BIR Ruling [DA-525-03]

December 22, 2003 BIR RULING [DA-525-03] Sec. 178; DA-102-2001 Colgate-Palmolive Philippines, Inc. 1049 Jose Rizal Avenue Makati City Attention: Atty. Aniceto Y. Dideles Legal Director & Corporate Secretary and Atty. Jose F. Reandelar Asst. Legal Counsel & Corp. Affairs Manager Gentlemen : This refers to your letter dated October 1, 2003 requesting for a ruling that the transfer of a proprietary club share to another is exempt from any tax. It is represented that your company, Colgate-Palmolive Philippines, Inc. (CPPI) is a domestic corporation engaged in the manufacture and/or distribution of personal and household care products with office address at 1049 JP Rizal Street, Makati City; that as a subsidiary of a multinational corporation, it would often have foreign nationals in its employ occupying top executive positions; that these officers would stay in the country for sometime until they get re-assigned by your parent company to another subsidiary; that CPPI is the real and beneficial owner of Manila Polo Club (MPCI) Proprietary Membership Certificate No. 5290 (hereafter, "the Certificate"); that in the year 2000, it had designated Mr. Jose Pedro M. Figueira, its then Sales Director, as its nominee (in replacement of the previous nominee) for the limited period of his stay in the Philippines; that even with Mr. Figueira's nomination, CPPI remained the real and beneficial owner of the Certificate; that Mr. Figueira had since been re-assigned to Brazil and replaced by Mr. Luis Enrique C. Neira, an Ecuadorian national; that CPPI is now designating Mr. Neira as its nominee with respect to the Certificate; that the transfer of the Certificate from Mr. Figuiera to Mr. Neira, as in the past, is without monetary consideration; that CPPI being the real and beneficial owner of the Certificate, retains its interest in the Certificate, that even with the nomination of Mr. Neira, CPPI does not lose its power to dispose of, or alienate the certificate by any means and in an absolute manner or to replace Mr. Neira with another nominee at anytime. In reply, please be informed that since the aforementioned proprietary membership certificate is actually owned by CPPI and that Messrs. Jose Pedro M. Figueira and Luis Enrique C. Neira are mere nominees and/or trustees of CPPI of said proprietary membership certificate, the transfer of said certificate from Mr. Jose Pedro M. Figueira to Mr. Luis Enrique C. Neira, is not subject to capital gains tax. Moreover, the transfer of the said Certificate is not subject to the documentary stamp tax imposed under Section 176 of the Tax Code of 1997. (BIR Ruling No. DA-102-2001 dated June 1, 2001) This ruling is being issued on 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. SECIcT Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service