SyCip Salazar Hernandez & Gatmaitan

September 8, 2009 BIR RULING [DA-(C-196) 504-09] BIR Ruling No. DA-79-05, DA-312-05, DA-503-05, DA-289-08 & DA-290-08 SyCip Salazar Hernandez & Gatmaitan SSHG Law Centre 105 Paseo de Roxas Makati City Attention: Atty. Rolando V. Medalla, Jr. Atty. Melyjane G. Bertillo Gentlemen : This refers to your letter requesting on behalf of your client, Reco Rizal Pine Pte. Ltd. (the "Company"), for confirmation of your opinion that the income of the Company from the sale of its shares of stock in RCBC Realty Corporation ("RCBC Realty") is exempt from Philippine income tax, and consequently from withholding tax, pursuant to Section 32 (B) (7) (a) of the Tax Code of 1997, as amended. As represented, the Company is a non-resident foreign corporation organized and existing under the laws of Singapore for the purpose of, among others, carrying on the business of investment, acting as a holding company, and undertaking and transacting all kinds of investment business. The Company is 100% beneficially owned by the Government of Singapore. The Company's investments are managed by GIC Real Estate Pte. Ltd., which is 100% directly owned by the Government of Singapore Investment Corporation Pte. Ltd., a financing institution wholly-owned and controlled by the Government of Singapore ( Government of Singapore Investment Corporation v. Commissioner of Internal Revenue , CTA Case No. 5568 dated February 10, 2000). The Company owns 2,722,834 common and 8,758,819 preferred shares (collectively, the "Shares") in RCBC Realty Corporation, a company organized under Philippine law. The Company is currently considering selling some or all of the Shares to another entity (the "Proposed Transaction"). In reply, please be informed that Sec. 32 (B) (7) (a) (ii) of the 1997 Tax Code, as amended, provides as follows: "(B) Exclusions from Gross Income The following items shall not be included in gross income and shall be exempt from taxation under this Title: xxx xxx xxx (7) Miscellaneous Items. (a) Income Derived by Foreign Government. Income derived from investments in the Philippines in loans, stocks, bonds or other domestic securities, or from interest on deposits in banks in the Philippines by (i) foreign governments, (ii) financing institutions owned, controlled, or enjoying refinancing from foreign governments, and (iii) international or regional financial institutions established by foreign governments." From the foregoing, it is clear that the Company is a financing institution owned and controlled by the Government of Singapore. Since the Company is a financing institution owned, controlled, or enjoying refinancing from the Government of Singapore, it is not subject to Philippine income tax under Section 32 (B) (7) (a) (ii) of the Tax Code of 1997, as amended, on its income from the sale of some or all of the Shares to another entity. 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 as null and void. SEcADa Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service