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December 23, 2005; BIR RULING [DA-522-05]; 24 (C); DA 567-04

Romulo Mabanta Buenaventura

Sayoc & De Los Angeles
30th Floor, Citibank Tower
8741 Paseo de Roxas
Makati City
Attention: Atty. Priscilla B. Valer and Atty. Jayson L. Fernandez

Gentlemen :

This refers to your letter dated October 10, 2005 stating that your client, Kraft Foods (Philippines), Inc.
(KRAFT) purchased one (1) share of Manila Polo Club, Inc. with a par value of P100,000.00 as evidenced
by Proprietary Certificate No. 4269; that the purchase was paid by KRAFT but in accordance with the
rules and regulations of Manila Polo Club, Inc., the share was not registered in the name of KRAFT but its
officer; that the cost of the share is still carried in the books of KRAFT as part of its assets, particularly,
under the heading Investments in Stocks; that the share is presently registered in the name of Mr.
Bienvenido Bautista (Mr. Bautista), the former President of KRAFT, who was the assignee of the share;
that the share is beneficially owned by KRAFT but was placed in the name of Mr. Bautista to make him
qualified to avail of and use of the various facilities of the Manila Polo Club; that Mr. Bautista retired from
KRAFT; that due to the severance of his employment, the share will be transferred to a new nominee-Ms.
Marivi Tiongson, KRAFT's incumbent President and General Manager so that she can avail of the
services and facilities of the Manila Polo Club; that the transfer of the share, being merely a transfer from
one nominee to another of KRAFT, is without any consideration; and that Ms. Marivic Tiongson has
executed a Declaration of Trust in favor of KRAFT to acknowledge that she is a mere nominee and the
share is beneficially owned by KRAFT.

Based on the foregoing representations, you now request confirmation of your opinion that the transfer of
the aforesaid share is not subject to capital gains tax or income tax imposed under Section 24(C) of the
Tax Code of 1997 and to the donor's tax imposed under Title II of the said Code.

In reply thereto, please be informed that since the transfer of the proprietary membership certificate
representing one (1) share of Manila Polo Club, Inc. beneficially owned by KRAFT from its present
nominee, Mr. Bautista, to a new nominee, Ms. Marivic Tiongson, does not involve any monetary
consideration or other material consideration, the same is not a taxable transaction and therefore, no
capital gains tax is due and payable on the aforementioned transaction.

Moreover, while the said transaction is considered a gift since it is a valid transfer of property from one
person to another without consideration or compensation therefor, the same is not subject to the gift tax.
This is so because although there is a direct gift, there is no donative intent under the above
circumstances. It has been held that in a direct gift, the element of donative intent must be present in the
transfer of property to be donated. (Perez vs. Commissioner, CTA Case No. 1707, February 10, 1969)
(BIR Ruling No. DA567-04 dated November 9, 2004)

Furthermore, the transfer of the said certificate is not subject to the documentary stamp tax imposed
under Section 176 of the Tax Code of 1997.

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.) JOSE MARIO C. BUÑAG
Commissioner
Bureau of Internal Revenue