's Tax

tax applies, whether such transfer is in trust or otherwise, whether the gift is direct or indirect. and whether the property is real or personal, tangible or intangible. The essential elements of a patrimony of the donee, and (3) the intent to do an act of liberality (animus donandi). imposed on the transfer by any person, resident or non-resident, of property by gift. The donor's valid donation are: (1) the reduction of the patrimony of the donor, (2) the increase in the Section 98 of the Tax Code, as amended, provides that a donor's tax is generally

shares, and there is no donative intent or act of liberality involved on the part of the CIIF Companies. of the CIIF Companies as the transfer was made in compliance with RA No. 11524 and its IRR. The transfer of the legal title to the ROP is only a confirmation of its ownership over the said We note that based on the facts represented, there is no intention to donate on the part

3 GR No. 217965, August 8, 2017 GR No. 178193, January 24, 2012 GR No. 177857-58, January 24,2012

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Documentary Stamp Tax

transfer as contemplated under Section 175 of the Tax Code, as amended. ROP is likewise not subject to DST imposed under Section 175 of the Tax Code, as amended. considering that there is no sale, agreement to sell or memorandum of sale, or delivery or The transfer of the subject shares in the name of the CIIF Companies in favor of the

issue the corresponding Certificate Authorizing Registration (CAR) so that the BTr can transfer the subject shares of stock from the CIIF Companies to the name of the ROP. This will, therefore, serve as authority for the concerned Revenue District Officer to

if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoing facts as represented. However,

Very truly yours.

Commissioner of Internal Revenue LILIA CATRIS GUILLERMO

K- 002289

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