Cash Dividend Payable to Stockholders Who are US Residents Subject to 25% Preferential Tax Rate

May 21, 1998 BIR RULING NO. 056-98 000-00-056-98 China Banking Corporation Paseo de Roxas corner Villar Street Makati City Attention: Mr . Arsenio L . Lim , Jr . Vice President & Corporate Secretary Gentlemen : This refers to your letter dated October 25, 1996 and August 4, 1997 and your follow up letter dated October 17, 1997 requesting for a ruling that the Cash Dividend No. 185 declared by the Bank and payable to the following stockholders, Mesdames Mary Feng-Ling Huang, Steinar Sei-Hwa Huang and Clotilde Hyndman Xavier, all residents of the United States of America, is subject to the preferential tax rate of 25% imposed under Article 11(2)(a) of the RP-US Tax Treaty. prcd Documents submitted to this Office disclosed that as of September 23, 1996 the above-named stockholders are the owners of the following number of shares subscribed to the capital stock of China Banking Corporation, viz.: Name Residence No. of Shares Total Par Value Percentage of Ownership Mary Feng-Ling Iowa, USA 10,315 P1,031,500.00 .102% Huang Steinar Sei-Hwa Ohio, USA 9,800 980,000.00 .097% Huang Clotilde M. Xavier California, USA 57 5,700.00 .001% that on April 3, 1996 and July 3, 1996 at the regular meetings of the Board of Directors of China Banking Corporation, wherein quorums were present, the board unanimously resolved to declare, as it did, a cash dividend equivalent to 10% of the par value of each share or a total amount of P100,680,000.00; that the board further resolved to fix the date of record of said cash dividend on July 24, 1996, the payment date on August 19, 1996 or immediately thereafter and the closing of the stock and transfer books from July 25 to August 7, 1996; and that in support of your request, you submitted the following documents: (1) BIR application form TC-001 duly accomplished in triplicate; (2) Certified true xerox copy of Secretary's Certificate on the Cash Dividend Declaration; (3) Certified true xerox copy of withholding tax return; (4) Secretary's Certificate showing the number and value of shares and percentage of ownership of shares of the abovementioned stockholders as of September 24, 1996; and (5) Certified true xerox copy of the Bangko Sentral ng Pilipinas' approval on the 10% cash dividend. In reply, please be informed that Article 11(2)(a) of the RP-US Tax Treaty provides, viz.: "Article 11 DIVIDENDS "(1) Dividends from sources within one of the Contracting States by a resident of the other Contracting State may be taxed by both Contracting States. "(2) The rate of tax imposed by one of the Contracting States on dividends derived from sources within that Contracting State shall not exceed (a) 25 percent of the gross amount of the dividend; (b) . . . xxx xxx xxx" Accordingly, the cash dividend payable to the following stockholders, Mary Feng-Ling Huang, Steinar Sei Hwa Huang and Clotilde Hyndman Xavier, who are all residents of the United States of America, by China Banking Corporation shall be subject to the preferential tax rate of 25% of the gross amount of the dividend imposed under the aforementioned provision of the RP-US Tax Treaty. LLjur 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, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue