BIR RULINGS ON NON-TAXABILITY OF TRANSFERS INVOLVING NOMINEE/TRUST SHARES

April 3, 1997; BIR RULING NO. 039-97; 21 (d), 24 (e) (2; 000-00 039-97

Romulo, Mabanta, Buenaventura

Sayoc & De Los Angeles
30/F Citibank Tower
Paseo de Roxas, Makati City
Attention: Edmundo P. Guevarra and Priscilla B. Valer

Gentlemen :

This refers to your letter dated February 20, 1997 requesting, in behalf of your client, the Philippine
Central Depository, Inc. ("PCD"), for confirmation of your opinion that the transfer of legal title to
outstanding shares of stock, without a transfer of beneficial title, from stockholders to the PCD Nominee
Corp., as nominee, and vice-versa, is not subject to the capital gains tax imposed under Sections 21 (d),
22(a) (3), 24(e) (2) and 25(a) (6) (C) of the Tax Code or the stock transaction tax imposed under Section
124-A of the Tax Code and the documentary stamp tax imposed under Section 176 of the Tax Code.

It is represented that PCD is an entity licensed by the Securities and Exchange Commission ("SEC") as a
depository of, among others, shares of stock listed and traded in the Philippine Stock Exchange ("PSE");
that its primary mandate is, among others, to introduce a scripless book-entry system for the settlement of
PSE trades, in order to address the problem of delay, inefficiency and even fraud attending the existing
paper-based settlement procedure; that for PCD to carry out this mandate, the shares of stock of the
PSE-listed companies must first be "lodged" into the PCD System for "immobilization"; that lodgment is
the process by which stockholders of the PSE-listed company transfer the legal title over their shares of
stock in favor of PCD Nominee Corp. ("PCD Nominee"), a corporation wholly owned by PCD whose sole
purpose is to act as nominee and legal title holder of all shares of stock lodged into PCD (beneficial title to
the "lodged" shares remains with the lodging stockholders); that immobilization is the process by which
the share certificates of lodging stockholders are cancelled by the Transfer Agent and a new stock
certificate covering all the shares lodged ("Jumbo Certificate") issued in the name of PCD Nominee, in
order that settlement of PSE trades of the PSE-listed company can be effected by mere book-entry
transfer of beneficial title in the PCD System without the transfer of stock certificates covering the traded
shares; and that no consideration is paid for the transfer of legal title to PCD Nominee.

The Corporation Code requires that all shares of stock of a corporation must be evidenced by a certificate
and a stockholder who has fully paid his subscription has the right to demand such certificate. Thus, it is
also represented that if a stockholder wishes to withdraw his stockholdings from the PCD System, the
PCD has a procedure of "upliftment", under which PCD Nominee will now transfer back to the stockholder
the legal title to the shares lodged in order that legal and beneficial title will once again be consolidated in
the stockholder; that under this process, the Jumbo Certificate is surrendered to the Transfer Agent, which
then issues a new stock certificate in the name of the uplifting stockholder and a new Jumbo Certificate
for the balance; and that again, no consideration is paid for the transfer of legal title back to the beneficial
owner.

In reply, please be informed that the conveyance of the legal title over the shares to a trustee or nominee
without transfer of beneficial title and without any consideration does not involve an actual transfer of
ownership over the shares, hence, not subject to the capital gains tax and documentary stamp tax. Thus,
your opinion that the transfer of legal title over the shares from the lodging stockholders to PCD Nominee
Corp., or from PCD Nominee Corp. to the uplifting stockholders, is not subject to capital gains tax or stock
transaction tax and documentary stamp tax because there is no actual transfer of ownership over the
aforementioned shares of stock is hereby confirmed. (BIR Ruling Nos. UN-258-95, 123-93, 124-93, 125-
93, 127-93, 128-93 and 129-93) However, the transfers of beneficial ownership over the lodged shares
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shall be subject to capital gains tax or stock transaction tax, as the case may be, and to documentary
stamp tax.

Moreover, under Section 191 of the Documentary Stamp Tax Regulations (Revenue Regulations No. 26),
the conveyance of property to a trustee is exempt from documentary stamp tax. Section 191 of said
Regulations provides:

"Section 191. Conveyance to trustees or from trustee to cestui que trust, without consideration.
Conveyances to a trustee without valuable consideration, or from a trustee to a cestui que trust without
valuable consideration are not subject to tax."

Thus, your opinion that the conveyance of the shares from the stockholders to the nominee — PCD
Nominee Corporation and versa, is not subject to documentary stamp tax pursuant to Section 191 of
Revenue Regulations No. 26, otherwise known as The Documentary Stamp Tax Regulations, is likewise
hereby confirmed.

Accordingly, the Transfer Agents of the publicly listed companies may cancel the outstanding shares
certificate in the name of the stockholders and issue the Jumbo Certificate in the name of PCD Nominee
Corporation for immobilization. Likewise, in the event a shareholder withdraws his stockholdings from the
PCD System, the Transfer Agents shall likewise issue a new stock certificate in the name of the uplifting
stockholder and a new Jumbo Certificate for the balance upon surrender of the original Jumbo Certificate
in order that the legal and beneficial title will once again be consolidated in the stockholder.

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,

LIWAYWAY VINZONS-CHATO

Commissioner of Internal Revenue

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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
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October 14, 2003; BIR RULING [DA-367-03]; 24 (C); DA-013-97, DA-542-98

Aranas Consunji Barleta

Unit 106 G/F Le Metropole Building
326 Tordesillas cor. De la Costa Streets
Salcedo Village, Makati City
Attention: Atty. Jesus Clint O. Aranas

Gentlemen :

This refers to your letter dated October 1, 2003 requesting for and in behalf of your client, Orion Land, Inc.
(OLI) for a confirmation of your opinion that the transfer of shares of stock from Guoco Securities
(Philippines), Inc. (GSPI) to your client is exempt from the capital gains tax and the documentary stamp
tax.

It is represented that in 1996, OLI acquired 49,998 shares of stock of Luck Hock Venture Holdings, Inc.
(LHVHI); that these shares were registered in the name of GSPI Client Account; that the arrangement
was covered by a Deed of Trust between GSPI Client Account and OLI; and that the beneficial owner,
OLI, now intends to transfer the LHVHI shares to its name.

In reply, please be informed that in BIR Ruling No. DA-542-98 dated December 2, 1998 involving the
transfer of shares of stock from a trustee to a beneficial owner without consideration, this Office ruled that:

"In reply, please be informed that under Section 24(C) of the Tax Code, as amended, capital gains
presumed to have been realized from the sale, exchange or disposition of shares of stock in any domestic
corporation shall be taxed as follows:

(1) Net capital gains tax as defined in Section 39(A)(2) of the Tax Code, as amended, realized during
each taxable year from the sale, exchange or other disposition of shares of stock not traded through a
local stock exchange: ISTECA

Not over P100,000 5%

Or any amount in excess of P100,000 10%

Such being the case, and considering that in the event that Messrs. Tan and Ng, as trustees of the said
share of stock, convey the same in favor of the beneficial owners or their duly appointed trustees there
would be no actual transfer of ownership over the aforementioned shares of stock as a result thereof,
coupled with the fact that the conveyance is without any valuable consideration, this Office is hereby
confirming your opinion that the said transaction is not subject to the capital gains tax imposed under
Section 24(C) of the Tax Code, as amended.

Moreover, your opinion that the deed conveying the aforesaid shares of stock in favor of the beneficial
owners or their duly appointed trustees is not subject to documentary stamp tax pursuant to Section 191
of Revenue Regulations No. 26, is likewise hereby confirmed. However, the notarial acknowledgment is
subject to the documentary stamp tax of P15.00 under Section 188 of the Tax Code, as amended by R.A.
7660. (BIR Ruling Nos. 039-97, UN-258-95, 123-93, 124-93, 126-93, 127-93, 128-83 and 129-93) "

Furthermore, in BIR Ruling No. DA-013-97 dated January 10, 1997, this Office ruled that "the execution of
a Declaration of Trust whereby a nominee shareholder acknowledges and states that he is holding certain
shares in trust for the real owner, is not a taxable transaction/event."

In the same ruling, this Office went further by stating that the subsequent transfer by the Nominee to the
beneficial owner of shares of stock, without consideration, will not involve any actual sale or conveyance
of ownership since what is being transferred is merely legal title to the shares. Hence, the transfer by the
Nominee to the true, actual and beneficial owner of the shares, is not subject to the capital gains tax
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under Section 21(d) or Section 124-A both of the Tax Code, as amended. Likewise, the transfer is not
subject to donor's tax since it pertains to the transfer for trustee/Nominee to the real owner.

Following the stand of this Office laid down in the foregoing rulings, we confirm your opinion that the
transfer of shares of stock from GSPI to OLI is exempt from the capital gains tax and documentary stamp
tax as well as the donor's tax. However, the notarial acknowledgment is subject to the documentary
stamp tax of P15.00 under Section 188 of the Tax Code of 1997. (BIR Ruling Nos. 039-97, UN-258-95,
123-93, 124-93, 125-93, 127-93, 128-93 and 129-93)

This ruling is 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,

Commissioner of Internal Revenue

By:

(SGD.) MILAGROS V. REGALADO

Assistant Commissioner

Legal Service

Bureau of Internal Revenue

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April 10, 2008; BIR RULING [DA-231-08]; 24 (C); 98; 176; DA-525-03

Puyat Jacinto & Santos Law Offices

12/F Manilabank Building
6772 Ayala Avenue
Makati City
Attention: Atty. Najha Katrina J. Estrella

Gentlemen :

This refers to your letter dated March 12, 2008, requesting on behalf of your client, Performance Asia
Philippines, Inc. (PAPI), for confirmation of your opinion that the transfer of share of stock in PAPI from a
shareholder's trustee and nominee to the same shareholder's new trustee and nominee, is not subject to
capital gains tax, donor's tax and documentary stamp tax.

It is represented that PAPI is a domestic stock corporation, duly organized and existing under Philippine
laws and with office address at 12th Floor Chatham House, 116 Valero St., Salcedo Village, Makati City;
that C.P. Wireless, Inc. (CPWI) is a domestic stock corporation, duly organized and existing under
Philippine laws and with office address at 23 Arayat St., Mandaluyong City; that CPWI is the holder of
3,999 shares of PAPI representing 39.99% ownership; that Carlos G. Dominguez is a holder of 1 share of
stock of PAPI as trustee of CPWI; that Mr. Dominguez is being replaced by Mr. Jose Alberto D. Javier as
the new trustee of CPWI; and that CPWI has instructed Mr. Dominguez to transfer his 1 share to Mr.
Javier to qualify as director and new trustee of CPWI.

In reply, please be informed that under Section 24 (C) of the Tax Code of 1997, a final tax at the rates of
5% and 10% shall be imposed upon the net capital gains realized during the taxable year from the sale,
barter, exchange or other disposition of shares of stock in a domestic corporation, except shares sold, or
disposed of through the stock exchange.

In the instant case, there is no sale, barter or exchange of the 1 share of stock of PAPI since Mr.
Dominguez, acting as Trustee of CPWI, is merely transferring his share to Mr. Javier as CPWI's new
trustee. Accordingly, the transfer of the PAPI share from the Trustee-Shareholder to Trustor's new
Trustee-Shareholder, without monetary consideration and by virtue of the Deed of Assignment is not
subject to the capital gains tax since the share of stock is actually owned by CPWI and that Mr.
Dominguez and Mr. Javier are mere nominees and/or trustees of CPWI (BIR Ruling No. DA-525-03 dated
22 December 2003).

Moreover, the assignment of the said share of stock is not subject to donor's tax imposed under Section
98 of the Tax Code of 1997, due to lack of donative intent.

Furthermore, the said assignment is not subject to the documentary stamp tax imposed under Section
176 of the Tax Code of 1997, but only to the documentary stamp tax on certificates under Section 188 of
the same code. (BIR Ruling No. 115-94)

This will, therefore, serve as authority for the Corporate Secretary to transfer the share of stock of PAPI in
the name of Mr. Jose Alberto D. Javier.

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.
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Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) JAMES H. ROLDAN

Assistant Commissioner
Legal Service
Bureau of Internal Revenue
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January 10, 1997; BIR RULING [DA-013-97]

Belo Gozon Elma Parelasuncion & Lucila

15th Floor, Sagittarius Condominium
H.V. dela Costa St., Salcedo Village
Makati City
Attention: Atty. Catherina M. Fernandez

Gentlemen :

This refers to your letter dated October 15, 1996 stating that your client, Malayan Bank Savings and
Mortgage Bank (Bank) is duly licensed by the Bangko Sentral ng Pilipinas (BSP) to operate a savings and
mortgage bank; that FLG Management and Development Corporations (FLG) is the owner of 450,000
shares in the Bank with a par value of P100.00 per share; that for expediency and to facilitate the
processing of the bank's application for a license with the BSP, the 450,000 Bank shares were subscribed
and registered in the name of Atty. Felipe L. Gozon (Nominee), who is a majority stockholder of FLG; that
of the total subscription of P45,000,000.00 the amount of P28,599,000.00 has already been paid; that on
November 24, 1995, the Nominee executed a Declaration of Trust whereby he declared and
acknowledge the absolute title and ownership of FLG over the 499,999 shares of the Bank, retaining one
(1) share in the name of the Nominee; and that the nominee agreed to execute the necessary instrument
to enable FLG to register in its name legal title to the 499,999 Bank shares in the books of the Bank.

Based on the foregoing, you now request a confirmation of your opinion that:

1. The execution of the transfer of the Bank shares from Atty. Felipe L. Gozon to FLG is likewise not
subject to capital gains tax, donor's tax and documentary stamp tax.

2. The subsequent transfer of the Bank shares from Atty. Felipe L. Gozon to FLG is likewise not
subject to capital gains tax, donor's tax and documentary stamp tax.

In reply thereto, I have the honor to inform you that execution of a Declaration of Trust whereby a
nominee shareholder acknowledges and states that he is holding certain shares in trust for the real
owner, is not a taxable transaction/event.

Further, the subsequent transfer by the Nominee to FLG of the 499,999 Bank shares without
consideration will not involve any actual sale or conveyance of ownership since what is being transferred
is merely legal title to the shares. Such being the case, the transfer by the Nominee to FLG, the true,
actual, and beneficial owner of the aforementioned shares, is not subject to the capital gains tax under
Section 21(d) or Section 124-A both of the Tax Code, as amended. Furthermore, the transfer is not
subject to donor's tax since it pertains to the transfer by trustee/Nominee to the real owner, the FLG.

Considering the foregoing, your opinion that the execution of a Declaration of Trust by Atty. Felipe L.
Gozon in favor of FLG, over the 499,999 shares of stock in Malayan Savings Bank and Mortgage Bank as
well as the subsequent transfer of the same by Atty. Felipe L. Gozon to FLG is not subject to capital gains
tax, donor's tax documentary stamp tax is hereby confirmed.

This ruling is being issued on the basis of the 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. (BIR Ruling No.
029-90 dated March 15, 1990; BIR Ruling No. 123-93 dated April 5, 1993; BIR Ruling No. UN-072-95
dated February 6, 1995)

Very truly yours,

ALICIA L. TOMACRUZ
Head Revenue Executive Assistant
(Legal Service)