BIR Ruling

March 9, 1976 Manila Teachers Savings and Loan Association, Inc. 91 General Luna St. Malabon, Rizal Attention: Mrs . Honorata Alfante President Gentlemen : This refers to your request for exemption from the payment of income tax and the filing of the corresponding income tax return under Section 27(b) of the Tax Code. Investigation conducted by this Office disclosed that the Manila Teachers Savings and Loan Association is a non-stock, savings and loan association organized in accordance with Republic Act No. 3779 and complying with the conditions set forth in Section (3) (c) and 5 (e) of the aforesaid act, hence, it, comes within the purview of exempt organization's described in Section 27(b) of the Tax Code as "Mutual Savings Bank not having a capital stock organized and operated for mutual purposes". Accordingly, it is exempt from the payment of income tax and the filing of the corresponding income tax return. It is however, required to file on or before April 15 of each year, balance sheet, profit and loss statement together with annual information return under oath, stating its gross income and expenses incurred during the preceding year, and a certificate showing that there has not been any substantial change in its By-Laws, Articles of Incorporation, manner of operation and activities as well as sources and disposition of income. cdt Attention is, however, invited to the fact that the exempt character of that Association may be lost should it place its funds in securities and other investments inasmuch as an exempt savings and loan association within the purview of Section 27(b) of the Tax Code, must limit its operations to the receipt of the deposits from, and to the granting of loans to, its members. However, the interest earned from deposits of its funds with any banking institution will not give rise to any income tax consequence, said deposits being essentially done for safekeeping and the interest thereon being purely an incident thereto. Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue