Payment of Retainer Fees and Processing Fees by San Miguel Corp. Not Subject to Expanded Withholding Tax

June 15, 1998 BIR RULING NO. 090-98 50 (a)-000-00-090-98 SMC Stock Transfer Service Corporation 9th Floor Hanston Bldg., Emerald Avenue, Ortigas Center Pasig City Attention: Mr . Enrique LL . Yusingco Asst . Vice President & General Manager Gentlemen : This refers to your letter dated March 11, 1997 stating that SMC Stock Transfer Service Corporation (STSC) is a domestic corporation duly registered and existing under the laws of the Philippines; that it is engaged in business as a stock transfer agent; that on January 16, 1997, a Transfer Agency Agreement was executed by and between San Miguel Corporation (SMC) and STSC , whereby the latter was appointed as transfer agent for and on behalf of the former, to do and perform the following: prcd 1) to cancel certificates of stocks presented for transfer by stockholders and prepare and issue the corresponding required new certificates to the transferee; 2) to prepare and issue certificates for stock subscriptions and attend to their delivery to stockholders or subscribers within the time limit set by existing regulations and/or contract; 3) to compute the correct amount of documentary stamp taxes due on original issues and remit the same to the BIR on behalf of the Company; 4) to furnish the Company prior to the annual or special meeting of its stockholders or upon request by the Company, with a list of stockholders and the number of shares owned by each and such other information necessary under the circumstances; 5) to prepare and mail out notices, reports, proxies or circulars to stockholders; 6) to prepare and issue stock dividend certificates and cash dividend checks which may from time to time be declared and made payable by the Company only upon receipt of written instruction from the Company; 7) to replace stock certificates reported lost; stolen or destroyed upon strict compliance with the provisions of Republic Act 201, as amended, and the By-Laws of the Company; 8) to register all liens constituted on shares of stock of the Company upon receipt of notice thereof and cancel existing liens upon receipt of notice of release thereof; 9) to see to it that the certificates issued are within the authorized capitalization of the Company and that the Company is advised from time to time of the shares outstanding; and 10) to prepare and submit reports that may be required by the Securities and Exchange Commission and the Philippine Stock Exchange. and that in consideration for these services, SMC undertakes to pay STSC retainer fees and additional processing fees depending on the type of documents to be processed computed per stockholder. Based on the foregoing representations, you now request confirmation of your opinion that the payment of retainer fees and additional processing fees to STSC by SMC are not subject to the expanded withholding tax. In reply, please be informed that your opinion is hereby confirmed. Under Revenue Regulations No. 6-85, as amended, implementing then Section 50(b) of the Tax Code, as amended [now Section 57(B) of the Tax Code of 1997], payments only to persons enumerated therein are subject to the expanded withholding tax. Considering that payments to STSC in the form of retainer fees and additional processing fees are not among those specified in said Regulations, such payments to STSC are not, therefore, subject to the expanded withholding tax. LexLIb 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.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue