Isla Lipana & Co.

August 5, 2008 BIR RULING [DA-(C-025) 109-08] DA 502-03 Isla Lipana & Co. 29th Floor Philamlife Tower 8767 Paseo de Roxas Makati City Attention: Atty. Malou P. Lim Partner Gentlemen : This refers to your letter dated June 25, 2008 stating that your client, Aplaya Laiya Corporation (ALC), is a domestic corporation duly registered with the Securities and Exchange Commission (SEC) and is primarily engaged to purchase, exchange, or otherwise acquire real properties in Laiya, San Juan, Batangas; to own, hold, control, maintain, administer, and develop the same as comprehensive tourism-oriented community, and any and all other businesses as may be necessary or desirable in connection therewith; to maintain any and all services and facilities incident to the foregoing, including but not limited to the operation and maintenance of hotels, resorts, restaurants, bars, cafes, barbershops, gift, souvenir and curio shops, boutiques, beauty shops, gyms, golf courses, tennis and pelota courts, swimming pools, other sports and recreational facilities, automobiles, buses, motorboats and other vehicles of all kinds; to provide other tourist oriented services; and to sell, lease, sublet, mortgage, exchange, assign, transfer, convey, or otherwise alienate or dispose of said real properties, and any interest or right therein, and generally to purchase, lease, exchange or otherwise acquire, sell, lease, sublet, mortgage, exchange, assign, transfer, convey, or otherwise alienate or dispose of other real properties and any interest or right therein; that on the other hand, Laiya Tourism Development Corporation (LTDC) is a domestic corporation duly registered with the SEC and was primarily engaged to lease, hold, possess or develop real estate, and to erect thereon hotels and other buildings or improvements; to lease, operate, manage and administer hotels, resorts, apartment hotels, inns, lodging houses, restaurants, cafes, bars, refreshment rooms, shopping arcades, and all other facilities, accommodations, adjuncts and accessories appurtenant to a general hostelry business; to furnish entertainment and otherwise perform any and all acts for the pleasure, comfort and convenience of hotel guests, tenants and other customers; and otherwise, to handle and engage in other allied businesses; that the respective Board of Directors and stockholders of ALC and LTDC approved the merger with the former as the surviving corporation; that the merger is mutually desirable and advantageous to ALC and LTDC and will result in the consolidation of economic resources, economy of scale, and efficiency of operations; that accordingly, this will improve profitability and reduce costs; that the Articles and Plan of Merger by and between ALC and LTDC were filed with the SEC on April 29, 2008; and that the SEC Certificate of Filing of the Articles and Plan of Merger was then approved and issued by the SEC on June 2, 2008. DITEAc Based on the foregoing representations, you now request for an extension of sixty (60) days for the filing of the short period return of the absorbed corporation, LTDC, resulting from the merger which was approved by the SEC on June 2, 2008. In reply thereto, please be informed that Section 52 (C) of the Tax Code of 1997 provides that "SEC. 52. Corporate Returns. "(A) . . . (B) . . . (C) Return of Corporation Contemplating Dissolution or Reorganization. Every corporation shall, within thirty (30) days after the adoption by the corporation of a resolution or plan for its dissolution, or for the liquidation of the whole or any part of its capital stock, including a corporation which has been notified of possible involuntary dissolution by the Securities and Exchange Commission, or for its reorganization, render a correct return to the Commissioner, verified under oath, setting forth the terms of such resolution or plan and such other information as the Secretary of Finance, upon recommendation of the Commissioner, shall, by rules and regulations, prescribe. aTEHIC The dissolving or reorganizing corporation shall, prior to the issuance by the Securities and Exchange Commission of the Certificate of Dissolution or Reorganization, as may be defined by rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, secure a certificate of tax clearance from the Bureau of Internal Revenue which certificate shall be submitted to the Securities and Exchange Commission." Corollarily, Section 53, supra provides that the Commissioner may, in meritorious cases, grant a reasonable extension of time for filing returns of income (or final and adjustment returns in case of corporations), subject to the provisions of Section 56 of this Code. The rationale of the above-mentioned rule has been elucidated by the Supreme Court in the Case of Bank of the Philippine Islands vs. Commissioner of Internal Revenue, G.R. No. 144653, August 28, 2001, where it was held that the short period return of an absorbed corporation should be filed within 30 days after the approval of the Articles of Merger. This is because the SEC's approval of the merger is the operative act that gives legal effect to the merger and results in the cessation of the separate juridical personality of the absorbed corporation. TcSAaH Thus, the reckoning date of the 30-day period within which to file the short period return shall be from the SEC's approval of the merger which is June 2, 2008. Accordingly, the deadline for filing the short period return is on July 2, 2008. However, since your client is still in the process of engaging the services of external auditors who will conduct the audit of LTDC's financial statements that would be used as basis for the short period return. Likewise, LTDC is still completing the closure of its books and are still compiling the records and documents necessary for the audit, it is physically impossible for you to meet the deadline for filing the said returns which is on July 2, 2008. SUCH BEING THE CASE, since the above-cited reason is found to be meritorious, your request for an extension of 60 days within which to file the short period return of the absorbed corporation is hereby GRANTED. ATCaDE Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service