SGV & Co.

March 20, 2007 BIR RULING [DA-163-07] Section 24 (D) (1); DA-371-2006 SGV & Co. 6760 Ayala Avenue Makati City Attention: A.C. Tionko Tax Services Gentlemen : This refers to your letter dated October 18, 2006 concerning the BIR Confirmation-Ruling dated July 15, 2006 which this Office issued to SGV & Co for San Miguel Properties, Inc. ("SMPI") and HOC Realty, Inc. ("HRI") , confirming that pursuant to Section 40 (C) (2) of the 1997 Tax Code, no gain or loss shall be recognized on the transfer of assets and liabilities by HRI to SMPI as a consequence of their merger wherein SMPI became the surviving corporation. aETADI It is represented that SMPI was required by BIR to cause the annotation at the back of the Transfer Certificate of Title (TCT), the substituted basis of the transferred properties and the fact that no gain or loss was recognized as a result of the merger; that the substituted basis for the land was not broken down which totaled P166,612,829.00; that the parcels of land concerned are covered by Transfer Certificates of Title No. T-12164 and T-12165; that the substituted basis for T-12164 shall be P166,241,599.40 and for T-12165 shall be P371,229.60; and that you request that this ruling shall serve as instruction to the Register of Deeds for the City of Mandaluyong to annotate such information at the reverse side of the Transfer Certificates of Title of both parcels of land. In reply, please be informed that, this Office confirms that the substituted basis for the parcels of land mentioned in BIR Ruling DA-371-2006 dated June 15, 2006 shall be P166,241,599.40 for TCT No. T-12164, and P371,229.60 for TCT No. 12165. This information shall have to be annotated at the reverse side of the Transfer Certificates of Title of both parcels of land in compliance with the instructions of Revenue Regulations No. 18-2001. This shall also serve as instruction to the Register of Deeds of Mandaluyong City to cause the following information for annotation: "The following information is required to be annotated on the reverse side of the Transfer Certificate of Title (TCT) issued in connection with BIR Confirmation-Ruling dated July 15, 2006:" "The acquisition of the properties described in BIR Confirmation-Ruling dated July 10, 2006 are by virtue of a tax-free exchange pursuant to Section 40(C)(2) of the National Internal Revenue Code of 1997. The substituted basis pursuant to Section 40(C)(5) of the Internal Revenue Code of 1997 are as follows: Nature of TCT No. Tax Declaration Total Substituted Basis Property No. Square Meters Land T-12164 D-027-04284 60,007 sq.m Php166,241,599.40 Land T-12165 D-027-04287 134 sq.m Php371,229.60 TOTAL 60,141 sq.m Php166,612,829.00 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, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service