BIR Ruling [DA-043-03]

February 19, 2003 BIR RULING [DA-043-03] R.A. No. 8763 PLDT General Office, P.O. Box 2148 Makati City Attention: Ma. Criselda B. Guhit Coordinator Tax Management Gentlemen : This refers to your letter dated January 29, 2002 requesting for a confirmation of your opinion that TAHANAN MUTUAL BUILDING AND LOAN ASSOCIATION (Tahanan for brevity),including its franchise, capital, reserves, surplus, and its loans, receipts and incomes, is exempt from all taxation imposed by the Government, considering that it is insured by the Home Insurance and Guaranty Corporation (HIGC for brevity). The facts, as you represent, are as follows: Tahanan is a corporation duly organized and existing under the laws of the Philippines with principal address at the Ramon Cojuangco Building, Makati Avenue, Makati City. Tahanan is a housing program vehicle for the employees of the Philippine Long Distance Telephone Company (PLDT for brevity).Its primary purpose is: DAaEIc "To accumulate the savings of its stockholders, to repay to said stockholders their accumulated savings and profits upon surrender of their shares; to encourage industry, frugality and home building among the stockholders; to loan its funds, as unencumbered real estate and with the pledge of shares of the capital stock owned by such stockholders as collateral security; to assist or provide facilities for its stockholders to avail or take advantage of any suitable housing assistance, programs/packages of the Government, Private Developers/Individuals or any Financial Institution; and to enable Corporations (Employers) and/or any of its employee-welfare organizations to fund or contribute to a company-sponsored/assisted housing program for its employees. This shall be applied initially and particularly to PLDT and its employees." The accounts of Tahanan are insured with the HIGC. You now request confirmation of your opinion that Tahanan, including its franchise, capital, reserves, surplus, and its loans, receipts and income is exempt from all taxation imposed by the Government considering that Tahanan is insured with HIGC. IHEDAT In reply, please be informed that HIGC is governed by Republic Act No. 8763, otherwise known as The Home Guaranty Corporation Act of 2000. Section 20(a) and (d) of the said Act provide that: "Section 20. Building and Loan Associations. (a) In order to encourage the accumulation of savings and the financing of homes through the local mutual thrift institutions, the Corporation is authorized, under such rules and regulations as it may prescribe, to issue contracts of guaranty for the accounts of such building and loan associations in accordance with the best practices of known mutual thrift and home financing institutions. (d) When guaranteed by the Corporation, such associations including their franchises, capital, reserves, surplus, and their loans, receipts, and incomes, shall be exempt from all taxation now or hereafter imposed by the Government." Article 46 of the Rules and Regulations Implementing the said Act also provides as follows: "Art. 46. Tax Exemption. When guaranteed by the Corporation, BLAs including their franchises, capital, reserves, surplus, and their loans, receipts and incomes shall be exempt from all taxation now and hereafter imposed by the Government." Section 16(f) of Republic Act No. 580, also known as the "Home Financing Act", as amended, provides: "Sec. 16. ... (f) When insured by the Corporation, such associations, including their franchises, capital, reserves, surplus and their loans, receipts, and incomes, shall be exempt from all taxation now or hereafter imposed by the Government." Based on the foregoing, this Office hereby confirms your opinion that Tahanan, including its franchise, capital, reserves, surplus, and its loans, receipts and income, is exempt from all taxation imposed by the Government. 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. BUAG Deputy Commissioner Legal & Inspection Group