May 5, 2003

BIR RULING [DA-144-03]

S.27 347-87/11-5-87

Siguion Reyna, Montecillo & Ongsiako

4th & 6th Floors, Citibank Center 8741 Paseo de Roxas
Makati City

Attention: Attys. Jose Lis C. Leagogo &

Michael Felipe A. Mercado

Gentlemen :

This refers to your letter dated October 19, 2002 requesting, on behalf of your
client, Unilever, confirmation that the transfer of Unilever shares from Chico-
Invest B.V. (CIBV for brevity) to its wholly owned subsidiary Mavibel B.V. (MBV for
brevity) is not subject to tax since the transfer is part of a worldwide corporate
reorganization and no gain was realized by CIBV for income tax transferring the
Unilever shares to MBV.
The facts, as you represent, are as follows:
CIBV is a corporation incorporated under the laws of Netherlands whose primary
purpose is to participate in and to manage and finance other enterprises.
On 6 March 2002, MBV was spun off by CIBV under the laws of Netherlands. The
primary purpose of MBV is to participate in, to take other interest in, to conduct
the control of other enterprises, or any nature whatsoever, and furthermore to
finance third parties and to give security in any way or to be bound for
obligations of third parties and finally everything that is related to the above or
may be conducive thereto.
MBV, as a spin off of CIBV, is a wholly-owned subsidiary of CIBV.
In the early part of 2002, CIBV undertook a worldwide corporate reorganization
which has the effect of transferring its assets to its wholly-owned subsidiary,
MBV. Pursuant to the worldwide corporate reorganization, the Unilever shares
were transferred by CIBV to its wholly owned subsidiary, MBV. The transfer
involves 4,918,512 fully paid shares of Unilever Phil. With a par value of P50.00
per share.
Based on the above-mentioned facts, you respectfully request our confirmation of
the opinion that since the transfer was pursuant to a worldwide reorganization
where the Unilever shares were transferred from CIBV, the parent company, to
MGV, a subsidiary, no gain was realized by Chico-Invest for income tax purposes
in transferring the Unilever shares to MBVI.
In reply, please be informed that in BIR Ruling No. 347-87 dated November 5,
1987 wherein the transaction involved the transfer of Philippines shares owned
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 by a foreign corporation to its wholly-owned foreign subsidiary under the
proposed corporate reorganization, the BIR ruled that:
"In reply thereto, I have the honor to inform you 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.
This ruling is based on the facts as presented. However, if upon
investigation the same could not be substantiated, then this ruling shall be
considered as null and void."TcaAID

Accordingly, this Office opines and so holds that the transfer of the Unilever
shares from the parent company, CIBV, to its subsidiary, MBV, was in pursuance
to a legitimate worldwide corporate reorganization. As the transfer was from a
parent company to a wholly owned subsidiary, there is no effective transfer of
beneficial ownership. Since there is no effective transfer of beneficial ownership,
no gain was realized by CIBV 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 ascertained that the facts are different,
then this ruling shall be considered void.

Very truly yours.

Commissioner of Internal Revenue

By:

(SGD.) JOSE MARIO C. BUÑAG

Deputy Commissioner
Legal and Inspection Group

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