Issuance by the Corporate Secretary of the Club of a Replacement Stock Certificate in the Name of Its True Owner Not Subject to Capital Gains Tax Since the Transaction is Without any Monetary Consideration and there is Actually No Transfer of Ownership of the Share or Even a Function Thereof

September 3, 1996 BIR RULING NO. 096-96 21 (d) 000-00 096-96 SUA & ALAMBRA Law Offices Rm. 622 Bank of P.I. Bldg. Plaza Cervantes, Binondo Manila Attention: Atty . Kenton S . Sua Gentlemen : This refers to your letter dated November 13, 1993 stating that your client, Ms. Helen Go Chua purchased one (1) proprietary share of stock in the Tagaytay Highlands International Golf Club, Inc. last September 29, 1993; that Mr. King Sy Go processed the documents in connection with the purchase of the said share by Ms. Helen go Chua from the Club and also signed the application forms in the mistaken belief that his signature was also required; that as a consequence thereof. Stock Certificate No. 1146 was erroneously issued in the names of Ms. Helen Go Chua and Mr. King Sy go to the effect among others, that Mr. King Sy Go has no right and interest in the said proprietary share of stock which belongs solely to Ms. Helen Go Chua who paid for the entire purchase price; and that since as embodied in the By-laws of the Golf Club, a proprietary share in the club should be owned by one person only, it is therefore imperative for Ms. Chua to secure a replacement stock certificate issued in her name only. cdi Based on the foregoing representations you now request for a ruling that a new stock certificate be issued solely in the name of Ms. Helen Go Chua to rectify the aforementioned error and to replace Stock certificate No. 1146 is not subject to the capital gains tax and documentary stamp tax respectively imposed under Section 21 (d) and Section 176 of the Tax Code, as amended. In reply, please be informed that since the transaction is without any monetary consideration, and considering further that for the foregoing reasons, there is actually no transfer of ownership of the share or even a function thereof, the issuance by the Corporate Secretary of the Club of a replacement stock certificate in the name of its true owner, Ms. Helen Go Chua only, is not subject to the capital gains tax imposed under Section 21 (d) of the Tax Code, as amended. Likewise, the replacement Stock Certificate is not subject to the documentary stamp tax imposed under Section 176 of the Tax Code, as amended, but only to the documentary stamp tax of P15.00 pursuant to Section 188 of the Tax Code, as amended by Republic Act No. 7660. This ruling is issued on the basis of the foregoing representations. 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, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue