BIR Ruling No. 004-2023

REPUBLICOF THE PHILIPPINES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE

National Office Building

Ouezon City

Secs.24C175 &176,Tax Code. as amended

BIR Ruling No. 39-97 BIR Ruling No.OT-0653-2020 BIR Ruling No.OT-0421-21 OT-004-2023 JAN 2 02023

ZUELLIG PHARMA CORPORATION

Sun Valley,Paranaque City Km.14 West Service Rd., South Superhighway cor. Edison Ave

Attention: Mr.Nilo P.Badiola Chief Finance Officer

Gentlemen:

or the "Company) for confirmation on the exemption from payment of taxes on the transfer of Manila Polo Club(MPCmembership from one officer to another. This refers to your request on behalf of Zuellig Pharma Corporation ("ZPC

Background

Philippine Securities and Exchange Commission (SEC). The Company is primarily involved in the wholesale distribution of pharmaceutical products nationwide. ZPC is a corporation incorporated in the Philippines and registered with the

as of December 31,2021 up to the present.Due to MPC's policy and to avail of privileges nominee/assignee, Mr. Martinus Leopold Kuijpers. name of its former officer. Mr. Michael James Becker.Due to severance of his employment with the Company, the aforesaid share will be transferred to a new in the club,one (l) proprietary share was issued to and presently registered in the ZPC owns proprietary shares of the MPC and are recorded as assets in its books

Discussion/Ruling

The transfer of MPC share from the Transferor to the Transferee is not subject to capital gains tax (CGT).

that 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

Whatsoever in the MPC share and that he is holding only the legal ownership of the same + acknowledged that the transfer did not give him any kind of right, claim, or interest In the Declaration of Trust which the declarant/appointee executed, he

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with the beneficial ownership pertaining to the Company. Here, the Trustor is the Company while the Trustee is the declarant/appointee.

which 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 and placed under the 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. Class Aclub share in Alabang Country ClubACC in 1987.but being a corporation 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 In the case of Sime Darby Pilipinas, Inc. v. Mendoza2, Sime Darby acquired a

title to its Trustee-appointee, which entitles the Trustee-appointee only to the use and of MPC only natural persons may become registered members. Thus, the transfer of the new Trustee-appointee (Mr.Kuijpers),is not subject to CGT under Section 24(C of the National Internal 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 legal title of the MPC share from the former Trustee-appointee (Mr.Becker to the In the instant case, ZPC, the purchaser of the MPC share, intends to give the legal

The Transfer is not subject to donor's tax.

patrimony of the donee; and (3) the intent to do an act of liberality (animus donandi. donation are:(l the reduction of the patrimony of the donor: (2 the increase in the 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. and 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. Clearly, there is no intention on the part of ZPC to donate to the new Trustee-

The Transfer is not subject to documentary stamp tax (DST).

corporation is subject to DST upon execution of the deed transferring ownership or rights The rule in this jurisdiction is that the assignment of shares of stock of a domestic thereto, or upon delivery, assignment or indorsement of such shares in favor of another. The transfer is not subject to DST under Section 175 of the Tax Code,as amended

beneficial ownership of the shares of stock from one person to another. Section 4 thereof Act (RA) No.9243, otherwise known as An Act Rationalizing Further the Structure and sale or exchange to be taxable,there must be an actual or constructive transfer of Administration of the Documentary Stamp Taxqualified this rule by stating that for a Revenue Regulations (RR)No.13-2004,implementing the provisions of Republic

G.R.No.202247,June 19,2013

ZUELLIG PHARMA CORPORATION Page 3 of 3 OT-004-2023 JAN 20 2023

provides:

"For a sale or exchange to be taxable. there must be an actual or constructive transfer of beneficial ownership of the shares of stock from one person to another. Such transfer may be manifested by the clear exercise of attributes of ownership over such stocks by the transferee. or

stock or in the Stock and Transfer Book of the issuing corporation or by by an actual entry of a change in the name appearing in the certificate of

any entry indicating transfer of beneficial ownership in any form of registry including those of a duly authorized scripless registry. such as those maintained for or by the Philippine Stock Exchange. However.if by the transfer of certificates of stock from a resigned trustee to a newly appointed C10 trustee such certificate of stock remain in the name of the cestui que trust 311 1f 3a

depository of the stock.such transfer is not taxable. Provided, however or the resigned trustee so that the new trustee is constituted as mere

to qualify them to perform any act in relation to the corporation shall not be subject to the DST provided herein only upon proof of a duly executed that transfer of shares to"nominees"to qualify them to sit in the board or

is without consideration other than the undertaking of the nominee to only represent the beneficial owner of the stock; and the transfer is in trust. Nominee Agreement showing the purpose of the transfer that the transfer

(Emphasis and underscoring supplied.)

Therefore, the herein transfer cannot be subject to DST as there is no transfer or

imposed. However, the notarial acknowledgment to the Deed of Declaration of Trust is conveyance to the new Trustee-appointee of the beneficial ownership of any right, claim to speak of in this case, there is no new exercise of a privilege upon which DST may be or interest over the MPC share or over the asset of MPC.There being no new conveyance

subject to DST imposed under Section 185 of the Tax Code,as amended.

It is, however, understood that this Ruling shall not serve as authority to the Corporate Secretary of ZPC to effect the transfer of the MPC share in the name of the new Trustee-appointee without the necessary Tax Clearance (TCL) and/or Certificate

be presented to the Revenue District Office (RDO concerned in order for the latter to issue the TCL/CAR as prescribed in Revenue Memorandum Circular (RMC) No.37- 2012. Authorizing Registration (CAR issued by this Bureau. In this regard,this Ruling shall

This ruling is being issued on the basis of the foregoing facts as represented

ruling shall be considered null and void. However,if upon investigation, it will be ascertained that the facts are different, then this

Very truly yours.

Comimissioner of Internal Revenue ROMEO D.LUMAGUI,JR.

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