Romulo Mabanta Buenaventura Sayoc & De Los Angeles

March 11, 2008 BIR RULING [DA-152-08] DA209-05 Romulo Mabanta Buenaventura Sayoc & De Los Angeles 30th Floor, Citibank Tower 8741 Paseo de Roxas Makati City Attention: Atty. Jayson L. Fernandez Partner Gentlemen : This refers to your letter dated January 15, 2007 stating that your client, Ford International Services, Inc. (FISI), is a non-resident foreign corporation organized and existing under the laws of the State of Delaware, USA with principal office address at No. 100 West Tenth Street, Wilmington, Delaware, USA; that on the other hand, Ford International Services LLC (FIS LLC) is a non resident foreign corporation organized and existing under the laws of the State of Delaware, USA with principal office address at Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, USA; that FISI is currently the registered owner of 173,946 preferred shares in Ford Motor Company Philippines, Inc. (FMCP), a corporation organized and existing under the laws of the Republic of the Philippines (the FMCP Shares); that on December 17, 2007, FISI and FIS executed an Agreement of Merger whereby FISI shall be merged with and into FIS LLC, with FIS LLC as the surviving entity in accordance with Section 18-209 of the Delaware Limited Liability Company Act; and that upon the effective date of the merger, all of the property, liabilities, rights and obligations of FISI (including the 173,946 preferred shares in FMCP) will be transferred to and absorbed by FIS LLC by operation of law. Based on the foregoing representations, you now request confirmation of your opinion that 1. The transfer of the FMCP Shares from FISI to FIS LLC as a consequence of a statutory merger effected under the laws of the State of Delaware, USA is not a taxable event in the Philippines, hence, not subject to the 5%/10% capital gains tax imposed under Section 28 (B) (5) (c) of the Tax Code of 1997; and 2. The transfer of FMCP Shares from FISI to FIS LLC as a consequence of a statutory merger is exempt from documentary stamp tax pursuant to Section 199 (m) of the said Code. In reply thereto, please be informed that your opinion is hereby confirmed as follows 1. In BIR Ruling No. DA209-05 dated April 27, 2005, this Office had already occasion to rule on the matter, as follows SDHAEC "The transfer of the shares in Taian Subic from Taian Taiwan to TECO is a legal consequence of the merger of Taian Taiwan with TECO, with the latter as the surviving corporation. A merger does not involve a sale, exchange or disposition of shares since there is no transfer of beneficial ownership over the shares. In a merger, the surviving corporation succeeds to the rights and liabilities of the absorbed corporation and merely carries on the identity of the latter. Hence, no taxable transaction actually took place in the Philippines. (BIR Ruling No. UN397-95 dated October 14, 1995) Accordingly, the transfer of the Taian Taiwan to TECO pursuant to a merger effected in accordance with the laws of Taiwan is not subject to the 5%/10% capital gains tax imposed under Section 28 (B) (5) (c) of the Tax Code of 1997." Accordingly, the gains, if any, derived by FISI in the transfer of its shares in FMCP to FIS LLC as a result of the merger effected abroad is not subject to the capital gains tax prescribed in Section 28 (B) (5) (c) of the Tax Code of 1997. 2. Moreover, the transfer of shares held by FISI in FMCP to FIS LLC pursuant to the said merger effected abroad is not subject to the documentary stamp tax imposed under Section 199 (m) of R.A. No. 9243. 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service