Surewell Equities, Inc.

February 17, 2010 BIR RULING [DA-(IL-003) 029-10] EO 226; 163-94; DA518-99; DA133-00; UN205-95 Surewell Equities, Inc. 690 A Quirino Avenue Tambo, Paraaque City Attention: Mr. Edwin N. Espedido Department Head Government Compliance Section Gentlemen : This refers to your letter dated December 3, 2009 stating that Surewell Equities, Inc. (SEI) is a Board of Investments (BOI) registered entity; that SEI is a developer of mass housing project on a Non-Pioneer Status located in Cavite, namely: No. of BOI Project Location Economic Date of Registration Units Registration No. Le Rica Homes Phase I General Trias, Cavite 412 12-23-2008 2008-332 Le Rica Homes Phase II General Trias, Cavite 707 05-24-2006 2006-070 that under the terms of its registrations, SEI is entitled to certain fiscal and non-fiscal incentives which include an Income Tax Holiday (ITH) respectively for a period of three (3) years from November 2009 and four (4) years from August 2006 or actual start of commercial operations/selling, whichever is earlier, but in no case earlier than the date of registration. Based on the foregoing representations, you now request for a ruling on the tax consequences that as a BOI-registered enterprise enjoying an ITH it is exempt from income tax and consequently from withholding tax. DEacIT In reply thereto, please be informed that Revenue Regulations No. 2-98, as amended, implementing Section 57 (B) of the Tax Code of 1997, provides: "SEC. 2.57.5. Exemption from Withholding. The withholding of creditable withholding tax prescribed in these Regulations shall not apply to income payments made to the following: (A) National government and its instrumentalities, including provincial, city or municipal governments; (B) Persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special, such as but not limited to the following: (1) Sales of real property by a corporation which is registered with and certified by the Housing and Land Use Regulatory Board (HLURB) or HUDCC as engaged in socialized housing project where the selling price of the house and lot or only the lot does not exceed one hundred eighty thousand pesos (P180,000) in Metro Manila and other highly urbanized areas and one hundred fifty thousand pesos (P150,000) in other areas or such adjusted amount of selling price for socialized housing as may later be determined and adopted by the HLURB, as provided under Republic Act No. 7279 and its implementing regulations; (2) Corporations registered with the Board of Investments and enjoying exemption from the income tax provided by Republic Act No. 7916 and the Omnibus Investment Code of 1987; (3) Corporations which are exempt from the income tax under Sec. 30 of the NIRC, to wit: the Government Service Insurance System (GSIS), the Social Security System (SSS), the Philippine Health Insurance Corporation (PHIC), the Philippine Charity Sweepstakes Office (PCSO) and the Philippine Amusement and Gaming Corporation (PAGCOR); However, the income payments arising from any activity which is conducted for profit or income derived from real or personal property shall be subject to a withholding tax as prescribed in these regulations." Inasmuch as SEI is a BOI registered company enjoying an income tax holiday respectively for three (3) and four (4) years for the above-mentioned projects, the income payments made to SEI pursuant to its BOI-registered activities, during the ITH period shall not be subject to creditable withholding tax prescribed by Revenue Regulations No. 2-98, as amended. This ruling is being issued on the basis of the foregoing facts as presented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. ACETSa Very truly yours, (SGD.) GREGORIO V. CABANTAC Deputy Commissioner Legal & Inspection Group