Platon Martinez Flores San Pedro Leaño

June 20, 2007 BIR RULING [DA-336-07] DA 500-03 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 March 20, 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) per share; that all 12,000 shares are issued and outstanding and the following are the registered owners of said shares: Name No. of Shares Amount Subscribed (Php) Degussa Texturant Systems 4,798 P4,798,000.00 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 12,000,000.00 ====== =========== that Degussa Texturant Systems France SAS (DTS) is a corporation organized and existing under the laws of France prior to its merger with and into Cargill France SAS (Cargill); that DTS is not doing business in the Philippines; that on the other hand, Cargill is a corporation organized and existing under the laws of France and is likewise not doing business in the Philippines; that as an integral part of a corporate reorganization among the subsidiaries and affiliates of Cargill, DTS and Cargill entered into a Merger Treaty, pursuant to which DTS merged with and into Cargill effective as of November 30, 2006, with the latter as the surviving corporation; and that as a result of such merger, Cargill became owner of the shares of DTS shares in PBR consisting of 4,798 shares with a par value of P1,000.00 each. Based on the foregoing representations, you now request confirmation of your opinion that the transfer by DTS, a foreign company, of its shareholdings in PBR to Cargill, another foreign company, is not subject to tax since the transfer is part of a worldwide corporate reorganization and that no gains will be realized both by DTS and Cargill for income tax purposes relative to the said transfer. In reply thereto, please be informed that in BIR Ruling No. 347-87 dated November 5, 1987 , wherein the transaction involved the transfer of Philippine 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." HCSDca Accordingly, this Office holds that since the transfer by DTS of its shares of stock in PBR to Cargill is in pursuance to a legitimate worldwide corporate reorganization, and there is no effective transfer of beneficial ownership, no gain was realized by both DTS and Cargill for income tax purposes. 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