ATR KimEng Capital Partners, Inc.

September 20, 2007 BIR RULING [DA-501-07] 27 (D) ATR KimEng Capital Partners, Inc. 17/F Tower One & Exchange Plaza Ayala Triangle, Ayala Avenue Makati City Attention: Ms. Milaida S. Enriquez Treasurer Gentlemen : This refers to your letter dated July 3, 2007 requesting for a ruling relative to the sale of share of stocks. cSIACD It is represented that ATR KimEng Capital Partners, Inc. (ATR Capital) with business address at 17th Floor, Tower One & Exchange Plaza, Ayala Triangle, Ayala Avenue, Makati City is engaged in investment house operation; that it is registered with the Securities and Exchange Commission under Registration No. 181021 with the primary purpose viz: To carry on the business of assisting commercial, industrial, agricultural enterprises and other institutions by aiding in the creation, expansion and modernization of such enterprises; by sponsoring and facilitating the formation of capital, the participation of domestic as well as foreign capital therein and the acquisition of ownership of investments, shares and securities in said enterprises and providing financial, technical managerial and administrative assistance and advice to be carried out, among others, through the following: DAHSaT 1. To act as an originator, underwriter on a firm, guaranteed or best efforts and/or participate in a syndicated undertaking to purchase and or deal in securities and commercial papers issued by other enterprises and of the government and its instrumentalities; 2. To participate as soliciting dealer or selling group member in tender offers, block sales or exchange offering of securities; or to deal in options, rights or warrants relating to stocks bonds or debentures and other securities or evidence of indebtedness and to promote the maintenance of secondary markets; 3. To advise aforesaid enterprises and institutions on the appropriate techniques and methods for maintaining sound financial structures, the installing of proper business planning and/or forecasting machinery, or the designing of a borrowing program and/or the formalization of the implementation strategy hereof; IcHTED 4. To encourage companies to go public and initiate or promote whenever warranted, the formation, merger, consolidation, reorganization or recapitalization of productive enterprises to achieve more economic operation in such enterprises and to provide aforesaid enterprises and institution with assistance in the form of debt or equity financing or other technical advice or service; 5. To design pension, profit-sharing and other benefit plans and to induce non-profit and non-stock scientific, educational, religious, charitable and other eleemosynary institutions to set up capital funds for investment purposes thereby with the capability for supporting their program of operations while at the same time productively employing their capital funds to the support of the Philippine economy and to this end, advise them on then proper organization of their funding vehicles, and in programming and allocating their funds for investment and operational expenditure purposes; TAacIE 6. To assist in the formulation and/or implementation of investment strategy and programs that may be suitable for specific individuals, families, investment clubs and institutional investors; and to provide to analysis and evaluation of the status and condition of their investment portfolios; 7. To undertake or contract for business and economic researches, studies and surveys and to disseminate the same; 8. Subject to the provisions of Chapter VII of the General Banking Act and existing laws and to prior approval of the Monetary Board, act as a trustee or a trust fund or property; 9. Subject to prior approval of the Monetary Board, to engage in foreign exchange operations which the Monetary Board identifies as directly related to and supportive of the activities specified under paragraph 4 hereof; 10. Subject to the prior approval of the Monetary Board, to act as portfolio manager and/or financial agent; and 11. Subject to the prior Monetary Board approval and in accordance with its rules and regulations, to engage in trust, investment management activities and other fiduciary business, with the power to act as trustee or to hold property in trust or deposit for the use on behalf of others. HDTcEI that it is also registered with the Bureau of Internal Revenue under OCN 9RC0000170036 with TIN 000-166-719-000; that recently, ATR Capital sold certain listed and unlisted shares of stocks wherein it realized gains; that the listed shares were sold through the Philippine Stock Exchange and were subjected to the appropriate taxes; that said taxes were paid in the sale of the unlisted shares as shown in the transaction report, tax clearance and certificate authorizing registration; and that ATR Capital wants to know whether there are other taxes that it needs to pay aside from those reflected in the aforementioned documents. EcTaSC In reply, please be informed of the 1997 Tax Code provisions relative to the disposition of shares of stocks which are as follows: 1. Section 27 (D) (2), viz: "(D) Rates of Tax on Certain Passive Incomes. (2) Capital Gains from the Sale of Shares of Stock Not Traded in the Stock Exchange. A final tax at the rates prescribed below shall be imposed on net capital gains realized during the taxable year from the sale, exchange or other disposition of shares of stock in a domestic corporation except shares sold or disposed of through the stock exchange: Not over P100,000 5% Amount in excess of P100,000 10% 2. Section 127 (A), viz: Sec. 127. Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded through the Local Stock Exchange or through Initial Public Offering. HIESTA (A) Tax on Sale, Barter, or Exchange of Shares of Stock Listed and Traded through the Local Stock Exchange. There shall be levied, assessed and collected on every sale, barter, exchange or other disposition of shares of stock listed and traded through the local stock exchange other than the sale by a dealer in securities, a tax at the rate of one-half of one percent (1/2 of 1%) of the gross selling price or gross value in money of the shares of stock sold, bartered, exchanged or otherwise disposed of which shall be paid by the seller or transferor. 3. Section 176, viz: "Sec. 176. Stamp Tax on Sales, Agreements to Sell, Memoranda of Sales, Deliveries or Transfer of Due-bills, Certificates of Obligation, Or Shares or Certificates of Stock . On all sales, or agreements to sell, or memoranda of sales, or deliveries, or transfer of due-bills, certificates of obligation, or shares or certificates of stock in any association, company or corporation, or transfer of such securities by assignment in blank, or by delivery, or by any paper or agreement or memorandum or other evidences of transfer or sale whether entitling the holder in any manner to the benefit of such due-hills, certificates of obligation or stock, or to secure the future payment of money, or for the future transfer of any due-bill, certificate of obligation or stock, there shall be collected a documentary stamp tax of One Peso and fifty centavos (P1.50) on each Two hundred pesos (P200), or fractional part thereof, of the par value of such due-bill, certificate of obligation or stock: Provided, That only one tax shall be collected on each sale or transfer of stock or securities from one person to another, regardless of whether or not a certificate of stock or obligation is issued, indorsed, or delivered in pursuance of such sale or transfer: and Provided, further, That in the case of stock without par value the amount of the documentary stamp tax herein prescribed shall be equivalent to twenty-five percent (25%) of the documentary stamp tax paid upon the original issue of said stock." AcHaTE Revenue Regulations No. 9-2004 defined non-bank financial intermediaries as referring to persons or entities whose principal functions include the lending, investing or placement of funds or evidences of indebtedness or equity deposited with them, acquired by them or otherwise coursed through them, either for their own account or for the account of others. This includes all entities regularly engaged in the lending of funds or purchasing of receivables or other obligations with funds obtained from the public through the issuance, endorsement or acceptance of debt instruments of any kind for their own account, or through the issuance of certificates of assignment or similar instruments with recourse, trust certificates, or of repurchase agreements, whether any of these means of obtaining funds from the public is done on a regular basis or only occasionally. Therefore, ATR is a non-bank financial intermediary. Moreover, the sale, barter or exchange of shares of stock owned by the company, not listed in the local stock exchange is subject to capital gains tax and documentary stamp tax pursuant to Sections 27 (D) (2) and 176 of the Tax Code of 1997. However, sale, barter or exchange of shares of stock listed and traded through the local stock exchange or through initial public offering is subject to stock transaction tax pursuant to Section 127 (A) of the same Tax Code. The same is true with respect to shares of stock held by ATR for resale. Inasmuch as the capital gains tax and the documentary stamp tax for unlisted shares of stocks and the stock transaction tax for listed stocks, have been paid, the corresponding tax clearance certificate and certificate authorizing registration have been issued, this Office is of the opinion that the taxes imposed on the disposition of shares of stock by ATR have been duly complied with. AaIDCS 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