BIR Ruling [DA-669-06]

November 15, 2006 BIR RULING [DA-669-06] Empire Insurance Company 2nd Floor, Prudentialife Building, 843 Arnaiz Ave., Legaspi Village, 1229 Makati City Attention: Ms. Myriam M. Fernandez Asst. Vice-President Gentlemen : This refers to your letter dated February 14, 2006 requesting for a tax exemption regarding the transfer of one (1) share in the name of your company. It is represented that in a meeting held on October 30, 1975, the Board of Directors of Empire Insurance Company (Company) has authorized membership with the Makati Sports Club, Inc.; that the membership thereof was placed in the name of its then President, Sergio Corpus (now deceased); that the Company used its own funds to purchase one (1) share of stock which was registered solely under the name of Sergio Corpus; and that during that time, the proprietary membership was opened only to individuals until such time when company membership will be accepted, in which case, the membership will be transferred and placed in the name of the Company. 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, 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 February 10, 1969). And lastly, the transfer of the said certificate of club share is not subject to documentary stamp tax imposed under Section 176 of the Tax Code of 1997, as amended. CIETDc This ruling is 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, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service