BIR Ruling [DA-567-04]

November 9, 2004 BIR RULING [DA-567-04] UN-241-94 dtd Aug. 16, 1994 DA-102-01 dtd June 01, 2001 De Borja Medialdea Bello Guevarra & Gerodias 21st Flr. Wynsum Corporate Plaza Emerald Avenue, Ortigas Center Pasig City Attention: Mr. Pablo A. De Borja Gentlemen : This refers to your letter dated October 7, 2004, in behalf of your client, AMKOR TECHNOLOGY PHILIPPINES, INC. (formerly Amkor Aram Pilipinas, Inc. [the corporation]), requesting opinion and/or ruling on the taxability of the transfer of a Proprietary Membership Share. It is represented that the corporation is the true and beneficial owner of one (1) proprietary membership share in the Manila Polo Club, Inc.; that it had paid valuable consideration to purchase the subject share from Mr. Jose T. Dayrit in 1993 for the exclusive use of its corporate officers; that, however, inasmuch as the Club's Articles of Incorporation and By-Laws provide that only natural persons shall be admitted as shareholders, the subject share was registered in the name of Mr. Antonio R. Ng; that at that time, Mr. Antonio R. Ng, was the corporation's Vice-President and General Manager; that consequently although the corporation retained true and beneficial ownership of the subject share, Proprietary Membership Certificate No. 4307 covering the subject share was issued in the name of Mr. Ng on August 2, 1993; that presently, however, Mr. Ng is no longer connected with the corporation; that the corporation therefore intends to cause the transfer of the subject share to its current president, Mr. Anthony Michael Petrucci and to have a new Proprietary Membership Certificate issued in the latter's name; that the transfer shall be without consideration and would involve only the legal title to the subject share; that the corporation, meanwhile, shall remain its true and beneficial owner; that it is your opinion that: "1. The transfer of the subject share is not subject to capital gains tax because it does not involve any monetary or material consideration whatsoever, and is merely a transfer of legal title to the subject share from one nominee of the corporation to another; "2. That there being no donative intent under the above-described circumstances, the transfer is not subject to donor's tax; and "3. That the transfer is not subject to the documentary stamp tax imposed under Section 176 of the National Internal Revenue Code. In reply, please be informed that since the transfer of the proprietary club share does not involve any consideration, the same is not a taxable transaction; hence, the transferor, Mr. Antonio R. Ng, is not subject to capital gains tax. Moreover, the above transaction is not subject to the donor's tax, since there is no donative intent under the above circumstances. It has been held that in a direct gift, the element of donative intent must be present in the transfer of property to be donated ( Perez vs. Commissioner , CTA Case No. 1707 Feb. 10, 1969). IADCES 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. 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. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group