Factoran & Associates Law Offices

September 28, 2007 BIR RULING [DA-507-07] Factoran & Associates Law Offices 7th Floor, Montepino Building Adelantado corner Gamboa Streets Legaspi Village, Makati City Attention: Atty. Joseph Jason M. Natividad Gentlemen : This refers to your letter dated July 3, 2007 stating that your client, the Board of Trustees of the Private Education Retirement Annuity Association (PERAA), is a BIR approved/registered administrator of a Multi-Employer Trust; that it is authorized to receive and accept a reserve or augmentation funds from the Participating Institutions (employer schools) which shall form part of each school's retirement fund and which will not be used for any other purpose but for the retirement benefits of the school's employees; and that this reserve or augmentation fund would be in addition to the regular premium contributions being given by each school pursuant to the PERAA Plan and that all the conditions/requirements set forth under Section 60 (B) of the Tax Code of 1997 for employees will be complied with. aSHAIC Based on the foregoing representations, you now request for an opinion that the reserve or augmentation fund to be received from the Participating Institutions will not affect the qualifications of the PERAA Plan and consequently entitled to all the benefits and privileges granted under Section 60 (B), supra. In reply thereto, please be informed that since the reserve or augmentation funds from the Participating Institutions will not be prejudicial to the employer schools, it will not affect the PERAA Plan's qualification under Section 32 (B) (6) (a) of the Tax Code of 1997, and will remain entitled to all the benefits and privileges granted under Section 60 (B), supra. Consequently, the fund created to implement the provisions of the Plan and the retirement pay to qualified retirees remains exempt pursuant to said law. HaTISE Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service