BIR Ruling [DA-029-98]

January 30, 1998 BIR RULING [DA-029-98] Poblador Azada & Bucpy 7th Floor, State Condominium I 186 Salcedo Street, Legaspi Village Makati City Attention: Atty . Antonio Audie Z . Bucoy Gentlemen : This refers to your letters dated September 12, 1996 and November 11, 1996 requesting for the issuance of a clearance to transfer the shares of stock of the late Honorio Poblador, Jr. in Baguio Country Club Corporation to his heirs. The pertinent facts as represented are as follows: "xxx xxx xxx "Atty. Honorio Poblador, Jr. died on February 1, 1985. At the time of his death, he had one (1) fully paid share and subscription rights to fourteen (14) shares of the Baguio Country Club, Inc. These were conjugal property with the surviving spouse, Elsa A. Poblador. "A petition for the settlement of his estate was filed on September 6, 1986 with the Regional Trial Court in Pasig. It was docketed as Sp. Proc. No. 9984. "An Estate Tax Return was filed on November 3, 1986. . . . the estate tax in the amount of P7,957,911.84 was paid. "On December 15, 1986, the Estate availed of the tax amnesty pursuant to Executive Order No. 64. The Estate reported a net worth of P36,349,492.93 as of December 31, 1985. The increase in net worth over that reported as of February 1, 1985, was P22,384,389.89; and the 15% amnesty tax amounting to P3,357,658.48 was paid in three installments on December 15, 1986, December 25, 1986 and January 29, 1987. "Although there were one (1) fully paid share and fourteen (14) subscribed shares in Mr. Poblador's name, the Schedule of Stock Investments (Schedule 3) of the Tax Amnesty Return showed only one-half () fully paid and seven (7) subscribed shares in the Baguio Country Club because the amnesty referred only to the estate of the deceased which was one-half of the conjugal estate. The fourteen (14) subscribed shares were subsequently paid; and there are now fifteen (15) shares of the Baguio Country Club in the name of the deceased for distribution among his heirs. "The Regional Trial Court authorized the partial distribution of the estate; and for this purpose, the assets of the estate were appraised by Cuervo Appraisers, Inc. The Baguio Country Club shares were appraised at P900,000.00 per share. In the partial distribution, it was agreed that the surviving spouse and the six legitimate children be given two (2) shares each of the Baguio Country Club, and the illegitimate child one (1) share. Thus, the surviving spouse and the six legitimate children were charged with having received P1,800,000.00 each and the illegitimate child was charged with having received P900,000.00 as their shares in the estate. The heirs will receive the balances of what is due to each of them as their shares in accordance with the law on intestate succession out of the remaining assets of the estate in the final distribution thereof." In reply, please be informed that since the estate of the late Honorio Poblador, Jr. has paid the estate tax of P7,957,511.84 as evidenced by CR No. 7375117 dated November 3, 1986 and has likewise availed of the tax amnesty under E.O. No. 41 as amended by E.O. No. 64 by paying a tax of 15% on the increase in net worth in the amount of P3,357,658.48 in three (3) installments, the estate is no longer subject to any deficiency estate tax. This serves as your authority to transfer the fifteen (15) Baguio Country Club shares in favor of the heirs of the late Honorio Poblador, Jr., namely: (a) surviving spouse, Elsa Poblador, (b) the six legitimate children, and (c) the illegitimate child, Cristina J. Poblador. cdt Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue