BIR Ruling [DA-256-01]

December 05, 2001 BIR RULING [DA-256-01] 28 (B) (5) (C); 176; 051-84 SGV & Co . 6760 Ayala Avenue Makati City Attention: Mr. Joel L. Tan Torres Partner, Tax Division Gentlemen : This refers to your letter dated August 20, 2001 requesting on behalf of your client, International Water (MWC) S.a.r.l. (the "Company"), for a ruling regarding the tax consequences of (1) the change in name of the Company and (2) the transfer of the registered office and place of effective management of the Company. It is represented that the Company is a non-resident foreign corporation; that it was first incorporated under the corporate name Ben MWSS Holdings Ltd. with registered office in Cayman Islands and with Ben IWL Holdings (U.S.), Inc., a Delaware corporation, as the sole shareholder; that on December 9, 1999, the Company changed its name to International Water (MWC) S.a.r.l. and transferred its registered office and place of effective management to Luxembourg, with Ben IWL Holdings (U.S.), Inc. continuing to be the sole shareholder of the Company; and that the change in the name and the transfer of the registered office and place of effective management of the Company do not create a new legal entity, but merely constitutes a continuation of the Company's legal personality in another jurisdiction; that it is further represented that the Company owns shares of stock in Manila Water Company, Inc. ("MWCI") and MWC Holdings, Inc. ("MWCHI"), both domestic corporations; that at present, these shares are still registered in the stock and transfer books of MWCI and MWCHI under the Company's former corporate name of Ben MWSS Holdings, Ltd.; and that as a result of the changes described above, the Company would like to have its shares of stock in MWCI and MWCHI registered under its new corporate name of International Water (MWC) S.a.r.l.. In reply, please be informed that the change in the Company's name and the transfer of its registered office and place of effective management do not result in any sale, barter, exchange or other disposition of its shares of stock in MWCI and MWCHI. The Company continues to be the owner of the MWCI and MWCHI shares. Accordingly, the registration of the Company's MWCI and MWCHI shares under its new corporate name and registered office is not subject to capital gains tax pursuant to Section 28(B)(5)(c) of the Tax Code of 1997. The capital gains tax is imposed only on the sale, barter, exchange or other disposition of shares of stock in a domestic corporation. DAaEIc Since the change in the Company's name and the transfer of its registered office and place of effective management do not result in any taxable sale or transfer of its shares of stock in MWCI and MWCHI inasmuch as the Company continues to be the owner of the MWCI and MWCHI shares, it follows that the registration of the Company's MWCI and MWCHI shares of stock under its new corporate name and registered office is not subject to documentary stamp tax under Section 176 of the Tax Code. The documentary stamp tax imposed under Section 176 of the Tax Code applies only when there is a sale or transfer of shares of stock resulting in a change in ownership. Moreover, the issuance of new certificates of stock bearing the new name of the stockholder to replace prior or original certificates is not subject to documentary stamp tax since there is no change in ownership and provided that there is also no change in face value. However, it should be noted on the new certificate of stock that the proper documentary stamp has been affixed to the original certificates. (Sec. 15, Regulations No. 26) (BIR Ruling No. 051-84 dated March 6, 1984; and 3rd Indorsement to the Chief, Tobacco Division, dated March 29, 1971) Accordingly, the Corporate Secretary of MWCI and of MWCHI may issue new certificates of stock of MWCI and MWCHI and register the same in the corresponding stock and transfer book under the Company's new name ("International Water (MWC) S.a.r.l." and registered office to replace the old certificates of stock under the Company's former name ("Ben MWSS Holdings, Inc.") without need of payment of any capital gains tax and documentary stamp tax by the Company. This ruling is being issued on the basis of the facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered as null and void. Very truly yours, (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group