BIR Ruling

May 29, 1974 Guzman, Bocaling & Co. 416 Regina Building Manila Gentlemen : This refers to your letter dated April 18, 1974, stating as follows: "Pursuant to a plan of merger between Bank of the Philippine Islands (BPI) and People's Bank and Trust Company (PBTC) which is expected to take effect on April 30, 1974 it is agreed upon between them that in exchange for the net assets of PBTC, BPI (which will be the surviving entity) will issue its own shares at such number as will be necessary to effect the merger, which will be in accordance with an agreed exchange ratio, BPI proposes to issue a single certificate for the required number of shares in exchange for PBTC's net assets, in the meantime that the certificates pertaining to each and every shareholder of PBTC cannot yet be issued for one reason or another, at the time of merger. This certificate will be issued and kept by BPI under the name of "PBTC for account of its shareholders", and will thus constitute the master certificate for all shareholders of PBTC. Thereafter, as each shareholder of PBTC goes to BPI to exchange his certificates of stock in the former for those of the latter, BPI will issue certificates for the corresponding number of shares for which a particular shareholder is entitled. Complete records will be maintained for these issuances and the master certificate will be cancelled when all of PBTC's shareholders have surrendered their certificates. "Queries: "1. Will the master certificates issued in the name of "PBTC for account of its shareholders" be subject to the documentary and science stamp taxes? "2. If the answer to the foregoing is in the affirmative, will the certificates issued to each and every shareholder as they surrender their PBTC certificates for BPI certificates be still subject to documentary and science stamp taxes?" In reply, I have the honor to inform you that the master certificate issued in the name of "PBTC for account of its stockholders" is subject to documentary and science stamp taxes in accordance with Section 212 of the Tax Code. However, when the master certificate is finally broken up, the difference in tax measured by the sum of the tax corresponding to the certificates delivered to PBTC shareholders and the tax paid on the master certificate will have to be paid and the stamps affixed to the stub of the master certificate. (Sec. 13, Documentary Stamp Tax Regulations) aisa dc Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue TAN 1601-593-5