Platon Martinez Flores San Pedro & Leaño

May 30, 2008 BIR RULING [DA-331-08] DA 144-03 Platon Martinez Flores San Pedro & Leao 6th Floor, Tuscan Building 114 V.A. Rufino Street Legaspi Village Makati City Attention: Atty. Carlos G. Platon and Atty. Anthony Brett M. Abenir Gentlemen : This refers to your letter dated October 19, 2007 stating that your client, PBI Realty Corporation (PBR), is a domestic corporation duly registered with the Securities and Exchange Commission (SEC); that it has an authorized capital stock of Twelve Million Pesos (P12,000,000.00) divided into Twelve Thousand (12,000) shares with a par value of One Thousand Pesos (P1,000.00) per share; that all the 12,000 shares are issued and outstanding and the following are the registered owners of said shares, to wit: Name No. of Shares Subscribed Amount Paid-up Degussa Health and 4,798 P4,798,000.00 Nutrition Holding France SAS Ricardo Cruz Jr. 1 1,000.00 Richard Radier 1 1,000.00 Marcel Trading Corporation 4,793 4,793,000.00 Lee Hiong Wee 2,400 2,400,000.00 Michael Tan 2 2,000.00 Melvin Tan 1 1,000.00 Dee Ping Wee 1 1,000.00 Maricris Tongco 2 2,000.00 Winston Lee 1 1,000.00 Total 12,000 P12,000,000.00 ==== ========== that Degussa Health and Nutrition Holding France SAS (Degussa Health) is a corporation organized and existing under the laws of France; that prior to its merger with and into Degussa Texturant Systems France SAS (DTS), Degussa Health was not doing business in the Philippines; that DTS, a corporation organized and existing under the laws of France is likewise not doing business in the Philippines; that as an integral part of a corporate reorganization among the subsidiaries and affiliates of DTS, Degussa Health and DTS entered into a merger treaty, pursuant to which Degussa Health merged with and into DTS, with the latter as the surviving corporation; and that as a result of such merger, DTS became owner of the shares of Degussa Health shares in PBR consisting of 4,798 shares with par value of P1,000.00 per share. CacHES Based on the foregoing representations, you now request confirmation of your opinion that no gain or loss shall be recognized by Degussa Health in the transfer of its shareholdings in PBR in favor of DTS as a result of the merger of Degussa Health into DTS pursuant to Section 40 (C) (2) of the Tax Code of 1997, as amended. In reply thereto, please be informed that in BIR Ruling No. 347-87 dated November 5, 1987, wherein the transaction involved the transfer of Philippines shares owned by a foreign corporation to its wholly-owned foreign subsidiary under the proposed corporate reorganization, the BIR ruled that ". . . the transfer of all the outstanding shares of API consisting of 148,994 common shares of AAB to APH, its wholly-owned subsidiary in accordance with its proposed corporate reorganization which will consolidate certain operations in the South East Asia Region to APH is not subject to any Philippine tax." Later, it was reiterated in BIR Ruling No. DA144-03 dated May 5, 2003, where it was held that ". . . the transfer of the Unilever shares from the parent company, CIBV, to its subsidiary, MBV, was in pursuance to a legitimate worldwide corporate reorganization. As the transfer was from a parent company to a wholly owned subsidiary, there is no effective transfer of beneficial ownership. Since there is no effective transfer of beneficial ownership, no gain was realized by CIBV for income tax purposes." SUCH BEING THE CASE, this Office holds that no gain or loss shall be recognized on the transfer of PBR shares by Degussa Health in favor of DTS as a result of the merger under Section 40 (C) (2) of the Tax Code of 1997. 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. ETISAc Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service