BIR Ruling No. 75-2018

,., il.. REPUBLIC OF THE PHILIPPINES DEPARTMENT oF plxeNcii B UREAU OFqJNueTzEoRnDuIAlLtrRE- V;E'-N- U-E- CASTILLO LAMAN TAN PANTALEON Sec. 40(C)(2). NIRC BIR Ruling Nos. 214-12,100- cJ sax JosE LAw FrRM 20t7 The Valero Tower, l22Yalero St., Salcedo Village "A:oT5_zor9 1227 Mil<ati City a-29-rctB Attention: Ma. Guillermina G. Totanes Mabel L. Buted Gentlemen: This refers to your letter dated December 1I, 2017 requesting, on behalf of your client, Marcventures Holdings, fnc. ("MHI") for confirmation of your opinilon that the statutory merger of MHI, as the surviving corporation, with Asia Pilot Mining Phils. Corp. ("APMPC") and Brightgreen Resources Holdings, Inc. ("BI{I"), as the absorbed corporations, is a tax-free transfer/exchange pursuant to Section 40(CX2) in relation to Section 40(CX6Xb) of the National Internal Revenue Code of 7997, as amended (the "Tax Code',). MHI is a publiciy-listed holding corporation organized and existing under Philippine laws, with business address at 4th Floor, Citibark Center, 8741 Paseo de Roxas Avenue, Mukuti City, and registered with this Bureau with Tax Identification Number (TrN) It is engaged in dealing with properties of every kind and description to the extent permitted by law without engaging in the business of an investment company or acting as a securities broker or dealer. It wholly owns Marcventures Mining and Development Corporation, a co{poration organized and existing under Philippine laws, which is primarily engaged in the business of extracting, mining, smelting, refining and converting mineral ores. On the other hand, APMPC is a corporation organized and existing under Philippine laws, with principal office at Ground Floor, 31 Bingo Street, Sta. Mesa Heights, Quezon City, and registered with the BiR with TIN It is engaged in the business of operating coal mines and prospecting, exploring, mining, milling, concentrating, converting, smeltin g, treating, refltning, preparing for market, manufacturing, buying, selling, exchanging, and otherwise producing and dealing in all kinds of ore, metal and minerals, hydrocarbons, acids and chemicals, and in the products and by-products of every kind and description and by whatever process, the same can be or may thereafter be produced. BHI is a financial holding corporation organized and existing under Philippine laws, with plincipal office at the 4th Floor, Citibank Center, 8741 Paseo de Roxas Avenue, Makati City, and registered with the BIR with TIN

U, t;o|5-2ot9 Mdrcventures Holdings, lnc. 1-29*2018 APMPC, BHI and MHI (hereinafter collectively referred to as the "Parties") believe that the combination of the resollrces, capabilities, clientele, and operations of MHI, APMPC and BHI via a s.tatti;oty *etg.t will bring aQout a bigger, stronger, and more competitive mining entity, thereby coniributing to the further growth and strength of the merged entity in particular and the mining"industry and the national econorny in general, which wili pave the way. towards giving MHI, tire surviving corporation, the ability to compete'on a global scale. For these reasons, the Parties agreed to mergd, with MHi as the surviving corporation, as a consequbnce of which, properties of APMPC and BHI will be exchanged ,with the shares of stock of MHI, by way of original issue, and without any intention to donate. illl , . The Plan of Merger and Articles of Merger were approved by a majoriiy of the Board of Directors of MHI on December 15, 2016 and by a grajority of the Board of,Directors of APMPC and BHI on September 8, 2017 . After their Board of Directors approved the merger, the relevant resolutions were authotrized, approved, ratified, and confirmed by at'least two-thirds (213) of the of MHI on October 23,2017 and by at least (2/3J of the outstanding and BHI on September 8,2017. Thereafter, on October 24, 2017, the t 'coauptsittaanl dsitnogckcoapf iAtaPl MstPocCk Parties ente;ed into a Merger Agreement. Pursuant to the Plan of Merger, APMPC and BHI shall transfer ali their assets and liabilities to MHtr as a consequence of the merger, for which MHI, by way of original issue, shall issue a total of shard, and lommon shares to the st$ckholders of APMPC, with a par value of Fl.00 per common shares to the stockholders of BHI, also with a par value of Pi.00 per share. : ' The authorized capital stock, issued and outstanding capital stock of APMPC, BHI and MHI as set forth in their respective General Information Sheets are as follows: APMPC (Prior to the Effective Date of Mergbr) ;Type of," Authorized Issued and Par No. of Amount Share outstanding value PHP shares PHP shares Common shares BIII (Prior to the Effective Date of Merger) Type of Authorized Issued and Par No. of Amount outstanding value PHP Share shares PHP shares shares Amount Common I' MHI (Prior io the Effective Date of Merger) Type of Authorized Issued and Par valire No. of shares outstanding Share ,'., l. ,:

I ffi5-P19 Marcventures Holdings, lnc' L-?9-2OAB PHP shares shares I Date of Merger' the authorized caPital stock and issued and shall as follows: Begirudng the Effective be outstandin-g caPital stock of MHI MHI (Beginning the Effective Date of Merger) Amorutt Type of Authorized Issued and Par -No. of shares -THP value Share shares outstanding- PHP Common shares Per representations and documents submitted' the assets and liabilities of BFII and APMPC are as follows: B}II Nut,,t. of Properties Arnnrtnt Liabilities Amount PhP A qqets eurrent Li4biiities _r!3 Ea tc.n <?6 O0 Equity Uurrent tuastt/ I pnP Non-Current (Inves!!qggD- Total Nut.ti. of PrqPgrlles Non-Current (Investment & Advances

r{il}*SlS i' MPaagreBc4Iv.eTonfshthIeuarselulsbbHestoiotldu.iit.nergrdosb'inaln.scae' softahcecsohradr#e.s. .o*rfrstt,osc.kcotifoMnH+lrroer tc-c^e^liovsiei'ited"rrbl y"hbivothhthoeth19A9P7Mt*T8Pa9Cx*fcafonitddSeB'HasI amended; *ifi';H; C.Tbheesduerbesrmtitiunteeddbinaascecsoordftahnecperopertiesrece+ivoeidcbiiys.iMuHj ltffriormttibbogthzATPaMxPcCodaen'daBsHalmshenadlled; subject to output ;;'in*iii'"a hdTii it9" D. Tvtrahalenusetfr-eaardnredsdfeeortootaafxnpdr(ovapAbesrrroi)ersb*edbdy-dBbyHi -Iffiai nid" ApMp!.to MHI (a) shall or epit'tpc and BHI shall be accordance',i,itir s..tion 4.106-8(b)(3) of Revenue Regulations (RR) No' 16-2005; well_as the surrender of the Tsdhhoaenroetrsra'snosrftet r"iib"."ysthAteopcaMkbhspoecnldcaeen*odf.BdHonI aotifvteheinirtfepfrnrott;pi'e"rties to MHI as of MHI are not subject to i"*.t*g" ;;;ffiares t* E. be APMPG and BHI shall not F. TsAwuhpibethMjescSuptrcer,ec"nat'dnniodeSnrBlfolH.4f ItHhoaefostwshuheeav"Troeearrs,xrrot.Ctfq"os*-dt""oet,"c;iJkgbio"yfAtthh-eei*s*"t.'ot*gctktt-h'"oo'tlidtMuertsHibotef to the stockholders of 'shu*b"jesct to DST in accordance .TbdoehufeetarfaetoaxnrxcsetfhcesersneesdaduintcdtccoeeueMrntdiufiHnitcigIlaiztteeadx(TacCrbeCdll)i;t;Jab-b,lee withhording taxes (cwTl ofApMpc and BHI shail apptiedu"",arr" bv MHI against irs income tax whicffi ;til ;,;*;u;ji:* G. of a claim for refund or rssuance H. peinuxccrosemusasenattnatdxoe'snSedexucpetiiorfoenrdt2hm7e(inE#i)m;(2iu;);moif#cthJoeripaTorta"etIeil*vinl;ro;*;M;""Hi"L"Idmi(lMsac1tat:Dx1a-tb"vl'eefd:vtie*tasarsra;dgaanaindnsdt credit any its normal I.Ansyheax' cnoetsfsoarmndpuarnteoxf pth-eirire;d;n;;e"toi"peberatitainnesfloenlle;aJriorYfv-*ff:Ulopruor!s-u9a9n-t)toofAthePMmePrgCera' ndBHI ' i"l *t * t*ffi *t *lT #lp?: : li:i In reply thereto' please be informed as follows: BHI and MILis a merger within the . A, B & C' The 'foregoinlI merger of APMPC' fr g rotp*"rions and their asset ihllfl c o nr e mp r at i o n o r s e cti ""'io?iit? ' b."u.rr. MHI shall acquire/assume all the :ffi:fu li*frfft,"*Ju'i',:*;fHlf;:ili*:l d#';t:"[;:a'Tl'ift ;6p;1'1ff ciientele' 'Sutploungueitri,tiatn''d more .o,1p^.,i.i.'" mining entitv uur. to competeeonnratog"l;oobbrrinanlegs,chaaebleor.euHtseoanubcriegc,geteshre'' ma"oa en"ort"fiovrruthle,ApPurMpoPseC".f;idltB"pHi"IigJbteheinbgur.d#eiln;;o;Tf toa'xuaUtioonn' iTdebusinesspurpose

t ; tc75'n1\ Marcventures Holdings, lnc. r'29-2018 Page 5 of B The merger of ApMpC, BHI and MHI qualifies for non-recognition of gain or loss for the Tax Code, where no gain income tax purposes in accordance with Section a0(CX2) of r6uit U. recognized by APMPC and BFII, as the transferors of all assets and or loss liabilities, to MHI pursuant to the Plan of Merger' Accordingly, no gain or loss shall be recognized by MHI, as the transferee, on its receipt [abilities of APMPC and BHI pursuant to and as a consequence of the assei *a of the merger. The basis of shares of stocks received by APMPC and BHI Shareholders upon the exchange shall be the same as the basis of the properties, stocks, or securtiies exchanged, t.dh"ee*cJrae"maAsoe,udn"bt"iovlif.n(a"l)nr.ytuhgrea"aimn obthnVaet(yuw)raethsceereiavcmeodogunanizntedtdr(e2ianftettdhheeasefaxdciirvhimadneagnrekd.e(otSfvetahcietuioesnhoaafrOeth(hCeoXldpser)or(sap)earnotydf/ite(hbse) Tax Code of 1991, as amended) The basis of the properfy transferred in the hands of the transferee (MHI) sinll be the same hands of the transferors (APMPC BHI) increased by the amount as it would Ue in tne recognized to the transferors on and transfer' (Section 40(CX5Xb)' of the gain, if .any, the supra) Ftpehuxiencrsahpulalraynon,gpteieftorotthyfseuaiscachmsau"po"biut.janehltc*atogsfei"exth,cteeothelriedaonbtfhispleiutricoethopsteeaarxitscyoseufwsmsthhesicedhhaapldillsujbusnesottchetoedanasbcmiaadspeoiirusteandolt faoastsfhstaeehtge,paarlsioinaptbhferierloittmycieatsstrehatenomsswafaeyhlreribecoedhr' (Section 40(CX4Xb), suPr a) TcsbwOrahhrsemeicitsphtslueyuotrbfacsltotiitahoimtnbeupitlopeiltyfdrieotwnsbpa"eiatsrahsetdysstjuuhtomrseafteentrddhsuefalbeenarp-drstreheotdasop,teo*pcfrtuttatiihers.setshut patatrrntanottn"dpsipeooferrttohriNerpeeseordr'tctrybIaaVnysishs(AAfseituP)rerbMme(je2dsPc)ftcowodrfiaolpRnlluodebrptveBoeeseHnxexucIsceetleuooMddf IeedtvhdmeIeHtofeaIrrrodamsmjnhuidnosttuuienhlmddeg Ruting (RMR) No. 2-2002 dated June 10, 2002' Moreover, the transferors shall observe the provisions of Revenue Regulalions No' 06-13 in ttre determination of the fair market value of the properties/assets transferred' D. No VAT shall be due on the transfer made pursuant to the Plan of lVlerger following Section 4.106-8(b)(3) of RRNo. 16-2005, as amended' il;;;y Edo.nWateioiln-saerttele:thd(1.'i)dnothnoeu.,rreajunddruisc(p3tir)ountdheeonficntetheenisiptotahterdiomfaaocnntyatchotafotfthtlhiebeederoasntsioteyrn,(ti(aa2nl)imetlheuesmdeinoncntrseaanosdfei)a'invathlide "f transferors' APIvlPc and BHI to clearly, there is no intention on the part of any of the for legitimate br.siness purposes' donate to MHI its assets since the transaction is purely

#s?Fe18 t-2$*!91$ Mdrcventures Holdings, lnc. Thus, the aforesaid merger will not be subject to donor's tax since there is no intention to donate, and the transaction is a bona fide merger effected solely for business reasons. F. No DST is due on the transfer made pursuant to the Plan of Merger under Section 199(m) of the Tax Code, as amended by Republic Act No. 9243, in relation to Section a0(C)(2) of the Tax Code, as amended . However, DST shall be imposed on the original issuance of shares by MHi to- the stockholders of APMPC and BHi as a consequence of the merger as provided under .section 174 of the Tax Code, as amended G. Following BIR Ruling No. 100-2017, dated Marcl't0),2017,the excess and unutilized creditable *itfuftotaing taxes (CWT) of the absorbed corporations, APMPC and BHI as of the Effective Date oi M.tg.r, which form part of the assets to be transferred by the absorbed corporations to the surviving corporation as a consequence of the merger, may be applied as a tax credit by MHI against its income tax due for succeeding taxable years, or may b.e subject of a claim for refund or issuance of a TCC' H. Any excess and unexpired MCIT of the absorbed corporations, as of the Effective Date and credited against the normal income tax of the osuf rthveiviMngergJeorrpsohraaltliobne,"MuoHi.Id, forward three (3) immediately succeeding taxable years for the pursuant to Section 27(E)(2)of the 1997 TaxCode. Since the excess and unexpired MCITs are among its rights, privileges, property and/or interest, the of the absorbed sxcess and unex"poirrpeod.uMtioCrrIsT of the latter shall be transferred and vested in MHI on the Effective Date oithe Merger. Thus, APMPC and BHI's excesS and unexpired MCIT shall be carried forward and credited against the normal corporate income tax of MHI subject to the three-year-carry-forward p"riod reckoned from the date of payment by the absorbed aoyorations of their MCITs. I. The net loss carry-over (I{OLCO) under Section 34(D)(3) of the Tax Code, as amended, and as implement.a Uy Revenue Regulations No. 14-2001, of the absorbed corporations is the assets of the latter that can be transferred dnd absorbed by the suwiving not one of the absorbed as this privilege or deduction can be availed of merely by ;;;;;;; corporations. Accord^ingly, ihe tax-free merger between APMPC, BHI and MHI does not cover any NOLCO of the former as part of the assets that can be transferred and absorbed , by the latter corPoration. u."n*dperftSH*erocrwtfiroeifnv-te4.r0,foi(nfCfooX*r2idn)egrantrhedaqt(u6itrh)e(ebm)aebonotfsvtehs-eedteTfsoacrxrthibCeuodnddereerooRr{g1ea9vr9eizn7au,teitohRneecgpauanlratitbeioesncstooNntshoied' e1mr8ee-d2fg0ae0sr1m:sheorgueldr A. Tttahophepetheapeadlrarionenpgotoriuogf pnirneoibonzeragtihtnaioJgnnio,szfhfasiochtiwioaannlllsfrhbieloyecuo,ltrdhadsesbpeaoacfartttdshooeopf tfcietosditrsprbeoydtruuaemtlaiyocfnhco.oroEnftshattehcitheutatccexoodarrbpprlooeerrsaayptteiioooannnrss,w,ibwipltehhaiirconthifefwrsicshethaircesphreaattrnholdye,

#$?5-et8 L!";lg-,fi*t& Marcventures Holdings, lnc. reorganization occurred a complete statement of all facts pertinent to the non-recognition of.gain or loss in connection with the rcorgarization, including: -l j I (1) A copy of the plan of reorgatization, together with a statement executed under the I penaities of perjury, showing in fulI the purposes thereof and in detail ail i transactions incident thereto, or pursuant to the plan; I (2) Acomplete statement of all cost or other basis of all properfy, including ail stocks r securities, transferred incident to the plan; (3) A statement of the amount of stock or securities and other properly or money received from the exchange, including a statement of all distribution of other disposition made thereof. The amount of each kind of stock or securities and other property received shall be stated on the basis of the fair market value thereof at the date of the exchange; (4) A statement of the amount and nature of any liabilities assumed upon the exchange, and the amount and nature of any liabilities to which any of the property acquired in the exchange is subject. B. Every taxpayer, other than a corporation, party to the reorgarization, who received stock or seturities ar.rd other properfy ot *ongy upon a tax-free exchange in connection with a in his income tax return for the taxable year in corporate reorg:rnization shall incorporate which the exc[ange takes place a iomplete statement of all facts pertinent to the non- recognition of gain or loss upon such exchange, including: (l) A itatement of the cost or other basis of the stock or securities transferred in the exchange; and (2) Astatement in full of the amount of stock or securities and other property or money exchange, including any tiabilities assumed upon the exchange, received from the to whiJh property received is subject. The amount of and any liabilities each kind ;i stock or securities and-other properly (other liabilities assumed upon the exchange) received shall be set forth upon the basis of the fair market value thereof C. Rtteeohxxeecccfahhotcaarradinnlinsggtaseeitf,neeinorsrrtuehcaboednsniytpneaertlnoiecatpritbaimoelilnriifnttoiyeawrstmoiitohrtnos*uhowoa"ftolhltgri"bcpayehoinrkarueeonGpciyetlrooibevsfyoestrdhegfervao(eipnmnrriyzcoaipltuuatebidxorstpinineeaqgssyuheareorennwcwtyeinhdilvgoiiaestdppbhaoielwristt.ciiietceoirioespsnatsatouoesrbfssojsuetiumcnhcte)eha,rdstibnatoaoxsno-cifrskrdtehoeoeerrf I securities and other properfy received from the exchange. In addition to the foregoing requirements, the parties shall enclose with their respective the tax-free exchange occirrred a copy of the income tax returns for the taxable year in which request ift. *"'esponding ruling issued by the Bureau of lntemal for ruling filed with, *a

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