Manabat San Agustin & Co.

August 6, 2008 BIR RULING [DA-(C-027) 114-08] DA 406-07 Manabat San Agustin & Co. 22/F Philamlife Tower 8767 Paseo de Roxas Makati City Attention: Ma. Georgina J. Soberano Principal Gentlemen : This refers to your letter dated July 10, 2008 stating that your client, Bureau Veritas Consumer Products Services Phils. Inc. (BV-Philippines), a domestic corporation with business address at 8439 South Super Hi-Way West, Meralco Green Village, Paraaque City, is a wholly owned Philippine subsidiary of Bureau Veritas Consumer Product Services (HK) Ltd. (BVCPS-HK); that the following are the registered owners of the BV-Philippines shares, to wit: DaScCH Stockholder No. of Shares Amount (Php) BVCPS-HK 12,495 P1,249,500.00 Carmela U. Babor 1 100.00 Mylaine C. Pasia 1 100.00 Maxine Botton 1 100.00 Alex Leung 1 100.00 Ming Chang Wu 1 100.00 TOTAL 12,500 P1,250,000.00 ====== =========== that on the other hand, BVCPS-HK is a private limited company duly incorporated and registered under the laws of Hong Kong with legal address at 1/F Pacific Trade Centre, 2 Kai Hing Road, Kowloon Bay, Kowloon, Hong Kong; that BVCPS-HK is a wholly owned subsidiary of Bureau Veritas International SAS (BVI), a company duly incorporated and registered under the laws of France with its legal address at 17bis Place des Reflects, La Defense 2, 92400 Courbevoie, France; that BVI, on the other hand is a subsidiary of Bureau Veritas SA, the group's ultimate holding company, which is a company duly incorporated in France; that in view of the present global restructuring being undertaken by the Bureau Veritas Group which involves the transfer of the Group's international operational subsidiaries to be held by BVI and as part of this global restructuring, it is intended that the subsidiaries of BVCPS-HK, including BV-Philippines, will be transferred to BVI for purposes of rationalizing and consolidating the control of the various BV international shareholdings; that to implement this worldwide corporate restructuring of the Bureau Veritas Group, BVCPS-HK and BVI executed a Share Purchase Agreement (SPA) dated June 16, 2008 for purposes of transferring the 12,495 BV-Philippines shares (Transferred Shares) held by BVCPS-HK to BVI; and that the pertinent provisions of the SPA are as follows: HAIDcE ART. 2. Sale and Purchase of the Transferred Shares . Upon the terms and subject to the conditions of this Agreement and in reliance upon the representations, warranties and covenants of the Parties, on Completion Date the Seller shall sell to the Buyer, and the Buyer shall purchase all, but not less than all, of the Transferred Shares. As of Completion, the Buyer shall be entitled to exercise all rights of the Seller, and shall be bound by all obligations and Encumbrances, attached or accruing to the Transferred Shares including but without limitation to the generality of the foregoing, all rights to receive any dividend or other distribution on or after Completion Date other than those declared but not paid prior to Completion Date. ART. 3. Purchase Price . Pursuant to the terms and subject to the conditions of this Agreement, the Seller and the Buyer have agreed on a purchase price for the Transferred Shares of USD1,791,899 in total (the Purchase Price). ISTCHE ART. 5. Conditions Precedent to the Obligations of the Parties . The obligations of the Seller and the Buyer to sell and purchase the Transferred Shares and to take the other actions required to be taken on the Completion Date are subject to the satisfaction on or prior to the Completion Date, of the following condition (unless such condition is waived by all Parties); (a) The obtaining of a written tax-ruling from the Bureau of Internal Revenue of the Philippines (BIR) confirming that the transaction contemplated by this Agreement is exempt of any capital gains tax in the Philippines. Based on the foregoing representations, you now request for confirmation of your opinion that the transfer of the BV-Philippines shares from BVCPS-HK to BVI, pursuant to a legitimate worldwide reorganization of the BV Group, is not subject to the capital gains tax there being no transfer of beneficial ownership over the shares. AISHcD In reply thereto, please be informed that this Office had already occasion to rule on the matter, when it said in BIR Ruling No. DA088-06 dated March 6, 2006, that ". . . the proposed transfer of the TPC shares from TTC to THBV, pursuant to a worldwide corporate reorganization of the Thomson Group of Companies, is not subject to capital gains tax as (1) there is no effective transfer of beneficial ownership of the TPC shares since both Transferor and Transferee belong to The Thomson Group of Companies; and (2) the proposed transfer is a mere re-alignment of stockholdings effectively consolidating beneficial and legal ownership of the TPC shares. Since there is no transfer of beneficial ownership, no gain will be realized by TTC and THBV for income tax purposes. ICAcHE xxx xxx xxx The proposed transfer of the TPC shares will be made primarily for business considerations, i.e., in connection with a worldwide corporate reorganization and to consolidate beneficial and legal ownership into the Transferee. Thus, the proposed transfer to be made without consideration is not subject to donor's tax since there is no donative intent that can be attributed to the Transferor. Furthermore, both the Transferor and the Transferee are subsidiaries and part of the Thomson Group of Companies and there is no transfer of beneficial ownership of the TPC shares . . . there can be no donative intent on the part of the transferor in a transfer of properties to the member-beneficiaries, considering that a person or entity cannot donate properties the ownership of which belongs to themselves. (BIR Ruling No. DA318-99 dated May 21, 1999)" aDSTIC WHEREFORE, in view of the foregoing, this Office hereby confirms your opinion that the transfer of the BV Philippines shares from BVCPS-HK to BVI, pursuant to a legitimate worldwide reorganization of the BV Group, is not subject to capital gains tax since there is no effective transfer of beneficial ownership of the said shares in the Philippine company. 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. IDSETA Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service