Internal Revenue Case of Mr. Jose tan

December 10, 1959 BIR RULING NO. 643-59 2nd Indorsement Returned to the Chief, Investigation Division, B.I.R., Manila, the docket of the internal revenue case of Mr. Jose Tan as donor, and his children, Primitivo, Engracia, Marcelina, Natividad, Francisco and Leticia Tan as donees. The question to be resolved in this case is: Was there transmission of property from one person to another? If so, what is the nature or mode of transfer, and what is the tax due thereon? After a careful scrutiny of the records of the case, we find that what was ultimately transferred or given to the children, Primitivo, Engracia, Marcelina, Natividad, Francisco and Leticia Tan by their father, Mr. Jose Tan, was the subscription for said children of 2,460 shares of stock in the Primitivo Tan Hermanos, Inc., a family corporation which was, at the time of the transfer, in the process of incorporation. Said shares of stock were paid for with the parcels of land assigned to Mr. Primitivo Tan as Treasurer of said corporation through a deed of assignment made by Mr. Jose Tan on February 3, 1954. The records further show that in the same proportion as indicated in the said deed of assignment, the paid-up capital of the Tan or Primitivo Tan Hermanos, Inc. of P250,000.00 was divided into P4,000.00 for Mr. Jose Tan, and P41,000.00 for each of his six children and that the articles of incorporation of said corporation, as reported by Examiner Jose R. de Guzman, were duly registered with the Securities and Exchange Commission. There is no denying the fact that there was transmission of property from father to children for the reason that the 2,460 shares of stock subscribed and paid for by the father for his children appear in the records of the Securities and Exchange Commission. Since the said shares of stock were not sold to the children by the father and since the intention to donate said shares is evident for the deed of assignment executed by Mr. Jose Tan dated February 8, 1954, said shares of stock shall, for the purpose of taxation, be deemed donated by the father to his six children. Such being the case, the requisites for the validity of donations of real property need not be discussed. It is, therefore, requested that appropriate action be taken hereon in the light of the foregoing observations. cdtech (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue