Multinational Village Homeowners Association, Inc.

July 23, 2008 BIR RULING [DA-(C-015) 077-08] RR 8-2005; 746-2006 Multinational Village Homeowners Association, Inc. Le Auditorium Country Club John St., Multinational Village Moonwalk, Paraaque Attention: Gen. Arsenio M. Torres (ret) President Gentlemen : This refers to your letter dated June 16, 2008 requesting for exemption from the withholding tax in connection with your Meralco refund. It appears that Multinational Village Homeowners Association, Inc. is a non-stock, non-profit corporation duly registered with the then Ministry of Human Settlements Home Financing Corporation under Registration No. 04-558 dated November 21, 1984; that some of the purposes for which the corporation was formed are to promote better understanding, foster goodwill, cooperation, fellowship and mutual assistance among its members; to develop, promote and sustain civic consciousness among its members, their families and associates, and the neighboring communities for the maintenance of peace and order and security in the area, to provide and encourage activities for the development of the social, moral, educational, cultural and economic well-being of its members and their families; and that the corporation shall be maintained by fees, dues, assessments or charges paid by its members and other income as the corporation may derive from the pursuit of its livelihood and economic activities as well as voluntary contributions, donations or loans from persons, partnerships, corporations and other entities. 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. HcISTE Multinational Village Homeowners Association, Inc. is an exempt corporation organized for mutual aid association as contemplated under Section 30 (C) of the Tax Code of 1997, as amended. 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 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 (C) of the Tax Code of 1997, as amended. In sum, the MERALCO refund to Multinational Village Homeowners Association, Inc. arising from the Supreme Court case G.R. No. 141314 dated April 9, 2003 of the excess utility payments which were incurred and paid by it as an exempt organization under Section 30 (C) 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. (BIR Ruling No. DA-746-2006 dated December 29, 2006) 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