BIR Ruling [DA-350-99]

June 16, 1999 BIR RULING [DA-350-99] National Steel Corporation 377 Sen. Gil J. Puyat Avenue Makati City Attention: Ms . Josephine G . De Jesus Assistant Manager Corporate Development Gentlemen : This refers to your letter dated May 28, 1997 seeking clarification on whether or not the conversion of preferred shares into equivalent common shares of the same stockholder in the same corporation is subject to documentary stamp tax. It is represented that common shares will be issued in exchange for preferred shares redeemed, par for par; that said shares will be issued to the same stockholders who held the redeemed preferred shares and that the total value of issued/subscribed capital stock, after the conversion, will remain the same since only the type of shares issued will change. In reply, please be informed that since the conversion of the subject preferred shares into equivalent common shares will not involve an original issuance of shares of stocks the same is not subject to the documentary stamp tax imposed under Section 175 of the Tax Code, as amended. The re-classification of the shares from preferred shares into common shares of the stockholders in a corporation is not subject to the documentary stamp tax provided the new certificates are also issued to the same stockholders and the par value is not higher than the replaced certificate. (BIR Ruling No. 184-95 dated December 6, 1995). This ruling is being issued on the basis of the foregoing facts as represented and the same shall be considered null and void if it turns out in an investigation that the facts are different from those represented. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)