BIR Ruling [DA-085-97]

March 4, 1997 BIR RULING [DA-085-97] Guoco Holdings (Philippines), Inc. 17th Floor, BA Lepanto Building, Paseo de Roxas Makati City Attention: Mr . Ernesto T . Ding Group Financial Controller Gentlemen : This refers to your letter dated December 16, 1996 stating that Guoco Securities (Philippines), Inc. (GSPI) is a corporation organized and existing under Philippine laws; that it is authorized to engage in business as a dealer in securities and as securities and as a securities broker; that GSPI is a wholly owned subsidiary of Guoco Securities Bermuda Ltd. (GSB); a non-resident foreign corporation organized and existing under the laws of Bermuda; that both GSPI and GSB are members of the Guoco Group of Companies, a conglomerate of companies within the Asia Pacific Region; that other than in GSPI, GSB has shareholdings in companies within the region which are involved in financial services; that Guoco Group of Companies is currently undertaking a corporate reorganization of its companies in the financial services industry, and an integral component of such reorganization, is for the transfer of the shares of GSPI from GSB to another affiliate; that GSB has recently acquired Growluck Limited (GLL), a company organized and existing under the laws of the British Virgin Islands; that to carry out the corporate reorganization, GSB will transfer all its shareholdings in GSPI to GLL in exchange for the latter's shares of stock that no cash is involved in the transfer of the shares; and that at the end of the transaction, GSPI will be wholly owned by GLL, which in turn will be wholly owned by GSB. Based on the foregoing representations, you now request confirmation of your opinion that no gain or loss shall be recognized on the transfer of the shares of stock of GSPI by GSB to GLL in exchange for the latter's shares of stock, on account of a corporate reorganization. In reply, please be informed that your opinion is hereby confirmed. Since no sale took place in the transfer of the GSPI shares by GSB to GLL the same being an integral part of an ongoing reorganization of the Guoco Group of Companies to which GSPI, GSB and GLL belong, such that GSPI will be wholly owned by GLL, which in turn will be wholly owned by GSB, consequently no gain will be realized by GSB for income tax purposes. (BIR Ruling Nos. 347-87 dated November 5, 1987; 264-88 dated June 27, 1988; 385-93 dated September 30, 1993) Very truly yours, ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)