Mount Carmel Rural Bank, Inc.

July 6, 2009 BIR RULING [DA-(C-117) 352-09] RA 7353; 184-99; DA-026-04; DA-420-04; DA-084-06; DA-692-07 Mount Carmel Rural Bank, Inc. J.M. Kalaw St., Lipa City Attention: Mr. Gerard V. Cadiz President Gentlemen : This refers to your letter dated January 12, 2009 stating that the Bangko Sentral ng Pilipinas ("BSP") approved the consolidation of the Lipa Public Bank, Inc. and the Rural Bank of Mataasnakahoy (Bats), Inc. to be known as the Mount Carmel Rural Bank, Inc. The Articles of Incorporation and the Articles of Consolidation was registered and approved by the Securities and Exchange Commission ("SEC") on August 6, 2008. The BSP approved the Consolidation and Certificate to Register per MB Resolution No. 868 dated August 2, 2007. The Authority to Operate as a Rural Bank was granted on November 18, 2008. Mount Carmel Rural Bank, Inc. started its operation on January 5, 2009. Based on the foregoing representations, you are requesting confirmation of your opinion that Mount Carmel Rural Bank, Inc. is exempt from payment of all taxes, fees and charges of whatever nature and description, such as capital gains tax (CGT) and documentary stamp tax (DST), for a period of five (5) years reckoned from January 5, 2009 pursuant to Section 15 of Republic Act (R.A.) No. 7353. In reply thereto, please be informed that Section 15, in relation to Sections 20 and 21 of R.A. No. 7353, otherwise known as the "New Rural Bank Act" provides "Sec. 15. All rural banks created under its provisions and those already in operation as of the date of the approval thereof shall be exempt from the payment of all taxes, fees and charges of whatever nature and description, except the corporate income tax and local taxes, fees and charges, for a period of five (5) years from the date of commencement of operations." In relation thereto, Section 2 (B) of Revenue Regulations No. 16-93 provides that all rural banks are exempt from the Gross Receipts Tax (GRT) imposed under Section 119 of the Tax Code of 1997 on gross receipts derived from sources within the Philippines. In view of the foregoing, this Office hereby confirms your opinion that since Mount Carmel Rural Bank, Inc. is a rural bank and was issued a Certificate of Authority by the BSP to operate as such, it is entitled to all the exemptions provided in Section 15 of R.A. No. 7353 ( i.e. , GRT, CGT and DST) from the commencement of its operation as a rural bank. EHDCAI 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