We prove a factorization theorem in QCD for the color suppressed decays B0->
D0 M0 and B0-> D*0 M0 where M is a light meson. Both the color-suppressed and
W-exchange/annihilation amplitudes contribute at lowest order in LambdaQCD/Q
where Q={mb, mc, Epi}, so no power suppression of annihilation contributions is
found. A new mechanism is given for generating non-perturbative strong phases
in the factorization framework. Model independent predictions that follow from
our results include the equality of the B0 -> D0 M0 and B0 -> D*0 M0 rates, and
equality of non-perturbative strong phases between isospin amplitudes,
delta(DM) = delta(D*M). Relations between amplitudes and phases for M=pi,rho
are also derived. These results do not follow from large Nc factorization with
heavy quark symmetry.Comment: 38 pages, 6 figs, typos correcte
