SGV & Co.

February 14, 2007 BIR RULING [DA-090-07] Sec. 199 (f) of the Code, as amended by R.A. No. 9243; DA-019-05 SGV & Co. 6760 Ayala Avenue Makati City Attention: Atty. E.C. Alcantara Gentlemen : This refers to your letter dated January 23, 2007 requesting on behalf of your client, CrimsonPower Holdings Company Inc. ("CrimsonPower"), for confirmation of your opinion that the assignment to CrimsonPower of the Intercompany Notes issued by Mirant Sweden International AB (Mirant Sweden) is not subject to documentary stamp tax in the Philippines since the assignment will not bring about any change in the maturity date or remaining period of coverage from that of the original Intercompany Notes, pursuant to Sec. 199 (f) of the 1997 Tax Code, as amended by RA 9243. AScTaD It is represented that CrimsonPower is a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines with SEC Company Registration Number CS200619721. Its principal stockholders are Tokyo Electric Power Company International B.V. (TEPCO) and Marubeni Corporation (MC). TEPCO and MC are non-resident foreign corporations that won the bid for the acquisition of the power generation interests in the Philippines owned by the subsidiaries of Mirant Corporation. It is further represented that to evidence the said acquisition, on December 11, 2006, Tokyo Crimson Energy Holdings Corporation, a Cayman Islands corporation, on behalf of TEPCO and MC, entered into a Stock and Note Purchase Agreement (SPA) with Mirant, providing among others, the purchase of the following Intercompany Notes: TcDHSI 1. Intercompany Note dated August 15, 2006 between Mirant Sual Corporation and Mirant Sweden International AB in the principal amount of US$ 400,000,000; and 2. Intercompany Note dated August 15, 2006 between Mirant Pagbilao Corporation and Mirant Sweden International AP, in the principal amount of US$ 300,000,000. Mirant International Sweden AB (publ) is a non resident foreign corporation domiciled in Sweden. The SPA contained no provisions changing the terms and conditions of the above Intercompany Notes nor the maturity or remaining period of coverage of the Intercompany Notes from that of the original Notes. Further, Sec. 9.8 of the SPA provides for the assignment by the Buyers (TEPCO and MC) of the SPA and all their rights, obligations and liabilities under the SPA to a Philippine company owned 100% by the Buyers, referring to CrimsonPower. Based on the foregoing, you now request for confirmation of your opinion that the assignment to CrimsonPower of the Intercompany Notes issued by Mirant Sweden is not subject to documentary stamp tax in the Philippines since the assignment will not bring about any change in the maturity date or remaining period of coverage from that of the original Intercompany Notes, pursuant to Sec. 199 (f) of the 1997 Tax Code, as amended by RA 9243. cADSCT In reply, please be informed as follows: Pursuant to Sec. 199 (f) of the Philippine Tax Code, as amended by RA 9243, the assignment or transfer or the renewal or continuance of any evidence of obligation or indebtedness (such as a promissory note) is exempt from documentary stamp tax (DST) if there is no change in the maturity or remaining period of coverage from that of the original instrument, to wit: "Section 199. Documents and papers not subject to stamp tax. The provisions of Section 173 to the contrary notwithstanding, the following instruments, documents and papers shall be exempt from the documentary stamp tax: xxx xxx xxx (f) Assignment or transfer of any mortgage, lease or policy of insurance, or the renewal or continuance of any agreement, contract, charter or any evidence of obligation or indebtedness, if there is no change in the maturity or remaining period of coverage from that of the original instrument ." (emphasis supplied) In BIR Ruling [DA-019-05] dated January 19, 2005 , the BIR held that the assignment of the promissory note without any provisions changing the conditions of the mortgage nor the maturity or remaining period of coverage of the promissory note from that of the original instrument is exempt from DST. This ruling involves Promissory Note No. TST97-0055 executed by Peter Cang Ho Cho in favor of HSBC whereby for value received, he promised to pay the amount of P15,300,000.00 on or before December 3, 2002, with interest at the rate of 29% per annum. This note was subsequently assigned and conveyed by HSBC to Josephine G. Antolin Cang under a Deed of Assignment which contained no provisions changing the conditions of the assignment of the mortgage nor the maturity or remaining period of coverage of the promissory note from that of the original instrument. The BIR held that: DcSEHT "Based on the foregoing and since the Deed of Assignment executed by HSBC merely transferred all its rights, interests and participation in the promissory note and in the indenture of mortgage to Josephine G. Antolin Cang without any provisions changing the conditions of the mortgage nor the maturity or remaining period of coverage of the promissory note from that of the original instruments, your opinion that the transfer by HSBC of all its rights, interests and participation in (1) Promissory Note No. TST97-0055 and (2) Indenture of Mortgage dated March 2, 1998 in favor of Josephine G. Antolin Cang is exempt from the payment of documentary stamp tax by virtue of R.A. No. 9243, therefore, is hereby confirmed." IDESTH In the instant case, the assignment to CrimsonPower of the Intercompany Notes issued by Mirant Sweden under the SPA will not bring about any change in the maturity date or remaining period of the coverage from that of the original Intercompany Notes as the SPA contained no provisions with respect to changing the maturity date or remaining period of the coverage of the Intercompany Notes. Such being the case, this Office hereby confirms that the assignment to CrimsonPower of the Intercompany Notes issued by Mirant Sweden under the SPA is not subject to documentary stamp tax in the Philippines since the assignment will not bring about any change in the maturity date or in remaining period of coverage from that of the original Intercompany Notes, pursuant to Sec. 199 (f) of the 1997 Tax Code, as amended by RA 9243. ScEaAD 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, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service