MONTERO // 2A TAX DIGESTS

ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN CHENG COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO
LIM, J. LIM, Q. LUNA ONG PASCUAL PEREZ REGIS REYES TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

the equity. For purposes of this section, the appraised value of

RR 06-2012 (Arcaina)

real property at the time of sale shall be the higher of

SECTION 1. Scope.

(2) The fair market value as shown in the schedule of valued fixed

(1) The fair market value as determined by the Commissioner, or

by the Provincial and City Assessors, or

Pursuant to provisions of Sec. 244 of the National Internal

(3) The fair market value as determined by Independent

Revenue Code of 1997, as amended, in relation to Secs. 24 (C),

Appraiser.

25 (A)(3), 25 (B), 27 (D) (2), 28 (A) (7) (C), 28 (B) (5) (C) of the
National Internal Revenue Code (Tax Code), as Amended

promulgated to amend certain provisions of Revenue Regulations

RMC 37-2012

(RR) No. 06-2008 relative to the imposition of tax for the sale,
barter, exchange or other disposition of shares not traded through
the Local Stock Exchange.

This Circular is issued to clarify Section 11 of Revenue Regulations

(RR) No. 06-08 or the Consolidated Regulations Prescribing the
Rules on the Taxation of Sale, Barter, Exchange or Other Disposition

SECTION 2. Sale, Barter or Exchange of Shares of Stock Not Traded

of Shares of Stock Held as Capital Assets.

Through a Local Stock Exchange Pursuant to Secs. 24 (C), 25 (A)(3),

25 (B), 27 (D) (2), 28 (A) (7) (C), 28 (B) (5) (C) of The Tax Code, as

BACKGROUND

Amended. Sec. 7 of RR No. 06-2008 is hereby amended to read as

Revenue Memorandum Order (RMO) No. 15-03 dated May 8, 2003

follows:

prescribes

"SEC. 7. Sale, Barter or Exchange of Shares of Stock Not Traded Through

documentary requirements, in the issuance of Certificates Authorizing

a Local Stock Exchange Pursuant to Secs. 24 (C), 25 (A)(3), 25 (B), 27

Registration (CARs) for transactions subject to capital gains tax on the sale,

(D) (2), 28 (A) (7) (C), 28 (B) (5) (C) of The Tax Code, as Amended. xxx

barter, transfer, or assignment of shares of stock not traded in the Stock

xxx xxx (c.2)

Exchange.

Definition of "fair market value" of the Shares of Stock:

Accordingly, a CAR is necessary before any transfer of shares of stock

the

policies,

guidelines,

and

procedures,

including

the

In the case of shares of stock not listed and traded in the local

not traded in the Stock Exchange may be transferred in the books of a

stock exchanges, the value of the shares of stock at the time of

corporation.

sale shall be the fair market value. In determining the value of the
shares, the Adjusted Net Asset Method shall be used whereby all

On the other hand, Section 11 of RR No. 06-08 only mentions the filing with

assets and liabilities are adjusted to fair market values. The net of

and recording by the stock transfer agent or secretary of the corporation of

adjusted asset minus the liability values is the indicated value of

the receipts of payment of the tax in effecting the transfer of shares in the

INCOME TAX

MONTERO // 2A TAX DIGESTS

ARCAINA AUSTRIA BAADERA BANTA BELLO BUGAY CARAAN CHENG COLOQUIO CUALOPING DE LUIS DIPLOMA FAJARDO GO
LIM, J. LIM, Q. LUNA ONG PASCUAL PEREZ REGIS REYES TRIAS TUAZON VANSLEMBROUCK VILLARIN, L. VILLARIN, P. VILLARIVERA

books of the corporation. The provision reads:

SECTION 11. Effect of Non-Payment of Tax. No sale, exchange, transfer
or similar transaction intended to convey ownership of, or title to any share of
stock shall be registered in the books of the corporation unless t he receipts
of payment of the tax herein imposed is filed with and recorded by the
stock transfer agent or secretary of the corporation. It shall be the duty
of the aforesaid persons to inform the Bureau of Internal Revenue in case of
non-payment of tax. Any stock transfer agent or secretary of the corporation
or the stockbroker, who caused the registration of transfer of ownership or
title on any share of stock in violation of the aforementioned requirements
shall be punished in accordance with the provisions of Title X, Chapters I and
II of the Tax Code, as amended.
The above provision has caused some confusion whether a CAR is still
necessary before shares of stock not traded in the Stock Exchange may be
transferred.
CLARIFICATION
In order to transfer ownership of shares of stock not traded in the Stock
Exchange, it is necessary to secure a CAR pursuant to the process laid down
in RMO No. 15-03. The receipts of the payment of the tax should also be filed
with and recorded by the secretary of the corporation pursuant to Section 11
of RR No. 06-08.

INCOME TAX