Prestige Equities, Inc.

January 14, 2009 BIR RULING [DA-(VAT-004) 011-09] Sec. 4.102-1, RR 7-95; 76-95; 236-90 Prestige Equities, Inc. 10 Quezon Avenue, Quezon City Attention: William G. Tan President Gentlemen : This refers to your letter dated January 10, 2007 requesting for a clarification on whether or not Prestige Equities, Inc. will be considered as a dealer in securities, subject to Value Added Tax (VAT) under Section 108 of the Tax Code, when it trades the certificates described below which are all booked as ordinary assets for being held for sale to prospective buyers. cTAaDC As represented, Prestige Equities, Inc. (Prestige) is a corporation duly organized and existing under the laws of the Philippines and is a holder of Heritage Park-Investment Certificates (HPIC) which certificates are all intended for sale to prospective buyers. Each certificate for sale has the following features: 1. It is issued by the Bases Conversion and Development Authority (BCDA) pursuant to the terms of the Pool Formation Trust Agreement among BCDA, as issuer, the Public Estate Authority (PEA), as project manager and the Philippine National Bank (PNB), as trustee. 2. It is an instrument which represents the right of the holder to the perpetual use of a specific memorial lot in the Heritage Park identified and described thereon, and to the ownership of the improvements and enjoyment of the common amenities, facilities, services and perpetual care of the Heritage Park. 3. The certificate is issued in registered form and title to it is transferable upon surrender and endorsement of the same to the transfer agent. In reply, please be informed that Prestige is a dealer in securities which is subject to the value-added tax on sale of services imposed under Section 108 of the Tax Code. The term "dealer in securities" is defined under Section 4.102-1 of Revenue Regulations No. 7-95 as follows: "Dealer in securities" means a merchant of stocks or securities, whether an individual, partnership or corporation, with an established place of business, regularly engaged in the purchase of securities and their resale to customers, that is, one who as a merchant buys securities and sells them to customers with a view to the gains and profits that may be derived therefrom." EIcSDC The certificates held by Prestige for sale come within the broad purview of "securities" as defined under The Securities Regulation Code. Section 3 thereof, in explicit terms, provides: "3.1. "Securities" are share, participation or interests in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instrument, whether written or electronic in character. It includes: a) Shares of stocks, bonds, debentures, notes, evidences of indebtedness, asset backed securities; b) Investment contracts, certificates of interest of participation in a profit sharing agreement, certificates of deposit for a future subscription; c) Fractional undivided interests in oil, gas or other mineral rights; DEIHAa d) Derivatives like option and warrants; e) Certificates of assignments, certificates of participation, trust certificates, voting trust certificates or similar instruments; f) Proprietary or non-proprietary membership certificates in corporations; and g) Other instruments as may in the future be determined by the Commission." Whether viewed as an investment contract or plainly a certificate of participation , the certificates held by Prestige for sale definitely falls within the definition of securities. Accordingly, Prestige is by all means a dealer in securities because the term " dealer ", also defined under the aforesaid provision, means any person who buys and sells securities for his/her own account in the ordinary course of business. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service