Banco De Oro

August 10, 2007 BIR RULING [DA-451-07] 27 (D) (1) DA-414-2005 Banco De Oro ADB Avenue, Ortigas Center Mandaluyong City Attention: Mr. Noel L. Andrada Vice-President and Ms. Ma. Florencia P. Esguerra Assistant Vice-President Gentlemen : This refers to your letter dated December 29, 2004 requesting on behalf of your client, St. Scholastica's Academy of Marikina, Inc. (SSAM) , a non-stock, non-profit educational institution for a certification that its interest income derived from bank deposit accounts, retail treasury bonds, and yields from deposit substitute instruments are exempt from the 20% final withholding tax and the 7.5% tax under the expanded foreign currency deposit system imposed under Section 27 (D) (1) of the Tax Code of 1997. EcDSTI In reply thereto, please be informed that pursuant to Department Order No. 149-95 dated November 24, 1995 amending Department Order No. 137-87, interest income from currency bank deposits and yield from deposit substitute instruments used actually, directly and exclusively in pursuance of their purpose as an educational institution, are exempt from the 20% final tax and 7 1/2% tax on interest income under the expanded foreign currency deposit system imposed under Section 27 (D) (1) of the Tax Code of 1997, subject to compliance with the conditions that as a tax-exempt educational institution they shall on an annual basis submit to the Revenue District Office concerned an annual information return and duly audited financial statement together with the following: (a) Certification from their depository banks as to the amount of interest income earned from passive investment not subject to the 20% final withholding tax and 7 1/2% tax on interest income under the expanded foreign currency deposit system imposed under Section 27 (D) (1) of the Tax Code of 1997; (b) Certification of actual utilization of the said income; and (c) Board Resolution by the school administration on proposed projects (i.e., construction and/or improvement of school buildings and facilities, acquisition of equipment, books and the like) to be funded out of money deposited in banks or placed in money markets, on or before the 15th day of the fourth month following the end of its taxable year (Sec. 4, Finance Department Order No. 137-87). IDSETA As a non-stock, non-profit educational institution, St. Scholastica's Academy of Marikina, Inc. (SSAM) shall be exempt from payment of the 20% final tax on interest earnings derived from its bank deposit accounts, treasury bonds, treasury bills and other bank notes which also form part of its assets used for educational purposes. In view of the foregoing, interest income from currency bank deposits and yield from deposit substitute instruments and under the expanded foreign currency deposit system derived by St. Scholastica's Academy of Marikina, Inc. (SSAM) in pursuance of its purpose as an educational institution is respectively exempt from the payment of the 20% and 7.5% final tax. Moreover, it is likewise exempt from payment of the 20% final tax on interest earnings derived from its deposit accounts, treasury bonds, treasury bills and other bank notes. HcaDIA 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, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service