Chilipsons Development Corporation

August 22, 2008 BIR RULING [DA-(S40-008) 163-08] S-40 (C) (2) Chilipsons Development Corporation No. 33, Washington Street, San Juan, Metro Manila Attention: Mr. Vanison G.T. Co Corporate Secretary Gentlemen : This refers to your letter dated July 24, 2008 requesting for a modification and/or amendment of BIR Ruling/Certification No. SN-190-2007 dated June 19, 2007 relative to the tax-free exchange between Philip W. Co, Jr. and Cuanco & Sons, Inc. (the "Transferors") and Chilipsons Development Corporation (the "Transferee"), whereby the Transferor transferred a parcel of land and improvement to the Transferee in exchange for shares of stock of the latter. As a consequence of the exchange, the Transferor gained control of the Transferee by owning 99.99% of its total voting stocks. EDISTc In the aforesaid ruling, the transfer value of the parcel of land covered by Transfer Certificate of Title No. T-(247266)-1266 and improvement covered by Tax Declaration No. 96-021-24822, pursuant to two (2) Deeds of Assignment between Co Cuanco & Sons, Inc. and Philip W. Co, Jr. (assignors) and Chilipsons Development Corporation (assignee) both dated June 5, 2007, is Twenty Seven Million Nine Hundred Fifty Three Thousand Two Hundred Pesos (P27,953,200.00) in exchange for Two Hundred Thousand (200,000) shares amounting to Twenty Million Pesos (P20,000,000.00). Out of the 200,000 shares, 185,000 shares were issued to Co Cuanco & Sons, Inc. while the remaining 15,000 shares were issued to Philip W. Co, Jr. However, on June 16, 2008, the Board of Directors of Chilipsons Development Corporation approved that the authorized capital stock of the company be reduced from P20,000,400.00 to P320,400.00. On the same date, two (2) Amended Deeds of Assignment were executed by Co Cuanco & Sons, Inc. on one hand, and Philip W. Co, Jr. on the other, both as assignors, in favor of Chilipsons Development Corporation, as assignee, whereby the transferors and transferee agreed that the subscriptions of Co Cuanco & Sons, Inc. in the transferee be reduced from 185,000 shares to 1,850 while the subscriptions of Philip W. Co, Jr. in the transferee be reduced from 15,000 shares to 1,350. The aforesaid Deeds of Assignment thereby amended the (2) Deeds of Assignment executed by the same parties on June 5, 2007. cCSTHA The aforesaid Amended Deeds of Assignment were executed due to the filing of the decrease of capital stock by Chilipsons Development Corporation with the Securities and Exchange Commission (SEC) which was later approved on July 23, 2008. The Certificate of Decrease of Capital Stock of Chilipsons Development Corporation effectively reduced the authorized capital stock of the latter from P20,000,400.00 to P320,400.00 Thus, to effect the said decrease in the authorized capital stock of Chilipsons Development Corporation, you are requesting that BIR Ruling/Certification No. SN-190-2007 dated June 19, 2007 be amended or modified to reflect the new transfer value of the said parcel of land and improvement transferred by Co Cuanco & Sons, Inc. and Philip W. Co, Jr., respectively, in exchange for 3,200 shares, herein described: TcSCEa Name of Property No. of Shares Substituted Basis Transferors Allocated Co Cuanco & Sons, Land 1,850 P120,988.00 Inc. Philip W. Co, Jr. Building 1,350 1,000,000.00 TOTAL 3,200 P1,120,988.00 ==== ========== In reply, please be informed that your above request is hereby granted. BIR Ruling/Certification No. SN-190-2007 is hereby amended or modified insofar as the transfer value of the parcel of land and improvement in exchange for shares is concerned. Thus, the entries on the table appearing in Annex "1" of said BIR Ruling/Certification No. SN-190-2007 transferred by the Transferors to the Transferee is hereby modified as follows: HICSaD Name of Property No. of Shares Substituted Basis Transferors Allocated Co Cuanco & Sons, Land 1,850 P120,988.00 Inc. Philip W. Co, Jr. Building 1,350 1,000,000.00 TOTAL 3,200 P1,120,988.00 ===== ========== 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. aACEID Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service