National Bureau of Investigation Savings and Loan Association Incorporated

October 24, 2007 BIR RULING [DA-560-07] BIR Ruling No. 138-97; DA-347-98 Sec. 5, RA 8367; Sec. 27 (D) (1), NIRC National Bureau of Investigation Savings and Loan Association Incorporated Taft Avenue, Manila Attention: Rodrigo C. Bucaoto President Gentlemen : This refers to your letter dated March 1, 2007, requesting this Office to issue a certificate of tax exemption from the 20% final withholding tax on bank deposits due to its non-stock and non-profit nature. ICcaST It is represented that National Bureau of Investigation Savings and Loan Association Inc . (NBISLA) is a non-stock, non-profit domestic corporation duly registered with the Securities and Exchange Commission (SEC) with SEC Registration No. 11292 on August 8, 2006; that it was issued a Certificate of Authority to operate as a non-stock savings and loan association by the BSP on September 28, 1973; and that the corporation, according to its amended articles of incorporation, was organized for the following purposes: 1. To encourage and promote thrift and the habit of saving among its members; 2. To make credit available to the members at a reasonable rate of interest; 3. To educate the members in the wise use of money and to emphasize the importance of punctuality in meeting obligations; 4. To cooperate with the government of the Philippines, together with all its instrumentalities in the execution of the governmental policies which will redound to the benefit of the general public; cETDIA It is further represented that no member is benefited but only to a reasonable share of income based on his/her capital contribution in accordance with BSP supervision of Non-Stock. Savings and Loan Association operations. Furthermore, none of the trustees of NBISLA receives any compensation in their capacity as such. The annual net income consisting of interest on loans, penalty for late payment, service fee and interests on bank deposits are returned back to members in the form of dividends at the end of the year. There is no undivided profit balance of the NBISLA. In reply, please be informed that Section 5 of Republic Act (RA) No. 8367 provides that: "Sec. 5 Tax Exemption. An association shall be exempt from payment of tax in respect to income it receives, including interest on its deposits with any bank: Provided, however, that income derived from any of its properties real or personal, or any activity conducted for profit, regardless of the disposition thereof, is subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code. HSaIET Interest earnings on deposits of members with Associations, as well as the shares of its members from the net income of the Associations shall be exempt from income tax." From the foregoing, this Office holds that as a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission under SEC Registration No. 11292, dated August 8, 2006 and with the Central Bank of the Philippines under Certificate of Authority No. C-080 dated September 28, 1973, the interest income derived by NBSLA from its bank deposit and yield or any other monetary benefit from deposit substitutes shall be exempt from the 20% final withholding tax imposed under Section 27 (D) (1) of the Tax Code of 1997, as amended by RA 9337. (BIR Ruling No. 138-97 dated December 29, 1997) 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. aCcHEI Very truly yours, Commissioner of Internal Revenue By: (SGD.) GREGORIO V. CABANTAC Deputy Commissioner Legal and Inspection Group