Elizabeth F. Villa-Real

May 5, 2009 BIR RULING [DA-(C-064) 219-09] DA 247-04; 24 (C) Elizabeth F. Villa-Real No. 67 Zodiac Street Bel Air IV, Makati City Madam : This refers to your letter dated August 8, 2008 stating that John C.B. Go, as Trustee, upon instructions from Nora T. Go, as Principal, purchased a proprietary membership in Manila Golf and Country Club, Inc. bearing Certificate of Membership No. 1195; that for this purpose, the Trustee executed a Declaration of Trust in favor of the Principal; that pursuant to said Deed, the Trustee acknowledged the right and interest of the Principal as beneficial owner of the said membership share; that on August 8, 2008, pursuant to the Declaration of Trust, the Principal instructed the Trustee to cause the transfer in her favor the aforesaid membership share; and that the transfer of said membership share is without consideration. Based on the foregoing representations, you now request for confirmation of your opinion that 1. The transfer of proprietary membership in Manila Golf and Country Club, Inc. bearing Certificate of Membership No. 1195, without consideration, by the Trustee in favor of the beneficial owner thereof, is neither subject to capital gains tax imposed under the National Internal Revenue Code nor to the creditable withholding tax prescribed in Revenue Regulations No. 2-98, as amended; CTEDSI 2. The transfer of the proprietary membership without consideration by the Trustee in favor of the Principal shall not be subject to donor's tax imposed under Section 98 of the said Code due to lack of donative intent on the part of the Trustee; and 3. The transfer of the proprietary membership by the Trustee in favor of the Principal shall not be subject to documentary stamp tax imposed under Section 176 of the said Code. In reply thereto, please be informed that this Office had already occasioned to rule on the matter when it said that the conveyance by the trustee in favor of the trustor of the subject properties which the former acquired by virtue of the trust agreement is not to be treated as another transfer separate and distinct from the sale between the original owner and the trustee. The conveyance is merely to be treated as a continuation and confirmation of title in favor of the ultimate and real beneficiary of the shares of stock. (BIR Ruling No. DA 125-97) Accordingly, since the transfer of the proprietary membership in Manila Golf and Country Club, Inc. under Certificate No. 1195, which was effected by virtue of a Declaration of Trust, is without any consideration because the real owner and Nora T. Go acted only as a trustee, the same is not subject to the capital gains tax imposed under Section 24 (C) of the Tax Code of 1997. ACcTDS Likewise, the above transaction is not subject to donor's tax since there was no donative intent on the part of the transferor. Finally, the Declaration of Trust executed by the Trustee in favor of the Principal to cause the transfer of the proprietary membership share to the latter is not subject to the documentary stamp tax imposed under Section 176 of the Tax Code of 1997, as amended. However, the notarial acknowledgment to the said deed is subject to the documentary stamp tax of P15.00 pursuant to Section 188, supra. 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service