Sto. Niño Catholic School, Inc.

July 5, 2007 BIR RULING [DA-361-07] RR 8-2005; DA-746-2006 Sto. Nio Catholic School, Inc. Sampaloc Street, Zone 1, Signal Village Taguig City Attention: Rv. Fr. Salvador O. Yun School Director Gentlemen : This refers to your letters dated March 2, 2007 and April 24, 2007 requesting for exemption from the withholding taxes in connection with the refund of excess utility payments from MERALCO. It is represented that Sto. Nio Catholic School, Inc. is a non-stock, non-profit educational institution duly recognized by the Department of Education Culture and Sports with Government Recognition Nos. P-052 series of 2001, E-025 series of 2001 and S-005 series of 2003; that it is authorized to operate nursery/kindergarten course, complete elementary course effective school year 2001-2002 and complete secondary course (day) effective school year 2002-2003, respectively; that it is likewise registered with the Securities and Exchange Commission under SEC Registration No. 179409 dated July 23, 1990; that the purpose for which the corporation was formed are: to teach religion, morals, arts, sciences and other studies and courses embraced in pre-school and elementary course of instruction, to grant certificates and diplomas for completion of such courses under such rules and regulations as may from time to time be promulgated by the Board of Trustees and the Department of Education Culture and Sports, to foster Catholic formation, character education and civic consciousness in students with the view to mold them into upright and responsible members of the community, aware of their duties, rights, dignity and destiny as human being created in the image of His Creator; and that no profit or benefits, pecuniary or otherwise, however, will inure to the benefit of any member, officer or trustee of the corporation. cSaADC In reply, please be informed that Section 2.57.5 (B) (2) of Revenue Regulations No. 2-98 as amended by Revenue Regulations Nos. 3-2004 and 8-2005, is explicit in its provisions that the expanded withholding tax does not apply to income payments to persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special. Sto. Nio Catholic School, Inc. is a non-stock, non-profit educational institution duly recognized by the Department of Education Culture and Sports. As such, it is exempt from payment of income tax on income received by it as such organization and consequently from the expanded withholding tax. Further, since the excess utility payments pertain to expense related to Sto. Nio Catholic School, Inc. registered activity, then the refund which will be received by it is not subject to the 32% regular corporate income tax because it is an exempt corporation under Section 30 (H) of the Tax Code of 1997, as amended. In sum, the MERALCO refund to Sto. Nio Catholic School, Inc. arising from the Supreme Court case G.R. No. 14814 dated April 9, 2003 of the excess utility payments which were incurred and paid by it as an exempt organization under Section 30 (H) of the Tax Code of 1997, as amended, is exempt from the 32% regular corporate income tax, and consequently, from the 25% or 32% withholding tax imposed under Revenue Regulations No. 8-2005. 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