First Laguna Electric Cooperative, Inc.

September 25, 2009 BIR RULING [COOP-(E-007) 620-09] Section 39 (a), PD No. 269; BIR Ruling No. 069-98 First Laguna Electric Cooperative, Inc. Lumban, Laguna Attention: Mr. Evangelito S. Estaca Project Supervisor/Acting General Manager Gentlemen : This refers to your letter dated July 20, 2009 requesting for a ruling exempting you from deduction of creditable withholding tax. As represented, you were issued BIR Ruling No. Coop (E-005) 376-2009 dated June 15, 2009. From the documents submitted, it appears that you are an electric cooperative (EC) which was franchised under the National Electrification Administration (NEA) under Certificate dated August 12, 1977, Certificate No. 060 dated May 28, 1980 and Certificate No. 196 dated November 29, 2002. You were formed primarily for the purpose of supplying, promoting and encouraging the fullest use of electric service to its members on an area coverage basis, pursuant to the provisions of Presidential Decree No. 269. In reply, please be informed that you are exempt from income tax pursuant to Section 39 (a) of PD No. 269 as clarified in Section A (3) and (4) of Revenue Memorandum Circular No. 72-2003 dated October 20, 2003 which provides: "A. Electric Cooperatives (Ecs) registered with the National Electrification Administration (NEA) are exempt from: xxx xxx xxx 3. Income taxes for which they are directly liable [P.D. No. 269, Sec. 39(a)(1)]; TAcSaC 4. All National Government taxes and fees, including franchise, filing, recordation, license or permit fees or taxes. Provided, however, that the said exemption shall end on December 31 of the thirtieth full calendar year after the date of the cooperative's organization or conversion, or until it shall become completely free of indebtedness incurred by borrowing, whichever event first occurs. Provided further, that the period of exemption for a new cooperative formed by consolidation, as provided in Section 29 of P.D. No. 269, to begin as of the date of the beginning of such period for the constituent consolidating cooperative which was most recently organized or converted under P.D. No. 269 . . ." As a NEA-registered electric cooperative, you are, therefore, exempt from income tax for which you are directly liable. Thus, payments to you shall not be subject to income tax and consequently, to creditable withholding tax (BIR Ruling No. 69-98 dated May 21, 1998). 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, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service