BIR Ruling

August 22, 1977 Manila Teachers Savings and Loan Association, Inc. 91 General Luna St. Malabon, Rizal Attention: Cipriano J . Lacson General Manager Gentlemen : In reply to your letter dated July 20, 1977, I have the honor to inform you that the Manila Teacher's Savings and Loan Association has been considered by this Office in a letter dated March 9, 1976 as an Association exempt from the payment of income tax and the filing of the corresponding income tax return pursuant to Section 27(b) of the Tax Code, and that the Association's interest income, earned from deposits of its fund with any banking institution has been held as " not to give rise to any tax consequence, said deposits being essentially done for safekeeping and the interest thereon being purely an incident thereto ". (Emphasis ours) Accordingly, the aforesaid interest income is exempt from the 15% withholding tax prescribed by Presidential Decree No. 1156. This serves as authority of the depository banks to forego withholding of the 15% tax on the interest earnings of the funds deposited with them by the Manila Teachers' Savings and Loan Association, Inc. Very truly yours, CONRADO P. DIAZ Deputy Commissioner of Internal Revenue TAN-D2567-D1025-A-2