BIR Ruling No. 444-2022

BUREAU OF INTERNALREVENUE REPUBLICOF THE PHILIPPINES DEPARTMENT OF FINANCE

National Office Building Quezon City

Secs.24C,175&176,Tax Code,as amended BIR Ruling No.OT-0653-2020 T-444-2022 DEC 2 9 2022

Salcedo Village,Makati City 1227 Nisce Mamuric Guinto Rivera and Alcantara Law Office 8th Floor 139 Corporate Center, 139 Valero Street

Attention: Atty.Francisco J.Rivera Authorized Representative Gentlemen:

Assurance Co., Inc., ("FPG from the former company President to the new company President is not subject to capital gains tax (CGT) and donor's tax. Club MPC) shares, owned by FPG INSURANCE CO., INC., formerly Federal Phoenix This refers to your request for confirmatory ruling that the transfer of Manila Polo

Background

1.FPG,with Taxpayer Identification No. 000-455-062-000 is a corporation duly 6th Floor, Zuellig Building, Makati Ave. Corner Paseo de Roxas, Makati City. organized and registered under the laws of the Philippines, with office address at

2 FPG purchased and owns onel share in MPC Inc.and recorded the acquisition

in its books and its Audited Financial Statements as of December 31,2020 as part of FPG's Investments in Financial Assets.

3.MPC's policy, particularly Article Seventh ofits Articles of Incorporation assigning their MPC shares to natural persons. as such in the Membership Book of the Club." In compliance with this policy, as a "holder of proprietary membership certificate in his/her own name registered corporations and institutions who own MPC shares adopt the standard practice of provides that only natural persons shall be admitted as proprietary members. MPC's By-laws and House Rules and Regulations defines a Proprietary Member

4.Consistent with FPG's prevailing practice, FPG placed its MPC share in the name of its former President,MR.CARLOS F.UY,JR.Mr.Uy).Accordingly,MPC issued in favor of Mr. Uy Proprietary Certificate No.3614.

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5.On June 2, 2007, Mr. Uy executed a Declaration of Trust expressly acknowledging that he held the MPC share in trust for FPG.

6 Due to the death of Mr.Uy FPG is now designating its current President

MS.PIO DE RODA-REYES (Ms.Reyes),as its new trustee over the MPC share.

7.On July 1,2021,FPG executed a Deed of Assignment transferring the MPC share to Ms. Reyes without any consideration.

8. Also on July 1,2021,FPG and Ms.Reyes executed a Declaration of Trust which MPC share. states that the MPC share shall be held by Ms. Reyes for the benefit of, and in trust for FPG and FPG shall continue to be the true and beneficial owner of the

9.The documentary stamp taxes were paid and affixed to the Deed of Assignment and Declaration of Trust.

Discussion/Ruling

to the Transferee is not subject to CGT. The transfer of MPC shares from the Transferor

the property, title to which he holds, is held by him for the use of another. A declaration of trust has been defined as an act by which a person acknowledges that

the declarant/appointee. share and that he is holding only the legal ownership of the same with the beneficial ownership pertaining to the Company. Here, the Trustor is the Company while the Trustee is that the transfer did not give them any kind of right, claim,or interest whatsoever in the MPC In the Declaration of Trust which the declarant/appointee executed,he acknowledged

name of Mendoza, the latter's title was only limited to the use and enjoyment of the club's facilities and privileges while employed with the company. was expressly disallowed by ACC's By-Laws to acquire and register the club share under its name, registered the share under the name of respondent Mendoza, Sime Darby's sales manager at the time. The Supreme Court held that a trust arrangement existed between Sime Darby and Mendoza and while the share was bought by Sime Darby and placed under the "A" club share in Alabang Country Club (ACC") in 1987, but being a corporation which In the case of Sime Darby Pilipinas, Inc.v. Mendoza2Sime Darby acquired a Class

1 Resurreccion de Leonet al.v. Emiliano Molo-Peckson,et al.,G.R.No. L-17809, December 29,1962 2 G.R. No. 202247, June 19, 2013.

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to its Trustee-appointee, which entitles the Trustee-appointee (Mr. Uy) only to the use and Revenue Code of 1997(Tax Code),as amended,considering that the transfer involves neither monetary consideration nor change in beneficial ownership. enjoyment of the club's facilities since under the Articles of Incorporation and By-laws of MPC only natural persons may become registered members.Thus, the transfer of the legal title of the MPC share from the former Trustee-appointee (Mr.Uy to the new Trustee- appointee (Ms. Reyes), is not subject to CGT under Section 24(C of the National Internal In the instant caseFPG, the purchaser of the MPC share,intends to give its legal title

The Transfer is not subject to donor's tax.

donation are:1 the reduction of the patrimony of the donor;2 the increase in the patrimony of the donee; and (3) the intent to do an act of liberality (animus donandi). Well-settled in our jurisprudence is the fact that the essential elements of a valid

appointee the MPC share since the transaction is purely for a legitimate business purpose. the transaction is a bona fide transaction effected solely for business reasons. Thus, the transfer will not be subject to donor's tax since there is no intention to donate, and Clearly, there is no intention on the part of FPG to donate to the new Trustee

as prescribed in Revenue Memorandum Circular (RMC) No. 37-2012. appointee without the necessary Tax Clearance (TCL and/or Certificate Authorizing the Revenue District Office (RDO) concerned in order for the latter to issue the TCL/CAR Registration (CAR) issued by this Bureau. In this regard, this Ruling shall be presented to Secretary of MPC to effect the transfer of the MPC share in the name of the new Trustee It is, however, understood that this Ruling shall not serve as authority to the Corporate

ruling shall be considered null and void. However, if upon investigation, it will be ascertained that the facts are different, then this This ruling is being issued on the basis of the foregoing facts as represented.

Very truly yours.

X LUMKGUI, JR.

K-1-MCUS missioner of Internal Revenue 000954